The Crimean War made Alexander II realize that Russia was no longer a great military power. His advisers argued that Russia's serf-based economy could no longer compete with industrialized nations such as Britain and France.
Alexander now began to consider the possibility of bringing an end to serfdom in Russia. The nobility objected to this move but as Alexander told a group of Moscow nobles: "It is better to abolish serfdom from above than to wait for the time when it will begin to abolish itself from below.
In 1861 Alexander issued his Emancipation Manifesto that proposed 17 legislative acts that would free the serfs in Russia. Alexander announced that personal serfdom would be abolished and all peasants would be able to buy land from their landlords. The State would advance the the money to the landlords and would recover it from the peasants in 49 annual sums known as redemption payments.
Alexander's reforms did not satisfy liberals and radicals who wanted a parliamentary democracy and the freedom of expression that was enjoyed in the United States and most other European states. The reforms in agricultural also disappointed the peasants. In some regions it took peasants nearly 20 years to obtain their land. Many were forced to pay more than the land was worth and others were given inadequate amounts for their needs.
To give the land (to the serfs) meant to ruin the nobility, and to give freedom without land meant to ruin the peasantry. The state treasury impoverished by the vast expenses of war, could not afford to indemnify either party. There lay the problem. Could the serfs made to pay for their freedom? Could the serf-owners be granted loans on the security of their estates? Would not twenty-two million slaves suddenly set free combine to take matters into their own hands.
The position of most large landowners was this. They lived in St. Petersburg or some other great city. They did not farm their estates. They had stewards who administered their property and collected their revenue. They had numbers of serfs paying a handsome annual tribute for their partial freedom, a tribute which the landowners' agents strove incessantly to increase. It was their slaves rather than their land which brought them income.
From 1840 onwards, the need for serious reform does begin to be apparent: agricultural production is poor, grain exports low, the growth of manufacturing industry slowed down through the shortage of labour; capitalist development is being impeded through aristocracy and serfdom.
It is a perilous situation, which is given a fairly astute solution in the act of "liberation" of 19th February 1861, abolishing serfdom. With a population of sixty-seven million, Russia had twenty-three million serfs belonging to 103,000 landlords. The arable land which the freed peasantry had to rent or buy was valued at about double its real value (342 million roubles instead of 180 million); yesterday's serfs discovered that, in becoming free, they were now hopelessly in debt.