by Norman Stone
CHAPTER THIRTEEN
War and Revolution, 1917
Early in 1917, Russian generals were full of fight. Conferences with allied soldiers at Chantilly, and with allied politicians in Petrograd, confirmed suspicions that the Entente had now become vastly more powerful than the Germans: the western, eastern, Balkan and Italian fronts each showed an allied superiority of at least sixty per cent in men and guns. Even Evert’s mouth watered, as he contemplated the great amounts of shell with which he would plaster a few square kilometres of German line in the coming spring offensives. Moreover, the prospect of American intervention against Germany gave Russians and western Powers alike a hope of final success in 1917. None the less, there was to be little fighting in the east in 1917. Revolution broke out in March; there was a Bolshevik coup in November; Russia dropped out of the war in December, when an armistice was concluded at Brest-Litovsk; and a peace-treaty was signed in March 1918. In the meantime, the front itself was almost wholly inactive. There was some grumbling in March 1917, in Volhynia; an offensive, lasting a few days, in July; a German counter-offensive, which took Eastern Galicia in August, and Riga in September. The Russian economy might, now, be capable of sustaining a world war; but Russian society had not stood the strain. The home front collapsed into class-war; the army at the front could not apparently be got to fight; while the army in the rear joined the forces of revolution. Virtually the whole of the country’s working population went on strike, although, with the German enemy at the gates, there was ostensibly every good cause for keeping a united home front until the war had been won.
It was later asserted that the disaster was caused, above all, because of the division of government. After the March Revolution, ‘Establishment’ Russia—the Stavka generals, the Duma, the industrialists—came together as in the spring of 1915, and formed a Provisional Government. The revolutionary masses of Petrograd formed their own council, the Soviet, which faithfully recorded, at regular intervals, the temper of the masses, and which, from the beginning, was dominated by the left-wing parties. A system of Soviets came into existence, more or less spontaneously, throughout the country: the men in army units, in factories, and, in the end, the villages as well set up such councils to safeguard the revolution and ensure its promotion. The Soviet’s order on army matters decreed an end to the humiliating rituals which ordinary soldiers had had to put up with, and henceforth officers’ authority could, in most units, be enforced only through agreement with the unit’s council, if then. The division of power between government and Soviet was, in fact, unreal. The government had control of the bureaucracy, but increasingly it lost control of the armed forces, and it owed most of its power to the Soviet. But the Soviet did not know how to use its power, and most of its early leaders earnestly wished that the Provisional Government would do the job. The Soviet had pledged itself, quite early on, to ‘peace without annexations or contributions’. But, as became increasingly clear, the German government was not interested in this, except from tactical motives, so that, unless the Soviet wanted to see Ludendorff invade Russia, it must go on fighting the war. In this event, power must be left to the generals. In the same way, the maintenance of the economy must be left to bankers and industrialists who understood these things. In due course, many Mensheviks thus found themselves striving to suggest to their followers that they should obey the prescriptions of a régime which they had themselves been elected to repudiate; and in time, prominent Soviet people were to join the Provisional Government—Kerenski being the best-known.
The system did not break down because of Bolshevik agitation alone. To begin with, the Bolsheviks were just as confused as the other parties. They too accepted that the revolution must be defended against German imperialism, and after the March Revolution were eager, to their subsequent embarrassment, to get back to normal—Kamenev and Stalin appealing for ‘order’ in the army and the factories, Gorki telling people to get back to work. It was only after Lenin’s return to Russia in April that the Bolsheviks adopted an out-and-out revolutionary programme: unremitting class-war in town and country, immediate peace, all power to the Soviets. Even then, many Bolsheviks regarded Lenin as a maniac, and in July his name was missed off a list of Anarchists and Bolsheviks drawn up to form a government. It was not until September that the Soviets became, in majority, Bolshevik; and even in November, it was more fear of counter-revolution than desire for power that drove the Bolsheviks into their November coup against the Provisional Government. Russia did not go Bolshevik because the masses were Bolshevik from the start of the Revolution, or because of the machinations of Soviet and Bolshevik leaders. She went Bolshevik because the old order collapsed, more or less as Lenin—uniquely—had foretold it would. By the autumn of 1917, the towns were starving and disease-ridden; stratospheric inflation deprived wage-increases, indeed the whole economic life of the country, of meaning; production of war-goods fell back so far that the army could not fight, even if it had wanted to. Mines, railways, factories seized up. Kerenski and his sympathisers in the Soviets wished to restore things through co-operation with the old order. This programme did not work, for the economy collapsed in chaos, and the way was open to Lenin, who promised a new system altogether. Economic chaos drove Russia towards Bolshevism, sometimes despite the Bolsheviks.
This economic chaos was frequently ascribed quite simply to backwardness: Russia was not advanced enough to stand the strain of a war, and the effort to do so plunged her economy into chaos. But economic backwardness did not alone make for revolution, as the examples of Romania or Bulgaria showed; and in any case, Russia was not backward in the same way as these countries, as was shown in her capacity to make war-material in 1915–16. The economic chaos came more from a contest between old and new in the Russian economy. There was a crisis, not of decline and relapse into subsistence, but rather of growth. There was a sudden burst of progress during the war—much greater commercial activity, much greater labour-mobility, much more investment—and hence much greater exploitation of the country’s labour-force than before. Virtually for the first time, the Russian government prepared to spend money, instead of being bound, as in the past, by the narrowest of gold-standard orthodoxies. The result was a considerable economic explosion. It was shown in the wartime statistics of growth overall, particularly the delivery of war-material. It was shown in the great profits of 1915–16, in the boom of the Stock Exchange. It was also shown in the rise of banking, as the general level of economic activity forced banks to extend their business. The number of State Savings Banks doubled, to over 15,000, in the war-years; and more bank-branches were opened, between 1914 and 1917, than in the whole of Russia’s past.
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.1
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 indust
ries, 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.2 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.3 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.4 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:
Russian Public Finance 1914–1917
(thousand million roubles, rounded to the nearest hundred million)
Year
Money (all types) in circulation
% rise
price-index
1914: 1st half:
2.4
(100)
(100)
1915: 1st half:
3.5
146
115
1916: 1st half:
6.2
199
141
1916: 2nd half:
8.0
336
398
1917: 1st half:
11.2
473
702
1917: 2nd half:
19.2
819
1,172
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.*
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 f
our 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.
