The Eastern Front 1914-1917 (27 page)

Shell (1,000 rounds) expected by the Department for use at the front:
¹¹

General Hanbury-Williams, British representative at
Stavka
, even said that Vickers should be sending two million rounds in the first half of 1915, while a further British firm, Kings Norton, was due to send a million 22-cm. time-fuzes by April 1915. Vickers were also directly involved with the Russian government in gun-production. An Anglo-Russian company,
RAOAZ
, was set up to make guns in Tsaritsyn, and extensive orders were made.

If these foreign firms had done their work, there would have been neither shell- nor rifle-crisis. But there were endless delays in fulfilment of Russian orders. Both British and American firms were busy working for the British government; in any case, they were performing even this task inadequately, because they had to expand very quickly, and were not used to the work. In the British case, a withdrawal of skilled labour to the army went together with an ill-suited conservatism of management; in the American case, there were also serious misunderstandings in finance. Moreover, Russian practices did not make things easier. Vickers complained that they could not make Russian fuzes because the powder for them had not come from Russia; guns to test the Russian shell produced by Vickers had not arrived, or had arrived late, and without carriages; Russian blue-prints were difficult to make out, because they came in Cyrillic, and with Russian measurements; Russian experts, sent out to negotiate over contracts, behaved with an exasperating suspiciousness even in trivial matters—a criticism given heart-felt echo by American firms who had to deal with General Sapozhnikov and his technical mission. The links between Russian authorities were often tenuous, such that any negotiation took months, however urgent the business. Writing on the Vickers’ fuze-contract, Hanbury-Williams could claim that it was hardly Vickers’ fault if—as he engagingly wrote
^*
—
‘ces négotiations ont déjà duré pour entre trois et quatre mois’
(
sic
). Even more engagingly, Vickers explained delays to the Russian government, with reference to their need to conceal things from British factory inspectors, who wanted to make sure that every shell went to their own army. But the real problems were much simpler to define. Without lavish government finance, which, at the time, the firms themselves rejected, the firms could not produce enough to meet all of the demands on their books; and at the same time they did not hesitate to accept all orders, if only because the swelling capital costs involved demanded more and more money in the form of advances. French contracts subsidised British ones, and Russian ones subsidised French ones. Vickers’ affairs went into confusion, and it was with justice that Grand Duke Sergey, for the Artillery Department, concluded that ‘they have unconscionably lied to us… it has been one long, wicked piece of deception’. British government people themselves agreed with this judgment: Sir G. R. Clerk, at the Foreign Office, found that ‘Messrs. Vickers have done us enough harm, in all conscience’. American industry did not do any better. Deliveries to Russia came a long way down its list of priorities.
¹²

The Russian army in 1915 got very little in the way of finished war-goods from its allies and the United States, despite the large sums poured into them. Three hundred thousand Russian rifles had been ordered from Winchester in America, 1,500,000 from Remington and 1,800,000 from Westinghouse, to be delivered at monthly rates of 100,000 in mid-1915, rising to 200,000 in mid-1916. By March 1917, only nine per cent of the Winchester order, and twelve per cent of the other two, had reached Russia. The Kings Norton fuzes, ordered for April 1915, arrived in August 1916. The
RAOAZ
factory in Tsaritsyn failed to produce heavy guns, and the order (for 167) was passed direct to Vickers in England, who supplied nothing until late in 1916. Meanwhile, the Tsaritsyn factory was put on to production of light artillery, for which the State paid a third above the usual price, and gave an advance of 17,500,000 roubles. In shell, the short-fall was disastrous. In 1915 as a whole, Russia herself produced 11,200,000 shells, and imported 1,300,000—about a tenth of what had been expected. By November 1916, 40,500,000 shells had been ordered abroad, but only 7,100,000 had arrived. Yet this mistaken reliance on foreigners had led the government to neglect ways of developing Russian industry. In Sidorov’s words, ‘hopes placed in the Allies, in the vast industry of America, had allayed the fears of the Russian government, and had removed all creative energy from the war ministry, the will of which had been paralysed’.
¹³

The dishonesty and bungling of foreign businessmen destroyed the Russian people’s faith in foreign capitalists. In Petrograd, a repulsive
atmosphere of profiteering developed, as one parasite after another descended on the Hotel Astoria: from English tailors, offering to extract rifles from bandit-chiefs in Bolivia via Japanese middlemen, to more highly-placed toilers in the bran-tub of Russian war-orders, such as Raguzo-Suszczewski, friend of the Tsar’s mistress, Kseshinskaya, or the comte de Saint-Sauveur, brother-in-law of Schneider. Americans and Canadians arrived in the expectation of a new Yukon trail; the Canadians Mackay and Clergue, with an associate, Allison, described by the British Foreign Office as ‘the most notorious black-leg in Canada’, arrived to set up a ‘Canadian Purchasing Syndicate’, which would produce shell for Russia, in factories that would be bought with the advance on the deal. Thanks to ‘contacts’ with the various ministries, some of these profiteers were amply rewarded; but not much in the way of war-goods reached Russia, at least, until the Russians were already well able to make them for themselves.
¹⁴

The Russians were then expected to pay a huge price for the privilege of having had their industrial development retarded by this vast confidence-trick. In matters of foreign trade, Russia was dependent on Great Britain, and some of the delays in foreign ordering, particularly in the United States, had been caused by difficulties to which this dependence had given rise. Her gold-reserve, though large, was not in any proportion to her needs in foreign trade, and she had virtually no investments overseas that could be converted into imports; while her surplus on balance-of-trade was cancelled out by the interest she had to pay on foreign loans. In the first weeks of the war, when there was still an illusion that it would not last long, the Russian government placed orders abroad and paid for them out of current account, although even then there were difficulties, because the French included Russian assets in the ‘freeze’ they proclaimed early on. But by October, the source of Russian payments for foreign orders had become questionable, and foreigners jibbed at accepting payment in roubles that they could see depreciating in a few months’ time. It became necessary for Great Britain, with her £5,000 millions of foreign investment, to act as banker for Russia. Between 1914 and 1917, Russia’s foreign debt increased by some 8,000 million gold roubles—a doubling, within three years, of the pre-war debt. About three-quarters of the increase was due to Great Britain.

It took several months of war before the British were ready to finance Russian ordering—an important cause of the confusions of shell-supply in 1915—and the whole matter was not put on a regular footing until the autumn of 1915, when British authorities agreed to place £25,000,000 per month at the Russian authorities’ disposal, although these credits had in fact been anticipated since the early summer. Delays occurred partly
because the Russians found British terms onerous. The British, who themselves had a lower gold-reserve than Russia, demanded quantities of Russian gold before they would back Russian purchases; the Russians, who knew that their own currency was much more fragile than sterling, fought against this until October 1914, when £8,000,000 of Russian gold was sent via Archangel to Liverpool (where there was, characteristically, no Russian represenative to meet it), and continued to fight against further British demands. There was also grumbling that the rate of interest demanded by the British was high: five per cent. At bottom, the Russians felt that, since their troops were fighting and dying, while the British army consisted of a mere dozen divisions, the British should forget about commercial considerations and simply hand their allies cash to get on with the war. There was a widespread suspicion that the British were using their favoured creditor-position to take unfair advantages; and there was something in this view, for the meaning of ‘business as usual’ in Great Britain came perilously close to sharp practice. The British navy would cut off, not only Germany’s imports, but also Germany’s exports. British goods would supplant them—in China, Latin America, the United States, and in Russia as well, which had been one of the largest takers of German manufactures and of course machinery. British merchants dreamt of capturing Russian trade.
¹⁶
The profits made from these enterprises could then be used, via war-loan to the British government, to pay for purchases of war-material in the United States and Great Britain; and this would then be presented, with a bill, to Great Britain’s allies, who would do the actual fighting. Great Britain’s weapons would be—first the blockade, and then an export-drive. British exports did in fact undergo a period of buoyancy in the middle of the First World War, where ever other all’s declined sharply:

British exports in the First World War (£ million)

1910–1913 average: 474; 1914—431; 1915—385; 1916—506; 1917—527.

Russian exorts and imorts in the First World War (million roubles)

Exports: 1914—1,000; 1916—600.

Imports: 1910–1913 average: 1,200; 1916—2,800.

It was in this light that Russians saw, for instance, Great Britain’s long refusal to introduce conscription, which would have bitten severely into the export-trade, or to apply it very seriously in 1916.

In time, the British, no doubt recognising that there was a danger Russia would make a separate peace, supplied Russia generously enough with capital. But it took a long time for the mechanism to work properly, because the British insisted on centralising all orders in a committee
dominated by themselves. Almost as soon as war broke out, Grey had suggested a
‘Commission internationale de ravitaillement’
, with French, Belgian and Russian sections, which would act as clearing-house for all allied orders placed with British industry. It was sensible enough; for otherwise the allies would be bidding secretly against each other and the British government, and prices would rise. A consumer-co-operative made sense, in the circumstances. Later on, an Anglo-Russian committee was formed by which Russian orders, paid with British credits, were passed to British industry; finally, when the bulk of Russian orders was passed, again with British credit, to the United States, the committee was established in New York, in June 1916. It came to contain, on both sides of the Atlantic, 700 men, and passed orders worth 7,694,000,000 roubles on 5,386 separate orders. Each step in this centralisation was carried out only after much black-mailing of the Russian authorities.
¹⁷

The Russian war ministry, Artillery Department, and various other ministries greatly resented British attempts to interfere with their ordering abroad. Each one was only concerned with its own section of affairs; and was concerned above all to secure goods immediately, so as to avoid discredit. There were frequent cases of Russians’ conniving—sometimes with suspicions of corruption—in breaches of British regulations. Captain Kostevitch was said to have exported toluol from England, in tea-chests, via Norway. Vickers’ doings with Russia were often underhand. Wyldbore-Smith, chairman of the
‘Commission internationale de revitaillement’
, remarked early in 1915 that ‘At present there seems to be no cohesion between the various Russian delegates, they all seem to take a pride in each going his own way and keeping his actions as secret from his colleagues as he possibly can, while the central Authorities at Petrograd are showering orders on this country without informing any of their delegates what they are doing.’
¹⁸
The Artillery Department resented British centralisation of orders, because, often enough, it meant paying huge prices. For instance, in February 1915 Lord Kitchener offered his good offices to
Stavka
to obtain ten million rounds of artillery munition in America. The Artillery Department obstructed the affair, on the reasonable grounds that Kitchener would do better to get the shell already ordered, and not delivered, in Great Britain. Moreover, Kitchener’s supposedly generous offering was to cost the Russians 732,000,000 roubles, more than twice what they normally paid for shell.
^*
At its most
extreme, the Russian attitude was simple: that the Russians would be expected to pay back British money, and therefore should spend it as they liked, instead of going through tortuous processes that usually caused Russian wants to come last on the list. On the other hand, the British could claim—and were supported both by Benckendorff, the ambassador in London, and Yermolov, the military attaché—that independent ordering by Russia would merely drive prices up still more. The British, in the event, won, because the rouble declined in value (early in 1916, to half its pre-war value against neutral currencies), such that Russian ordering had willy-nilly to pass by the British agencies. But it was not until early 1916 that the system worked with much efficiency.