by Norman Stone
Since the end of 1914, there had been signs that such an alliance would develop. The visit to Stavka2 of politicians such as Rodzyanko and Varun-Sekret, President and Vice-President of the Duma, the industrialist Putilov, the banker Vyshnegradski and the ‘technocrat’ Litvinov-Falinski had occurred at the end of December; it was followed by a memorandum of the great banks’, urging ‘collaboration’ of business in the war-effort and, by extension, appointment of ministers sympathetic to this programme. In February and March, these themes were taken up lower down the scale: lesser businessmen, under great economic pressure, lobbied Guchkov and the Moscow industrialists, and hoped to see something similar to the German system of local war-industries committees established in Russia. Duma politicians began a campaign of agitation for constitutional change : the Octobrists, party of big industry, came together with the Constitutional Democrats, a left-liberal party that supported small business, to form an opposition coalition, later known as Progressive Bloc; and, gradually, it acquired the sympathies of allied diplomats, Stavka generals, ‘even the Imperial Yacht Club on Morskaya’.
The government might have resisted Duma ‘chatter’ if the times had been normal. But they were not. Now, powerful figures whose rôle in 1905 had been counter-revolutionary, were prepared to enforce reform: Stavka, on the one side, and big industrialists, on the other. Both had their reasons for resenting Sukhomlinov. The peculiarly obstinate refusal of the war ministry and the artillery department to recognise that there might be angels in the marble of Russian private enterprise was hardly affected until the end of 1914. They continued to believe that Russian businessmen would be inefficient and expensive. They were not prepared to spend money, and therefore would not pay more than ten roubles per shell—a price at which most Russian firms could not make a profit, since they lacked the experience and tools. Moreover, they would not pay substantial advances on the contract: not more than ten per cent, for which there was legal justification. They felt that, if money had to be spent, it would be much better-spent on State factories, and developed something of a programme for building these.3 If private enterprise were involved as well, it could only mean wasteful competition for scarce stocks of skills and raw-materials, and of course for the machinery that had to be imported. In fairness to Sukhomlinov, Russian businessmen behaved more or less as predicted, once they were involved in war-work. Their advances were considerable, and their prices rose far beyond what the State was used to paying. Three-inch shell rose in price to at least fourteen roubles and twenty-five kopecks, where the State could turn them out for 6.40; field cannon cost, from State suppliers, between 3,000 and 6,000 roubles each, whereas private suppliers charged from 7,000 to 12,000.4 In England, by contrast, the price of eighteen-pounder shell declined from £1. 12s. od. early in 1915 (c. 16 roubles) to £1. o. od. in June 1915, and 12s.6d. (c. 6. 50 roubles) 5 at the end of the year, as private producers learnt how to mass-produce it; and Russian expensiveness was quite often matched by inefficiency and even corruption.* Of course, many of these difficulties were simply the price of economic progress; but that was not how Grand Duke Sergey saw things at the time. He cold-shouldered both Vankov and Pyot, for their standard shell-price would be 18.50; and the most he would do was to form a ‘special executive committee’7 in January 1915, that did little more than remove some of the more indefensible pieces of ritual in contracting, with slight increases in the advances that the State was prepared to pay on its contracts with already-established firms.
But defeat at the front, and non-delivery of foreign goods, provoked crisis. Stavka’s power extended, with every reverse at the front, since these reverses were ‘explained’ with reference to the limitation of Stavka’s powers. Highly-placed generals slipped to Stavka’s side—among them, Polivanov, who had been refused the appointment of governor of Warsaw by the Grand Duke, but who subsequently made his peace with Stavka, serving first as assistant to the head of the Red Cross, Prince Oldenburg, and then becoming the Grand Duke’s candidate for Sukhomlinov’s succession. Even Sukhomlinov’s regiment of journalistic house-carls slipped off: Prince Andronikov writing winsomely patriotic articles in praise of the Grand Duke. Stavka, in any case, wrested control of the army’s promotions-machinery from Sukhomlinov, and now played this instrument with much virtuosity. In February, there was a considerable political scandal that destroyed Sukhomlinov: the Myasoyedov affair. Stavka (with Polivanov in a prominent rôle) controlled justice in the army area, and it arranged to have Myasoyedov arrested as a spy. The charge was trumpery. A Russian, who had been allowed to leave Germany after agreeing to spy for the Germans, was allegedly conscience-stricken when he returned to Russia, and revealed that there was a highly-placed spy in the north-western front. After prodding, he identified the spy as Myasoyedov. Myasoyedov was certainly unpleasant and corrupt. He had served Sukhomlinov† before 1914 by spying on the officers’ corps, and had been provoked to a duel by Guchkov. His corruption led to his dismissal, but—whether out of blackmail or loyalty—Sukhomlinov found him other employment, in the gendarmerie on the German border. In this capacity, he was attached to the north-western front, which of course was commanded by Sukhomlinov’s protégés, Ruzski and Bonch-Bruyevitch. The decline of Ruzski coincided with Myasoyedov’s arrest by Stavka, and both Ruzski and Bonch-Bruyevitch were shifted to lesser posts in the aftermath. In March, with full-scale publicity, Myasoyedov was condemned and executed, after trial before a Stavka-staged court in Warsaw. The affair was, as Polivanov subsequently confessed, judicial murder.8 But for the time being, it discredited Sukhomlinov whose incompetence now received the lining of treachery. Duma politicians rode off against him, and colleagues within the government came to regard him and three other ‘reactionary’ ministers, as simple liabilities. The Tsar held on to him until early in June. But against demands from Stavka, the government, Allied envoys and the big industrialists, he could not prevail for ever. The degree to which the Tsar’s own power had waned was shown when, almost immediately, Sukhomlinov was arrested, and made subject of a ‘High Commission of Investigation’. The wishes of the big industrialists were now met. In May, there assembled a ‘Special Council for Examination and Harmonisation of Measures required for the Defence of the Country’.9 It included Duma politicians and representatives of industry; it was supposed to take control of all ordering for the war-effort. In June, it was extended to include further business and political representatives, and it seemed as if the body would promote political reform and economic progress at the same time.
But the alliance of politicians, Stavka and Special Council was short-lived. The politicians lacked mass-support, and some of them would have repudiated it if they had had it. Their talk remained no more than talk, so long as they had neither military nor industrial allies to influence the government. The military ally, never in any event staunch for constitutional change, was appeased by the old régime when Sukhomlinov fell, and Polivanov took his place. In any case, Stavka was discredited by the great retreat, the chaos of refugee-evacuation, the German threats to Riga, Moscow, Kiev. Late in August, the Tsar knocked the Stavka card from the Duma politicians’ hands, when he sent Grand Duke Nicholas off to the Caucasus, and himself took charge of the army. Grand Duke Nicholas was too remote and powerless in Tiflis, and although his old associates of spring 1915 sometimes travelled there to find out his attitude to a military or palace coup, there was not much that he could do. There would be no ‘officers’ plot’ against the Tsar—at least, not until the revolution had actually been started by someone else.
Of greater importance in home affairs was the failure of the Special Council to act as agent for constitutional reform. This occurred because the Council itself split, and essential elements in it, which had hitherto favoured the cause of reform, now swung back to adopt a waiting attitude. The first Special Council, in May, had been dominated by representatives of business that the war ministry already knew and favoured: mainly the great bosses of Petrograd, Putilov, Vyshnegradski, Meshcher
ski, Plotnikov, Davydov. They were quickly attacked by their Moscow rivals, who did not wish to see defence becoming a Petrograd monopoly; and the Moscow men—Ryabushinski, Guchkov, Tretyakov, Tereshchenko and other magnates—denounced the new system, and promoted attacks upon it by thousands of lesser businessmen throughout the country, who formed War-Industries Committees to assert their willingness to furnish war-material. The industrialists’ newspaper, Commerce and Industry, and the 9th Congress of Representatives of Commerce and Industry, in May, were loud with complaint at a system that permitted businessmen from a rival region to award contracts to each other, more or less naming their prices. Zemgor; the Octobrists who were in league with the large Moscow firms; and the Constitutional Democrats, who supported the lesser firms of the War-Industries Committees, added their voices to these protests.
The Moscow magnates apart, this was essentially a quarrel between big industry and the rest—a quarrel that did more and more to divide the businessmen, and to drive the more important of them to take the government’s side. The industrial ‘outs’, in this case, had very good arguments. Moscow was not being properly-used for the war-effort; the Petrograd men, on the other hand, used the Council to favour themselves. The first two orders given by it went to Putilov and Vyshnegradski.10 Putilov and his factory group were ordered 113,250,000 roubles worth of shell, with an advance of thirty-four millions; each shell was to cost thirty-three roubles and seventy kopecks, which gave a profit of 5.70—itself not far from the standard State price for shell. Vyshnegradski’s RAOAZ company similarly took an order for guns—to be made in a non-existent works—that would cost forty per cent more than usual; and the banks behind them both took eighteen per cent of the profit, as well as the State’s advance-payment, which was deposited at a low rate of interest. It later turned out that Putilov used shell-contracts to subsidise other parts of his factories. Before 1914, he had laid in too much ship-building machinery, much of which he could not now use. The works were converted to shell-work, and even then did not perform very well. The affairs of his firm became more and more complicated; he took on loans to the value of more than five times his capital. Attempts were made to cut costs. Workers’ wages in the Putilov works stayed almost exactly the same as in pre-war days—3.16 per day, on average—although the cost of living had risen by fifty per cent by the middle of 1915. There were strikes. The firm also neglected its less profitable contracts of pre-war, pre-inflationary days, and in 1916 was, after a long wrangle, placed under sequestration. When the government managers moved in, they found 1.50 roubles in the till, and 137 in the current account. Meanwhile, Putilov and his co-director Dreyer went off to the south of the country, with the million roubles which they had been given as ‘bounties’.
Episodes such as this were particularly discreditable, because they came at a time when business was under very great pressure. The Russian economy had always been dominated by great monopolies and very large firms.11 They faced unstable profit-rates, lack of skilled labour, bottle-necks of various kinds, and combined to make conditions easier. Prices were maintained by Prodameta, the metals-cartel, Produgol, which united 711 coal-firms in the south, Prodvagon, which produced railway-material, and Med, producing copper, because they would restrict production in order to create sometimes artificial scarcities; and the method was so successful that by 1914 there were some thirty monopoly-organisations in Russia, which naturally strove to subjugate competitors. The First World War generally favoured large firms at the expense of lesser ones. Skilled labour was rare enough in Russia, and consciption bit into the stock of it; but firms employing a thousand men, and able to pay higher wages, were naturally less affected by this problem than lesser firms. Fuel and transport offered bottle-necks. The country’s performance in both fields was, in fact—and despite legends to the contrary—superior to its performance in 1913, in so far as there was more coal, much more petrol, more rolling-stock and greater railway-mileage during the First World War than before it.* But demand also rose, even further, and it was large firms that could survive the problem better than others. Foreign machinery presented a similar version of the war-time problem. Scarce supplies of foreign exchange could not meet the demands of every firm needing plant from abroad—although such plant was often essential for a firm to take part in production of war-material. Monopolies, fearing competition, also used their position as a weapon to compel independent firms to subject themselves.
These bottle-necks—some traditional, some wartime in origin—brought about concentration of capital, as small firms were forced to amalgamate with larger ones. In 1913, thirty-one factories had opened, and twenty-one had closed. In the First World War, many more factories closed than opened, but the number of workers in the factories that opened greatly exceeded that in the factories that closed:12
Factories:
Average number of workers in those
opening
closing
opening
closing
1914:
215
356
88.8
45.1
1915:
187
573
96.8
28.7
1916:
276
298
78.5
37.6
1917:
264
541
81.5
69.9
War-years overall:
942
1,788
86.4
47.8
These figures represent only the tip of an ice-berg, for they make no reference either to the great extensions of capital occurring in existing companies, or to the great difficulties that many lesser companies experienced, without quite going bankrupt. In particular, they ignore the hundreds of thousands of cottage-industries that folded up, without ever disturbing the statisticians of the Special Council. It was this movement that underlay much of the agitation of the War-Industries Committees, and their allies in Zemgor which were, first and foremost, unions of small or, at best, middle-sized industry. In May 1915, both sets gained the ear of the Moscow magnates, who had their own interest in War-Industries Committees. The resulting agitation against the Petrograd monopoly in the Special Council was successful. Early in June, as Sukhomlinov fell, the body was widened to include representatives, not only of great Moscow industry, but also of the War-Industries Committees and Zemgor. In theory, Russian industry was now organised for war. In practice, its performance was frequently more impressive than legend allows. But little of the performance was owing to War-Industries Committees or to Zemgor, whatever the legendry of the time. The Special Council began as an engine for utilisation of free enterprise; but it ended by inaugurating the Soviet economy.
War-Industries Committees and Zemgor, despite the claims of their propagandists, did not provide the sinews of the war-economy, but were rather its greatest casualty.13 Where they succeeded, they were unnecessary; where they did not, they were a nuisance. In theory, the system looked good enough when it began in spring 1915. A Central War-Industries Committee, in Moscow, undertook to farm out contracts from the war-ministry departments to its own subordinate Committees—33 district ones, 220 local ones—which would in turn report on their capacity and their needs, in terms of raw-materials and labour. The Central Committee had a staff of 2,000, and its labours would be paid for by one and a half per cent of the value of any contract passed through it, or by subsidies from the great Moscow men who had promoted the system. To begin with, the Central Committee also included representatives of the metals-cartel, Prodameta (Darcy, Theakston, Vvedenski, von Dittmar), in the hope that Prodameta would support the new system and break with its own restrictive practices. The system also enjoyed political power, by virtue of the Moscow magnates’ links with the Octobrists, and the lesser businessmen’s alliance with the Constitutional Democrats. It was the Progressive Bloc on the factory floor, which no doubt accounts for the inflated reputation that it ca
me to enjoy in the west.
In reality, the large firms did not need War-Industries Committees, and soon began to regard them as tiresome. The many lesser firms imagined that War-Industries Committees would permit them to acquire government money, lathes from abroad, raw-materials (at favourable prices) from Prodameta or the coal-owners, whereas the larger firms knew that these things could be much better used if devoted to themselves rather than to thousands of lesser producers scattered over the face of European Russia. They had their own contacts with the monopolies and the Special Council, and found the Central War-Industries Committee almost irrelevant, and sometimes bothersome, whilst the local Committees, with a heavy admixture of lawyers and academics, seemed to be meeting-places of barrack-room lawyers. The system worked well only where it dovetailed with already-existing sub-contracting links. This meant in practice the large towns, particularly Moscow. Here, by virtue of advanced transport-possibilities and the magnates’ links with cartellised suppliers of fuel and raw-materials, a certain de-centralisation could be carried out within the industrial concentration that Russian circumstances promoted. The forty-five local Committees of the Moscow region existed, informally, before the system was formally introduced, and Vankov made use of these links among the Moscow men in February 1915, when he began to set up his shell-producing organisation with Pyot. Even before May, 1915, 500 of the 1,200 Moscow firms eventually included in the War-Industries Committee were already on war-work, and the rest would have been included, committee or no committee, as the flow of government money increased. The same was true, though on a lesser scale, of Kiev or Odessa; and as for Petrograd, it, though forming the country’s source for the most intricate war-goods and machinery, scarcely troubled to have a War-Industries Committee at all.
Elsewhere, the War-Industries Committees were little more than a nuisance. The large firms by-passed them, and the lesser firms, unless they could do sub-contracting work for the larger ones, were left high-and-dry. Of course, the lesser ones could grumble, legitimately enough, that if they had been given greater State assistance, they would be able to produce more. But this was not an argument that had much appeal, either to large firms or to the State. It was characteristic that, in Ivanovo-Voznesensk, the largest textile-centre of Russia, the whole War-Industries Committee network supplied Vankov’s organisation with less shell than two independent factories14—the Kuvayevskaya manufaktura and the Ivanovo-voznesenskoye tovarishchestvo mekhanicheskikh izdeliy, which supplied 150,000; in Samara and Saratov, it was the same story. In Yekaterinoslav, the Elworthy railway-works supplied Vankov, virtually without rivals on the War-Industries Committee side. Sometimes, political influences on the Special Council did secure contracts for War-Industries Committees, but their record of delivery was poor. The Reval one, by August 1916, had given only 500,000 roubles’ worth of orders totalling four million; the Vyatka one gave nothing; the Rostov-on-the-Don one, less than five million roubles’ worth out of twenty-four millions. The Baku Committee offered to undertake production of benzene and toluene by pyrolysis of petroleum, but failed;15 the work was taken over, successfully, by the local Nobel company. Once inflation bit into the economy, the performance of lesser industry became still less impressive; and the War-Industries Committees appeared to be almost parasitical. The Prodameta men abandoned the Central War-Industries Committee; Ryabushinski and von Dittmar even denounced the Constitutional Democrats, and left the Party, for its links with wasteful small enterprise. Altogether, the Central Committee took less than ten per cent of war-ministry orders, and fulfilled less than half of those. The system survived by virtue of the sub-contracting networks of Moscow or Kiev, which were disguised as War-Industries Committees, and even then needed considerable charitable hand-outs from the local millionaire. For better or worse, this kind of business was being slowly throttled in Russia, and by the end of 1916, the War-Industries Committees, their needs neglected by Prodameta, their representatives abroad spurned by the government purchasing-committees, their wages derided, relapsed into querulous isolation. Their assemblies were marked by ‘coarse attacks on the working-classes’,16 who, by going somewhere else for better wages, made life so difficult for War-Industries-Committee people; equally, there were attacks on the government, the monopolies, and the Special Council, who lacked ‘understanding’. Not surprisingly, this agitation took, in the end, political form. But by then, the Duma Octobrists had lost sympathy for the War-Industries Committees, and the Constitutional Democrats, who remained faithful to them, were powerless.
