NET CAPITAL STOCK AND NET INVESTMENT: RUSSIAN RAILROADS

My figures on net capital stock and net investment in Russian railroads are based upon data published by the Ministry of Transportation in its annual yearbook Statisticheski sbornik Ministerstva putei soobshcheniia, section “expenditures of capital on the construction of the rail network” (zatrata kapitalov na ustroivstvo seti zh. dorog). S. G. Strumilin has published gross and net capital stock series using the Ministry of Transportation data, but the widely cited Strumilin figures are not suitable for compiling series on net investment and net capital stock. Prior to 1897, loans for railroad construction and equipment acquisition were floated both in gold (primarily abroad) and in credit rubles. The Ministry of Transportation reported two series for this early period, one for capital expenditures in metallic rubles and the other for expenditures in credit rubles. The exchange rate between the two currencies fluctuated, at times quite widely, but a par value of 1 metallic ruble equal to 1.5 credit rubles was employed to combine the two series. Upon conversion to the gold standard in 1897, the new gold ruble was introduced at a rate 33% below the old metallic ruble, and a stable rate of 1:1 was then maintained between the gold and credit ruble.

To estimate a consistent net capital and net investment series in credit rubles, I had to adjust the official capital expenditure series (with flotation costs netted out) for annual fluctuations in the credit ruble-metallic ruble exchange rate prior to 1897.