Lending in Russia has a fairly long history. Banks received great development in the middle of the 19th century, along with the abolition of serfdom. Of particular importance, among others, were the Noble and Peasant Land Banks, the latter of which issued loans to peasants recently liberated from serfdom.
Reasons for the emergence of new state-owned banks
Serfdom, according to some historians, has long held back the economic and technical development of the Russian Empire. With the decree of 1861 on the abolition of Serfdom, a real economic boom began - more and more new banks were created, ready to issue loans to peasants, skilled businessmen and speculators, novice merchants and industrialists, people from the peasant environment. Their work was extremely difficult to regulate and contain government agencies.
Such consequences of the decree had both a positive and a negative side, and, of course, the lending sector needed state supervision.
In this regard, Ministers N. P. Ignatiev, M. N. Ostrovsky and N. Kh. Bunga was instructed in the early 1880s to draw up regulations for the Peasants' Bank. It took almost two years to develop the document and, finally, the position was approved by the king. This is how the peasant land bank began its history.
Important dates in the history of the bank
Work on the bank project began in 1880. The establishment of the peasant land bank took place a little later - on March 18, 1882, along with the signing of the corresponding decree by Emperor Alexander 3.
The bank opened its doors to everyone a year later, and in 1888 its branch was opened in the Kingdom of Poland, at that time belonging to the Russian Empire. Later, Peasant Land Banks began to open in the B altic States and Belarus.
By 1905, there were 40 branches throughout the empire, half of which were merged with the Noble Bank.
Thanks to the bank's maintenance of stable land prices, in 1905-1908, an economic crisis and a revolutionary outbreak were avoided, which would undoubtedly follow the deterioration of the quality of life.
The bank closed in 1917 with the advent of the new government and the overthrow of the monarchy.
Bank supervision and management system
The Peasant Land Bank was under the supervision of the Ministry of Finance. Managers of local branches were appointed by the minister himself. To create a stable economy, the peasant bank issued loans only on the condition that the peasant bought land, which immediately became a pledge, seized in case of non-payment of the loan. Loans were usually given at a high interest rate (7.5-8.5% per annum) and for a long period - from 13 to 55 years.
Functions of the Peasant Land Bank
The main function of the bank was to issue long-term loans to farmers to buy land. Together with the Noble Land Bank, they constituted the state credit system. The bank received funds for mortgage lending by issuing and selling securities.
Initially, the bank issued loans mainly to agricultural associations and peasant societies, and the share of individual land recipients was negligible (about 2% of the total number of loan recipients). In the future, the situation changed a little, but the bank still unwittingly remained a conservative of the old type of relationship, when peasants are forced to live in a community, and not act as independent land owners, since a rare peasant could pay the loan interest alone.
Also, the bank issued loans to migrants leaving to develop new lands, and in every possible way encouraged the resettlement policy.
Another important direction in the work of the bank was the purchase of noble lands for subsequent sale to peasants. During the crisis, the bank continued to buy and sell land at fixed prices, and such a measure helped to overcome a difficult economic period and avoid land depreciation.
The fate of the bank after the revolution of 1917
By 1906 whenThe Peasant Land Bank was established as one of the most important instruments for expanding private ownership of land, it was a powerful economic tool in the hands of the state. During the reforms of P. A. Stolypin, the bank stimulated the creation of farms and cuts, and in every possible way encouraged the exit of peasants from the community. Most of the bank's borrowers were among the landless peasants, for whom the new policy of the bank became a real salvation.
By 1917, the Peasant Land Bank was among the first lending institutions in terms of the number of transactions. Bank securities played a huge role in Russia. Almost 77% of all transactions with land passed through the bank. Finally, a result was achieved in the field of private land ownership and the percentage of single buyers exceeded half.
Despite the great importance of the bank and the economic achievements it made, together with the coming to power of the Bolsheviks, its work was curtailed. By decree of the Council of People's Commissars of November 1917, the Peasant Land Bank was abolished.
