History of Russia deficit required borrowing, primarily from Amsterdam; five percent of the budget was allocated to debt payments. Paper money was issued to pay for expensive wars, thus causing inflation. For its spending, Russia obtained a large and glorious army, a very large and complex bureaucracy, and a splendid court that rivaled Paris and London. However, the government was living far beyond its means, and 18th-century Russia remained "a poor, backward, overwhelmingly agricultural, and illiterate country." Peter I was succeeded by his second wife, Catherine I (1725–1727), who was merely a figurehead for a powerful group of high officials, then by his
Catherine I of Russia her daughter Elizabeth and granddaughter-in-law Catherine the Great, all of whom continued Peter the Great's policies in modernizing Russia. At the time of Peter's death the Russian Army, composed of 130,000 men and supplemented by another 100,000 Cossacks, was easily the largest in Europe. However, the expense of the military was proving ruinous to the Russian economy, consuming some 65% of the government's annual revenue. Since the nation was at peace, Catherine was determined to reduce military expenditure. For most of her reign, Catherine I was controlled by her advisers. However, on this single issue, the reduction of military expenses,