creative destruction and a fear of industry and the railways.
At the heart of this during the reign of Nicholas I was Count
Egor Kankrin, who served as finance minister between
1823 and 1844 and played a key role in opposing the
changes in society necessary for promoting economic
prosperity.
Kankrin’s policies were aimed at strengthening the
traditional political pillars of the regime, particularly the
landed aristocracy, and keeping the society rural and
agrarian. Upon becoming minister of finance, Kankrin
quickly opposed and reversed a proposal by the previous
finance minister, Gurev, to develop a government-owned
Commercial Bank to lend to industry. Instead, Kankrin
reopened the State Loan Bank, which had been closed
during the Napoleonic Wars. This bank was originally
created to lend to large landowners at subsidized rates, a
policy Kankrin approved of. The loans required the
applicants to put up serfs as “security,” or collateral, so that
only feudal landowners could get such loans. To finance the
State Loan Bank, Kankrin transferred assets from the
Commercial Bank, killing two birds with one stone: there
would now be little money left for industry.
Kankrin’s attitudes were presciently shaped by the fear
that economic change would bring political change, and so
were those of Tsar Nicholas. Nicholas’s assumption of
power in December 1825 had been almost aborted by an
attempted coup by military officers, the so-called
Decembrists, who had a radical program of social change.
Nicholas wrote to Grand Duke Mikhail: “Revolution is on
Russia’s doorstep, but I swear that it will not penetrate the
country while there is breath in my body.”
Nicholas feared the social changes that creating a
modern economy would bring. As he put it in a speech he
made to a meeting of manufacturers at an industrial exhibit
in Moscow:
both the state and manufacturers must turn
their attention to a subject, without which the
very factories would become an evil rather
than a blessing; this is the care of the
workers who increase in number annually.
They need energetic and paternal