The Eastern Front 1914-1917 (52 page)

There was a parallel movement on the side of labour. The size of Russia’s proletariat grew very fast between 1914 and 1916. The registered part of it—which was only a small section, contained in factories with over sixteen employees—rose by one million to reach 3,643,000 in January 1917, and the number of workers in this category may even be larger, since the wartime statistics were not infallible. There were also great increases in the parts of the proletariat not registered with the Factory Inspectorate. State factories, for instance, which had taken 120,000 workers in 1914, employed 400,000 in January 1917—a third of them in Petrograd. The railways employed 1,200,000 persons in 1917, an increase of half amillion
over 1914, although the mileage operated in 1917 was smaller. The work-force in mines doubled, to 800,000; employees of the oil-firms in the south rose to over half a million, as did men engaged on the country’s water-ways. Even the building-industry, normally one to be hit in war-time, employed 1,500,000 people in 1917, a rise of one-third.
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The main source for these increases was, inevitably, the countryside; and it is probably not even too much of an exaggeration to suggest that the countryside lost more men of working age to industry than to the army. There was much greater mobility between town and country than ever before: men might go to the towns in search of higher wages in the expanding industries, but they would often return to their village communes so as to keep going their right to land there. Indeed, the whole movement was prompted partly by blandishment, partly by force. Higher wages made the blandishment, though their value was often reduced by inflation. Conscription certainly made for force on the other side, as men strove to get into a ‘white-ticket’ occupation to save them from the army, or simply strove to escape the recruiting-sergeants in the anonymity of the towns. But the chief element was the collapse of many village occupations as competition from the towns, the dry-up of raw materials, confusions of transport, and inflation hit them. Eleven million Russian peasant households had lived, not from agriculture, but mainly from cottage-industries of one kind or another—rope-making, sack-making, weaving. By 1917, only four and a half million of these were left: in Tula, for instance, three-quarters of the peasant households had declared some kind of cottage-industry before the war, but by 1917, less than a third did so.
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Conscription, inevitably, was blamed, but in reality much more than that was involved. The large firms produced rope, sacks, textiles more than before, and by modern methods; they acquired raw-materials and machinery, and, with their storage-space, could resist inflationary problems better than cottage-industries that had to sell their goods at once. It is not surprising that many peasants, who had counted among the well-off members of their village community, trekked into the towns in search of work. The vast increase in labour-mobility is best judged by railway-statistics: in 1916–17, there were 113 million more civilian passenger-journeys than in 1913–14, and this was only part of the story, since journeys by road or river and canal are not taken into account.
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There was, in other words, a burst of economic activity between 1914 and 1917 that brought as much change to Russia as the whole of the previous generation. It was, indeed, the economic ‘take-off’ that men had been predicting for Russia; that had, in a sense, caused the First World War, since German apprehensions of it had led Germany’s leaders into provoking a preventive war. The
First World War provoked a crisis of economic modernisation, and Bolshevik revolution was the outcome.

Some writers have argued that, had it not been for the accident of war in 1914, the Russian economy would have continued to make progress on European lines, instead of having to go through the Stalinist phase. Maybe these writers are right. On the other hand, the war was not such a distortion of Russia’s economic patterns as was often thought: on the contrary, economic problems, thought at the time to be peculiar to a wartime situation, were not more than hectic versions of economic problems that have become quite standard in this century. Abandonment of the gold standard—at least in practice—and reliance on printed money were an obvious instance; but there were many others. The cessation of imports from Germany, the difficulty—whether financial, or from transport-problems—of replacing them from other countries, and the increasing inability of Russia to export grain as before, were all versions of a foreign-trade dilemma that any country relying on exports of primary products for its place in the world market was likely to encounter: it had to develop its own industry, because the price-instability of its main exports was such that it could not rely on other people’s industry for ever. This, far from being a uniquely wartime problem, was one encountered by all such countries in the 1920s and 1930s, and indeed in the 1950s. Similarly, the ostensibly wartime problem of Russian agriculture was merely a version—and not even in a very altered pattern—of the greatest long-term Russian economic problem of all: how to fit an agriculture that was not structured for production of surpluses to the needs of a modern industrial economy, with millions of urban workers to be fed. In this context, even the supplying with food of an army six million strong would be an incident, not a crippling distortion. Behind the confusion and dislocation of wartime, Russia was encountering, in other words, problems that she had to face, war or no war; the nature of the economy is to be seen, not in speculations as to how the economy would have gone on had there been no war, but in its reaction to the demands of war.

Overall, the war-economy illustrated the force of the maxim,
‘il faut souffrir pour être belle’
. It required, and got, an expansion of heavy industry, and a concentration of resources on that sector, that could not bring much immediate return—certainly not in the form of consumer-goods and higher living-standards for the masses, for it was on the contrary essential for most workers to put up with lower standards while they were laying the basis for higher ones. The Tsarist government, aware of its isolation, shrank from demanding such a sacrifice, and it refrained from imposing taxes of any seriousness on the populace. But the tax came, none the less, in the most ruthless and dishonest form of all: inflation, which was more
effective in transferring resources from consumer to investor than any other mechanism.

Before 1914, Russia had operated a gold standard. Maintenance of this meant strict control of the money-supply, such that circulating money would always be covered by the gold-reserve. In this way, foreigners’ and Russians’ confidence in the currency and the economy as a whole would be maintained, although the restriction frequently made credit difficult. The gold standard had been under strain before 1914: the volume of economic activity rose, and there was a demand for money that existing gold reserves could not cover. In 1914, ordinary housekeeping had to be thrown to the winds, because the government had to spend far beyond the capacity of Russia’s gold-reserve. The circulating currency of 1914—with 106 per cent gold-coverage—would barely suffice to meet one half of the bounties paid to soldiers’ families in the First World War; bounties paid at the insulting rate of $1.00 per month for most of the war, but amounting, by 1st September 1917, to 3,264, million roubles. The 15,000 million roubles disbursed on armaments by the Special Council—not to mention the thousands of millions of roubles spent on supply—could only be covered by government borrowing. Pre-war expenditure had amounted to less than 3,500 million roubles per annum. Wartime expenditure rose far beyond this level : 9,500 million roubles in 1915, 15,300 million in 1916, of which the War ministry accounted for 11,400 million. Russia spent $27,800,000 per day in wartime, more even than France or Great Britain.
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To meet these demands, the government borrowed—partly from the Russian public, through war-loan, partly from its allies, and partly by ‘short-term obligations of the State Treasury’, usually discounted by the State Bank. The result was a very great rise in the amount of circulating mone:

In these circumstances, formal maintenance of the gold standard became almost laughable. Russian gold covered less than 2,000 million roubles, and although there was a theoretical loan from Great Britain of a further
2,000 million roubles’ worth of gold, the gold itself stayed in the Bank of England—or rather, would have done if the British had had it. Rapidly-expanding money supply, however much men might bewail it, at least secured a much higher level of economic activity than before, was indeed an inevitable concomitant of progress. It generated something of a boom, in which public demand for money came to exceed even the State’s willingness to provide it.
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But whatever the immediate, short-term benefits attached to this new policy, it brought about an inflation that went far beyond the experience of any other country in wartime. Prices, overall, rose almost four times by January 1917, and over ten times before the Bolshevik Revolution. The increase in money-supply was not alone responsible; its effects were greater because the structure of the economy was such as to make inflation considerable once the government abandoned its strict monetary policy. The decline of the rouble on foreign exchanges, the rise in basic costs such as transport, shortages that could be exploited by profiteers, the need for firms to obtain relatively scarce skilled labour by offering higher and higher wages, monopolies’ tendency to go for quick profits in an era of uncertainty, all made for inflation’s being more marked in Russia than in other countries. Finally, the inflation became self-generating, since prices came to include their own counter-inflationary mark-up. The government did attempt to control prices: but the attempt was based on incomprehension of the problem, epitomised by the Governor-General of Turkestan’s Saturday visits to the bazaars, and public horsewhipping of traders found to be exceeding his—unpredictable—price-norms. In industrial matters, government—monopoly combinations came into existence in an effort to stop the great traders from hoarding against inflation; but with food, and millions of peasant households, this system did not work at all, and merely dried up supplies unless the government were prepared to equalise its maximum price with the farmers’ minimum one. Price-control could work, even modestly, only if accompanied by subsidies; and yet the government’s own policy excluded these. Public prices and private prices grew apart, and the background to revolution in 1917 was one of vast queues in the shops, shortages everywhere, and a flourishing black-market.

The government barely understood what was happening, and certainly
lacked the statistical apparatus that might have produced a more suitable policy. It fell back on standard remedies: attempts to restore confidence by raising the exchange-value of the rouble; blaming of ‘speculators’ — i.e. Jews or Germans; in summer 1917, blundering attempts to get the trade-unions to restrict their members’ wage-demands—which merely resulted in a loss of confidence in Menshevik trade-union leaders. There was constant talk of somehow absorbing the excess paper-money that was held to be responsible for the inflation, but these measures did not work, since neither the Tsarist régime nor the Provisional Government had the popular base that alone would have enabled them to demand sacrifices.