How millions of tsarist bonds owned by Europe became worthless overnight
European investors were shocked when they lost all of their money in Russia.
On February 8, 1918, the new Soviet government repudiated all debts amassed by the tsarist government. Millions of sovereign bonds turned into worthless paper. Tucked away in closets and attics throughout Europe, tsarist bonds rested among useless clutter for generations, until their owners rushed to find them, all of a sudden.
The papers were not so useless, after all. In 1996, Russia made agreements with France and Great Britain, the major debt holders in 1918. Russia would pay France $400 million to redeem tsarist bonds and the British government would use gold belonging to deceased Nicolas II to pay off the tsarist debt to its citizens.
All this was done to clear the way for modern Russia to borrow money from Western countries after the collapse of the USSR. Later, some bond holders complained that this was too little, as they expected to get more, but the issue was considered legally settled by all sides.
Click here to find out what happened to the Russian Empire’s richest people after the 1917 Revolution.
