The article analyzes the historical peasant situation in the late XIX — early XX centuries and the problems of the agrarian system that led to the land shortage among the peasants. In addition, the research examined the roots of the land shortage problems and the possible ways to solve those. The author also investigated the reasons that contributed to the low level of agriculture development. The study reviewed the mechanism of a causal relationship between industrial development and agriculture. The article described the features of the lease of additional land allotments and how it they affected the peasants. The study considered a possibility of land nationalization as a way to address the land shortage problem. The article describes the mechanisms and steps actually taken by the government to eliminate the land shortages in Russia: resettlement programs for the peasants and the establishment of the Peasant Bank. The study also highlighted the specific measures that really could affect the development of agrarian system in the long run. The research conducted a comprehensive analysis of the previous scientific studies of the agrarian reforms implemented in the late XIX — early XX centuries. The high interest to this topic is driven by the interest of the Russian economic theory to the land shortage issue. Agricultural and economic research used in the article utilized a theoretical and historical approach. It offers an opportunity to comprehend the past economic processes and phenomena from modern day perspective, and vice versa — to understand the modern world from the perspective of the past historical experience.