This book provides an economic historian's perspective on major

questions that confront all students of Russian history: how stable

were the economic and administrative structures of late-imperial
Russia, and how well prepared was Russia for war in 1914? The
decade following the Russo-Japanese War witnessed profound
changes in the political system and in the industrial economy. The
regime faced challenges to its authority at home from industrialists,
caught in the throes of recession, and from parliamentary critics of
tsarist administration. Against this domestic background, Russia
participated in a frantic continental arms race. Peter Gatrell provides a
comprehensive account of the attempts made by government and
business to confront these challenges, examining the organization
and performance of a key industry, and showing how decisions were
reached about the allocation of resources, and the far-reaching
consequences these decisions entailed.
GOVERNMENT, INDUSTRY AND REARMAMENT IN
RUSSIA, 1900-1914

Cambridge Russian, Soviet and Post-Soviet Studies: 92

Editorial Board
Stephen White (General editor)
Roy Allison Anthony Kemp-Welch Margot Light Alastair McAuley
Catherine Merridale James Riordan Judith Shapiro

Cambridge Russian, Soviet and Post-Soviet Studies, under the auspices of

Cambridge University Press and the British Association for Soviet, Slavonic
and East European Studies (BASSEES), promotes the publication of works
presenting substantial and original research on the economics, politics,
sociology and modern history of Russia, the Soviet Union and Eastern Europe.
Cambridge Russian, Soviet and Post-Soviet Studies

92 PETER GATRELL
Government, industry and rearmament in Russia, 1900-1914
The last argument of tsarism
91 LINDA RAC1OPP1
Soviet policy towards South Asia since 1970
90 WENDY GOLDMAN
Women, the State and the family
Soviet family policy and social life, 1917-1936
89 JONATHAN C. VALDEZ
Internationalism and the ideology of Soviet influence in Eastern Europe
88 PETER RUTLAND
The politics of economic stagnation in the Soviet Union
The role of local party organs in economic management
87 DONALD FILTZER
Soviet workers and de-Stalinization
The consolidation of the modern system of Soviet production relations 1953-1964
86 MIL1CA UVAL1C
Investment and property rights in Yugoslavia
The long transition to a market economy
85 AVRIL P1TTMANN
From Ostpolitik to reunification: West German-Soviet political relations since 1974
84 GEORGE O. LIBER
Soviet nationality policy and social change in the Ukranian SSR 1923-1934
The urban harvest
83 CMR1STOPH BLUTH
Soviet strategic arms policy before SALT
82 JOHN P. W1LLERTON
Patronage and politics in the USSR
81 JAMES HUGHES
Stalin, Siberia and the crisis of the New Economic Policy
80 ILIANA ZLOCH-CHRISTY
East-West financial relations
Current problems and future prospects
79 MICHAEL D. KENNEDY
Professionals, power and Solidarity in Poland
A critical sociology of Soviet-type society
78 GARETII M. W1NROW
The foreign policy of the GDR in Africa

Series list continues after index

Government, industry and
rearmament in Russia,
1900-1914
The last argument of tsarism

PETER GATRELL
Department of History, University of Manchester

CAMBRIDGE
UNIVERSITY PRESS
Published by the Press Syndicate of the University of Cambridge
The Pitt Building, Trumpington Street, Cambridge CB21RP
40 West 20th Street, New York, NY 10011-4211, USA
10 Stamford Road, Oakleigh, Melbourne 3166, Australia

© Cambridge University Press 1994

First published 1994

Printed in Great Britain at the University Press, Cambridge

A catalogue record for this book is available from the British Library

Library of Congress cataloguing in publication data

Gatrell, Peter.
Government, industry, and rearmament in Russia, 1900-1914:
the last argument of tsarism / Peter Gatrell.
p. cm. - (Cambridge Russian, Soviet and post-Soviet studies: 92)
Includes bibliographical references (p. ).
ISBN 0 521 45263 5 (he.)
1. Russia - Economic conditions - 1861-1917.
2. Industry and state - Russia - History.
3. Defense industries - Russia - History.
4. Russia - Armed Forces - Appropriations and expenditures.
I. Title. II. Series.
HC334.5.G37 1994
338.947'009'041-dc20 93-11074 CIP
ISBN 0 521 45263 5 hardback
ISBN 0 521 46619 9 paperback

CE
 Contents

List of maps page ix

List of tables x
Preface xiii
Acknowledgements xv
List of abbreviations xvii
Maps xviii

Introduction 1

Part I Defence imperatives and Russian industry,

1911-1907 11

1 Defence and the economy on the eve of the

Russo-Japanese War 13

2 War and revolution, retrenchment and recession 65

Part II Rearmament and industrial ambition 115

3 The defence burden, 1907-1914 117

4 The economics and politics of industrial recovery 161

5 The armaments industry: the search for identity

and influence, 1908-1914 197

6 The economics and politics of defence

procurement 260
viii Contents

7 Military preparedness on the eve of the First

World War 291

Conclusion 323

Notes 330
Bibliography 372
Index 388
 Maps

1 European Russia in 1914 showing location of major

enterprises page xviii
2 Urals state ironworks in 1914 xix
3 St Petersburg in 1914 showing location of major
shipyards and armaments factories xx
 Tables

1.1 Size and complement of the Russian fleet, 1899-1904 page 21

1.2 Baltic Shipbuilding Company, 1877-1903: selected indi-
cators 32
1.3 Nikolaev Shipbuilding Company, 1897-1904: selected
indicators 33
1.4 Net profits reported in iron and steel, 1901-1906 49
1.5 Total output and shell production at state ironworks,
1900-1908 50
1.6 Machine-building production, 1885-1913 53
1.7 Gross output of machine-building, 1900-1908 55
1.8 Net profits reported in Russian machine-building, 1901-
1906 60
2.1 Foreign orders for military goods, 1904-1905 73
2.2 Projected expenditure on ground-based armaments,
1906 101
2.3 Performance of Perm Cannon Works, Motovilikha,
1905-1907 105
2.4 Gross industrial production, 1896-1910 108
3.1 Government expenditure, 1900-1913 140
3.2 The army budget: estimates and outlays, 1907-1913 146
3.3 The navy budget: estimates and outlays, 1907-1913 146
3.4 Government revenue, 1900-1913 150
3.5 Defence/national income proportions in Europe, 1913/14 154
4.1 Gross industrial production, 1908-1913 173
4.2 Industrial employment, 1900-1913 175
4.3 Iron and steel consumption, 1908 177
4.4 Consumption of iron and steel, 1913-1914 178
4.5 Production and sale of pig iron, 1908-1913 181
4.6 Gross output of machine-building, 1908-1913 187
4.7 Output of rolling-stock, 1900-1913 188
 List of tables xi

5.1 Profile of the 'New Admiralty' yards, 1908-1912 203

5.2 Employment at state armouries, 1890-1914 207
5.3 Estimated expenditure on machine tools by GAU, 1908-
1914 208
5.4 Total output and defence production, Urals ironworks,
1908-1914 211
5.5 The Russian arms trade, 1908-1913: selected indicators 219
5.6 Russian military shipbuilding, 1908-1913: basic indi-
cators 227
5.7 Nikolaev Shipbuilding Company, 1904/5-1913/14 232
5.8 The labour force in the armaments industry, 1900,1908,
1913 244
5.9 Turnover of workers at St Petersburg Tube Works, 1907-
1914 247
5.10 Aggregate defence production in 1913 254
5.11 Defence production, 1908-1913 255
5.12 Armaments production, 1908-1913 255
5.13 Military shipbuilding, 1908-1913 256
6.1 Orders placed abroad by government departments,
1901-1910 276
6.2 Foreign share of military orders, 1907-1910 276
7.1 Munitions stocks at the outbreak of war, July 1914 299
7.2 Comparative military strength of the European powers,
1914 300
7.3 Stocks of military materiel, 1914 301
7.4 The Russian fleet, 1909-1917 303
 Preface

This study deals with the capacity of the tsarist regime to survive a
challenge to its authority at home and to maintain its prestige abroad.
The prerogatives of the imperial government to decide foreign and
defence policy, as well as economic and fiscal policy, were called into
question by the forces unleashed during war and revolution in 1904-5.
After 1905, a struggle took place between state and society for control
over fundamental issues of policy. This book concentrates upon one
aspect of that struggle, by examining the organization, administration,
finance and performance of the armaments industry in Russia from the
turn of the nineteenth century to the outbreak of the First World War.
The first two chapters address the political, economic and defence
imperatives before and during the years of upheaval in 1904-6. The
final decade of the nineteenth century witnessed a series of important
initiatives that had profound repercussions for the defence sector:
Russia signed a military agreement with France, the tsarist govern-
ment embarked on a programme of rapid industrialization, and sig-
nificant reforms in the armed forces came to fruition. But none of these
developments prepared Russia for what was to come as the new
century dawned. The first crisis appeared in the industrial sector,
where the basic industries that had flourished for a decade experi-
enced instead a severe recession. Next, the war against Japan humili-
ated the Russian empire and exposed serious weaknesses in the
system of military procurement. Much of the imperial fleet lay at the
bottom of the Pacific Ocean. To restore Russian pride and military
might was costly; and the price of rearmament had to be reckoned
along with the costs of the war. Finally, the ensuing revolution pro-
voked profound changes in the political system, leading to the estab-
lishment of a form of parliamentary government. The Duma had no
constitutional right of control over the armed services, but its
budgetary powers allowed its members to exert some influence over
xiv Preface

defence spending, as well as over the administration of the state-

owned arsenals and shipyards.
The resolution of these components of crisis forms the basis for the
following three chapters, which detail the rearmament programmes,
defence spending, the reform of procurement and the behaviour of the
arms industry. As in the first chapter, the treatment of armaments
industry is set in the context of the basic industries which provided the
essential underpinnings for modern warfare, namely iron and steel
and machine-building, and which themselves produced goods that
were either destined to be used by the military or that could be
adapted to military use. These form the subject of chapter 4, which
considers the mainsprings of industrial growth on the eve of the First
World War. This chapter also charts the uneasy relationship between
industry and government, in the light of budgetary conflicts, market
uncertainties and shifting defence priorities. Chapter 5 discusses in
detail the emergence of the private arms trade in Russia, as well as the
problems that beset the established state sector. It also considers the
place of the armament industry in the Russian industrial economy. In
chapter 6, attention turns to defence procurement, where the theme of
an 'internal arms race' figures prominently. The aim is to ascertain the
claims made by their supporters on behalf of rival forms of enterprise,
as well as the relative performance of the two sectors. The study ends
with a broadly conceived assessment of defence preparations and
Russia's readiness for war in 1914.
 Acknowledgements

I take a great deal of pleasure in being able to thank the people who
have helped me to research and write this book. My first task is to
acknowledge the assistance of those archivists who kept me supplied
with material. The staffs of the Central State Historical Archive, the
Central State Archive of the Navy and the St Petersburg State His-
torical Archive, as well as of the Central State Military-Historical
Archive, laboured under difficult conditions to meet many of my
needs. Kenneth Warren gave me helpful advice about archives in the
UK. I have also received assistance from staff at the John Rylands
University Library, Manchester, including those in the Inter-Library
Loans department, as well as from successive librarians at the Centre
for Russian and East European Studies, University of Birmingham. In
addition, the librarians and archivists of the Library of Congress, the
University of Illinois Library, and Cambridge University Library dealt
carefully with my requests for assistance.
I am pleased to be able to acknowledge financial support from the
University of Manchester's Staff Travel Fund, the British Council, the
Kennan Institute for Advanced Russian Studies, Washington DC, and
the British Academy.
Several people read part or all of an earlier version of the manu-
script. Two anonymous referees made numerous suggestions for
improvements and prompted me to rethink my approach to the
subject. Clive Trebilcock offered encouraging comments on the first
draft. I am also very grateful to David Stevenson for sharing with me
his thoughts about the diplomacy of the pre-1914 arms race and, more
particularly, for commenting carefully and constructively on the entire
manuscript. Edward Acton, now of the University of East Anglia, not
only read a first draft and made helpful comments, but also never lost
hope of my eventually finishing a revised version. No one could wish
for a finer colleague and friend.
xvi Acknowledgements

Several memorable trips to the USA, to Russia and Italy brought me

into contact with a large number of historians and economists, who
shared ideas with me, presented me with books and offprints and
offered advice and encouragement. Chief amongst them are Charles
Timberlake, Walter Pintner and John McKay in the USA: Boris
Vasil'evich Anan"ich and Valerii Ivanovich Bovykin in Russia; and the
participants in a Workshop on the European Armament Industry,
1860s-1939, organized by Luciano Segreto and Albert Carreras at the
European University Institute, Florence, in November 1991. I also
benefited from brief discussions with Kornelii Fedorovich Shatsillo
and Leonid Efimovich Shepelev, from whose work I learned so much,
as will be evident from the footnotes to this book. I am grateful to
Joseph Bradley for allowing me to read a manuscript copy of his
excellent monograph on the Russian small-arms industry during the
nineteenth century.
In the course of my research I have enjoyed friendship and hospita-
lity at every turn. I much appreciate the warmth of the reception I
received in the USA from Pat and Charles Timberlake, Sara and Walter
Pintner, and from Frances, Ham and Rod Kenner. In Moscow, I could
always count upon Leon and Ira Bell, Anya Bakhnova and Maya
Rapoport. In St Petersburg, Iulia Mutusheva and family and Zina
Skobeleva helped to keep up my spirits. Countless research trips to
Cambridge and London were made enjoyable by the kindness and
generosity shown by Kate and David Shoenberg, and by Peter Shoen-
berg, to all of whom I express my gratitude and love.
The completion of this book gives me the opportunity to thank Olga
Crisp and Bob Davies, whose advice and support I have enjoyed for
nearly two decades. I am also grateful to Michael Kaser for his encour-
agement. Nor do I forget those who taught me many years ago at the
University of Cambridge: Neil McKendrick, Philip Grierson, Sydney
Kanya-Forstner, Vic Gatrell and, above all, Norman Stone, Clive Tre-
bilcock and Jonathan Steinberg who encouraged my interest in
modern European history. I owe more than I can say to Keith Dawson,
Haberdashers' Aske's School, Elstree, and to the late Tony Howarth.
Their enthusiasm for history and their enviable gifts of exposition
inspired me long ago and remain precious memories.
As always, my beloved parents and brother, Tony Gatrell, have
followed my progress with keen interest.
It is hardest of all to find words to thank those who are so close and
dear to me, and I shall not attempt to do this in print. I can do no better
than to dedicate this book to Jane, David and Lizzy, with all my love.
 Abbreviations

d. delo (file)
f. . fond (collection)
GAU Glavnoe artilleriiskoe upravlenie (Main Artillery
Administration)
GIU Glavnoe intendantskoe upravlenie (Chief
Quartermaster's Department)
GUKS Glavnoe upravlenie korablestroeniia i snabzheniia
(Main Shipbuilding Administration)
1. list (sheet)
LGIA Leningradskii gosudarstvennyi istoricheskii arkhiv
(Leningrad State Historical Archive)
ob. obratnaia (reverse)
op. opis' (inventory)
SGO Sovet gosudarstvennoi oborony (Council for State
Defence)
SOGD Gosudarstvennaia Duma: stenograficheskii otchet
(Stenographic report of the State Duma)
SOGS Gosudarstvennyi Sovet: stenograficheskii otchet
(Stenographic report of the State Council)
TsGAVMF Tsentral'nyi gosudarstvennyi arkhiv voenno-morskogo
flota (Central State Archive of the Navy)
TsGIA Tsentral'nyi gosudarstvennyi istoricheskii arkhiv
(Central State Historical Archive)
TsGVIA Tsentral'nyi gosudarstvennyi voenno-istoricheskii
arkhiv (Central State Military-Historical Archive)
VOGK Vsepoddaneishii otchet gosudarstvennogo kontrolera
VDMM Vsepoddaneishii doklad po morskomu ministerstvu
1 European Russia in 1914 showing the location of major
enterprises.
 •••. State ironworks

Nizhne-Turinsk
.Verkhne-Turlnsk
-§. Kushvinsk
^.Motovilikha [*Baranchinsk
Perm
Serebriansk

Izhevsk • Ekaterinburg
arsenal
^.Artinsk / ^Kamensk

Kusinsk .f. Zlatoust

2 Urals state ironworks in 1914

 Privately-owned
1 Putilov
2 Franco-Russian
shipyard
3 Siemens-Schuckert
4 Baranovskii
5 Russkii Renault
6 Lessner
7 Parviainen
8 Phoenix
9 St.Petersburg Metal
10 Nevskii Shipbuilding Co.
11 SchlOsselburg

State-owned
A Obukhov
B Baltic shipyard
C New Admiralty yard
D St.Petersburg Ordnance
E Cartridge works
F Tube works
G Okhtensk

1 mile
PETERHOF

SCHLOSSELBURG

St Petersburg in 1914 showing the location of major shipyards

and armaments factories
 Introduction

An eminent scholar, surveying a century of Russian and Soviet devel-

opment, once remarked that 'it always was a "political" economic
history'.1 This epigrammatical statement reflected the widely held
view that the tsarist state actively promoted Russian economic devel-
opment for geo-political purposes. The old regime, conscious of the
disparity between its diplomatic pretensions and relative economic
weakness, aimed to build a modern industrial economy. Russian
industrialization and tsarist foreign policy were closely intertwined, as
the regime sought to enhance the international status and influence
which it forfeited in the years following the Crimean War. The pursuit
of international prestige went hand in hand with a programme for
rapid industrial development, which laid the foundations for
economic and military security.
A generation after Gerschenkron wrote the words quoted above,
many aspects of Russia's 'political' economic history remain conten-
tious or unresolved. Scholars who disagree about key aspects of
Russian history nevertheless agree that the tsarist state exercised a
decisive influence over the course of economic development. But
exactly what role the state played in the process of economic develop-
ment and by whom economic policy was formulated are questions
which still await thorough examination. The implications of a power-
ful state for private entrepreneurial initiative have attracted some
attention, but many aspects of business policy, entrepreneurial prac-
tice and industrial performance remain unclear. The connection
between foreign and defence policy, on the one hand, and industrial
development, on the other, is opaque. What were the defence-related
imperatives that Russian industry purportedly obeyed? What role did
the state play in the production of defence goods, and what role did it
assign to private enterprise? The interaction of government and
business in the sphere of defence production is as yet imperfectly
 Introduction

understood. Did the tsarist defence effort promote economic growth,

by mobilizing resources that would otherwise have remained idle, or
retard it, by diverting resources from productive to unproductive
ends?

Backwardness, businessmen and the tsarist state

Russian industrialization was of paramount importance to the
tsarist state. Seeking to aspire to the great power status Russia once
enjoyed, but had lost with the coming of the machine age, policy-
makers had to overcome the legacy conferred by years of stagnation.
Economic backwardness was deeply entrenched. But - according to
Gerschenkron - having identified the ends, the tsarist state was forced
to confront the limited means at its disposal. These included a prepon-
derant and traditional agricultural sector, a dearth of funds for invest-
ment and a small and poorly qualified entrepreneurial class. The
government was unable to devolve upon private enterprise the func-
tion of mobilizing resources for rapid industrial growth: the burden
was simply too heavy, the responsibility too grave and the urgency of
the task too great. In Gerschenkron's terms, the state 'substituted' for
factors that were missing or in short supply, by purchasing industrial
goods on a massive scale, supplying credit to selected entrepreneurs
and encouraging the import of foreign capital and skills. Responding
to these stimuli, Russian industrial development during the 1890s
proceeded at breakneck speed.2
In Gerschenkron's scheme, war figured as an exogenous develop-
ment, unrelated to prior socio-economic and political change. As a
consequence, he never examined in detail the link between diplomacy
and domestic policy. He raised briefly the possibility that Russian
industrialists sought war, in order to secure lucrative contracts, but
dismissed the suggestion, on the grounds that it tended to 'magnify
the political significance of the Russian bourgeoisie out of all propor-
tion'. Beyond this statement he refused to venture in print.3 But the
war did not emerge like an unforeseen bolt from the blue. As for the
revolutionary process, Gerschenkron largely ignored its causes, pre-
ferring to concentrate instead on the stabilizing forces at work in the
late imperial Russian economy.
The connection between government policy, industrial develop-
ment and revolution figures much more prominently in the interpreta-
tion developed by Teodor Shanin. Shanin follows Gerschenkron in
accepting the primacy of state initiatives in accounting for rapid
 Introduction

industrialization. However, he offers a more explicit conceptualization

of the tsarist state and posits a link between government policy and
revolution. Shanin subscribes to the view that the Russian state under-
wrote rapid industrialization, in order to maintain its security at home
and abroad. However, this programme accentuated the predominant
features of a polity which is characterized by 'dependent develop-
ment', namely 'a state machinery that has variously been described as
"overgrown", "strong" and/or "state capitalist"'. The tsarist state pos-
sessed 'exceptional power* and maintained an 'extensive ... economic
grip as owner, producer, employer and controller of resources ...'.
Industrialization enhanced still further the scope of the tsarist state
and its control over resources.4
Shanin's conceptualization of the state is accompanied by an inter-
pretation of revolution. Industrialization helped to undermine the
foundations of the state at the same time as it magnified state power.
State-led industrialization antagonized and impoverished the bulk of
the peasantry (Gerschenkron also saw this as a cause of revolution in
1905), and created irresolvable tensions between foreign capitalists,
local capitalists and the government. Officials found it easier to handle
indigenous capitalists than the foreign ones who flocked to Russia to
take advantage of the growing opportunities for investment. The state,
according to Shanin, was undermined by bureaucratic mediocrity and
incompetence, by its dependence on foreign capitalists, by its exploita-
tion of the peasantry and by an inability to reduce differentials of
wealth.
Shanin's argument has the merit of addressing seriously the associ-
ation between the economic system of tsarist Russia and its eventual
collapse. According to Shanin, at the heart of Russian government
initiatives there lay what might be termed a structural paradox,
namely that the process of industrialization weakened rather than
strengthened the old regime. But this paradox needs to be examined
more fully. The latest research would certainly not corroborate the
suggestion that state-led industrialization during the 1890s was fed by
fiscal impoverishment of the peasant population; besides, the living
standards of the peasantry improved significantly between 1905 and
1914. Nor should the professional competence of the bureaucracy be
dismissed in so sweeping a fashion. The middle-level bureaucracy
struggled reasonably well to reconcile divergent interests and con-
straints.5
Dietrich Geyer offers an interpretation which relates economic
development both to domestic social and political conflict and to
 Introduction

international diplomacy. In his view, the tsarist regime found it diffi-

cult to come to terms with the changed realities following the Russo-
Japanese War. Internal problems remained acute in the aftermath of
the 1905 revolution. These problems included 'the disintegration of
pseudo-constitutionalism, an atmosphere of catastrophe charged with
strong social tension, the turbulence of a period of economic boom,
dissatisfaction in agricultural circles and the declining ability of the
government to assert its authority'. In these circumstances, deep-
seated fears about the future of the country 'were projected onto a
foreign enemy'. Although Geyer rejects the insistence of Soviet his-
torians on the emergence of a 'revolutionary situation' in 1914, he finds
evidence of a profound rupture between government and people,
which the regime sought to disguise and even surmount by leading a
nationalist crusade against Germany and Austria-Hungary. Thus, the
structural weaknesses associated with economic modernization gener-
ated a foreign policy that was fraught with risk.6
A somewhat different argument is developed here. There is no
dispute that the search for imperial grandeur led the old regime —
more accurately, a modernizing faction within it - to embark on a
programme of industrialization during the 1890s. The industrialization
programme required for its completion a sustained period of peace
and stability, in order to promote business confidence and foreign
investment in Russia. But Russian heavy industry rested on fragile
economic and institutional foundations, and the industrial boom came
to an abrupt end at the turn of the century, when the frantic pace of
railway construction and capital investment slackened. The con-
fidence of Russian businessmen received a nasty jolt. A welcome
upturn in the business cycle coincided with a reckless military gamble
in Manchuria, the result of ill-considered policies being pursued by
another faction within the regime. In the aftermath of the war against
Japan, Russia tried to pick up the pieces. The search for grandeur now
took on a different meaning, as the government struggled simultane-
ously to meet the costs of war in the Far East and to remain active on
the European stage. Russia hoped to share the burden of defence with
its French ally, but there was a limit to what the alliance could achieve,
when both parties ostensibly had little in common, save their mutual
suspicion of German predominance in Europe. In the industrial
sphere, the state used its control of industrial assets to counter a
potential increase in the power of capitalists, whether foreign or
Russian. Contrary to the claims of Shanin, the state did not succumb to
the dictates of foreign capitalism. Foreign investors, bankers and entre-
 Introduction

preneurs were kept at arm's length, either by design or by virtue of

the mass of bureaucratic regulation which confronted them in the
Russian empire and which made many businessmen wary of too deep
an involvement in the tsarist economy. The story with regard to dom-
estic capitalists was yet more complex, and requires a fuller elabo-
ration of business-government relations. In this sphere, against the
backdrop of renewed uncertainties about national security, is to be
found a key component of social and political instability in late
imperial Russia.

The economics of defence

The themes of industrialization, business-government rela-
tions and imperial diplomacy coalesce in a study of defence industry.
In any modern economy, as in tsarist Russia, several distinct branches
of industry contribute to the market for defence goods. The armed
forces require weapons and naval vessels, which are supplied either
by specialist armouries and dockyards or by metalworking and
machine-building industries. Engineering firms also supply defence
equipment, such as military vehicles, whilst at the same time pro-
ducing a range of other goods for the civilian market. Other indus-
tries, too, are involved in the construction and furnishing of military
installations, such as fortresses, barracks, depots and ports. Explosives
are produced by the chemicals industry. The armed services also
require food, fodder, footwear and uniforms. Thus, the market for
defence products is very varied and draws upon the productive capa-
bilities of a range of industries. Here, in pragmatic fashion, defence
industry is used as a convenient shorthand to describe those hetero-
geneous branches of industry that supply goods for the armed ser-
vices. In practice, the focus is largely on those branches of industry
that produce semi-finished goods and finished military hardware.7
'Defence industry' is not, however, an artificial construct, created
simply by amalgamating a number of discrete branches of manufac-
turing industry. Defence industry is possessed of specific features that
relate both to its structure and to the nature of the defence market.8
The production of military hardware is distinguished from other
branches of industry in that the goods are destined to be used, neither
as investment goods nor as the means of satisfying household con-
sumer needs. The defence industry is 'a component in an inter-
national system of threat and conflict, as distinct from all other indus-
tries whose relation is one of international exchange'. Its products are
 Introduction

either used as the means of destruction or are stockpiled until their

potential military usefulness has expired.9
Its strategic significance gives defence industry a potential leverage
that is likely to be denied other sectors. Decision-makers may attempt
to influence the course of foreign and defence policy, in order to
enhance its prospects. In a classic article, first published in 1933, the
German historian Eckhart Kehr argued that this behaviour was a
functional necessity for the survival of the industry. When business is
slack, he asserted, the industry's leaders advocate rearmament, in
order to protect their investment. The government may be unwilling
to respond, but the failure to accede to their demands carries the risk
that factories will close and skills will be dissipated. Corporate pressure
by the arms trade would, for these reasons, be difficult to resist.10
Kehr's conclusions hardly command universal acceptance amongst
scholars who have studied the prewar arms race. Evidence from other
societies, where Kehr's views might have been expected to be con-
firmed, weakens his case. For example, the zaibatsu did not whole-
heartedly support the Japanese arms build-up during the 1920s and
1930s, fearing that the programme would lead to higher taxes and
international instability. Although the expansionist policies pursued
by Nazi Germany had the active support of leading German firms,
notably in chemicals and non-ferrous metals, Hitler's foreign policy
was driven by a range of social forces, of which big business was only
one element.11 More generally, the concept of a 'military-industrial
complex', which Kehr was the first to scrutinize in depth, has lately
been reassessed. Defence economists have demonstrated that modern
capitalist economies do not rely heavily upon defence production for
their survival, and they are sceptical of the view that modern govern-
ments are strongly influenced by defence firms.12
Other distinctive attributes of defence industry command attention.
One outstanding feature is that governments are the sole customers
for its products. Government is directly involved in issues of defence
production and procurement, and will be at pains to establish some
degree of control and supervision over the industry, in order to ensure
that suppliers adhere to the terms of the contract. This means that
government agencies pay close attention to questions of price, product
quality and delivery date. A close relationship thus develops between
government and industry. But it does not follow that government, as
sole customer, is able to exercise the power implied by monopsony.
The defence industry is often structured in such a way as to prevent
competition.13
 Introduction

Defence economists have specified the conditions that hinder com-

petition and foster a tendency towards concentration, contrary to the
competitive tendencies which purportedly exist in other branches of
industry. The potential for oligopoly (a market dominated by a
handful of firms) is created in two ways, namely by the barriers to
entry of new firms and by the tendency of existing defence contractors
to collude and combine, in order to protect themselves against their
client. Barriers to entry operate because potential newcomers do not
have the necessary specialist expertise in defence production. They
find it prohibitively expensive to invest in the lengthy research and
development required to enter the industry. Existing defence firms, for
their part, will tend to join forces in order to realize economies of scale,
such as pooling their technical knowledge and expertise in order to
share R&D costs and thereby keep pace with the high rate of technolo-
gical change, on which their future depends. These oligopolistic ten-
dencies may be offset by other developments. Barriers to entry operate
less effectively where the technology is itself undergoing change. In
these circumstances, new and existing defence firms are in the same
position, neither having been able to accumulate the necessary exper-
tise. In addition, the complex and constantly changing pattern of
military demand may allow a plethora of small firms to secure a niche,
by concentrating their limited resources on one element of the
market.14
How relevant are these considerations to Russian defence industry
at the beginning of the twentieth century? Most of the attention of
economists who have studied defence industry has been devoted to
the principles governing the behaviour of private enterprise. This
emphasis is unfortunate. Before 1900, the contribution of state-owned
enterprise to armaments production was more important than the
contribution made by private industry. In Russia, state enterprises had
been established by Peter the Great. By the second half of the nine-
teenth century they had built up a skilled and loyal labour force.15 The
tsarist government had no wish to depend on the private sector, when
firms might combine, in order to dictate terms to government, or
suddenly cease trading. There was no question of abandoning state-
owned defence industry. However, the realization of this strategy
depended, in part, upon the distribution of large subsidies to state
shipyards and armouries. Whether this support could be justified after
1905, in view of new political and fiscal pressures, was another matter.
A significant private defence industry came on the scene relatively
late, at a time when government-owned enterprises were well
 Introduction

established, particularly in small arms and artillery. In the manufacture

of small arms, a high degree of precision engineering was required, far
more than in other branches of civilian engineering, such as locomo-
tive manufacture. Here, a technological barrier certainly hampered the
entry of new enterprises. The entry of private firms in other branches
of defence industry coincided with a profound shift in armaments
technology. In artillery, heavier calibres were adopted, the machine
gun became more widespread and, above all, shipbuilding was trans-
formed by the introduction of the dreadnought. Now, private enter-
prise offered the Russian government the opportunity to tap
advanced technology, by means of the technical agreements con-
cluded by new firms and their foreign associates. The barriers to the
entry of new enterprises in defence industry began to come down.
There were nevertheless risks involved in entering the defence
industry. First, private firms might invest heavily in new plant,
designed with a specific product in mind, only to find that the procure-
ment agencies changed the specifications attached to the order or,
more worrying still, that the government transferred future contracts
to the state sector. It must be said that some risks were no more serious
than the risks attendant in other branches of manufacturing industry:
fluctuations and uncertainty afflicted the defence market, but the same
was true of the Russian market as a whole. In practice, as we shall see,
private firms dealt with the problem by maintaining a diverse product
mix. Until the eve of the First World War, only a small number of firms
specialized exclusively in defence products.
Another key issue relates to the defence effort more broadly con-
ceived. To what extent were patterns of defence spending during the
early twentieth century linked in a coherent fashion to changing
conceptions of strategy? What kind of military preparations were
being formulated by the military leadership of the European powers:
were they designed to equip countries for an offensive or defensive
war, for a long or a short war, for a land or naval engagement? By what
means, and with what success did these military conceptions translate
into defence spending and armaments programmes? These issues
have attracted a substantial literature, particularly in regard to German
preparations for war during the 1930s. The Blitzkrieg strategy was
designed to enable Germany to adjust its military goals to resource
endowment, in particular to shortages of raw materials. This strategy
in turn imposed the need for rearmament 'in width', that is a pro-
gramme based upon stockpiling tanks and other weapons. Economic
realities and military ambition thus corresponded closely. A discussion
 Introduction

of economic and strategic planning before the First World War reveals
that Admiralty strategists capitalized on Britain's geographical posi-
tion and naval power to prepare for the starvation of German civilians,
dependent as they were on imported foodstuffs, into submission.16
This kind of analysis has not been pursued very far with regard to
imperial Russia. Only rarely have military strategy, domestic politics
and economic policy been considered together.17 K. F. Shatsillo argued
that the personal preference of Tsar Nicholas for a strong fleet led to
cut-backs in planned spending on territorial forces. His approach is
more subtle than the crude judgements made by other former Soviet
historians. One eminent historian of late tsarist Russia condemned
tsarist military preparations in sweeping fashion: 'the government of
Nicholas II, in the ten years after the Russo-Japanese War, did nothing
significant to prepare for the coming war'.18 Given the resources at
Russia's disposal, including the prospect of sharing the costs of
defence with its French ally, did the country's military planners obtain
adequate security? Could they have done better?
The clear implication of one well-informed study of the imperial
defence budget is that Russia substituted manpower for capital equip-
ment.19 This policy economized on the relatively scarce resource. It
tallied also with the expectations held by French military planners,
who dearly hoped to maintain a huge contingent of Russian troops on
Germany's eastern frontier. As Russia's ally, France could have been
expected to exercise influence over the allocation of military man-
power and thus, indirectly, over the allocation of resources in the
defence budget.
Domestic politics should have the final word, because the combined
impact of international and domestic economic variables ultimately
impinged directly on the conduct and structure of domestic politics.
Possible sources of strain in the imperial polity included the politici-
zation of defence spending. Taxpayers, with some access to a parlia-
mentary assembly after 1905, might not be expected to tolerate the
burden of taxation, particularly if rearmament made it heavier still. On
the other hand, their criticisms might be offset by a commitment to the
overall strategic goals of the Russian armed forces: the containment of
Europe's other empires and the protection of slav minorities on the
territory of Austria-Hungary and the Ottoman empire. A more serious
problem derived from the attitudes of Russia's military leaders, who
baulked at the constant expectation that troops were expected to
repress the 'enemy within' as well as to defend the empire from
external aggression.20 Other sources of conflict - between Duma and
10 Introduction

government, between state and private enterprise, between govern-

ment and businessmen - also posed challenges to the old regime.
Whether it could handle them, at a time of rapid economic change and
international uncertainty, is the subject of this book.
Parti

Defence imperatives and Russian

industry, 1900-1907

Ultima ratio regum

(The last argument of kings)
(motto inscribed on French cannon during the seventeenth
century)
1 Defence and the economy on the eve
of the Russo-Japanese War

Introduction: Russian imperialism and industrialism from

Crimea to Manchuria: economic foundations of a search for
imperial grandeur
The pursuit of imperial grandeur - the desire to recapture the
international stature that Russia enjoyed during the eighteenth
century - occupied much of the time, energy and resources of the
tsarist regime. It was, however, a pursuit fraught with difficulties and
contradictions. The humiliation that autocratic Russia had endured at
the hands of democratic England and France during the Crimean War
convinced thoughtful contemporaries that future catastrophe could
best be avoided by some measure of political and economic reform.
Hence the decisions between 1860 and 1874 to modernize the banking
system, to dispense with the institutional prop of serfdom, to create
organs of local self-government, to modernize the Russian army and to
overcome deep-seated prejudices against that most modern and
democratic of nineteenth-century inventions, the railway.1 But these
institutional reforms neither guaranteed stability at home nor
enhanced the external security of the Empire. Partly, this was because
any reform created opportunities for new social groups to operate and
for political ideas to be articulated in opposition to the prevailing
orthodoxy. In addition, exogenous forces undermined tsarist Russia's
attempts to regain imperial hegemony. By 1870, Germany threatened
to dominate Europe, as Austria and France had recently discovered to
their cost. The weakness and enforced isolationism of Russia implied
that Britain, as a great naval power, alone stood in the way of
Germany's complete subjection of the continent. In this respect, the
decaying empires of Austria-Hungary and Turkey counted for
nothing. Thus, the fate of Europe seemed to hinge on Russia's pros-
pects. If Russia went the way of the Ottoman Empire, there was little to

13
14 Defence imperatives and Russian industry, 1900-1907

prevent the abandonment of Europe to German domination. But if

Russia could develop the appropriate economic foundations to meet
the challenge of German blood and iron, all was not yet lost.2
By 1900, tsarist Russia had completed more than a decade of rapid
economic growth. Between 1889-92 and 1901—4, total output grew by
around 4.7 per cent per annum in real terms, or by around 3.4 per cent
per capita. These rates were high by international standards. Although
the performance of Russian agriculture continued to give cause for
concern, other sectors of the economy were more dynamic and
promised a still greater contribution to national wealth. A modern iron
and steel industry had been established, and in addition Russia had
the makings of a modern engineering industry. Newer branches of
industry, such as basic chemicals, had also begun to appear. Consumer
goods industries thrived, largely on account of the growth of urban
population. The construction of a huge railway network offered the
prospect of further economic gains, by reducing transport costs,
improving inter-regional trade and stimulating population movement
to areas of greater economic opportunity. The process of industrial-
ization seemed to be irreversible, notwithstanding the misgivings of
populists about Russia's long-term capacity for industrial develop-
ment. The government had recently (in 1897) taken Russia on to the
gold standard and, against the background of fiscal orthodoxy and
monetary stability, the 1890s witnessed a massive inflow of foreign
capital, in the form of private direct investment in industry. In per
capita terms, Russian national income remained well below that of
other industrial economies, such as Germany, Britain and the United
States, and the fruits of industrial progress had still to trickle down to
the bulk of the population, many of whom continued to live in abject
poverty. Nevertheless, there can be little doubt that Russia had
achieved the status of a major industrial power by 1900.3
The rapid growth in industrial production during the 1890s rested in
part upon a programme of railway construction, induced and financed
by the tsarist government. Between 1890 and 1900, the total length of
track in the Russian Empire increased from 30,600 to 56,500km. During
the quinquennium 1896-1900, railway investment as a whole
amounted to between one-quarter and one-third of total net invest-
ment. The railways did not by themselves create the conditions for
industrial growth, and should be seen against the background of a
more broadly-based process of capital formation. Nevertheless, annual
additions to the transport capital stock usually exceeded additions to
the industrial capital stock between 1890 and 1905, and it was the
 The eve of the Russo-Japanese War 15

investment in rails and rolling stock that generated demand on a scale

broad enough to sustain the new iron and steel industry and the
nascent engineering industry.4
The broader repercussions of industrial growth must also be remem-
bered. To espouse the cause of industrialism, in the interests of great
power status, was to abandon much accumulated wisdom about the
economic foundations of the Russian empire. To promote industrial
expansion was to introduce a Trojan horse into the camp of imperial
Russia, in the shape of new social forces, possessed of their own
agenda and aspirations. In due course, Russian businessmen would
demand to be heard in the corridors of government, whether in
support of their immediate economic interests, or in defence of the
rights of capital vis-a-vis an interventionist bureaucracy. Some kind of
strategy would also have to be devised to accommodate the demands
of the growing industrial labour force. Tsarist Russia had to confront
another difficult problem before 1905, namely how to sustain the
interests of businessmen without sacrificing the traditional noble
estate (dvorianstvo) on the altar of industrial supremacy. The problem
of reconciling imperialism and industrialism was resolved by main-
taining a substantial degree of direct or indirect control over Russian
industry. This managed to satisfy those in the bureaucracy who had
never lost their hostility to industrial enterprise and whose aversion
did not diminish with each passing year. They were assuaged by the
recognition that industry was held in check by the Treasury, by
officials who controlled tariff policy and by the maintenance of state-
owned enterprise. That these conditions would not persist for ever
appeared not to cloud the thoughts of most tsarist officials and con-
temporary observers.5
If industrialism raised a number of difficulties for the tsarist polity, so
too did imperialism. To engage in adventures beyond the borders of
the empire was to risk disorder in the state, partly because of the
higher taxes that might result from foreign adventures, and partly
because of the expectations of reform that might be raised among the
civilian population and then dashed. The bulk of educated society had
been in favour of energetic action during the so-called war of liber-
ation in 1877; whether this support for military action would be
forthcoming if other imperial interests were at stake - in central Asia or
in the Far East - was by no means certain. In Manchuria, for instance,
the only liberation at stake was the freedom conferred on a handful of
speculators to make a quick killing. Some Russian businessmen stood
to gain from an adventurist policy in the Balkans, but there is no
16 Defence imperatives and Russian industry, 1900-1907

evidence of ministerial susceptibility to the blandishments of these

merchants. Most industrialists had a vested interest in peace, rather
than in bellicosity.
Of all the continental powers, France had most to gain from the
restoration of Russia to its proper place in the European firmament.
The cultivation of a serious rival on the eastern borders of the German
Empire offered France the hope of eventually exacting revenge for the
defeat it had suffered in 1871. For two decades, Germany's leaders did
their best to cultivate the Reich's eastern neighbour, by including
Russia in the Dreikaiserbund. However, the German grain tariff
threatened Russia's trade surplus and Bismarck's manipulation of the
money markets against Russian interests drove Russia into the arms of
France. In 1893-4, much to the delight of the Quai d'Orsay, the French
succeeded in persuading Russia to sign a military convention,
confirming the close ties established by the political agreement in 1891.
Preparations for the alliance with France had already begun to unlock
the Paris capital markets to Russian customers. The inflow of French
capital unleashed a decade of rapid industrialization, unprecedented
hitherto in world economic history.6
In addition to the many favourable economic indicators which
contemporaries could identify at the turn of the century, tsarist Russia
enjoyed the advantages of international peace. This was an essential
background to the movement of capital, goods and specialist technical
advice on which the industrial boom of the 1890s depended. Russian
public opinion did not need reminding that the situation had been
very different during the 1850s and 1860s. In the aftermath of the
Crimean War (1854-6), Minister of Finances Mikhail Reutern had
embarked on a campaign designed to restore the currency, shattered
by the inflationary consequences of war. But these efforts were quickly
dashed by the Polish uprising in 1863, which destroyed foreign con-
fidence in the ruble and, by implication, in the tsarist government
itself. The government struggled to restore the currency to a sem-
blance of stability, but Reutern was frustrated in similar fashion by the
Russo-Turkish War in 1877-8. It was left to his successors, notably
N. Kh. Bunge, I. A. Vyshnegradskii and S. Iu. Witte, to make use of the
peace in Europe during the 1880s and 1890s to lay the foundations for
budgetary expansion, monetary stability and foreign investment.7
Towards the end of the nineteenth century, the achievements
described above seemed secure. At the turn of the century, however,
they were threatened by a slump in industry, a loss of confidence on
the part of foreign investors and a decline in industrial, municipal and
 The eve of the Russo-Japanese War 17

railway investment. The crisis led in 1903 to the dismissal of Witte, who
was held responsible for the impoverishment of the Russian consumer
and thus for the inability to generate an alternative source of demand
to compensate for the decline in government orders for investment
goods. While Russian industrialists struggled to survive this recession,
the tsarist government more easily overcame the political crisis associ-
ated with the departure of Witte. But within two years, the govern-
ment faced a much more serious reversal in its fortunes. A short, yet
disastrous war against Japan - itself the consequences of a wholly
misguided and, in many respects, dishonest attempt at 'peaceful'
economic penetration of the Far East - proved once more, if proof
were needed, that war was a costly business for the tsarist state to
undertake.

Foreign and defence policy

For much of the nineteenth century, it made sense for Russia,
as a predominantly agrarian country, to concentrate diplomatic atten-
tion on the Balkans. Economic interests dictated that the passage of
grain through the Straits of Constantinople should be protected. But
the rise of industrialism dictated other considerations, such as the need
to protect the Russian market from German competition and to find
export markets in China and the Near East. These considerations
might not loom large whilst Russia was itself an infant industrial
power. But they could hardly be postponed indefinitely. At the same
time, the inflow of foreign capital to finance government commit-
ments, notably railway construction, and industrial investment,
required a fine diplomatic balancing act in order to maintain peace and
stability in Europe, and thus safeguard capital flows.
The delicate balance of European great power relations during the
last decade of the nineteenth century could be disturbed in a number
of ways. One possibility was that Russia might come to an understand-
ing with Germany, thereby wrecking the best-laid plans of French
diplomacy. A somewhat different issue arose in the Balkans, where
slavic populations suffered under Austrian and Ottoman tutelage.
Russia had intervened in 1877 in support of 'pan-slavism', but at heavy
cost to state finances and (as War Minister Dmitrii Miliutin had feared)
to military pride. No less disheartening were the tactics subsequently
pursued by Britain and Austria, which revised the terms of the peace
treaty agreed with Turkey. The Balkan problem, and with it the vexed
question of Russian access through the Straits, remained a powder
18 Defence imperatives and Russian industry, 1900-1907

keg. Still more uncertain was the diplomacy of Russia beyond the
European mainland. Russia had huge territorial borders to defend. In
addition, elements within the imperial bureaucracy tolerated and (in
some instances) demanded that Russia extend its influence into Persia,
Afghanistan and the Far East. The burden of maintaining a high profile
on the European mainland could be shared with Russia's new-found
ally. But the costs of engaging Britain in the Near East and Japan or
China in Manchuria would inevitably be incurred by Russia alone.
After the humiliating experience of the Crimean War, the tsarist
regime sought to avoid further military operations in Europe. The War
Ministry concentrated instead on army reform. During the early 1870s,
Miliutin set in motion a series of changes in military organization and
administration, slashing the normal term of military service to five
years and creating a trained reserve. These far-reaching reforms did
not reach fruition before Russia became embroiled in war against
Turkey. Russia's armed forces revealed themselves to be woefully
unprepared. Their poor performance in battle reflected abject gen-
eralship, chronic deficiencies in military procurement and supply and
the poor quality of Russian small arms - all of them problems that had
been in evidence during the Crimean War. The Miliutin reforms had
been designed to create a better trained army: dearly, they had a long
way to go before they could bear fruit. Only the greatly inferior
opposing forces saved the Russian army from the beating it could
otherwise have expected.8
A widespread belief in Russia's relative economic weakness and
potential political instability, together with the memory of recent
military humiliation, compelled Russian decision makers to counsel
moderation in Russian diplomacy. The Minister of Finances also
quashed any hope of re-equipment, rearmament and further military
reform. The 1899 conference at The Hague represented the high-water
mark of this disengagement from the 'struggle for mastery' in Europe.
But new diplomatic initiatives threatened to call forth fresh military
commitments. The alliance with France was the cornerstone of Russian
defence policy in Europe during the last decade of the nineteenth
century. The protocols stipulated that Russia would come to the aid of
France, if France were attacked by Germany. The French government
agreed to assist Russia in similar circumstances. Both parties commit-
ted themselves to mobilize their troops in the event of a German
attack. The military convention also required the French and Russian
general staffs to liaise over military strategy. During the final years of
the nineteenth century, Russia strengthened its defences on the
 The eve of the Russo-Japanese War 19

western border with Germany as best it could. However, Russian

policy was driven by nothing more ambitious than a desire to keep the
French reasonably happy. Successive ministers of war reminded
anyone who would listen of the commitments into which Russia had
entered, but political circumstances deprived them of serious influence
in goverment. Russia's defence policy in Europe was driven by
budgetary policy, not the other way round.9
It was a different story in the Far East, where Witte's policy of
economic expansion brought imperial Russia face to face with Japan,
which had ambitions of its own on the mainland. Conventional
wisdom in St Petersburg held that the considerations that dictated
caution in central Europe did not apply in the Far East, because Japan
was not a power of any significance. The prospect of conflict with the
European powers over Manchuria seemed remote, and this perception
gave the tsarist government the kind of freedom of action which it was
denied in the west. China's weakness during the 1890s enabled Russia
to gain a foothold in the Liaotung peninsula. In 1895, international
pressure forced Japan to give up its territorial conquests there, and
Russia obtained a long-term lease on the cherished warm water facili-
ties of Port Arthur. But these diplomatic gains brought with them
further responsibilities that could not easily be shirked. By the mid-
1890s, resources had to be found to defend these new interests in the
Far East. This meant additional troops in Manchuria, stronger fortifi-
cations at Port Arthur and a bigger Pacific fleet. The government also
projected a railway that would link the trans-Siberian line with the
heartland of Manchuria. Unlike some of the commitments into which
Russia entered in Europe, the burden of financing these developments
could not be shared with France.10
Diplomatic manoeuvres in Europe during the late nineteenth
century gave rise to a new wave of militarism. By the early 1890s,
Russian military experts had excellent knowledge of the scale and
character of European rearmament. The supply of magazine rifles to
the continental armies made corresponding improvements in the
Russian army imperative. Between 1888 and 1891, the War Ministry
began to implement a plan for the re-equipment of the Russian army
with modern rifles. The change proved to be a great success: the new
Mosin rifle revealed itself in trials to be far superior to the alternative
versions available. The military also planned to modernize field artil-
lery, by introducing pieces that had a longer range, and to install new,
large-calibre ordnance in the fortresses on the western frontier. Minis-
ter of War P. S. Vannovskii instituted a competition to find an
20 Defence imperatives and Russian industry, 1900-1907

improved version of field artillery. By 1900, production of the new

artillery pieces was well under way, at the Putilov factory. The War
Ministry also increased the number of artillery batteries per battalion.
In fortress artillery, the main innovation consisted in replacing old
pieces with steel guns (1895), but progress was held up by a lack of
funds. These were not half-hearted measures, although they neither
compensated for a decade of relative neglect nor matched the
advances being made in western Europe.11
General A. N. Kuropatkin, who replaced Vannovskii as Minister of
War in 1898, had strong reservations about the impact of Witte's policy
in the Far East: 'this diversion of funds to the Far East is now a great
obstacle to the satisfaction of many essential needs of our army, and
hinders our taking measures towards the further strengthening of our
military position on the western front, which is most important to us'.
Kuropatkin argued that naval rearmament had already begun to
siphon funds from the urgent programme to reconstruct the land
forces in Europe. If Witte were allowed to pursue an expansionist
policy in the Far East, he at least had the duty to provide additional
funds for troop deployments on the border with Manchuria. The
Minister of Finances conceded this point in a report to the Tsar in 1895.
The implications of Russian expansionism soon made themselves felt.
In 1900, Russia dispatched troops to pacify Manchuria and protect
Russian property against the Boxer rebels. Four years later, war broke
out against Japan. 12
Whether or not Russia developed diplomatic ambitions beyond the
mainland of Europe, the possession of a navy implied a willingness to
engage with the supreme maritime power, Britain, and to protect
Russian interests in its Far Eastern territory. Initially, however, the
rationale for a Russian navy was defensive: that is, the objective was to
secure the Russian capital from attack. The Straits posed more complex
problems. Russia unilaterally embarked on the construction of a Black
Sea fleet, in contravention of the terms of the peace settlement that
followed the Crimean War. Not surprisingly, this decision provoked
the British into flexing their maritime muscles. In 1878, Britain declared
its readiness to send warships into the Black Sea, with or without an
invitation from the Turkish authorities. By the end of the 1890s, British
ships moved freely through the Straits. The possibility always
remained that Russian vessels would find themselves in confrontation
with British and Turkish naval forces.
The catastrophe that befell the Russian navy at Tsushima in 1905
might lead one to suppose that little had been done to improve the
 Theev«: of the Russo-Japanese War . 21

Table 1.1. Size and complement of the Russian fleet, 1899-1904

Battleships Armoured cruisers Light cruisers Destroyers

A B A B A B A B

to to
1899 20 190 7 54 3 87 15
1904 20 221 14 111 9 118 22

Col. A: number of vessels; col. B: total tonnage (000 tons)

Source: Rossiia v mirovoi voine, Moscow, 1925, p. 95.

quality or quantity of military vessels in the preceding period. But this

was not the case. Ever since the Japanese incursion into Korea and
China in 1894-5, Russia had made plans to strengthen the Far Eastern
fleet. Furthermore, the imminent modernization of the German navy,
as a result of the initiatives taken by Admiral Tirpitz, lent additional
urgency to the naval programme envisaged by the Tsar. Between 1895
and 1899, the Tsar approved additional expenditures on the fleet. The
programme of naval rearmament provided for the construction of 12
destroyers (eskadronnye bronenostsy), 19 cruisers and up to 42 torpedo
boat destroyers (minonostsy). Two-thirds of the total order went to
Russian factories, as part of a deliberate policy to favour domestic
suppliers. In 1898, exceptionally, the government ordered vessels from
abroad, at a cost of 90 million rubles. In the thirteen years after 1894 the
Russian fleet increased by nearly 680,000 tons, compared with 225,000
tons in the years 1881-94. The fleet became much more powerful. The
total horsepower embodied in the new ships that entered service
between 1894 and 1907 was four times greater than those completed
between 1881 and 1894.13
The navy set a deadline for completion of the programme in 1904. By
that time, the building programme had made considerable progress.
But it had not proceeded without a hitch. Much of the addition to
naval strength actually took place during 1904, reflecting the hurried
completion of orders that should have been completed sooner. The
government appointed a special commission under Vice-Admiral Ver-
khovskii, a previous director of the Main Administration of Shipbuild-
ing (GUKS), with a brief to accelerate the programme's completion.
Meanwhile, the Japanese fleet prepared to launch a pre-emptive attack
on Russia's Far Eastern fleet.14
The completion of the programme did not guarantee that the vessels
22 Defence imperatives and Russian industry, 1900-1907

would be put to effective use in battle. In theory, the navy was

adequately provided with the vessels it required. But the training of
officers and men left a lot to be desired. In a typical instance of
mismanagement of resources, the navy enforced stringent economies
on the use of coal and on the expenditure of artillery ammunition.
These shortsighted measures deprived officers and men of the practi-
cal experience that might have saved them from catastrophe at
Tsushima.15

The defence budget

The competing claims of defence and the economy were never
more apparent than during the last two decades of the nineteenth
century. The Russian army suffered a decade of relative underfunding
during the 1880s and even the increased appropriations of the 1890s
failed to compensate entirely for this fiscal neglect. The army budget
increased in absolute terms, from an average of 261 million rubles
(1890-4) to 302 million rubles (1895-9). Allocations to the navy
increased from 47 million rubles to 71 million rubles, excluding an
extraordinary appropriation of 90 million rubles in 1898. Taken at face
value, the growth of the defence budget during the last decade of the
nineteenth century suggested that spending was more than sufficient
to meet the needs of the military. However, this level of expenditure
represented a declining proportion of state funds. The military share
of the total budget fell from 24 per cent during the first half of the
decade (28 per cent, if we include the navy) to 19 per cent during the
second half (24 per cent, including the navy). This proportionate
decline reflected other pressing government commitments, notably
expenditure on the construction and maintenance of the railway
network. The construction of the trans-Siberian railway was but the
most dramatic manifestation of railway mania, which testified to the
superior bargaining power of the ministries of Finances and Transport.
Whilst Russian military leaders stood to gain from the anticipated
improvements in the speed with which troops could be mobilized in
the railway age, this did not compensate for what they took to be a
neglect of traditional priorities. The final straw came in 1899, when the
government reimposed a ceiling on the War Ministry's budget, to
remain in force over the next four years.16
The size of the Russian military budget was largely dictated by the
number of conscripts. In 1890, the army comprised 878,000 officers and
men, but within five years, as a result of growing commitments in the
 The eve of the Russo-Japanese War 23

Far East, it had grown to more than a million. This large army was a
function of the sheer size and backwardness of the Empire: apart from
the extensive frontiers to defend, to say nothing of the need to
maintain troops in 'hostile' areas of the Empire, the huge distances
involved made it difficult to mobilize men as quickly as Russia's
potential adversaries. Only correspondingly greater numbers of men
in uniform could compensate for these disadvantages. In addition,
Russian conscripts were kept longer in uniform than their counter-
parts in western Europe, on the grounds that they needed longer
training in the ways of war.17
The War Ministry incurred a significant cost in maintaining an army
of this size. The military budget was severely stretched. Financial
constraints meant that a far smaller proportion of Russian manpower
received military training than elsewhere. Those men who were con-
scripted received a relatively meagre allowance. In an attempt to inflict
on soldiers the burden of feeding and clothing themselves, the minis-
try supplied raw materials to the troops and obliged them to prepare
food and manufacture boots and uniforms. In the absence of military
accommodation, many men found whatever billets they could with
local residents. In short, the War Ministry cut corners.18
Nor did the War Ministry manage the resources at its disposal in a
manner that inspired confidence. Typical of this incompetence was the
management of funds for the acquisition of raw materials. A great deal
of money found its way into the pockets of a small circle of suppliers,
who charged extortionate prices. The State Auditor urged the intend-
ance officials in the Chief Quartermaster's Department (GIU) to enlist
a greater range of suppliers, in order to stimulate competition and
keep prices down, but without evident success. Collusion between
suppliers was not the only problem. Officials in the GIU, like their
counterparts in other agencies, received no special training and lacked
interest in such matters as the quality of cloth and leather. An unscru-
pulous supplier did not find it difficult to bribe ill-paid officials. With
the scarcity of resources available, the War Ministry could hardly
afford the waste implied by this level of incompetence and corrup-
tion.19
The Russian army faced difficult choices when it came to defining
spending priorities. In 1891, the War Ministry received funds to acquire
the new Mosin rifle; appropriations were subsequently approved to
strengthen the fortresses on the western frontier. The army also
obtained extra funds - notwithstanding the financial straitjacket
imposed in 1899 - for artillery and barrack construction. However, the
24 Defence imperatives and Russian industry, 1900-1907

army suffered in other respects, notably in the supply of heavy field

artillery and fortress artillery, in which there was a shortfall by 1900 of
more than 1,000 guns, or 15 per cent of the required norm. The average
annual amount spent on fortresses between 1880 and 1900 came to no
more than 18 million rubles, far below what was necessary to maintain
all 23 fortresses in an adequate state. 20
Yet, to argue that the tsarist defence effort as a whole suffered from
underfunding before 1905 is to underplay the significance of spending
on the imperial navy. During the 1880s, the naval budget increased
steadily. After 1890, it increased at a much faster rate. Between 1891-5
and 1896-1900 total appropriations for the navy grew by around 52 per
cent. Over the course of the next quinquennium the naval budget
grew by a further 40 per cent, reaching the impressive sum of 107.4
million rubles by 1901-5. Unlike the army budget, which was divided
between expenditures on manpower, horses, uniforms, equipment
and armaments, the naval budget went overwhelmingly on the acqui-
sition, repair and operating expenses of naval vessels. Yet, as with the
War Ministry budget, poor accounting procedures meant that the
imperial navy could have got better value for money from these
appropriations. There is no evidence that naval officials pursued this
possibility with any vigour, or even thought in these terms at all.
The cost of funding these defence programmes, as well as the
expansion in troop numbers, was that the material living standards of
officers and men failed to improve. Civilian ministers remained
indifferent to this state of affairs, and argued that the quality of
military life mattered less than the maintenance of civilian morale and
living standards. Vyshnegradskii summed u p the prevailing
viewpoint in 1888, arguing that 'the welfare of the people, even if it
implies a certain imperfection in the military establishment, will
render more use in wartime than the most complete military prepared-
ness of the army'. The Russian soldier, he went on to say, could only
lay down his life once and would make a bigger contribution to the
nation by developing its productive forces, thereby improving Russia's
material foundations for war. Such men (Vyshnegradskii might have
added) would also have a greater vested interest in the defence of their
country. This was a valid argument and in the long term had much to
commend it, but it hardly corresponded to the immediate problems of
the Russian army. Given that Russia's military leadership was prepar-
ing for a brief war, a strong case could be made for spending additional
resources on the improvement of conditions for the relatively small
contingent of men who were likely to be exposed to the battlefield.
 The eve of the Russo-Japanese War 25

Instead, on the eve of the war against Japan, Russia ended up with the
worst of all possible worlds. Men whose living conditions in civilian
life left a lot to be desired, but who nevertheless played a crucial part in
the peasant family economy found themselves abruptly immersed in a
military world whose harshness owed much to the underfunding of
basic facilities and services. Meanwhile, the men already in uniform
saw no improvement in their conditions. In a society whose military
commanders stressed the morale and commitment of the individual
soldier, the Russian army suffered from an unhelpful allocation of
resources.21

The defence industry: armaments and shipbuilding before

1904
The tsarist government spent substantial sums on food for the
army, on fodder, pay, transfer payments and uniforms, as well as on
barracks, equipment and military hardware. Confronted with this
varied menu of requirements, one might be forgiven for thinking that
Russian manufacturers supplied a wide range of goods to the armed
forces. Nothing could be further from the truth. Before 1900, the
Russian government did not normally supply its soldiers with manu-
factured goods, whether they, be blankets, belts or biscuits. Russian
troops were expected to feed and clothe themselves. Armaments and
military vessels constituted a relatively small part of the total defence
budget. However, they assumed disproportionate significance in dis-
cussions about defence capability, partly because the government
exercised direct control over the manufacture of hardware and partly
because military prowess in the machine age was so closely identified
with armaments. To focus on armaments and shipbuilding is, there-
fore, to reflect the attention given to hardware in the corridors of the
defence establishment.
The resources devoted to armaments impinged directly on the
emergent industries of metalworking and machine-building, lending
further justification to the study of military hardware. True, the impact
of military spending on manufacturing industry and employment was
not confined to the production of armaments and military vessels.
Resources were also absorbed in the construction and maintenance of
military installations, such as port facilities, military fortresses and
barracks. In 1900, more than 60,000 workers were employed in these
tasks. None the less, the substantial workforce engaged in military
construction did not possess the significance that attached to
26 Defence imperatives and Russian industry, 1900-1907

armaments, the manufacture of which absorbed large amounts of fixed

capital and engaged the energies of a more skilled and settled work-
force.22
As elsewhere in Europe, a good deal of armaments production took
place in state arsenals and dockyards. The state employed around
66,000 workers in shipbuilding and armaments production in 1900,
making defence second only in importance to railway transport in
state-owned enterprise. The role of the state in Russian armaments
production had been consolidated over the course of two centuries.
Between 1712 and 1719, Peter the Great established two shipyards, an
armoury at Tula and a gunpowder works on the river Okhta, in the
city that bore his name. For a century and a half, these enterprises,
supplemented by the Izhevsk arsenal in the Urals, remained the
cornerstone of the Russian defence industry. The government also
procured artillery pieces from several privately-owned metallurgical
factories that were scattered around the Urals.23
The administration of production was divided amongst three separ-
ate agencies: the Main Artillery Administration (GAU), under the aegis
of the War Ministry; the Department of Mines (Gornyi departament), a
branch of the Department (later Ministry) of Trade and Industry and
thus part of the Ministry of Finances; and the Admiralty Administra-
tion, within the Navy Ministry. The GAU administered 18 separate
enterprises (tekhnicheskie artilleriiskie zavedeniia), including 6 state arm-
ouries (arsenaly). The Department of Mines had overall charge of 13
ironworks, all but one of them located in the Urals. They included
armament factories at Perm (Motovilikha) and Zlatoust. The navy
maintained four shipyards, the Admiralty, Izhora, Obukhov and Baltic
yards, as well as wharves and workshops in Kronstadt, Sevastopol and
Nikolaev.24
At the beginning of the twentieth century, only a small number of
specialist defence firms were to be found in private hands. Without
doubt, pride of place before 1900 belonged to the Putilov Company. Its
primacy was unaffected by the fact that a number of other general
engineering firms also accepted military contracts from time to time.
None of them specialized in armaments work. In shipbuilding, only
the Nevskii Company and the Nikolaev Company could claim to be of
any significance. Both enjoyed mixed fortunes: as we shall see, the
Nikolaev yards struggled to stay afloat, and eventually fell into
receivership, whilst a question-mark always hung over Nevskii's long-
term viability as a private venture. To survive in the fragile Russian
defence market required patience, good fortune and a level of govern-
 The eve of the Russo-Japanese War 27

ment largesse that could not be taken for granted. For these reasons,
state-owned enterprise had the field virtually to itself.25
Occupying centre stage in the tsarist defence industry for much of
the nineteenth century were the renowned state armouries of Tula
and Izhevsk. They had not always been owned and administered
directly by the state. Izhevsk had been leased to private entrepreneurs
for a brief spell during the 1870s and early 1880s, before returning to
state control. The Tula armoury also had a somewhat chequered
history, having been leased to military officials during the 1860s. These
arrangements proved short-lived and by the 1870s the Tula factory was
also back in state hands. The state armouries were joined by other
government-owned factories producing shell, ordnance and car-
tridges, as well as special steel. In 1900, Tula employed just over 7,000
workers. The Izhevsk works was slightly larger, employing around
8,000 workers during the 1890s. The Sestroretsk armoury, close to St
Petersburg employed 1,725 men in 1900, but the labour force shrank to
just over 1,000 three years later.26
The Tula armoury was exceptional in being located in the central
industrial region: most state arsenals and armouries were situated
either in the Urals or in or near Russia's chief port and capital city, St
Petersburg. Tula enjoyed a high status both in Russia and further
afield. Its reputation depended largely on the ability of the local labour
force to retain their skills under varying management regimes. The
manufacture of rifles took place in a centralized plant. Management
had experimented briefly with a putting-out system, under which
rifles were produced by craftsmen in surrounding villages. However,
the complex tasks associated with the production of the Mosin rifle
during the 1890s made it imperative for management to exercise closer
supervision over the labour process, the implications of which are
considered below.27
It was difficult to envisage a more isolated plant than that of Izhevsk.
The nearest rail link was 150km away (on the Perm-St Petersburg line)
and even the nearest navigable river could only be reached after a trek
of over 40km. Location in the Urals offered reasonably convenient
access to supplies of iron, but the distance from central Russia made it
difficult and costly to send finished products to their destination.
Inhospitable conditions also made the Urals an unattractive posting
for government officials. Management had the unenviable task of
ensuring that adequate stocks of materials and other supplies were on
hand during the long winter months, when the factory was virtually
cut off from the outside world. Coking coal arrived from south Russia
28 Defence imperatives and Russian industry, 1900-1907

and pig iron from the Urals ironworks; only fuel and construction
materials were in abundance, provided by the forests that surrounded
the factory. The construction of a proper rail link did not take place
until the First World War, when a new line connected the factory with
the towns of Kazan and Sarapul. Notwithstanding these difficulties -
perhaps even because of them - the factory worked reasonably
smoothly and developed an excellent reputation. The steel mill pro-
duced a high-quality product, which laid the basis for a reliable and
effective finished product from the ordnance shop. Wherever possible,
the plant concentrated on mass production: Izhevsk 'never chased
after private work under the influence of a temporary shortage of
work, but instead specialized in the mass manufacture of a definite
range of munitions and brought this production to perfection from a
qualitative and technical-organization point of view'.28
The state ironworks in the Urals, administered by a different auth-
ority, supplied shell and steel to the army and navy. Most of these
factories had been in existence since the eighteenth century. They had
extensive tracts of forest land, and therefore charcoal, at their disposal.
Between them, the twelve ironworks supported a huge number of
workers. In 1900, more than 35,000 men and women lived on plots of
land to which many of them had received title during the 1870s. The
armaments factory at Motovilikha and the ironworks at Votkinsk and
Zlatoust employed almost three-fifths of the total labour force.29
Motovilikha was in many respects the jewel in the crown of Russian
ordnance factories. It found itself in an anomalous position. Although
administered by the Department of Mines, it had no iron foundry and
purchased bar and billets from the other state ironworks. As a major
supplier of ordnance and artillery ammunition, logic dictated that it
should have come under the control of the Artillery Administration,
but the Department of Mines was reluctant to relinquish control. In
1900, it received one-quarter of all orders given to the state ironworks,
a position it retained in the early twentieth century. Its location gave it
great advantages over comparable factories. Unlike Putilov and
Obukhov, for instance, it did not depend on imports of coal and
deliveries of iron and steel from distant parts of the Empire. The
disruption of foreign trade by a blockade or the dislocation of trans-
port would not directly affect production at Perm. In addition, Motovi-
likha produced high-quality guns and an advanced armour and deck-
piercing shell, manufactured under licence from Krupp. The other
significant armaments producer at Zlatoust, in the south of the Urals,
produced shell and rifles, accounting for 14 per cent of orders allocated
 The eve of the Russo-Japanese War 29

to state ironworks in 1900. The remaining factories were not in them-

selves of great significance to the defence effort, although some of
them supplied iron and steel shapes to Motovilikha and Zlatoust and
to other defence producers in the state sector, such as Obukhov and
the nearby armoury at Izhevsk.30
Ordnance production offered the main outlet for private enterprise,
in the shape of the world-famous Putilov Company. Putilov had been
established during the late 1860s, largely to supply the growing market
in rolling-stock. The industrialization boom during the 1890s marked
the turning point in the fortunes of the firm. New share issues brought
total share and bonded capital up to a massive 20 million rubles by
1900. The labour force vitually quadrupled, reaching 12,400 in 1900.
Putilov was traditionally identified with government orders. Railway
products accounted for more than half the total output. But the firm
maintained an interest in other types of government contract work. By
1900, Putilov had begun to manufacture new artillery pieces, borrow-
ing from government to finance the expansion of plant. The State
Auditor entertained the hope that orders for new 3-inch artillery
would go to Obukhov, which promised to undercut Putilov by at least
13 per cent. But Putilov offered a superior product. Hedging its bets,
the War Ministry ordered guns from both suppliers.31
The example of ordnance production demonstrates that the tsarist
government did not willingly renounce control of armaments pro-
duction. Putilov had to share its contracts with the state-owned St
Petersburg Ordnance factory, as well as with Motovilikha and
Obukhov. A similar story emerges in the supply of cartridges. Com-
plaints during the war against Turkey about the quality of the product
from the state-owned cartridge works in St Petersburg created an
opening for private enterprise. In 1880, the Tula Copper and Cartridge
Company appeared on the scene, helped by a generous advance from
the GAU. No doubt, the owners of the new company hoped to recruit
skilled workers from a town already familiar with armaments pro-
duction. But initial expectations were quickly dashed as the firm ran
into difficulties, and only substantial government aid helped it to
survive. Before long, the company moved into civilian products.
However, the adoption of the Mosin rifle in 1891 obliged the army to
order new cartridges, and the Tula Cartridge Company seized this
fresh opportunity. Finding the government less than receptive to its
overtures (the government decided to build a second state factory, at
Lugansk), the firm reconstituted itself as a joint-stock company. By
1900, with fresh capital at its disposal, the Tula company had the
30 Defence imperatives and Russian industry, 1900-1907

capacity to manufacture up to 50,000 cartridges per annum, fewer than

at St Petersburg, but greater than Lugansk. Another relatively new
firm, the Schlusselburg company, entered the field during the 1880s,
trading on its ability to provide a new product, smokeless powder. 32
The defence market did not provide sufficient work for state enter-
prise, let alone for the private firms. The three armouries were kept
busy by the manufacture of the new rifle, but it was a different story
elsewhere. Government regulations permitted the Urals ironworks to
take on civilian contracts, provided that they did not interfere with
work on government contracts. In 1900, trade orders generated more
than a quarter of total output. The proportion rose to two-fifths at
Votkinsk, which supplied locomotives to private railway companies. 33
In the private sector, several engineering firms offered their services
during the last quarter of the nineteenth century, but they could not
afford to specialize in defence production. Major companies, such as
Sormovo, Kolomna and Phoenix, as well as newcomers, such as
Lessner, dabbled in the manufacture of shell. Even Putilov found it
impossible to specialize in defence production. These firms had to bide
their time until they could become more than part-time members of
the arms industry.
The Russian shipbuilding industry had a still more chequered
history. At the end of the nineteenth century, as at the beginning, the
industry was dominated by state-owned yards established by Peter the
Great. Private enterprise flourished briefly after the Crimean War, but
by 1900 most of the ventures had either collapsed or been taken into
state hands. Many officials within the navy remained ill-disposed
towards private enterprise and were inclined to ignore its claims to be
taken seriously. By 1900, only one firm, on the Black Sea, had emerged
as a genuine rival to the state yards.
During the first half of the nineteenth century, state shipyards
gradually ceded their position as suppliers of military vessels to
foreign yards. The Crimean War shook the complacency of the
Admiralty and released the shipbuilding industry from its lengthy
torpor, because the navy switched from sail to ironclad vessels, with
steam and screw propulsion. 34 Instead of reviving the flagging for-
tunes of the state yards, these opportunities encouraged new firms to
enter the market. The Baltic Shipbuilding Company and Nevskii Ship-
builders were both founded in 1857, the former by Russian engineers
and the latter by a Scottish engineer and his partner, an English sugar
merchant. But their hopes were dashed when orders dried up during
the later 1860s. The Baltic yards sank deeper and deeper into debt. The
 The eve of the Russo-Japanese War 31

government allowed a new private owner to take over, but the volume
of orders once again proved insufficient to sustain profitability, and
the firm collapsed ignominiously in 1876, with debts of three million
rubles.35
This time the government was forced to step in. New statutes,
approved in 1877, announced the formation of the Russian Baltic
Ironworks and Machine Company, three-quarters of whose shares
were owned by the Admiralty. The new company limped on year after
year, with contracts to supply thirty torpedo boats. During the 1880s, it
recorded a profit for the first time and began to supply a range of
products, including armoured cruisers and marine engines.
Throughout this period, management made no claims on shareholders
for additional funds; instead, the firm relied upon a flow of govern-
ment orders to provide the resources to fund operations. Eventually,
the Admiralty took the yards over completely in 1894. Subsequently,
after three decades of fluctuating fortunes, the Baltic yards enjoyed
some prosperity, thanks to the stimulus given to Russian shipbuilding
by the programmes launched in 1895 and 1898. Between 1894 and 1903,
investment in new buildings, machinery and other items amounted to
close on five million rubles. Simultaneously, the factory settled its
outstanding debts and created a substantial reserve and amortization
fund. The value of capital stock in the Baltic yards more than trebled
during the 1890s (table 1.2). By 1900, the Baltic yards were equipped
with a modern engineering shop, a foundry, and a new slipway. The
yards produced high-quality steel forgings and boiler fittings. By
producing virtually all auxiliary items on site, management avoided
the necessity to subcontract, allowing management to maintain a
much tighter control over costs. At the beginning of the new century,
the Baltic yards were the most powerful and modern in Russia, testi-
mony to the fact that government administration was not incompat-
ible with economic progress.36
The fortunes of other state yards were equally mixed. During the
1880s, two of the oldest shipyards ('Galernyi ostrov' and 'New
Admiralty'), had been leased to the privately owned Franco-Russian
Company, whose owners required a shipbuilding facility to add to
their boiler-making shops. However, they reverted to state control
during the following decade.37
The instability that characterized the Russian shipbuilding industry
was nowhere more clearly revealed than in the case of Nevskii Ship-
builders. Nominally in the private sector, Nevskii had few genuine
claims to be regarded as a private venture. Most of its shares had been
32 Defence imperatives and Russian industry, 1900-1907

Table 1.2. Baltic Shipbuilding Company, 1877-1903: selected indicators

Average annual tonnage Assets* (million rubles)

completed (tons)

1877-84 3,100
1885-93 3,550
1894-1903 10,122
1894 1.67
1898 5.75
1902 5.94
1906 6.63

* Insured value
Sources: col. 1 from N. I. Dmitriev and V. V. Kolpychev, Sudostroitel'nye zavody i
sudostroenie v Rossii i za granitsei, St Petersburg, 1909, p. 902; col. 2 from
TsGAVMF, f.420, op.l, d.188,1.111.

held since the 1880s by the State Bank, whose representatives sat on
the board of directors. Nevskii's difficulties were largely caused by its
geographical setting. Located on the left bank of the river Neva, the
ships it built had to negotiate the bridges in St Petersburg, before
making for the open sea; the construction of large vessels was out of
the question. None the less, the yards were kept busy, building 21
destroyers and 36 other vessels, mostly high-speed boats, between
1890 and 1906. From a technical point of view, the factory was reason-
ably well equipped. Originally built as a 'universal' factory, it manufac-
tured steel, in addition to marine engines and ship hulls. But the flow
of work from one shop to another was haphazard, and there was a
good deal of potential for improved productivity. 38
The tsarist government also maintained a dockyard at Nikolaev on
the Black Sea, but this yard stagnated in the aftermath of the Crimean
War, the victim of government cutbacks and closure of the Mediter-
ranean to warships. In 1895, however, a group of Belgian financiers set
u p a rival venture, the Nikolaev Shipbuilders, Engineering Works and
Foundry, with an initial investment of five million rubles. The new
firm benefited at once from the shipbuilding programme, rapidly
establishing a reputation as a supplier of vessels to the Russian navy, as
well as other items to private customers, who accounted for a quarter
of all output in 1900. The Nikolaev factory, like Nevskii, boasted an
integrated set of facilities. Apart from the dockyards themselves, Niko-
laev consisted of six separate workshops: a bridge and boiler shop, a
 The eve of the Russo-Japanese War 33

Table 1.3. Nikolaev Shipbuilding Company, 1897-1904: selected indicators

Gross output (million rubles) Labour force

1897-8 2.80 3,000

1898-9 3.45 2,650
1899-1900 4.01 2,250
1900-1 3.42 2,140
1901-2 4.06 1,906
1902-3 4.38 2,344
1903-4 5.70 2,492

Sources: TsGAVMF, f.512, op.l, d.1781,11.9ob., 21ob., 29ob.; f.512, op.l, d.1782,

forging shop, a castings section (copper and pig iron), a steel mill, an
engineering section (for the manufacture of turbines) and a wagon-
producing facility. Arranged in sequence, these workshops were
served by a single railway track, unlike most of the yards in the Baltic,
where different shops were often laid out in a chaotic fashion. The
Nikolaev yards were also served by a single power generator, unique
in Russian shipbuilding in 1900. The slipway was modern and well-
equipped and the docks could handle two large or four small vessels at
any one time.39
Investment, coupled with sharp cuts in the labour force after 1897
held the key to the impressive financial performance at the Nikolaev
yards. Between 1897 and 1902, the company reduced its labour force by
a third, whilst the value of output began to rise. As the shipbuilding
programme reached a climax, labour productivity at the Nikolaev
yards more than doubled (table 1.3). However, as the new century
dawned, a question-mark hung over the future of the entire industry,
given the limited tasks envisaged for shipbuilders, once the 1895-9
construction programme was completed. Cutbacks seemed inevitable
in state and private yards alike.
The creation of the kind of capacity described above generated
considerable potential for armaments production. Whether that
capacity could be exploited efficiently was another matter. Material
inputs might be supplied to customers in the required amounts - the
growth of basic industries helped to overcome this uncertainty - but
the effective utilization of those inputs was a different matter. It might
not be difficult to recruit workers from the pool of migrant labour in
Russia. But to train and supervise them, in order to maintain the
34 Defence imperatives and Russian industry, 1900-1907

quality of work required in a modern armament industry was likely to

prove a much more daunting task. How well did those responsible for
armament production at enterprise level use the resources at their
disposal before 1904?
The organization of the industry did not make the tasks of manage-
ment any easier to confront. The armament industry did not form an
integrated whole. Although owned and administered by the tsarist
state, arsenals and government dockyards demonstrated no tendency
towards collaboration; nor did officials encourage them to do so. The
regulations by which the managers of these enterprises were forced to
abide made no reference to formal cooperation. Admittedly, the three
state armouries coordinated activity to the extent that the parts pro-
duced in one workshop were interchangeable with those produced at
another. Links were also established between the armouries and the
Izhevsk works, which supplied them with steel shapes for the manu-
facture of rifle barrels. But other factories do not appear to have
coordinated their affairs to anything like the same extent, let alone to
have standardized their products. The two factories that manufac-
tured cartridges, in St Petersburg and Lugansk (established in 1895),
instituted little or no technical collaboration. The two major arma-
ments factories in the Urals, at Motovilikha and Zlatoust, were admin-
istered by the Department of Mines, and no mechanism was in place to
encourage the manager of one enterprise to liaise with his opposite
number in another, even if both factories were engaged on similar
programmes. This vacuum hardly made for rational decision-making
in the Russian armament industry. 40
Such striking indifference towards collaboration, let alone integra-
tion in the state sector stood in sharp contrast to the bureaucratic
efforts that were made to prescribe the functions and responsibilities
of management. The regulations published by the Main Artillery
Administration (GAU) set down in elaborate detail how its enterprises
were to be managed. The GAU appointed directors (nachal'niki) to
manage its factories. The director in turn appointed an 'economic
committee' which was responsible for the day to day management of
the enterprise. Its members were not permitted to serve for more than
three years, a provision designed to lessen the chance that suppliers
would establish a familiar and potentially corrupt relationship with
members of the administration. By the same token, of course, any
expertise that had begun to emerge was rapidly dissipated. The rights
and responsibilities of the committee were strictly limited. It super-
vised work in progress, but had no right to discuss technical questions,
 The eve of the Russo-Japanese War 35

such as the design and specification of weapons, which were the

province of a separate committee. The economic committee could also
propose and prepare plans for the extension of the plant. Its other
main function was to arrange for the purchase of raw materials. In
order to demonstrate how seriously it took this particular issue, the
GAU placed its own nominee on the committee, to ensure that com-
mittee members adhered strictly to the War Ministry's guidelines on
the prices at which raw materials might be procured. The economic
committee could thus take little initiative in procurement of raw
materials.41
Other boards were charged with responsibility for technical ques-
tions and for the supervision of the labour force. The technical commit-
tee, chaired by the director, controlled all matters directly relating to
the production and testing of finished goods, as well as the care and
refurbishment of tools and other equipment. The personnel committee
gave the director the right to hire and fire workers, to determine wage
and piece rates and to fix the hours of work. His autonomy in this
sphere contrasted sharply with the constraints to which he was subject
in respect of procurement prices.
These regulations created a number of difficulties. One concerned
the lack of clear demarcation of responsibilities between the technical
and the economic committees, regarding such matters as work in
progress and the acquisition and use of tools. This hardly promoted
the smooth running of the business, which likely depended upon the
authority and competence of the director. Another problem derived
from the regulations on the procurement of inputs. Where large sums
were involved, the administration had to get prior approval from the
relevant department of the War Ministry. Only in the case of small
orders, where sums of 5,000 rubles or less were involved, did the
economic committee have slightly more scope for independent initia-
tive. This provision encouraged the factory to order supplies in small
quantities, the source of much friction between the management and
its suppliers, who regularly complained about lack of forward plan-
ning (planomernosf) among their clients. Finally, the regulations
afforded the director only limited room for manoeuvre. He received
his annual budget from higher authority and could not deviate from
the accompanying schedule of expenditure. In normal circumstances,
this lack of flexibility might be irritating, but not damaging to the
medium or long-term performance or viability of the enterprise. But
the frustration felt by managers can easily be imagined: a piece of
equipment that broke down could only be repaired or replaced if and
36 Defence imperatives and Russian industry, 1900-1907

when the following year's estimates provided the necessary funds.

The directors of the GAU enterprises, who were poorly rewarded for
their services, had a thankless task. They were inundated with paper-
work: the GAU regulations were accompanied by 250 different forms
that the director was expected to complete, some of them daily! Few of
these procedures contributed to the efficient operation of the armou-
ries and factories under GAU control.
The Urals ironworks were administered by the Department of
Mines, not by the GAU. This arrangement made little administrative
sense where the armament factories at Perm and Zlatoust were con-
cerned. The bureaucratic regulations under which they laboured did
not differ in essentials from those that applied to state arsenals.
Management exercised little scope for independent judgement in such
key areas as finance and supply, and kept no proper check on pro-
duction costs or the value of work in progress. The use of capital
equipment was badly supervised. Enterprises made no allowance for
the depreciation of capital equipment, simply notifying repairs and
replacements to the central administration, in order to obtain the
necessary credits in the following financial year.42
As the century drew to a close, questions began to be asked about
these procedures. In particular, the internal organization and perform-
ance of the state shipyards excited a good deal of critical comment. The
Admiralty yards, for example, comprised two quite separate facilities,
for no good reason. Each yard had an engineering and shipbuilding
section, separately managed, giving rise to excessive overhead costs. In
practice, work in progress constantly passed between the two yards,
but this only caused protracted delays. The director with overall
administrative responsibility failed to address this chaotic state of
affairs, displaying more interest in the condition of the surrounding
gardens than in the affairs of his shipyards. In 1900, the government
remedied this confused state of affairs, by appointing a Chief Ship-
building Engineer, with the task of ensuring that the two yards
adopted similar methods of work. This initiative reduced production
costs by 10 per cent and cut the time taken to complete contracts by an
even greater margin. Here, surely, was a model for the defence indus-
try as a whole. But the need to find jobs for retired army officers as
managers, and the bureaucratic fondness of regulation, were powerful
inducements to maintain the status quo. 43
The acquisition of private yards during the 1890s posed problems for
the imperial government. Would they be incorporated into the exist-
ing regulations for state enterprise, or would they retain elements of
 The eve of the Russo-Japanese War 37

commercial management? In 1898, the State Auditor pressed for com-

mercial principles to be maintained at the Baltic and Obukhov yards
and to be extended to the Izhora and Admiralty yards. The Baltic yards
operated within a prescribed budget, receiving no further assistance
from the Treasury during the financial year. However, the reform cut
little ice with the mandarins in the defence ministries, who abided by
regulations that specified different priorities: 'the state requires of its
factories not dividends, but good quality products'. The Baltic yards,
with their tradition of self-finance and independence of the Treasury,
might represent the ideal to which other government dockyards
should aspire; but this ideal corresponded more to the wishes of the
finance departments than it did to those of defence chiefs. As the new
century dawned, those in charge of government enterprises were
bathed in a glow of complacency. To be fair, this attribute extended to
virtually all elements of the old regime.44
The Russian armament industry had, since its inception in the
eighteenth century, relied chiefly on unfree labour. The state directed
military recruits to its arsenals and dockyards and required that their
children serve in turn. Workers conscripted in this way were liable to
be discharged once they had completed their military service. In
practice, many of them stayed on. Most workers retained plots of land
which they had been granted, in return for being attached to a
particular armoury or ironworks. To leave one's place of work, there-
fore, disrupted a well-entrenched family economy; understandably,
few workers were prepared to make that sacrifice. The formal emanci-
pation from compulsory labour at government enterprises took place
in 1862, at which time around two-thirds of Russian shipbuilding
workers belonged to the category of bonded labour. Notwithstanding
the abolition of unfree labour, some of its features - notably a sense of
obligation towards the labour force - persisted.45
The Russian armament industry employed around 75,000 workers
in 1900, making it one of the largest sectors of the industrial
economy.46 This total included 27,000 workers in factories and arsenals
administered by the GAU, around 25,000 workers in the Urals iron-
works and 14,000 workers in government dockyards. The labour force
employed in the private sector barely amounted to 9,000 workers, most
of them in private shipyards. Fewer than 2,000 were employed on
armaments work in general engineering plants. Armaments accounted
for about one-fifth of the labour force in metallurgy, metalworking and
machine-building combined, or around 4 per cent of the entire indus-
trial labour force. This appears to have been a much higher proportion
38 Defence imperatives and Russian industry, 1900-1907

than in armaments industries elsewhere in Europe. The labour force

effectively engaged across the entire range of defence production was
considerably higher than these figures indicate. A further 60,000
workers were occupied in various military construction and engi-
neering projects, including work on barracks and fortresses. But even
the inclusion of these workers does not exhaust the numbers actually
employed in defence production at any one time. No one stopped to
count the contingents of soldiers who manufactured basic military
equipment, such as uniforms and boots. If these items had been
factory-made, total employment in defence production would have
climbed much higher. For present purposes, however, it is the per-
manent labour force in defence industry that claims our attention.
What accounts for this high level of employment, and to what extent
did workers' experience conform to that of their counterparts in other
branches of industry? 4 7
One explanation for the high level of employment in armament
production is that the poor level of labour productivity compelled
employers to substitute quantity for quality. Generally speaking,
labour productivity in manufacturing industry compared unfavour-
ably with other European economies. Basic education left a lot to be
desired, and the dearth of training programmes did nothing to
improve the aptitude and skill of successive generations of workers, as
contemporaries noted. Employers and work supervisors tended to see
things differently, pinning the blame on the 'pre-industrial' work
habits of the Russian workers, who took too many holidays, drank to
excess and treated materials and equipment far too casually.
Nevertheless, the causal link between manning levels and labour
productivity is not clear cut. Russian entrepreneurs might have gone
out of their way to employ large numbers, in order to offset the poor
quality of new recruits. But low labour productivity - defined in this
context as gross output per person - may have been the result of a high
employment regime, not its cause. In the uncertain world of Russian
industry, where supplies were erratic and production schedules diffi-
cult to plan, employers retained large numbers of workers to cope with
sudden upsurges in the pace of production. Furthermore, it was
cheaper to employ unskilled labour in various tasks (such as fetching
and carrying materials within the enterprise) than to mechanize these
auxiliary processes. Russian enterprises tended for these reasons to be
larger than their equivalents elsewhere in Europe. 48
These considerations apply still more forcefully to the armaments
industry. As in other branches of industry, unskilled workers could be
 The eve of the Russo-Japanese War 39

used in abundance to transfer work in progress from one part of the

factory to another. But the specific characteristics of armaments pro-
duction tended to promote a high employment regime. A 'reserve
army' offered managers a means of insuring themselves against a
sudden influx of orders or an abrupt change in specifications, and
enabled them to handle a sudden consignment of raw materials. By
recruiting and retaining a large labour force, management could main-
tain a cushion against such emergencies and reduce the risks of
incurring a penalty for late delivery.
There were other reasons for the high level of employment in this
sector of industry. Some workers in the state sector exercised consider-
able power on the shopfloor, enabling them to inflate manning levels.
Contemporaries noted that workers at state shipyards habitually
slowed down the pace of work, lest they be laid off when the admin-
istration had exhausted its annual credit from the Treasury. At Motovi-
likha, workers reportedly organized tasks in such a way as to maxi-
mize the number of positions available to workers: 'all power [wrote
an inspector in 1906] is in the hands of semi-literate artisans'. The
famous Tula armoury was probably an exception: towards the end of
the nineteenth century, management had been able to confront the
power of labour, and work practices became a byword for close
supervision. Elsewhere, workers enjoyed greater autonomy, affording
them scope to influence employment levels.49
State enterprises, in general, were suffused by a culture of patri-
archy. This patriarchal tradition had its roots in eighteenth-century
practice, which dictated that workers should be kept on, in good and
bad times alike, subject to the availability of funds earmarked for the
completion of a given project. Even when such funds were depleted,
workers were transferred to other tasks, including the maintenance of
factory buildings. The persistence of this doctrine inevitably tended to
inflate levels of employment, particularly at the state ironworks.50
One further consideration needs to be mentioned, in connection
with the prevailing paternalist ethos. The tsarist government restricted
the number of hours worked in state industry. Regulations introduced
in 1861 limited the working day at the state shipyards to ten hours. No
equivalent limitation was placed on the number of hours worked in
the private sector. On average, Russian factory workers spent between
twelve and thirteen hours on the shopfloor during the 1880s. The
government only intervened to regulate hours of work in 1897, when
the government stipulated a maximum of eleven and a half hours in
factory industry. None the less, this legislation continued to confer a
40 Defence imperatives and Russian industry, 1900-1907

clear advantage on employees in the state sector. In rejecting the

punishing routine that applied to workers in the private sector, the
government deliberately committed itself to a high level of employ-
ment in many of the enterprises under its jurisdiction.51
The numbers employed in armament production imply a consider-
able effort in recruiting and retaining factory labour. The recruitment
of unskilled workers posed relatively few problems. Young men were
often drawn from the locality: at the Sormovo engineering plant, close
to Nizhnii Novgorod, two in five workers arrived from nearby villages.
Others came from further afield. The rapid expansion of factory
employment in St Petersburg between 1897 and 1900 was made pos-
sible by immigration from the adjacent provinces of Tver, Yaroslavl
and Novgorod. These men, who retained significant links with the
family farm, were initially given ancillary and mundane tasks, such as
carting and loading materials. Many workers bribed recruiting agents
or foremen, in the hope of being taken on. 52
The recruitment and retention of skilled labour posed far greater
problems. In order to maintain the flow of skilled workers, managers
set up craft schools on factory premises and took on children as they
completed their education. The management of government arsenals
attached particular significance to this initiative, and instituted voca-
tional schools at Izhevsk in 1877, Tula in 1894 and at Sestroretsk in
1899. Izhora shipyards established a similar school in 1889, offering five
years' basic education to employees' sons, as well as giving them
priority when vacancies arose. Not that these schools necessarily
offered an adequate education. Petitions presented to the manage-
ment of the Sestroretsk arsenal during the 1905 revolution indicated
that these schools were staffed by poor teachers, who had failed to find
jobs elsewhere. The fact that workers contributed financially to the
maintenance of such schools only served to intensify the grievance.
Elsewhere, those in charge of state arsenals, cartridge and tube works
instituted factory schools for the children of workers. Children who
enrolled at these schools pursued a less vocational curriculum.53
These arrangements created a constantly replenished pool of semi-
skilled labour upon which the plant managers could draw. Recruiting
the children of factory workers also helped to overcome problems of
adaptation that bedevilled management elsewhere in Russian indus-
try. The law allowed children to start work at the age of fifteen. In
'exceptional circumstances', children as young as twelve were
employed, provided that they could read and write, that the work was
not dangerous and they worked alongside their parents. Government
 The eve of the Russo-Japanese War 41

dockyards also provided training for the children of employees, who

were given preference when job vacancies were filled. The need to
recruit young workers already in possession of basic skills remained
the paramount concern. By contrast, only a handful of factories in the
private sector established schools for workers' children.54
Managers of state yards traditionally tried to retain workers from
one year to the next, particularly if their skills made them difficult to
replace. Prolonged lulls in armaments production made this a difficult
strategy to sustain. During the 1880s and late 1890s, the state armouries
tended to lose labour to the private sector or to construction projects.
In 1882, having completed work on a new rifle, workers at Sestroretsk
departed for jobs in the engineering industry in the Russian capital.
Workers left Izhevsk and took labouring jobs on the trans-Siberian
railway. Tula's armourers turned to the manufacture of iron goods,
samovars and musical instruments. Some of these workshops became
familiar and well-established landmarks, such that when master crafts-
men returned to the armoury they continued to employ workers on
their own account. Workers who had little or no skill fared worse,
being forced to take poorly-paid jobs in St Petersburg or other towns
and cities, unless they could persuade the foreman to retain their
services.55
The managerial strategies described above tended to induce in
workers a sense of loyalty to particular enterprises. A survey of the
Baltic shipyards in January 1906 revealed that only 14 per cent of the
labour force had served for less than twelve months. More than half
had been employed for between one and five years, whilst more than a
quarter had worked for between five and ten years. One worker in ten
had been with the yards for more than a decade. The enquiry
uncovered a higher degree of loyalty amongst fitters, lathe operators
and joiners, in common with other parts of the St Petersburg engi-
neering industry. The relative loyalty at the Baltic yards compared
very favourably with other factories in Russia, where only 10 per cent
of workers formed a permanent core, defined as five years' service or
more. At Baltic, the equivalent figure was 35 per cent.56 In the private
sector, material incentives appear to have provided the chief reason
for workers to remain with a particular company. At Sormovo, there
was a close correlation between wage rates and length of service,
longstanding employees being rewarded with higher wages.57
Welfare legislation and benefits confirmed the superior entitlements
(and, therefore, status) of workers in the state sector. Since 1862,
workers in military shipyards had been insured against accidental
42 Defence imperatives and Russian industry, 1900-1907

injury and death. A further four decades elapsed before the govern-
ment, having overcome the objections of industrialists, legislated a
compensation scheme for industrial workers in the private sector.
According to the standard Soviet account, only one in ten factory
workers was covered against accidental injury before 1903. If a worker
in the government shipyards was injured as a result of an accident at
work, the law required management to compensate the worker or his
dependants. No attempt was made to apportion blame, and thus
claims could not be dismissed by management on grounds of the
worker's 'negligence'. Payments were made in accordance with a
series of separate sliding-scales for masters, journeymen and appren-
tices. Provision of a slightly different kind existed for workers
employed in the state ironworks. In 1857, the government agreed to
compensate these workers for industrial accidents. Mutual benefit
societies were established in 1861, to which all state workers were
required to belong. Fresh legislation in May 1901 confirmed the rela-
tively privileged position of workers in government employment:
henceforth, they were covered against diseases contracted at work. If a
worker submitted a claim for industrial injury, his own 'negligence'
did not constitute grounds for dismissal of the claim. Finally, disability
amongst this group of workers was judged in accordance with the
more rigorous health standards required by the state; the claimant did
not have to prove that he was unable to perform any kind of physical
work. His claim for disability was therefore more likely to be settled.58
Some workers in the state sector were also provided with an old age
pension. At the state ironworks, a scheme had been in force since 1861.
In 1898, the Obukhov and Baltic yards introduced a compulsory
pensions scheme. Management deducted three per cent from wages
each month and created a fund from which payments were made to
workers who retired after more than ten years' service. These pro-
visions were extended to other government dockyards in April 1903.
No equivalent statutory provision for old age existed at state armou-
ries, but the Popov commission (see below) recommended that this
anomaly be rectified. Managers of the armouries strongly supported
this proposal, on the grounds that an old age pension would enable
them to pay off elderly retainers (they failed to mention that it had not
produced this result at state ironworks). In the private sector, mean-
while, the prevailing assumption was that the extended family would
support retired workers, an attitude that reflected an increasingly
outmoded view of the links between workers and the village.59
Government concern for the welfare of state employees surfaced in
 The eve of the Russo-Japanese War 43

two extensive commissions of inquiry: the Kolokol'tsov report on

shipyards, in 1896, and the Popov commission on state arsenals, which
sat between October 1902 and March 1905. Both commissions recom-
mended further improvements in conditions of work at state enter-
prises. The government responded to Kolokol'tsov in 1897, by stipulat-
ing a minimum and a maximum age for employment, setting increased
wages and instituting a right of appeal over piece-rate payments.
Significantly, the government also began to supervise workers more
closely, by enforcing penalties for lateness or absenteeism. General
Popov, the former director of Izhevsk, advised the War Ministry to cut
the length of the working day to eight hours, to introduce a minimum
wage and pension entitlements, to improve and extend basic facilities,
such as accommodation, schooling and leisure provision. The outbreak
of revolution in 1905 quickly resolved matters in Popov's favour.60
Thus, at the beginning of the twentieth century, the old regime
provided a range of benefits for workers in government employment.
Meanwhile, the government eschewed welfare legislation for workers
in the private sector. Underlying this inaction was a belief that con-
ditions of work ought to be a private matter, forming part of the
contract between a worker and employer. A small number of factory
inspectors had the right to monitor the observance of this contract, but
their powers and numbers were limited. In extremis, the government
might intervene, using force to deal with any serious outbreak of
labour unrest in the private sector. But in its own enterprises, the
culture of patriarchy proved resistant to change. In this respect, as in
others, the government maintained a clear demarcation between the
two forms of enterprise.61

Defence production and supply

In the decade prior to the Russo-Japanese War, the main tasks
of the defence industry consisted in supplying the army with new
rifles, manufacturing new calibres of artillery and producing vessels in
accordance with the shipbuilding programme of 1898. Russian indus-
try coped well with the first two tasks, but the last taxed the abilities of
the domestic shipyards almost to the limit. Russian factories devoted
little time to the manufacture of basic finished goods, such as uniforms,
for which the Russian soldier himself was expected to assume respon-
sibility.
The cornerstone of the rearmament programme during the 1890s
was the re-equipment of the Russian army with the new Mosin rifle. In
44 Defence imperatives and Russian industry, 1900-1907

1891, the three state armouries at Izhevsk, Tula and Sestroretsk con-
tracted to supply half a million new rifles annually. This ambitious task
entailed huge outlays. The government set aside 155 million rubles to
instal new machine tools, most of them imported from Britain, France
and Sweden. Production of the new rifle continued throughout the
1890s. Ten years later, in 1901, the programme was finally completed, at
a total cost of 270 million rubles. The army hailed it as a great success;
so, too, despite the expense involved, did the State Auditor. None the
less, the three armouries only managed in one year to meet the target
they had originally embraced.62
More complex armaments posed a greater challenge to domestic
armouries. The manufacture of machine guns was a case in point.
Kuropatkin vigorously espoused the new weapon. In 1896, the army
ordered demonstration models from Vickers and from the leading
German producers. After lengthy negotiations, Vickers finally agreed
to allow the manufacture of its new Maxim gun under licence on
Russian soil. However, technical difficulties held up production at the
Tula Armoury until 1904.63
The supply of field artillery proceeded rather more smoothly.
Putilov designed a new 3-inch gun, which embodied improved
manoeuvrability, greater range and a lower recoil. In 1900, the army
ordered 1,500 pieces from Putilov and from the state-owned St Peters-
burg Ordnance factory to be delivered in two years' time. Putilov
agreed to take a half share in the contract, as well as to supply all gun
carriages and shell. This contract was completed on schedule. In 1903,
Putilov and Obukhov received a second order, for 400 and 750 guns
respectively, worth a total of 1.55 million rubles. But Obukhov failed to
deliver gun barrels and carriages on time, blaming technical problems
for the delay. This failure threatened the completion of the 1904
programme, under which the army hoped to take delivery of 1,050
guns in 1905 and a similar quantity in 1906.64
The completion of the shipbuilding programme left a great deal to
be desired. Only four of the ten warships destined for the Far East
were launched before the agreed deadline. Naval procurement
officials laid the blame squarely on poor work practices at the yards.
There are good grounds for believing that productivity at the state
yards failed to improve before 1905, in contrast to the performance of
the privately owned Nikolaev yards. Workers deliberately slowed
down the pace of work, in order to secure their jobs in the short term.
But this explanation hardly accounts for delays in the shipbuilding
programme during 1898. Work was abundant and employment more
 The eve of the Russo-Japanese War 45

likely to expand than to contract. A more plausible explanation for the

delay is provided by the constant changes that were made to the
specification of vessels by the Naval Technical Committee (Morskoi
tekhnicheskii komitet). Complaints on this score surfaced time and
again in the correspondence between defence contractors and govern-
ment departments.65
Given these shortcomings, the government found it necessary to
order military vessels from foreign suppliers. The foreign share of the
addition to total tonnage between 1881 and 1894 stood at 6 per cent; in
the following years it increased to around 15 per cent. Nevertheless,
thanks to the naval rearmament programme, the total tonnage sup-
plied by domestic yards increased dramatically. Russian firms had
made a significant inroad into the market for warships and even
marine engines.66
Only in exceptional circumstances did the Russian army supply its
troops with the products that added to their comfort, health and
hygiene, rather than to their immediate fighting potential. The state
displayed little interest in the production and distribution of finished
uniforms and boots. During the 1870s, Miliutin had planned to estab-
lish a range of centralized factories and workshops, in order to
produce uniforms and similar items, but the reform foundered -
typically - because of a lack of resources. Instead, regiments were
supplied with the raw materials and the troops were expected to
manufacture their own boots, uniforms and food.67
The funds allocated to regimental officers for the purchase of cloth
and leather were invariably insufficient, for reasons outlined earlier.
Troops were obliged to use their meagre earnings from side-
employment in the civilian economy, in order to pay for additional
raw materials. The system was frequently criticized, because it pro-
vided plenty of scope for fraud on the part of officers, who bought and
sold goods on behalf of their men. The impact on the morale of the
troops hardly needs to be laboured: soldiers were 'convinced that the
state (or, rather, the commissariat) gave them the very worst'. These
time-consuming tasks sapped the energy of the common soldier and
undermined faith in his superiors; worse, they reduced the time that
could be devoted to training. The Quartermaster's Department (GIU)
had neither the resources, the expertise nor the inclination to monitor
the quality of the finished product. Whenever the GIU did decide to
distribute boots, manufactured by peasant craftsmen (kustari), all
manner of complaints surfaced about their poor quality. Government-
issue boots were supposed to last for a year, but they reportedly fell to
46 Defence imperatives and Russian industry, 1900-1907

pieces within four months. Soldiers preferred to make their own boots
and to sell the others to local merchants, who promptly sold them back
to the procurement authorities.68
The War Ministry maintained a small number of workshops (oboznye
masterskie) that supplied carts, harness, belts and buckles. The labour
force consisted of hired labour or military conscripts. At one stage
these workshops had been leased to private entrepreneurs, who sold
their product to the state at an agreed price. By 1900, however, they
were back in state hands and funded from the state budget. Regula-
tions in force since 1867 stipulated that they had to be capable of
supplying semi-finished goods for up to 25,000 men per annum, or
finished goods for up to 15,000 men. But they would find it impossible
to respond to frantic demands for their product in the midst of the war
against Japan.69
The Russian defence industry entered the war against Japan, con-
fident that its main obligations to the defence departments had been
discharged. The expectation was that any additional demand for
military items in wartime could reasonably be met without disrupting
normal work routines and without calling upon new domestic sources
of supply. In the main, military production remained the preserve of
state arsenals and dockyards. Not even war was expected to disturb
the comfortable government monopoly.

The basic industries: iron and steel

Two branches of industry, ferrous metallurgy and machine-
building, underpinned the efforts to establish a modern armaments
industry. The emergence of Russia as a modern industrial power owed
much to the creation of a dynamic iron and steel industry. During the
1890s, foreign investors took advantage of government inducements to
establish new ventures or subsidiaries on Russian soil. Strictly speak-
ing, their activities were confined to Ukraine. The long-established
iron industry in the Urals remained immune from Russia's industrial
revolution. This regional contrast in economic vitality corresponded
also to differences in ownership. In Ukraine, the new firms all
belonged to Russian or foreign capitalists. The Urals ironworks
remained in state hands or belonged to noble landlords. Hence, the
struggle for supremacy in iron and steel was also a tussle between
competing forms of enterprise. The changes outlined below fore-
shadowed a later confrontation between the state sector and private
enterprise.
 The eve of the Russo-Japanese War 47

By the beginning of the twentieth century, Russia had joined the

ranks of the world's major producers of iron and steel. Russia contri-
buted around 6 per cent of total world output of iron and steel and
occupied fourth place after the United States (42 per cent), Germany
(18 per cent) and Britain (14 per cent). Between 1890 and 1900, the
production of pig iron in Russia more than trebled, from 0.93 million
tons to 2.93 million tons, while the production of rolled iron and steel
increased from 0.79 million tons to 2.67 million tons, representing in
both cases an average annual rate of around 1.5 per cent, well above
the rate of growth of industrial production as a whole.70
Most of the growth in output was contributed by the new iron and
steelworks located in Ukraine, where iron and steel production grew
nine-fold between 1890 and 1900. By the end of the century, the
Ukrainian industry accounted for almost half of total steel output in
the Russian Empire; in 1890, its share had been below one-fifth. The
Urals, which had been virtually synonymous with Russian iron pro-
duction since the early eighteenth century, forfeited its leading posi-
tion in 1896. By 1900, this region contributed one-fifth of total pro-
duction, half the share of the market it held ten years earlier. While the
Urals 'slept' - as the dismissive contemporary phrase had it - Ukraine
forged ahead, literally and metaphorically.71
Iron and steel producers in Ukraine had a competitive advantage
over producers in other regions of the Empire. Foreign entrepreneurs
installed new Bessemer converters and Siemens-Martin open-hearth
furnaces, capable of producing high-quality steel. The capacity of blast
furnaces increased, albeit modestly. Although the average capacity of
blast furnaces was smaller than in Germany or Belgium, the difference
was offset by the higher quality iron ore supplied by mines in Krivoi
Rog, and more pig iron was produced per ton of ore than in western
Europe, to say nothing of other parts of the Russian Empire. New
rolling mills, supplying steel rails, structural shapes and steel sheet,
represented another breakthrough. As a result, Russia possessed an
integrated iron and steel industry that stood the test of comparison
with best practice elsewhere in Europe. Other parts of the Russian
Empire were left behind.72
By 1900, the iron and steel industry in south Russia was dominated
by a dozen large works. With the exception of John Hughes' New
Russia Ironworks (1870), these factories were established after the
imposition of high tariffs on iron and steel in 1887 and 1891. There
were no barriers to entry during the heyday of expansion. The five
largest, namely the New Russia Ironworks, the South Russian Dnieper
48 Defence imperatives and Russian industry, 1900-1907

Ironworks (established in 1891), the Briansk Ironworks at Aleksan-

drovsk (1887), the Russo-Belgian Metallurgical Company (1895) and
the Donets-Iurevsk Metallurgical Company (1895) accounted for 50
per cent of pig iron production in south Russia and 25 per cent of
production in the Empire as a whole. With a few exceptions - Briansk
and Donets-Iurevsk, and the Nikopol-Mariupol Company, Hartmann
and Taganrog Steel - the industry was in the hands of foreign entre-
preneurs. Makeevka Steel was controlled by the Societe Generate of
France, and Donets Steel at Druzhkovka and Huta-Bankova both
formed part of the French Bonnardel Group. Less important than the
question of corporate nationality, however, is the fact that moderni-
zation and growth went hand in hand. 7 3
However, this expansion came to an abrupt halt at the beginning of
the twentieth century. The value of iron and steel production fell
sharply in 1901 and again in 1902. The production of rails fell by nearly
half between 1900 and 1903. Steel producers worked at only three-fifths
of capacity. Stocks of unsold pig iron increased from 11 to 25 per cent of
production. The value of shares plummeted. Several companies sus-
pended dividend payments altogether. Profits fell sharply (see table
1.4). Other evidence supports this picture: the high dividends available
to shareholders in iron and steel companies during the late 1890s, aver-
aging around 12 per cent of nominal capital, fell to 4 per cent in 1900-4.74
Individual firms had their own story to tell. The New Russia Iron-
works made a profit of 25 per cent on capital in 1898 and 1899; between
1901 and 1904 the firm still achieved profits of 10 per cent, largely as a
result of its participation in the rail syndicate (see below). Other
companies, without the benefit of government orders for rails to keep
them afloat, were in dire straits at the beginning of the century and
their situation remained bleak well beyond 1904.75 But reported profits
disguised as much as they revealed of companies' financial position.
Firms may have been at pains to emphasize their difficulties, in order
to improve the case for financial assistance and to minimize their tax
liabilities. The possibility that the situation was less bleak than indi-
cated above is suggested by evidence of declining costs of production.
A report prepared for the Credit Lyonnais found that costs of pig iron
production fell by 20 per cent between 1899 and 1905, because of a fall
in processing costs, attributable to improved labour productivity,
because of a decline in input prices and because of the abolition of the
excise tax, previously levied on iron. The cost of producing semi-
finished products also fell, by around one-half. It is against this back-
ground that entrepreneurial tales of woe should be judged. 7 6
 The eve of the Russo-Japanese War 49

Table 1.4. Net profits reported in iron and steel, 1901-1906 (per cent of
capital employed)

1901 2.26
1902 0.40
1903 1.61
1904 1.75
1905 1.24
1906 0.20

Source: Stenogramma soveshchaniia o polozhenii metallurgicheskoi i mashinostroitel'-

noi promyshlennosti, St Petersburg, 1908, pp. 6-7.

The dynamism of the iron and steel industry in south Russia con-
trasted sharply with the fortunes of the industry in the Urals, where
the state ironworks were an albatross around the neck of government.
Their main function was to supply the government with iron and steel
and finished goods, including armaments. They were entitled to
produce for the civilian market, provided that this did not interfere
with government contract work. In 1900, civilian orders generated
more than a quarter of total output, a proportion that rose to two-fifths
at Votkinsk, which supplied locomotives to private railway companies.
The lesser ironworks relied no less heavily upon civilian contracts.77
But these ironworks were notoriously unprofitable. The State
Auditor attributed their recurrent losses to the inability of manage-
ment to reduce production costs. In part, this was a result of a failure to
innovate; whilst other regions introduced the hot-blast method of
smelting pig iron and installed modern rolling facilities, factories in the
Urals remained comatose. As we have already seen, the government
insisted on tying the hands of its managers. A commission of inquiry
took evidence during 1903 and made several suggestions for improve-
ments in accounting procedures, but results were slow in coming.
Technical innovation and managerial initiative were not characteristic
features of this industry.
The Urals enterprises were inevitably affected, like other iron and
steel producers, by the industrial slump at the turn of the century.
Output reached its lowest point in 1902. The chief cause was the
decline in government orders for shell. Some enterprises did weather
the storm. Baranchinsk continued to produce shell, and the ironworks
at Zlatoust kept going by diversifying its product mix. Satkinsk was
more successful than most, because demand remained buoyant for its
50 Defence imperatives and Russian industry, 1900-1907

Table 1.5. Total output and shell production at state ironworks, 1900-1908

Total output Shell production

(million rubles) (per cent)

1900 13.12 34.5

1901 13.73 27.5
1902 11.33 26.4
1903 12.53 28.2
1904 15.65 39.4
1905 14.77 37.6
1906 12.03 55.1
1907 11.96 44.0
1908 12.76 32.3

Sources: col. 1 Otchet gornogo departamenta za 1900-01, St Petersburg, 1902; ibid.,

za 1905,1906; ibid., za 1908,1909; col. 2 derived from G. K. Miftiev, 'Artilleriiskaia
promyshlennost' Rossii v period pervoi mirovoi voiny', kandidatskaia disser-
tatsiia, Leningrad, 1953, appendix 2.

low-cost and high-quality pig iron. Others were less fortunate. Sere-
briansk continued to lose money throughout the years 1900 to 1904.
Artkinsk produced simple agricultural implements, for which demand
was sluggish; unlike Zlatoust, it failed to diversify. However, the
stuttering recovery that took place in 1903 was followed by a spurt in
output, associated with government demand for military goods
during the Russo-Japanese War. The Urals ironworks enjoyed brief
windfall profits.78
As all enterprises in the iron and steel industry struggled to come to
terms with the slump at the turn of the century, it became apparent
that the private sector suffered especially severely from its con-
sequences. Government subsidies helped to insulate the Urals iron-
works from the effects of recession. Granted, private entrepreneurs
possessed a degree of freedom of manoeuvre that enabled them to
respond more creatively to the pressures they encountered. But they
faced an uphill struggle, if they were to convince tsarist bureaucrats of
the need to launch a government-led recovery programme.

The basic industries: machine-building

The engineering industry, so crucial to the modern industrial
economy in peace and in wartime, comprised a large number of
 The eve of the Russo-Japanese War 51

product groups. Five broad categories may be distinguished: transport

equipment, agricultural machinery, industrial equipment, electrical
products and non-military shipbuilding.79 In practice, the largest engi-
neering firms had a stake in at least two product groups, and the
apparent diversity of these branches should not be allowed to obscure
the fact that they faced common problems, notably exposure to a
fragile market.
The origins of a modern machine-building industry in Russia can be
traced back to the 1860s and 1870s. Russian factories began to produce
more complex items of agricultural machinery, ships and railway
equipment. In 1869, two firms, the Kolomna Engineering Company
(founded in 1863) and the Nevskii works, along with the state iron-
works at Votkinsk began to produce locomotives. But the limited
market compelled these firms to diversify. Nevskii supplied rails,
rolling-stock and ships. Sormovo Engineering (founded in 1849) pro-
duced steamships, steam engines, boilers and shell, as well as locomo-
tives. Kolomna built bridges and other products. Nor did the govern-
ment encourage firms to supply a standard product, for example in
locomotive construction. As a result of frequent changes in product
specification and the short production runs, costs remained high.
Many leading firms, having taken the opportunity provided by the
first railway-building boom to acquire corporate status, subsequently
found it difficult to reward shareholders and to meet their obligations
to creditors. During the 1880s, the government stepped in to rescue
many of the larger firms from bankruptcy, with a mixture of loans and
subsidies.80
The expansion of railway construction during the 1890s revived the
flagging fortunes of the engineering industry. Between 1887 and 1900,
Putilov and Sormovo enjoyed a five- and six-fold increase respectively
in the value of their gross output. The railway building boom, accom-
panied by the high rate of protection given to domestic industry in
1885 and 1891, encouraged firms to produce locomotives once again.
New firms entered the industry, such as the Kharkov Locomotive
Company (1897) and the Hartmann Ironworks in Lugansk (founded in
1896). Both newcomers possessed adjacent steel mills and were self-
sufficient in steel castings and forgings. Again, the production of
locomotives added one more product to the diverse range produced
by Russian machine-builders. Few firms looked upon the supply of
locomotives as their main activity.
The boom of the 1890s demonstrated the potential for improvements
in productivity that could be derived from a larger volume of output.
52 Defence imperatives and Russian industry, 1900-1907

Between 1890 and 1894, Russian factories supplied 163 locomotives on

average; during the next quinquennium this figure increased to nearly
600. The largest producers could set up long production runs, and with
impressive results. In 1892, the price of locomotives fell by 18 per cent
compared to the price charged in the late 1870s, and the price of
wagons fell by 13 per cent.81
The production of steam engines, electrical equipment, textile
equipment and, especially, machine tools remained weak spots. The
largest firms, such as Putilov, Lessner, Nobel and Sormovo, normally
manufactured in-house. The new shipyard at Nikolaev was equipped
with its own tool-making shop. Imports filled most of the remaining
gap. A handful of specialist manufacturers supplied simple products
by 1900. The Moscow firm of Bromley supplied drilling and turning
lathes to the rapidly proliferating railway workshops. Gerliakh and
Pulst of Warsaw supplied milling machines to factories that produced
munitions or sewing machines. In St Petersburg, Phoenix supplied
state dockyards with metal-cutting tools. But, as these examples
suggest, the market for machine tools remained small and specialized.
Few Russian workers had the opportunity to acquire skills in the
manufacture of machine tools. To compound the problems of market
demand, the government offered this infant industry little protec-
tion.82
Russian merchant shipbuilding developed haphazardly and slug-
gishly in the period before 1900. This did not reflect a dearth of
possibilities in terms of coastal and river navigation. On the contrary,
the number of steam-driven vessels on the Volga increased from 1,015
to 1,783 between 1890 and 1900 and the volume of freight more than
doubled. But most new vessels were imported. The main Russian
shipping company, Russkoe obshchestvo parokhodstva i torgovli
(established in 1856), received a government subsidy, but was not
obliged to order ships from Russian suppliers; instead, the subsidy
covered operating costs on routes in the Black Sea and Mediterranean.
Only after 1900, under pressure from the Ministry of Finances, did it
order from the Nevskii factory.83
The production of merchant vessels was hampered by the high cost
of raw materials. The tariff of 1891 did not assist the domestic industry,
because it maintained high duties on inputs. In 1898, the government
even abolished the tariff on finished vessels, with the promise of a
review in ten years. Larger firms switched to other products, leaving
specialist suppliers to struggle as best they could. In this unsympa-
thetic environment, domestic producers barely maintained their share
 The eve of the Russo-Japanese War 53

Table 1.6. Machine-building production, 1885-1913 (million rubles)

Current prices Constant (1913) prices

1885-9 (annual average) 56 56.4

1890-4 (annual average) 69 67.1
1895 98 98.0
1896 148 159.3
1897 174 182.8
1898 202 214.7
1899 198 210.0
1900 191 199.2
1901 218 227.1
1902 202 213.8
1903 219 226.0
1904 230 247.3
1905 249 268.0
1906 231 249.2
1907 233 221.3
1908 214 218.6
1909 225 224.1 .
1910 252 255.6
1911 271 271.8
1912 317 318.9
1913 418 418.0

Note: figures include output from Small-scale industry

Source: P. R. Gregory, Russian National Income, 1885-1913, Cambridge, 1982,
pp. 276-9, table I.I, col. A.I, deflated by an index of equipment prices, recalcu-
lated from table I.I, col. D.3a and D.3b. The original data on machine-building
output derive from S. G. Strumilin, Ocherki ekonomicheskoi istorii Rossii i SSSR,
Moscow, 1966, pp. 442-53, with the pre-1897 data converted to Empire terri-
tory. The price deflator is discussed in Gregory, pp. 272-3,280-1.

of the market. Nor did tariff policy constitute the sole difficulty. As
happened elsewhere, merchant shipbuilders were bedevilled by cus-
tomers' tendency to change specifications each time they ordered a
new vessel. Costs of production remained high. For these reasons,
Russia - like France but unlike Britain, Japan and Germany - devel-
oped only a small merchant shipbuilding capacity.84
The total market for Russian-built machinery grew rapidly between
1885 and 1900, by around 9.7 per cent per annum. However, this
growth took place from a low base, and much of it was confined to
production for the railway transport sector (see table 1.6).
54 Defence imperatives and Russian industry, 1900-1907

The increase in output of the metalworking and machine-building

industries that was such a marked characteristic of the 1890s came to
an abrupt end in 1898. Output stagnated during the next two years. A
brief recovery in the value of production in 1901 was immediately
followed by a renewed slump. During the years 1903-5, output
increased steadily, but growth was interrupted once more in 1906. The
recovery in 1907 saw output virtually return to the 1905 peak, but the
hopes of the industry were quickly dashed. By 1908, the value of
output had fallen to its lowest level since 1902.
These phases of growth, stagnation and slump in the engineering
industries did not coincide precisely with the experience of Russian
industry as a whole or of ferrous metallurgy in particular. The stag-
nation in metalworking and machine-building between 1898 and 1900
coincided with a phase of continuous growth in total industrial
output, whose growth continued uninterrupted until 1905. Similarly,
the sharp fall in engineering output in 1902 hardly shows up in the
aggregate production index, which actually records a slight increase in
that year. By contrast, total industrial production fell during 1905,
whereas output of metalworking and machine-building reached a
fresh peak. However, the situation was reversed in the following year:
a sharp recovery in industry as a whole coincided with a slump in
metalworking and machine-building.
Stagnation at the beginning of the twentieth century concealed
important differences between the various sub-branches of the indus-
try (see table 1.7). The value of rolling-stock output fell by seven per
cent between 1900 and 1908. Production of boilers - a major element of
industrial equipment - plunged dramatically. By contrast, the value of
agricultural machinery output more than doubled between 1900 and
1908; in 1908, it accounted for 13 per cent of total engineering output.
The production of gas, diesel and electric engines increased sub-
stantially. So, too, did the manufacture of flour-milling, butter-making
and oil-processing machines, and refrigerators. On the other hand,
the production of lifting equipment, sugar-refining machinery and
distilling equipment fell slightly. More significant was a fall of around
one-third in the value of machine tools and textile machinery. Broadly
speaking, the market for industrial equipment in this phase of the
business cycle left a lot to be desired. 85
Underlying these shifts in industrial production were important
changes in the labourcapital ratio and in the productivity of labour.
The recession improved the technological level of the industry, by
weeding out some of the less well-equipped firms and leading to a
Table 1.7. Gross output of machine-building, 1900-1908

1900 1908

Units Output % share Units Output % share

(million rubles) (million rubles)

Rolling-stock 14 92.0 46 18 85.3 41

Vessels 32 6.1 3 18 4.6 2
Boilers 52 24.6 12 56 11.7 5
Agricultural machinery 162 12.1 . 6 216 26.5 13
Other 279 67.1 33 244 83.3 39
Total 539 201.9 100 552 211.5 100

Source: V. I. Bovykin, Formirovanie finansovogo kapitala v Rossii, Moscow, 1984, p. 61.

56 Defence imperatives and Russian industry, 1900-1907

concentration of capital. The amount of horsepower per worker

increased by one-third, with a still greater rate of increase in the
branch supplying rolling-stock. Furthermore, it is clear that some older
steam engines were being replaced by newer forms of motive power,
such as electrical and internal combustion engines. Output per worker
increased by 18 per cent, an increase that conceals substantial improve-
ments in the agricultural machinery industry. This seems to have been
a period in which new and technologically more advanced firms
entered this branch of industry, attracted by the prospect of taking
advantage of the fall in the price of iron and steel, which accounted for
a larger share of total input than in other branches of engineering. As a
result of these changes, the labour productivity differential narrowed
between agricultural machinery and rolling-stock producers. Whether
corresponding advances could be made in an industry such as arma-
ments, where different technical standards prevailed, and rigorous
quality controls were in force, remained to be seen.86

Industrial depression, reorganization and

business-government relations, 1900-4
The unprecedented slump in heavy industry at the turn of the
nineteenth century served to remind Russian industrialists of the
underlying vulnerability of the ventures they had created. Foreign
financiers, no less than Russian businessmen, were alarmed by the
sudden onset of recession and accused the Russian government of
doing nothing to protect their investment. In fact, this was a specious
claim. Having been the midwife of growth in heavy industry during
the 1890s, the government was not about to renounce responsibility for
its offspring. Officials took a number of steps to alleviate the critical
position of iron and steel producers. The State Bank extended long-
term credit facilities to the zemstvos, enabling them to purchase agri-
cultural equipment from Russian suppliers. In 1902, the Ministry of
Transport placed a large order for rails with the steel companies. But
the most significant measure was indirect, namely the decision to
countenance the formation of a syndicate in the iron and steel
industry.87
The initiative for the formation of a syndicate in the iron and steel
industry was taken by the directors of a handful of metallurgical firms,
most of them operating in south Russia. These firms had close links
with French financial institutions, notably the Soci£te Generate and
the Banque de l'Union Parisienne, as well as with Belgian capital.
 The eve of the Russo-Japanese War 57

French investors, the value of whose stock was falling during the
industrial crisis, clearly supported any measures to stem a further
decline, and the banks took their interests to heart. The planned
venture also had the support of Witte, who saw a syndicate as a means
of reassuring investors that he had no intention of using the crisis to
acquire French-owned assets at a cut price. To the firms concerned, the
formation of a syndicate had a more direct appeal: it would help to
create a more unified sales system, thereby reducing the leverage of
merchant houses, which imposed onerous credit terms on suppliers of
metal.
Twelve firms agreed to establish a 'Society for the sale of output of
Russian metallurgical factories', known by its Russian abbreviation as
Prodamet. In July 1902, the statutes of the new joint-stock company
were approved by the tsarist government. By 1905, Prodamet had
concluded agreements with firms outside its base in south Russia.
Prodamet apportioned orders amongst its members, in accordance
with pre-determined quotas. Initial agreements covered sheet iron
(July 1902), tires and axles (November 1902), beams and channels (June
1903), pipe (1905), and structural shapes, strip iron, profiled iron and
spring steel (1909). Finally, in December 1909, Prodamet fixed quotas
for rails. There was no formal agreement to syndicate pig iron, because
this was largely consumed by the steelworks themselves. Each party
agreed to sell its output through Prodamet, under threat of financial
penalty in the event of refusal to comply.88
What impact did Prodamet have on the consumer of iron and steel?
The immediate effect of the syndicate was to force up the price of
products, such as sheet iron, which in 1901-2 had sold for approxi-
mately 1.40-1.45 rubles per pud. By the end of 1902 it sold for 1.50, and
the price in 1903-4 had risen to around 1.7 rubles per pud. The price of
structural shapes (sortovoe zhelezo) increased from 1.40 to 1.70 rubles per
pud within a month of the agreement to syndicate output. Further-
more, there were several ways in which Prodamet could charge con-
sumers more than the rate stipulated in the basic schedule of prices, for
example, by charging consumers for the 'theoretical' weight of iron,
rather than the actual, heavier weight, but at the same rate. Prodamet
also charged consumers at the higher freight rate in force on the
railways, even though the syndicate itself paid a reduced tariff.89
Yet it would be wrong to give a one-sided impression of the
behaviour of Prodamet. There were tendencies that worked in the
opposite direction to those described above. In particular, differences
in technology, labour productivity and location between one firm and
58 Defence imperatives and Russian industry, 1900-1907

another within the syndicate meant that it was difficult to enforce a

unified price on all members. Some firms in south Russia objected to
the schedule of prices that applied to output from members in other
regions. As a consequence, there was a tendency towards lower prices
in certain regions, with a complex scheme in force to compensate those
producers, predominantly in Poland and the Baltic regions, who had
to accept a lower price. Consumers, for their part, benefited from the
lower prices and from the reduction in commission charged by the
syndicate. Transport costs also came down, because Prodamet's office
ensured that a customer received iron from a neighbouring factory. In
areas where Prodamet competed with outsiders, prices would be
forced down. Once competition had been eliminated, Prodamet could
raise prices in order to subsidize its efforts in other markets. 90
In the circumstances, the iron and steel industry had much to gain
from measures that imposed closer control over the market. The
government took other measures, for example extending to foreign-
owned corporations the law on receivership, which allowed them to
suspend debt payments indefinitely. 91 But government assistance also
went down the road of direct intervention. The main instrument was a
committee to allocate railway contracts. Government orders had
formed a crucial part of the output of the rapidly-growing iron and
steel industry, especially in south Russia. In the middle of the 1890s,
these contracts amounted to two-thirds of all output of south Russian
metallurgical firms. By 1900 they had dropped to 25 per cent, at which
level they remained stable for the next few years. In normal circum-
stances, suppliers of rails and other items were invited to submit bids
at auctions organized by the local offices of the Ministry of Transport.
But in 1899, as the crisis deepened, the government established an
official commission under Count D. M Sol'skii. The commission broke
with convention, ordering rails from a select handful of factories over a
three-year period. At that moment, five iron and steel companies were
planning to form a syndicate for the allocation of orders for rails that
they received from the government. Both actions were motivated by
the desire to prevent other firms from entering the market for rails. 92
In 1902, the government decided to make the above arrangement
permanent, 'to enable the most reliable factories to survive this difficult
moment without perturbations and losses'. Having successfully con-
cluded two large loans, with France in 1901 and with Germany in 1902,
Witte drew upon these funds in order to finance additional railway
construction. The new committee purchased rails from six firms in
south Russia (the New Russia Ironworks, the Briansk Ironworks, the
 The eve of the Russo-Japanese War 59

South Russian Dnieper Company, the Russo-Belgian metallurgical

Company, the Taganrog Metallurgical Company and Donets Steel),
and three firms in the Urals. Each firm's contract corresponded to the
volume of work it had carried out in recent years, the price being fixed
for three years. The advantages of this arrangement were considerable.
During 1902 and 1903 the market price of rails fluctuated between
1.08-1.12 kopeks per pud, falling at one stage to 90 kopeks. The
government agreed to pay 1.25 kopeks to its chosen suppliers. The
Moscow industrialist Jules Goujon, who - as an outsider - bitterly
opposed the deal, reckoned that the firms concerned reaped a total of
8.5 million rubles from the government. In addition, they could force
down the price of other iron and steel products and, by competing
with non-privileged producers, exercise enormous influence in the
industry. Other advantages accrued to companies involved in this
arrangement. The traditional regulations on procurement required
firms to leave a deposit with the government office as a mark of good
faith, but the new scheme freed the privileged few from this obli-
gation, as well as providing them with government loans and subsi-
dies. No wonder that the iron and steel producers who found them-
selves excluded from these arrangements protested at the treatment
they received.93
The impact of the depression was not felt immediately in those
branches of the engineering industry that produced industrial equip-
ment and rolling-stock. The manufacture of locomotives fell sharply in
1902, but over the next three years the volume of production fluc-
tuated around the peak reached in 1901. Newly built lines required
rolling-stock, and the lag between orders for rails and for rolling-stock
created a degree of buoyancy. The relative insulation of these manu-
facturers from the effects of the slump, at least until the end of 1906,
also owed much to the willingness of government to offer subsidies.
That advantage was compounded by the fact that producers of rolling-
stock (with the exception of those, such as Briansk and Hartmann, who
had substantial iron and steel capacity) could benefit from the fall in
the price of raw material inputs. For these reasons, the financial
position of producers of transport equipment held up relatively well.
Nevertheless, the writing was on the wall for Russian producers of
rolling-stock. If, in 1900, it was apparent that the feverish railway-
building boom had come to an end, by 1906 it became evident that the
government would no longer order rolling-stock on anything like the
scale of the 1890s. Nor would private railway companies, with only a
fraction of the total track between them, be able to plug the gap. As a
60 Defence imperatives and Russian industry, 1900-1907

Table 1.8. Net profits reported in Russian machine-building 1901-1906 (per

cent of capital employed)

All engineering Locomotive and Other engineering

wagon producers

1901 1.18 1.49 0.99

1902 2.27 4.0 1.22
1903 2.67 5.53 1.05
1904 3.53 6.49 1.93
1905 2.78 6.37 0.83
1906 2.19 4.64 0.95

Source: D. P. Il'inskii and V. P. Ivanitskii, Ocherk istorii russkoi parovozostroitel'noi

i vagonostroitel'noi promyshlennosti, Moscow, 1929, p. 91; Stenogramma sovesh-
chaniia metallurgicheskoi i mashinostroitel'noi promyshlennosti, St Petersburg, 1908,
pp. 6-7.

consequence, leading firms shed their workforce with brutal rapidity

and revived the informal selling agreements that had been instituted
during previous lean times.94
Negotiations for a syndicate of producers of locomotives were com-
pleted in December 1901, when six leading manufacturers agreed on
joint action. Unlike Prodamet, the newly-formed 'Society for the trade
in products of Russian locomotive factories' (Prodparovoz) did not
acquire the formal trappings of a joint-stock company. When the
members of Prodparovoz did seek corporate status (in 1908) the
Russian government refused to give permission, its hostility demon-
strating the extent to which tsarist officials maintained their distance
from 'monopoly capital'. In March 1903, a similar agreement was
reached between eleven companies that traded in railway wagons:
Putilov, Briansk, Sormovo and Kolomna were once again involved,
along with Lilpop (Warsaw), the Russo-Baltic Wagon Company,
Maltsov works, the Moscow Wagon Company, Verkhne-Volga,
Phoenix (Riga) and Dvigatel' of Reval. However, Prodvagon con-
ducted few transactions before 1906, and only in 1908 did its members
conclude an agreement that determined quotas. As with the locomo-
tive syndicate, Prodvagon failed to make much of an impact on
government. Its members lobbied unsuccessfully for additional orders
and failed to force up prices for finished goods. The government had
its own reasons for not wishing to see major locomotive producers go
to the wall; hence the element of subsidy in the trickle of government
 The eve of the Russo-Japanese War 61

orders. But these were hardly the stuff of industrialists' dreams. Some
Soviet scholars used to argue that both Prodvagon and Prodparovoz
dominated the committee for the allocation of rails, but the evidence
for this is inadequate. All one can say is that the two syndicates liaised
with government officials, enabling the firms to plan their production
schedules in a more rational manner than hitherto. This hardly smacks
of government subordination to big business.95
The syndicates played a broadly positive role in the industrial
economy. In a memorandum to the Ministry of Trade and Industry, a
spokesman for Prodvagon made the point that
unifying the activities of wagon manufacturers... has influenced the
quality of thefinishedproduct, because their agreement has brought
together the individual technical offices, their designers, builders
and specialists. The factories exchange drawings for new types of
rolling stock (which economizes on effort), collectively appraise their
worth and shortcomings, and seek to unify and standardize the
separate parts of rolling-stock, in order to simplify and cheapen
production.
Shorn of the somewhat idealized claims made on their behalf, this
element of the syndicates' activity has been underestimated in the
literature.96
The depression provided engineering firms with an opportunity to
reassess their product mix. In the initial phase, producers of rolling-
stock, who dominated the industry, were able to survive perfectly
well. Most of them could continue to reap advantages from bulk
production, as they had done during the 1890s. But, by 1907, they were
forced to cut back on the volume of output, and only the creation of
syndicates enabled them to maintain some degree of technical pro-
gress. In the medium term, they were likely to look elsewhere for
custom. Armaments, as we shall see, provided one outlet. For the
present, they turned to the production of iron and steel castings,
agricultural machinery, even laundry and gymnastic equipment. Pro-
duction of agricultural machinery flourished on a wave of land settle-
ment in western Siberia and the vast prairies of south-eastern Russia.
The relative buoyancy of consumer goods industries created a demand
for the corresponding types of equipment, such as textile machinery.
Finally, firms in all sectors of industry began to instal new kinds of
motive power, replacing older steam engines with machines powered
by gas and electricity. Many of these developments, however, lay in
the future. Between 1900 and 1908, the engineering industry as a
whole simply marked time.
62 Defence imperatives and Russian industry, 1900-1907

Conclusion
With the exception of a brief flurry of military activity during
the Russo-Turkish War, Russia enjoyed a half-century of peace
between 1856 and 1904. This breathing-space provided the tsarist
regime with the opportunity to embark on a remarkable and wide-
ranging programme of administrative reform. The prolonged peace
also helped to create a climate in which foreign capital could be tapped
to help finance the construction of a railway network and modern
enterprise in mining and metallurgy. Industrialization was associated
with the emergence of powerful new firms in private ownership. Some
of the leading firms began to develop expertise in armament pro-
duction, but this tendency did not as yet yield significant results. One
reason was that other lines of production appeared to hold out better
prospects, transport equipment being the obvious instance. Another
was that the government retained a strong grip over defence pro-
duction. This did not make the tsarist regime unique - other states, too,
maintained dockyards and arsenals in public ownership. But in Russia,
this practice bore all the hallmarks of a deliberate ideological choice to
retain state control over the most sensitive area of industrial pro-
duction. The emergence of a dynamic private sector in iron and steel
only served to demonstrate what would be in store, were the govern-
ment to open the gates to the arms trade: lobbying by and collusion
amongst suppliers, and the vulnerability of established state enterprise
to organized capitalism.
Russian entrepreneurs as yet paid little attention to the presence of
state armouries and dockyards. But their indifference could change -
and did change - when market conditions became less favourable.
Having grown fat on a diet of government orders before 1900,
industrialists felt entitled to a similar level of support when the recess-
ion began to bite. This implied a reduction in the government commit-
ment to state enterprise. To strengthen the case for the private sector, it
would be necessary to marshal arguments against state-owned enter-
prise; hence, as we shall see, the genesis of complaints about 'ineffi-
cient' state arsenals and shipyards. If industrialists could devise and
utilize a public forum in which these views could be articulated, so
much the better.
The defence industry on the eve of the Russo-Japanese War excited
adverse comment from those who advocated a more commercial
approach to administration. But the deficiencies of the armament
industry did not signify peculiar shortcomings of Russian enterprise
 The eve of the Russo-Japanese War 63

and public administration. Critics of British and French dockyards and

arsenals also complained that accounting and management pro-
cedures needed to be reformed, in order to allow for a proper calcula-
tion of production costs. Industrial managers in these societies, like
their counterparts in Russia, could be heard to lambast procurement
officials who changed their mind about specifications in the middle of
a production run or whose behaviour in other respects made life
difficult for the modern armaments enterprise. But it did not follow
that the way forward necessitated the extension of private capital into
defence production on an increased scale, even assuming that capital-
ists were willing to take the risk of becoming involved.97
In certain instances, the tsarist state did yield ground to the private
sector before 1905. However, before this process could advance very
far, certain conditions had to be met. The most important condition
required that private enterprise offer a substantially new product.
Innovation, as in the manufacture of smokeless powder, light artillery
and new cartridges, encouraged the government to turn to private
enterprise. But this was a necessary, not a sufficient condition. The
availability of a new product did not in itself imply that the state
would tolerate the extension of private enterprise in this sphere. The
sense of responsibility to the labour force under government control,
the widespread bureaucratic aversion towards private enterprise -
despite more than a decade of capitalist industrialization - and the
realization on the part of private investors that defence contracts
offered an insecure future, all conspired to limit the role of the Russian
arms trade. Whether its modest scope would survive the impending
recession, let alone the crucible of war in the Far East, remained to be
seen.
In retrospect, Russia's defence preparations did not suffer from
evident weaknesses in the organization of the armament industry. Nor
did the so-called underfunding of the defence effort during the 1890s
create serious shortcomings. Much more alarming was the use to
which available resources were put. Russian infantry entered battle
with inadequate training, because they were obliged to devote so
much time to other tasks. Fiscal starvation offers only a partial expla-
nation for the persistence of the regimental economy. Other consider-
ations predominated. Officers and men alike remained wedded to
their traditional way of life. Procurement officials had neither the
training nor sufficient motivation to change this state of affairs. The
navy, too, suffered from the misallocation of resources. Sailors were
expected to engage the enemy, without having put to sea in naval
64 Defence imperatives and Russian industry, 1900-1907

trials, because the Admiralty did not regard this as a priority. Not for
the first time, and certainly not for the last, the besetting problems of
Russia's armed forces resulted as much from conceptual myopia and
rudimentary decision-making, as from economic backwardness. The
adjustment to modernity, whether it manifested itself in the guise of
industrial syndicates, business ambition or the availability of new
military technologies, proved painfully slow.
 War and revolution, retrenchment
and recession

Introduction: the emergence of a new agenda, 1904-1907

Sergei Witte, the deposed Minister of Finances, argued that
the war against Japan proved a turning point in the fortunes of
imperial Russia. The war, he said, 'even if it did not create the revo-
lution, brought revolution forward by decades'.1 The events in the Far
East unleashed a torrent of criticism of the old regime by liberal
members of the Russian intelligentsia, the nobility and the merchant
estate. These disparate social groups urged the Tsar to concede some
form of national assembly that would oblige him to listen to the voice
of 'society' (obshchestvennosf). Some liberal activists demanded a
parliament, elected on the basis of universal, equal, direct and secret
suffrage. They were not alone. As news reached St Petersburg in
December 1904 of the fall of Port Arthur, workers in the capital took to
the streets in protest against living conditions and behind the banner
of radical reform. The following year and a half of revolutionary action
by workers, peasants, soldiers and sailors affected all realms of political
and economic life. In October 1905, the Tsar was obliged to issue a
manifesto, conceding a form of parliamentary government. Country-
wide elections led to the convocation of the First Duma in May 1906.2
The loss of human life in the war against Japan was accompanied by
the destruction of capital, notably the loss of military vessels, amount-
ing to three-fifths of the value of the imperial fleet. The ensuing
revolution yielded its own harvest of capital depletion, in the form of
serious damage to oilfields in the Caucasus. This was an extreme,
although not unique, example of the destructive impact of revolution
on the industrial economy.3 In addition, the wave of strikes disrupted
production and called forth punitive measures from the authorities.
The continued revolutionary ferment drove a wedge between liberals,
who welcomed the October Manifesto, and the radicals, who saw in

65
66 Defence imperatives and Russian industry, 1900-1907

the newly formed Soviets an alternative form of government. The

revolutionary experiment in urban Russia collapsed, amidst the arrest
of soviet and strike leaders. A general strike in Moscow during
December 1905 was suppressed with great ferocity.
From an economic point of view, the loss of output and the destruc-
tion of productive assets were, beyond the short term at least, less
significant than the effect of war and revolution on state finances.
Witte maintained in 1907 that the war 'completely destroyed the entire
economic organism of the country'. His main point was that the war
bequeathed Russia a heavy burden of debt. Germany and France
extended credit to Russia, partly because of diplomatic considerations
and partly because international financiers took a sanguine view of
Russia's underlying financial resilience. The end of the war confronted
Russia with the need to service these newly-incurred debts.4
V. N. Kokovtsov, Witte's successor as Minister of Finances, sought to
convince his colleagues that the country could not afford any
additional commitments beyond the measures required to stabilize the
economy. In straitened times, government departments that tradi-
tionally made heavy demands on funds, particularly the ministries of
Transport, War and Navy, had to cut back their claims. The pressure
on these spending stalwarts was made yet more intense by the appear-
ance of a fresh claimant on the post-revolutionary scene, in the shape
of the Ministry of Agriculture, which drafted an expensive programme
of land reform.5
Retrenchment thus became the keyword of economic policy after
1905. What of the implications for defence preparations? Kokovtsov,
whose name was synonymous with this policy, took much the same
view as his illustrious - and embittered - predecessor, namely that war
and preparations for war were inimical to economic prosperity. In
itself, this view might not antagonize the military establishment, who
in the aftermath of the defeats in the Far East were hardly in a position
to go looking for trouble. But to deny the armed forces funds to
re-equip and reorganize - to fail, in short, to do the minimum required
to salvage military pride and restore basic defence capabilities - would
certainly not commend itself to the Russian military leadership. Here
was scope for a divergence of opinion between government and the
military.
In this context, the attitude and behaviour of Russian industrialists
were especially critical. Some sections of industry, in particular those
connected with military supply, did well out of the war, which tempo-
rarily alleviated the worst consequences of the recession. But the
 War and revolution 67

outbreak of revolution early in 1905 shattered the dream of a sustained

upturn in economic fortunes. The peace treaty with Japan, signed in
August 1905, brought to an end the frantic pace of work in Russian
arsenals, shipyards and engineering shops. The defence sector was
faced with all manner of problems: increased costs, resulting from the
concessions made to workers earlier in the year; depleted order books,
which left equipment idle; and falling profits. Considerable entre-
preneurial initiative would be required to address these difficulties.
What resources did industrialists have at their disposal as they sought
to come to terms with the aftermath of war and revolution? During the
revolution, the fledgling business political parties had a short life:
evidently, the Duma would not become a refuge for distressed
businessmen. On the other hand, industrialists did devise new forms
of association during the revolution, which offered them better scope
to exercise leverage upon government.6
The revolution altered business perceptions of government, but it
also created in the Duma a parliamentary body that would claim the
right to pronounce on business and government affairs alike. Parlia-
ment provided a forum for liberal politicians to criticize the existing
arrangements for the administration of armament industry and to
question the procedures for the management of the defence budget
and military procurement. By so doing, the Duma challenged the
long-standing prerogative of the Tsar to oversee all matters relating to
the defence of the realm, a responsibility which he did not intend to
renounce. A threat to this prerogative would test the new political
system to the limit.

The war against Japan, 1904-1905

The Russian war effort in the Far East was bedevilled by
shortcomings in military supply which to a significant extent reflected
the location of the theatre of operations. The supply of military mater-
iel, food and fodder to Russian troops in Manchuria (100,000 of them in
February, twice that number by October 1904), over a distance of 9,000
km, posed enormous problems. At the outbreak of war, the carrying
capacity of the trans-Siberian railway was limited to ten trains per day
in one direction, and although this capacity more than doubled during
the war, its limitations inevitably caused bottlenecks at stations along
the line. Furthermore, no track yet ran around the southern side of
Lake Baikal; in winter, a light track could be laid across the ice to
transport troops and goods quickly, but in summer the authorities had
68 Defence imperatives and Russian industry, 1900-1907

to make use of whatever boats were at hand to make the journey. By

contrast, Japan could ship troops (150,000 of them in February 1904)
and equipment across to the Korean peninsula within twenty-four
hours. 7
The war cruelly exposed the inadequacy of existing arrangements
for military supply. Contemporary critics of the Russian war effort,
anticipating the accusations that were levelled at the procurement
agencies ten years later, pointed to the failure of the Main Artillery
Administration (GAU) and the Chief Quartermaster's Department
(GIU) to supply the army with stocks of weapons and equipment in
adequate quantities and at the appropriate time. A subsequent investi-
gation uncovered deficiencies in artillery supplied to the fortress at
Port Arthur and to the army in the field. At the outbreak of hostilities,
the fortress was equipped with guns based on the models of 1867,1877
and 1886 ('there are even brass guns'). There were other instances of
failures to keep abreast of modern technology. The GAU continued to
place orders for older versions of mountain artillery, even though
contemporary Russian arms producers had begun to produce more
sophisticated versions. Officials seemed to be in no hurry to place
orders for new guns; thus, 'the excellent quality of the rapid-fire field
guns, built by Putilov, could not be exploited, because of delays in
supply of the new guns to artillery batteries'. 8
Serious deficiencies in armaments and equipment manifested them-
selves once they arrived in the Far East. The firepower available to the
army was limited by the shortage of artillery appropriate to the terrain.
Field artillery pieces were too heavy to move in the rugged and often
muddy conditions that the army encountered: when troops retreated,
they simply jettisoned these guns. Military equipment was trans-
ported on wheeled carriages, which proved vulnerable for the same
reason: pack animals would have been better suited to the terrain. The
army suffered, too, from a lack of adequate stocks of mountain guns
and fortress artillery. Officers complained of shortages of high-
explosive shell, compared to shrapnel, as well as a dearth of machine-
guns. To add to these problems, radio communication between army
units hardly existed, and messages were relayed by soldiers on
horseback. 9
Other problems emerged with the supply of uniforms and boots. In
peacetime, Russian troops themselves manufactured uniforms and
footwear. Unfortunately, a system that operated tolerably smoothly in
peacetime broke down under the sudden increase in demand. The
Quartermaster's Department hastily abandoned any attempts at pro-
 War and revolution 69

curement by auction. Nor could it require front-line troops and reser-

vists to supply their own uniforms, in the midst of hectic preparations
for mobilization and military training. Instead, the GIU hurriedly
placed contracts for finished goods with local authorities, wholesalers
and other potential sources of supply. The army constantly com-
plained about delays in the delivery and about the quality of goods,
fuelling the discontent of the already over-stretched and despondent
troops. In some regiments, more than half the boots (valenki) disinte-
grated after a fortnight, forcing soldiers to patch them with pine and fir
bark.10
If Japan had the advantage over its adversary in terms of geography
and quality of weaponry, the same could not be said of troop strength.
Japan never possessed a commanding numerical superiority over
Russian troops. For example, at the battle of Liaoyang in August 1904,
125,000 Japanese troops, with 485 guns at their disposal, faced 160,000
Russian troops, with 592 guns. However, the Russian army was unable
to convert this quantitative advantage into military success. Short-
comings in military supply and qualitative deficiencies in armaments
do not tell the entire story. Many soldiers were inadequately trained. A
candid assessment of the lessons of the Russo-Japanese War concluded
that, 'manifesting astonishing stubbornness and perseverance in
defence, our armed forces are unable to display similar qualities in
attack... The reason for this must be found in inappropriate training, a
lack of understanding of local conditions and of weaponry, the lack of
any internal connection in the actions of different elements in the
armed forces and an inability to agree upon those actions'.11 Sub-
sequent research has tended to corroborate this assessment. Soldiers
were inadequately prepared to use the artillery at their disposal,
because they had been given no prior opportunity to practise
manoeuvres. Training placed a higher premium upon routine drill
procedures than it did upon techniques and skills that could be
deployed on the field of battle. In addition, Russian officers failed to
inspire confidence in their men. Their background had instilled in
them a preference for routine and an unwillingness to take initiative.12
Morale inevitably suffered from the constant strain imposed by
shortages of food and equipment. The more fortunate soldiers suc-
ceeded in obtaining meat from regimental herds and bread from the
regimental bakery. Other troops were not so lucky. Sanitary and
medical facilities appear to have been fairly primitive, but not woefully
inadequate by the standards of the time. An American observer gave a
broadly positive assessment of attempts to cater for wounded and sick
70 Defence imperatives and Russian industry, 1900-1907

men, and applauded the army's programme to protect horses against

anthrax, which was endemic in Manchuria. The army's own medical
service was supplemented by the zemstvos, who provided doctors,
fel'dshera (heath-care auxiliaries) and hospital beds in the field and in
the rear. Unfortunately, the consequence was a protracted conflict
between official and voluntary personnel, typified by complaints that
zemstvo doctors were paid twice as much as army personnel. 13
If the two sides were fairly evenly matched on the field - Russian
superiority in numbers helping to compensate for inferior munitions -
the same cannot be said for their relative naval strength. Japan enjoyed
a clear advantage in the quality and quantity of its ships and arma-
ments. The Russian navy lacked sufficient cruisers and torpedo boats
to deal with the threat posed by the Japanese. At the decisive battle of
Tsushima, Japanese torpedo boats outnumbered Russian by seven to
one. Furthermore, Japanese ships were better protected by armour
plate; and their guns could fire three times as much shell (by weight)
and fifteen times as much (in terms of explosive power) as the Russian
artillery. Russian ships were poorly endowed with radio equipment
and telescopes, leaving them ill-informed about the movements of
their Japanese counterparts. In addition to these material differences,
the quality of personnel left much to be desired. A contemporary
report suggests that both navies had much to learn about the
deployment of mines and the use of artillery; however, in contrast to
the Russian fleet, 'the Japanese were learning all the time'. Many naval
commanders lacked experience of the vessels for which they had
responsibility. Naval ratings were not encouraged to display any
initiative; in any case, the sailors who made u p Admiral Rozhdest-
venskii's fleet had been forced to endure a rigorous and unbroken
seven-month voyage from the shores of Latvia to the Korean Pen-
insula. As a result, they arrived in the Far East in a demoralised and
exhausted state. 'Of all the lessons taught in the war [wrote an astute
American attache], the most important is the value of trained and
patriotic personnel'. 14
The naval engagement at Tsushima on 14 May 1905 effectively
sealed the fate of the Russian war effort in the Far East. The irony of
this outcome has sometimes been lost on historians. The campaigns
which they engaged in during 1904 and 1905 had decimated the
Japanese army. Japan began the war with an army of 320,000 soldiers,
but by the beginning of 1905 around 230,000 men had been killed. By
early summer, the Russian army outnumbered the Japanese by one-
third. Tsushima rescued the faltering Japanese war effort, which
 War and revolution 71

explains why the Japanese government was not averse to the peace
settlement proposed by Theodore Roosevelt. However, Russia's mili-
tary leaders, and especially its naval commanders, derived little
comfort from this state of affairs. After Tsushima, only one cruiser and
two torpedo-boat destroyers limped on to Vladivostok; the rest of
Rozhdestvenskii's fleet was either sunk, captured or interned. In all,
the tsarist navy sustained the loss of seventeen battleships (including
two coastal defence vessels), eleven armoured cruisers, five light cru-
isers, twenty-two torpedo-boat destroyers, four transport ships and
eight dock vessels. The Russian navy lost virtually its entire com-
plement of battleships and cruisers, and around one-fifth of its des-
troyers. The implications of these losses for the defence of the Baltic
littoral were not lost on Russian observers. In addition, 284 officers and
6,227 men from the Far Eastern fleet lost their lives, representing one
fifth of the total complement. It is hardly surprising that contemporary
publicists spoke of Tsushima as an unparallelled tragedy for the
Russian fleet.15
The latter part of the Russo-Japanese war coincided with mounting
unrest in the main urban centres of European Russia. Against the
background of revolution and of Tsushima, the War Council enter-
tained the continuation of war. Some participants spoke in favour of a
further effort to defeat the Japanese ground forces. According to War
Minister Sakharov, additional troops could be deployed in the Far
East. Inevitably, however, this decision would jeopardize the mainte-
nance of public order in cities such as St Petersburg and Odessa. From
his vantage point as commander-in-chief of the St Petersburg military
district, Grand Duke Vladimir Aleksandrovich, uncle to Tsar Nicholas,
insisted that 'internal welfare [blagosostoianie] matters more to us than
victory against Japan'. This view was not shared by other military men,
notably Sakharov, who complained of the damage to Russian pride,
and Kuropatkin, who insisted that a victory over Japanese troops
remained a real possibility. Appropriately enough, the Court
viewpoint prevailed: just as the Tsar^s entourage pressed him to
confront Japan in the first place, so they now encouraged him to bring
the war to an end.16
The conclusion of hostilities after a succession of military defeats
brought with it the search for scapegoats. Post-war investigations
conducted by the Russian army admitted to shortcomings in military
training and expertise, but concentrated their criticism on the system
of weapons procurement. The main commission of inquiry berated the
various procurement authorities for failing to order an adequate range
72 Defence imperatives and Russian industry, 1900-1907

of products: machine-guns, artillery ammunition, communication and

observation equipment. Although military personnel were poorly
placed to make use of the equipment at their disposal, the army
managed to shift much of the blame for military setbacks on to the
procurement agencies. Peace brought them precious little respite from
bureaucratic invective and public opprobrium.

The impact of the war on the defence industry

Russian arms manufacturers saw the war against Japan as an
opportunity to put idle plant to use. They can hardly have been
prepared for the flurry of orders that were showered upon them. Even
the readiness of the procurement agencies to order armaments from
foreign suppliers did not prevent intense activity throughout the
defence industry. In this respect, as in much else, the Russo-Japanese
War prefigured developments a decade later: charges of profiteering
were levelled at industrialists, while the government procurement
departments stood accused of procrastination, corruption and disor-
ganization.
Only the readiness of the procurement agencies to place orders with
foreign suppliers stood between the domestic defence industry and
full order books. According to a spokesman for the arms trade, the
navy alone spent more than 200 million rubles on foreign vessels and
related items during the war (included in this total were contracts
placed with overseas producers in earlier years and delivered in
1904-5). The defence departments placed substantial foreign orders
during 1904 with German firms such as Krupp and Blohm und Voss, in
a desperate rush to secure armaments and vessels.17 The two ministries
between them spent 175 million rubles on imports in 1904-5, including
72 million rubles on military vessels, troop transport ships and naval
accessories and 58 million rubles on artillery and other weaponry.
Orders for coal and coke for the navy, worth 25 million rubles,
accounted for the remainder (see table 2.1). These contracts amounted
to one-third of total orders for weaponry, but up to four-fifths of all
new orders for military vessels during the war.
This level of dependence on foreign sources of supply was enough
to justify the fears of domestic manufacturers that they would be
overlooked in the scramble for military hardware. They looked on in
despair as the French sought to link Russian contracts to negotiations
for a Russian loan. Russian industrialists claimed that domestic fac-
tories were quite capable of supplying these goods and would have
 War and revolution 73

Table 2.1. Foreign orders for military goods, 1904-1905 (million rubles)

War Ministry Navy

Weapons and ammunition 57.5 5.7

(incl. 3-inch shell) (23.0) H
Explosives 1.2 0.4
Coal and coke 1.7 25.0
Metals 5.0 1.4
(incl. aluminium) (2.5) H
Communications equipment 3.0 0.7
Optical equipment 0.5 0.2
Searchlights - 0.7
Balloons (aerostats) 0.6 0.2
Ships and accessories - 72.0

Total 69.5 106.3

Source: TsGIA f.1276, op.4, d.530, U.198-202ob.

done so, if only the procurement authorities had made adequate

preparations for war, by ordering more vessels and armaments from
domestic suppliers in the years before 1904. The urgent need for
military vessels in 1904 only underscored, in their view, the short-
sightedness of procurement policy. Government officials defended the
decision to order from foreign suppliers, pointing out that Russian
firms were unable to deliver on time or at a suitable price. In the case of
new weapons, such as the machine-gun, domestic industry had no
manufacturing experience on which it might draw. The Tula armoury
had only just begun to produce machine-guns on the eve of the war.
Officials also argued that it made little sense to deal with Russian firms
which simply assembled parts manufactured abroad. The government
might as well obtain the finished product quickly and cheaply by
ordering direct from a foreign source.18
An outburst of voluntary initiatives to deal with shortages of mili-
tary goods also anticipated later events. In February 1904, Russian
industrialists and professional people established a 'committee to
strengthen the fleet by voluntary donations', with funds raised from
the sale of securities. Within a year, the committee had placed orders
for eighteen torpedo boats and four submarines, at a total cost of 14.4
million rubles. In a move calculated to demonstrate to official agencies
its confidence in domestic industry, the committee spent most of its
74 Defence imperatives and Russian industry, 1900-1907

resources in Russia and Finland. For instance, the Latvian firm of

Lange and Son obtained a contract for eight torpedo boats. This
'patriotic' initiative went some way towards alleviating the effect of
the official procurement policies. 19
The procurement authorities certainly did not overlook domestic
suppliers. State-owned armouries were especially hard pressed. The
production of rifles was almost entirely entrusted to the factories
administered by the GAU. The three armouries at Tula, Izhevsk and
Sestroretsk between them produced 204,000 rifles in 1904 and 312,000
in 1905, albeit with much lower completion rates during 1905, when
they were seized by revolutionary ferment. At the Tula arsenal, whose
labour force had been cut from a peak of 10,000 in the 1890s to 3,600 in
1903, extra workers were recruited, bringing the complement back to
10,000. Employees worked overtime to cope with orders for small
arms. The three cartridge works, in St Petersburg, Lugansk and Tula
also worked round the clock to keep pace with military demand.
Output at the Tula works increased from 4.2 million rubles (the
average figure in 1899-1903) to 14.8 million rubles in 1904 and 10.0
million rubles in 1905. The workforce increased at a staggering rate,
from 1,400 to 4,700 during 1904, and reached 7,000 in 1905.20
The manufacture of artillery and shell followed a rather different
course, in so far as the volume of production was maintained
throughout 1906. During the war, three factories (Putilov, the St
Petersburg Ordnance factory and the Perm Cannon Works at Motovil-
ikha) produced 1,400 3-inch guns. In 1906 and 1907 production
increased to 1,700 pieces, as the army replenished its stocks. The Perm
factory received a stream of orders from the Admiralty, as well as from
the GAU. Other ironworks in the Urals restored their fortunes by
taking additional government defence contracts. Most of them con-
centrated on the manufacture of shell, which accounted for two-fifths
of their output by 1905.21
The war led to feverish attempts to complete the shipbuilding
programme initiated during the 1890s. The average annual dis-
placement tonnage completed in 1895-99 had been 264,000 tons. In
1900-4 the figure rose to 340,000 tons, and in 1905 alone it reached
416,000 tons. 22 At Obukhov, the impact of the war was reflected in a
sharp rise in gross output, and management reported a modest - and
merely temporary - improvement in profits. The Baltic yards also
worked at fever pitch, producing and repairing vessels. Additional
workers were taken on to cope with the volume of orders, bringing the
total workforce to just under 7,000 in 1904, compared to 4,200 at the
 War and revolution 75

beginning of the century. The value of gross output swelled to 13

million rubles (yielding profits of 2.7 million rubles), compared to four
million rubles ten years earlier, when the yards had been in private
hands. Not all state yards reported such healthy results. The war
exposed serious shortcomings at the Izhora works. Izhora continued
to produce high-quality armour-plate throughout the war, but its car-
tridge shop left a lot to be desired. In 1904, the navy - urgently in need
of artillery ammunition - found that Izhora was four years behind the
current production schedule. Inspectors attributed delays to a lack of
specialist technical advisers at the factory and inadequate techniques
for brass-moulding.23
In the private sector, too, the war provided a much-needed boost.
Putilov embarked on its career as a specialist arms manufacturer. In
1900, military production accounted for 15 per cent of its output; by
1905, this had risen to 27 per cent. During the war, Putilov received
orders from the GAU worth nine million rubles. Contracts for artillery
were accompanied by a loan worth 1.5 million rubles for the expan-
sion of the gun shop. Putilov's products commanded the admiration
of the army and other interested observers, and the firm occupied a
position of virtual parity with the great state ordnance works at Perm
and Obukhov. Other private arms producers were able to restore their
labour force to the levels of the 1890s. At the Nikolaev shipyards, the
workforce reached 2,700 in 1904-5, having fallen below 2,000 in
1901-2. During the war, output reached 6.67 million rubles, one-fifth
higher than in 1903-4 and twice as high as in 1901-2. However, this
revival in the fortunes of the beleaguered company was to prove
shortlived.24
In the short term, factories coped with the volume of orders by
working additional shifts. But there was a price to be paid: the pace of
work meant that equipment was subjected to a much higher rate of
wear and tear than in peacetime. The director of the St Petersburg car-
tridge factory commented that the intensity of production deprived
him of the opportunity to carry out even minor repairs to equipment.
He pointed out that capital productivity would decline in the medium
term, unless steps were taken to replace machine tools, boilers and
other equipment which had worn out. The inspector of government
armouries, Lt. Gen. Bestuzhev-Riumin, agreed, noting that 'machine
tools should normally be replaced every 10 or 15 years, and so each
year about seven per cent of the stock should be replaced ... but
at the St Petersburg Cartridge Works only four per cent of the stock
was replaced and at Lugansk less than three per cent'. Unless
76 Defence imperatives and Russian industry, 1900-1907

re-equipment took place after the war, he affirmed, labour produc-

tivity would inevitably decline. 25
At some state enterprises, the government did take steps to invest in
new plant. The Department of Mines sank 2.7 million rubles (more
than three-quarters of its total allocation to the Urals ironworks) into
Motovilikha, whose stock of fixed capital increased by 50 per cent
between 1904 and 1907. The GAU projected a new cartridge factory, to
supplement the existing capacity at St Petersburg and Lugansk, and
the privately-owned Tula company. The Ministry of Finances accepted
the project, on condition that funds were found from the army's
existing budget. Finding this impossible, the GAU placed all three
factories on a three-shift system, and allocated 224,000 rubles for new
equipment. By this means, the Tula Cartridge Company, like Putilov,
drew upon government funds for new investment. 26
The war did little to alter the balance between state and private
enterprise. When not ordering from abroad, the GAU for the most part
favoured state arsenals. As the war drew to a close, the government
embarked upon plans to expand the state sector. A special commission
concluded that 10 million rubles should be allocated towards the
construction of four new works, one each for explosives, powder,
cartridge and fuse production. In the event, the government allocated
little more than 2 million rubles, for a fuse works at Samara. Such
parsimony was a clear sign that financial pressures had already begun
to constrain military spending plans. The navy was slightly more
favourably disposed to private enterprise than the War Ministry, a
difference in attitude that time did nothing to diminish. 27
As we shall see, the war caused the GAU to reassess the administra-
tion of the factories under its jurisdiction and to consider the benefits
of commercial management. In the short term, other issues demanded
prior consideration. Many factories badly needed fresh infusions of
capital, in order to re-equip. A fortunate handful had found the
resources, even in the midst of war, to invest in new plant. But, as the
war drew to a close, it became obvious that the defence departments
were in no position to make substantial and long-term commitments to
their domestic suppliers. In the difficult conditions after 1905, state
arsenals and dockyards vied for reduced and erratic orders. Even
though the state sector enjoyed a monopoly of many items, manage-
ment could hardly remain satisfied with this state of affairs. The
private sector occupied a still more precarious position. Managers
realized that by investing in new plant during the war, they had stored
up problems for the future. Whether orders could be found to justify
 War and revolution 77

these wartime outlays, let alone maintain employment levels, became

an inescapable concern. However, during the second part of 1905 and
1906, it was the revolutionary movement that claimed their immediate
attention.

Industrial production during the war

On the eve of the war, according to Kokovtsov, the economy
had begun to recover from the depression of the preceding three
years, but the war 'once again destroyed the restorative tendency in
our industrial affairs'.28 This view was endorsed subsequently by
Soviet economists. Mendel'son concluded that 'the advantages that
accrued to some sectors of industry from the increase in military orders
did not disguise the general negative influence of the war on the
economy'. But this is not entirely true. Total industrial output
increased by around eight per cent in 1904, sustaining the improve-
ment that had already begun in the previous year. It was to be
expected that mining, metallurgy, engineering, basic chemicals and
construction showed a marked improvement in output, which in 1904
was more than 12 per cent higher than the previous year. But the
upturn was not confined to these branches of industry.29
Inevitably, the war boosted the fortunes of those sectors which
supplied inputs to defence industry, as well as those directly involved
in military production. Branches of industry associated with the war
effort found themselves carried along in the wake of defence pro-
duction. The engineering industry received orders for military goods,
including locomotives and wagons. The prosperity of Russian rolling-
stock producers, whose fortunes had begun to revive in 1903 (partly as
a consequence of the new committee for the allocation of rail orders)
continued throughout 1904 and was no less marked during 1905.
However, the war did little to stimulate investment in industry or, for
that matter, in railway track. Uncertainties on the St Petersburg stock
exchange made it difficult for companies to raise capital. The State
Bank discounted fewer commercial bills, and the general rise in inter-
est rates discouraged industrial investment. The output of structural
steel shapes and roofing iron declined slightly in 1904 (and again in
1905), confirming the picture of stagnation in industrial investment.30
Other branches of industry managed a modest increase in output.
Again, the war effort provided fresh opportunities. A survey of the
textile trade in 1905 revealed that many firms, especially in Russian
Poland, had been forced to reduce their labour force, because of the
78 Defence imperatives and Russian industry, 1900-1907

general tightening of credit and because of a reduction in the supply of

cotton from central Asia. But flax-processing firms, which supplied the
armed forces with cloth, performed relatively well. It is also difficult to
accept the view that 'the increased production of manufactured goods
for the army was balanced by the reduced purchasing power of the
peasant market'. A record harvest in 1904, together with transfer
payments made by the army to peasant conscripts, probably served to
maintain rural purchasing power, and thus to prevent a downturn in
civilian production. Nevertheless, the prospects for industry in general
were hardly very favourable; and they were to get much worse during
the following three years. 31

Government, businessmen and labour in 1905: workers'

demands, market uncertainties and employers' organization
The revolution of 1905 shook Russian employers, changed
their habits of thought and impelled them to develop new forms of
action. But it should not be thought that the outbreak of widespread
labour protest in January 1905 disturbed an otherwise tranquil world
of work. The wave of strikes in the Russian textile industry during the
summer of 1896 still remained fresh in the minds of employers and
workers. In 1901, workers at the main shipyard in St Petersburg had
gone on strike.32 Nor did labour activism alone create uncertainty in
Russian factories. The delicate state of industrial relations in Russia
was also liable to be thrown into confusion by government action.
Throughout 1901 and 1902, the tsarist police and the Ministry of the
Interior actively promoted trade union organization among workers in
cities such as Moscow and Minsk. This interventionist programme
('police socialism') horrified Russian industrialists, not least because
the officials involved could ultimately be called to account only by the
Tsar. In Moscow, where the movement made considerable headway,
textile magnates expressed their disgust with the experiment. Any
means of curbing the arbitrary intervention of the bureaucracy in the
workplace would enjoy the wholehearted support of the employers.
Hence the efflorescence of liberalism amongst many businessmen on
the eve of the 1905 revolution. In addition, the working-class struggle
for political reform that gathered momentum before 1905 served a
useful purpose for Russian industrialists: it diverted attention from
workers' economic grievances and it challenged the unfettered
powers of tsarist officialdom over factory industry.33
Nevertheless, nothing in the previous history of the Russian labour
 War and revolution 79

movement prepared employers for what followed in 1905. At the

beginning of the year, businessmen in St Petersburg were driven to a
state of complete panic by the vehemence and extent of labour protest
in the capital, where around 160,000 workers walked out in the
immediate aftermath of the Bloody Sunday massacre. It fell to the
Minister of Finances to spell out the government's position. At a
meeting with industrialists on 24 January 1905, Kokovtsov made plain
that the government held them accountable for the outpouring of
labour unrest. Strikes would end when employers made improve-
ments in the material living conditions of their workforce. Kokovtsov's
attitude appalled the industrialists. Coming so soon after the experi-
ment with police socialism, this abdication of responsibility by govern-
ment stuck in the throat of employers. They were goaded by the
government's unwillingness to accept any responsibility for the out-
break of revolution into entering the political arena directly for the first
time.34
The aftermath of Bloody Sunday signalled an important change of
mood amongst employers. Of course, there had been petitions to the
government and meetings with ministers in earlier years, but the terms
on which these took place were dictated by tsarist officialdom. By
contrast, the events of early 1905 conferred on businessmen a new
degree of confidence, stimulated by government insouciance, no less
than by the opportunities created by revelations of the political and
military leadership's incompetence in the conduct of the war effort in
the Far East. It was no accident that war provided the background to
this tentative and (some argued) overdue intervention in politics.35
The first signs of employer activism came in the spring of 1905, when
several industrial associations expressed the view that the prevailing
unrest could only be curbed by political reform. In March, a group of
industrial magnates met in private to discuss the need for a unified
body that could advance the claims of industry in the face of labour
protest and the frosty reception given by government. All major
industrial regions were represented. They agreed on the need for a
permanent representative organization. Discussion did not advance
far before the project was overtaken by events, in particular by the
Tsar's declared willingness to entertain a consultative assembly. In the
tense spring of 1905, many industrialists were attracted by the idea of
direct involvement in politics. What better way to act upon their
widespread conviction that harmony in industrial relations could best
be served by reform of the 'circumstances outside of industrial life',
rather than by material concessions wrung from employers?36
80 Defence imperatives and Russian industry, 1900-1907

The outbreak of revolution in 1905 forced Russian employers to

confront the prevailing system of industrial relations. Broadly speak-
ing, they disliked the idea of collective representation for workers,
holding to the idea that an individual worker entered into a private
contract with an employer. However, employers feared still more the
likelihood that in the absence of such concessions the regime would
step up its arbitrary interference in the internal affairs of the enter-
prise. Reform of the system of industrial relations was preferable to
bureaucratic intervention. This position was by no means universally
adopted. The Moscow Bourse Committee vigorously opposed the
suggestion made by the municipal duma that peaceful strikes and
trade unions be legalized.37
The struggle for immediate material improvements, however, domi-
nated all other issues in the workplace at the start of the year. The
strength of the strike movement in January and February forced
employers to make concessions to workers over wages and hours. But
this conciliatory response left a sour taste in the mouth of manage-
ment. No sooner had they made concessions but employers found
reasons for holding the line against further improvements. Some
employers dug in their heels at the outset. The prevailing reluctance to
concede a reduction in hours was especially marked in the central
industrial region. The Moscow Bourse Committee formed a commis-
sion on the labour question, headed by the textile factory owner S. I.
Chetverikov, which took a hard line. Goujon, the outspoken owner of
the Moscow Metal Company, complained that he would go out of
business if hours fell below ten and a half. Other employers shared his
opinion. In the south Russian iron and steel industry, the employers'
organization issued a statement in support of the status quo,
remarking that 'private enterprises are designed to yield some returns,
however small, on the capital invested in them'.38
The strike movement abated during the late spring and summer of
1905, although there were isolated exceptions. Russian managers
drew scant comfort from this state of affairs. Workers had begun to
establish new craft unions, which organized fresh protests. The strike
wave intensified during the autumn, culminating in a general strike.
Many employers responded by taking a harder line than they had
done six months before. However, in several sectors of Russian
industry, notably engineering, workers did extract some concessions
from their employers. As if labour activism was not enough, by the
end of 1905, the government was on the verge of legalizing trade
unions. This imminent concession to labour served to remind
 War and revolution 81

industrialists of the need to give a clearer voice to their own collective

interests.39
In common with all shades of liberal opinion, many industrialists
wanted an assembly that could serve as a conduit between organized
interest groups and the government. Some business leaders hoped for
nothing more than a consultative assembly, without legislative
powers. Others took a more radical line, advocating a parliamentary
body, elected on the four-tail suffrage. But the creation of a parlia-
mentary chamber threatened to create as many problems as it solved.
Employers calculated that industry would be under-represented in
any assembly and that any economic reforms would be correspond-
ingly one-sided. These fears did not lack foundation. An electoral
system based on sosloviia (estates), as in local government, seemed
bound to satisfy the claims of landowners and the urban propertied
classes. Industry had much less likelihood of obtaining a voice com-
mensurate with its economic significance. Nor did the existing institu-
tions of state offer any comfort. No men with a background of full-time
activity in industry sat on the State Council.40 Finally, business leaders
rapidly discovered that the most dynamic and best organized political
party on the scene in the middle of 1905, the Constitutional Democratic
Party (Cadets) formulated an economic programme that included the
recognition of workers' right to an eight-hour day. For these reasons
business leaders embarked on an experiment in parliamentary politics.
It soon became clear that it was easier to identify a need for action than
to unite the disparate forces of private enterprise.
Discussions between industrialists during the course of 1905
revealed a fundamental lack of agreement over the nature and func-
tion of any parliamentary assembly that the Tsar might concede.
Broadly speaking, the Moscow Bourse Committee (led by V. A. Naide-
nov) stuck close to the project favoured by the new Minister of the
Interior, A. G. Bulygin, which envisaged a consultative assembly
without any legislative authority. A younger generation of business-
men advocated a parliamentary assembly with legislative powers.
They included the main figures in the textile industry. Some older
men, too, espoused the cause of radical reform; Chetverikov, a scion of
an old Moscow merchant family, advocated radical measures in order
to secure a genuine legislature, including refusal to pay taxes and
promote government loans. But discussions during the summer about
political reform were nipped in the bud, when Naidenov invited the
governor of Moscow to close down a conference of trade and industry
that had gone too far for his liking.41
82 Defence imperatives and Russian industry, 1900-1907

The October Manifesto altered the situation, not least by making

Naidenov and his ilk appear faintly ridiculous. Several political parties
representing businessmen appeared on the scene, albeit without
making a dramatic impact on the overall development of politics. They
included the Trade and Industry Party, formed in Moscow, and two
parties in St Petersburg, the All-Russian Union of Trade and Industry
(which recruited among small businessmen and merchants) and the
Progressive Economic Party. The initiative for the latter came from
businessmen in the iron and steel and engineering industries, disillu-
sioned at the failure of other business leaders to forge a united front in
support of parliamentary government and to stem the tide of revo-
lution. Without adequate organization and publicity on their behalf,
industrialists feared that the government would make too many con-
cessions to the radical movement. But this infant political party failed
to attract support even from those quarters where it might have
expected to do so. Major business figures in the capital poured scorn
on the idea of a separate political party, which could all too easily be
seen as the plaything of plutocracy.42
hi Moscow, business leaders set aside their differences to campaign
for the 'realization of the new principles proclaimed in the October
Manifesto' and for the restoration of law and order. The economic
programme of the Trade and Industry Party contained obligatory
references to the need for continued tariff protection, and for firm
resistance to the eight-hour day. This party alone managed any kind of
electoral success; the others disintegrated by the time the First Duma
convened. At the polls, the middle-class urban professionals voted for
the Cadets; the much more numerous class of peasant traders sup-
ported peasant candidates. Business activists eventually threw in their
lot with the Octobrists, a tacit admission that organized party-political
activity on behalf of industry had reached a dead-end. 43
The weakness of this political strategy lay in its assumption that
Russian businessmen could unite around a common business plat-
form. But Russian merchants and industrialists could not even agree
on the core content of a business party. In the wake of these abortive
attempts to form a political party capable of articulating their interests
in parliament, Russian industrialists turned once more to the creation
of a pressure group that would lobby the government. Their motive
remained the same as before, namely to convince the regime of the
validity of the claims of industry. But industrialists had to adjust to the
new situation brought about by the establishment of the Duma, domi-
nated by largely hostile interests. Only a powerful union of industrial-
 War and revolution 83

ists might counter the unsympathetic forces represented in parlia-

ment. However, the experience of 1905 demonstrated beyond all
doubt that no single organization could hope to speak on behalf of the
divergent business interests of the country.44
The problems associated with the formation of a national body came
to the fore in early 1906. Leaders of the permanent advisory office of
ironmasters in St Petersburg convened a congress of 'trade and indus-
trial establishments' in the capital, in order to defend the interests of
heavy industry. Over one hundred delegates attended and heard a
report about the need for unity in defence of industry, irrespective of
the political convictions of its representatives. More controversial was
the question of the relationship between member firms, their existing
associations and the new all-Russian organization. M. F. Norpe, a
leading steel magnate, spoke in favour of an organization that would
empower a central executive committee to act on members' behalf
between meetings of the congress. This proposal evoked a sharp
response from a spokesman for the Moscow Bourse Committee, who
argued in favour of maximum autonomy for member associations, lest
Moscow forfeit its preeminence to the 'periphery'. Representatives
from the Baltic region and from Poland also expressed reservations.
Russia's beleaguered businessmen, it appeared, stood on the verge of
another spectacular failure.45
The economic programmes of the various business parties reveal
something of the extent to which uncertainties about the Russian
market had seized hold of Russian employers. Curiously, Kokovtsov's
argument in favour of concessions in 1905 failed to evoke the obvious
response from employers, namely that the industrial depression tied
their hands. However, during the course of the year employers'
organizations began to seize the opportunity to shift responsibility on
to government, by demanding a substantial injection of funds in
industry. They supported calls for a reduction in the burden of tax-
ation on consumers, on the grounds that 'the chief brake on the
development of Russian industry is the absence of a domestic market,
as a result of the starvation of the peasant masses'. Several of the
short-lived business parties campaigned on a platform of economic
expansionism. The manifesto of the Trade and Industry Party included
a proposal for investment in a programme for the development of
Russia's abundant natural resources. The Progressive Economic Party
urged the government to release funds for the expansion of the
railway network and the mercantile marine. Other proposals, such as
those for improved credit for industrial clients, reduced subsidies for
84 Defence imperatives and Russian industry, 1900-1907

state-owned industry and protection for the engineering industry

anticipated many of the demands that would be made by industrial
pressure groups each year until the outbreak of war in 1914.
This kind of initiative held little interest for the politicians who
succeeded where the business parties failed. The elections to the First
Duma gave a majority of seats to radicals and left liberals, whose main
concern was to enact a land reform. The plight of industry came well
down the agenda. There were some exceptions in this unsympathetic
assembly, notably Peter Struve, who spoke in support of a more active
budgetary policy than that favoured by Kokovtsov. But the majority of
new parliamentarians regarded industry with disdain and capitalists
as self-seeking individuals.46

Revolution and the defence sector

The revolution impinged upon the capabilities of the Russian
defence sector in dramatic fashion. Hard on the heels of the fall of Port
Arthur in December 1904, a wave of strikes in St Petersburg in the
aftermath of Bloody Sunday (9 January 1905) threatened to disrupt
defence industry. Workers in the giant machine-building and arma-
ments factories took the lead in labour protest and political radicalism.
But the revolution entailed other consequences for the defence sector.
Strikes of railway workers and dockers interrupted military supplies
destined for the Far East; the Tsar responded with a decree militarizing
the railways.47 Troops were diverted from the war in order to deal
with unrest in the chief urban centres of European Russia. During the
later part of 1905 and throughout 1906, numerous contingents of the
armed forces refused to obey orders. Little was done to remedy the
outstanding grievances of soldiers and sailors, whose sense of outrage
over poor conditions, low pay and the indignities they suffered at the
hands of their superiors matched in intensity the feelings that pro-
voked workers into action. Nor were they appeased by the signature
of the peace treaty with Japan in August. Feeling that the regime had
let them down, by failing to organize the prompt and efficient with-
drawal of troops from the Far East, ordinary soldiers mutinied on a
massive scale. In October, troops on the naval base of Kronstadt
refused to obey orders, demanding a range of civil liberties and
improved living conditions. Only when the Tsar managed to reassert
his authority over the nationwide popular movement did the troops
begin to fall into line. Even then, however, a question-mark hung over
the underlying reliability of the armed forces.48
 War and revolution 85

In the defence industry, the year began unpromisingly. Close to the

capital, at the Izhora and Sestroretsk arsenals, workers walked out on
10 January, in support of the strike at the giant Putilov plant. Workers
at the Obukhov, Baltic and Galernyi shipyards followed suit. Many of
the claims lodged by workers reflected a common desire for a shorter
working day. Petitions presented to management at Sestroretsk and
Izhora called specifically for an eight-hour day. Workers demanded a
guaranteed minimum daily wage; at Sestroretsk, where piece-rates for
the manufacture of rifles (vintovki) had been reduced from 8.26 rubles
in 1895 to 6.20 rubles by 1901, workers called for the restoration of the
old rate for the job. Demands for better rates of pay were coupled with
a demand for pensions for employees who retired after more than
twenty-five years' service. Other improvements sought included the
right to better medical provision, an indication that the engagement of
a factory doctor did not guarantee either decent treatment or medical
facilities; the right to choose whether or not to belong to savings funds
instituted at the factory and to control such funds; and the abolition of
fines levied on workers for defective work, where workers themselves
were not to blame.49
Issues of job control were also sometimes at stake. At Sestroretsk,
management had begun to employ semi-skilled labour and to down-
grade the status of skilled workers. Craft workers called for the
employment of additional numbers of unskilled men, 'so that skilled
craftsmen aren't ordered about by foremen and storeroom supervisors
[kladovshchiki]'. More widespread still was the desire of workers to
reassert their dignity in the face of unsympathetic or tyrannical super-
visors. Workers' complaints about their harassment at the hands of
foremen were a constant refrain of the strike movement, and petitions
frequently called for the dismissal of individual supervisors who had
treated workers offensively. Finally, workers demanded guarantees of
no victimization.50
At first, managers tried to browbeat their workforce into submission,
appealing to workers' sense of patriotism. The plant manager at
Obukhov reminded them of the war currently being waged against
Japan. His opposite number at Izhora urged workers to return to work,
'which is now absolutely essential for the good of the country in its
hard struggle against the insolent Asiatic [s derzkim aziatom]'. Kokovt-
sov reinforced the point, adding that 'evil-minded men in causing this
unrest have not held back, in view of the problems our nation is facing
at this difficult time of war'. They all received short shrift, with a
reminder (from the men at Obukhov) that workers themselves were
86 Defence imperatives and Russian industry, 1900-1907

engaged in a bitter and potentially bloody confrontation: 'it's a waste

of time to talk about the war with Japan at this historic moment, with
people who are not completely conscious of our struggle. We have
taken the decision to fight till the last drop of our blood'.51
Faced with an impressive degree of solidarity, managers in the state
sector offered significant concessions. The manager of the Sestroretsk
arsenal, N. G. Dmitriev-Baitsurov, adopted a markedly conciliatory
tone. At a meeting in January with a delegation of workers, he
resolved some of the issues raised during the strike to the satisfaction
of workers' representatives. He agreed to increase daily wage rates
(they were last increased in 1891!), to restore the rate paid per rifle, to
pay overtime at time and a half, and to impose a minimum wage of one
ruble for machine-tool operators and 1.50 rubles for turners. In justi-
fication of these steps, Dmitriev-Baitsurov informed the Main Artillery
Administration (GAU) that workers had been badly hit by the recess-
ion after 1901 and by the rising cost of living during 1904. Commenting
on the demand for pension rights, Dmitriev-Baitsurov pointed out that
the War Ministry had been considering this question for 30 years and
had yet to come up with a scheme similar to that operated by the
Department of Mines. He stressed that a proper pension scheme
would allow managers to release workers whose infirmity made them
a liability: at present, pensionable workers 'are kept on because their
position would otherwise be helpless'. 52
The manager of the Izhora arsenal, General Gross, similarly pursued
a conciliatory line. Gross ordered foremen to drop the use of the
familiar ly form of address, a patronizing style deeply resented by
Russian workers. He promised that skilled craftsmen would be paid on
a regular basis: workers constantly complained at the erratic payment
of wages. Workers who left of their own accord would in future no
longer have to wait three months before being taken on again. The
management also increased wages and offered no objection to the
convocation of meetings of workers' delegates. This was enough to
cool the temper of the workforce for the time being. A similar pattern -
strikes, followed by a management climbdown - was repeated at
Obukhov and at the St Petersburg Cartridge Works.53
These concessions ensured that the armaments industry did not
come to a standstill for more than a few days in January. There were
fresh outbreaks of protest during the following month: at Sestroretsk
and elsewhere, workers went on strike when the authorities rejected
the delegates chosen by workers for the newly-formed Shidlovskii
commission. But these stoppages were an exception rather than the
 War and revolution 87

rule. In any case, dramatic moves by the Main Artillery Administration

and the Admiralty offered a significant additional concession to
workers. In April, the GAU instituted a nine-hour day at all factories
under its jurisdiction. The Admiralty did likewise in the following
month, for most workers in its shipyards. In the armaments industry,
the message was clear: prolonged interruptions to production could
not be tolerated, and were best resolved by negotiation rather than
outright confrontation.54
The statement issued by the authorities at the Perm arsenal at
Motovilikha in the Urals at the end of May 1905 gives an insight into
the mind of factory management. Workers went on strike on 25 May.
The director of the plant complex, P. P. Boklevskii noted that his
willingness to make limited concessions showed 'our readiness to
respond to sensible and feasible demands made by workers'. He went
on to say that a stoppage at the works
will have disastrous consequences ... when I sought additional con-
tracts for the Urals ironworks from the Admiralty and army, they
warned me that if I offered no guarantees that urgent contracts
would be completed ontime,then they intended to place orders with
overseas suppliers. The defence of the realm would compel them to
resort to this unwelcome step; and the factory would have to close.
For this reason I ask all workers, both in their own interests and those
of the state to halt the strike and to commence work without delay.
Workers seem to have heeded this appeal; news reached the capital
that the Perm plant re-opened towards the end of May.55
The strike movement flared up intermittently throughout 1905.
Workers in the 'hot metal' shops administered by the Admiralty
demanded that their shift be reduced from 12 to nine hours, in line
with other groups of workers. The management was still prepared to
offer modest concessions. In June, workers organized demonstrations,
in protest at the government decision to call up reservists. Workers at
Sestroretsk denounced the mobilization and went on strike. Some
factories passed resolutions in support of the Potemkin mutineers. In
July, workers at Motovilikha struck again, in protest at the arrest of
Social Democrat militants. This time the management took a harder
line, calling in Cossacks to restore order, resulting in the death of one
worker. A third strike during September was caused by the failure of
management to honour an agreement reached in July. Workers pre-
sented a long list of fresh demands. They telegrammed Kokovtsov,
complaining about the embezzlement of savings funds by manage-
ment. But many workers seem to have tired of strike action. Reports in
88 Defence imperatives and Russian industry, 1900-1907

December 1905 spoke of a militant minority which supported the SR

party, but concluded that 'the more solid family workers did not
support them'. The presence of Cossack troops led to confrontation
and further casualties at Perm, much to the dismay of officials in the
local Department of Mines. 56
In St Petersburg and Perm, there was none of the extensive blood-
shed that occurred towards the end of the year in Moscow and Nizhnii
Novgorod, in which workers in the defence industry were not
involved. In St Petersburg, the atmosphere remained subdued,
because of the change in workers' bargaining power caused by the end
of the war. At Izhora, Gross put the workforce on a four-day week in
September, blaming a lack of orders in all sections, except in the
armour-plate shop. In December, he closed down the works com-
pletely. When the plant reopened in the following month, it was with
a much depleted and demoralized labour force. At Obukhov, the
management was sufficiently confident of the hold it exerted over the
workforce, that it laid on a steamship to convey elected delegates to
the newly-formed St Petersburg Soviet. 57
Some enterprises in the state sector escaped disruption almost
entirely. The local cell of the Social Democrats complained that
workers at the Tula arsenal were completely apathetic. An appeal in
February 1905 to mobilize behind the clarion call for a constituent
assembly fell on deaf ears. Following the defeat of Russian naval forces
in the Far East, local party activists renewed the appeal in June: 'all the
failures of our armaments, the unemployment, hunger and poverty of
the people - all this clearly shows the incapacity of the tsarist govern-
ment ... are you satisfied with this slave-like silence?'. Their rhetoric
evoked no discernible response. Workers at the Tula arsenal, sup-
ported as they were by plots of land adjacent to the factory, did not
conform to the classic model of a property-less proletariat. Yet their
comrades at Sestroretsk and Perm also had this 'bourgeois' attribute,
and it did not prevent them from engaging in militant protest. This
explanation, therefore, is difficult to accept. More important was the
proximity of Sestroretsk to St Petersburg, with its dense concentration
of metalworkers. Meanwhile, at Perm and Izhevsk the Socialist Revo-
lutionary Party made a deliberate effort to appeal to contingents of
peasant-workers, by emphasizing the relevance of its programme for
the socialization of land. 58
The revolution of 1905 had a similar impact on the private sector.
The involvement of workers at the Putilov plant is well enough known
not to require further comment. Workers at the huge Sormovo
 War and revolution 89

machine-building complex in Nizhnii Novgorod followed suit, in

support of higher wages, shorter hours and improved work con-
ditions. Their elected spokesmen negotiated with the plant manager,
A. P. Meshcherskii. Much of the plant lay at a standstill by the begin-
ning of February: strikes closed the entire shipbuilding section during
the first week. Meshcherskii found himself in a difficult position. The
local governor held him responsible for the maintenance of 'order' in
the factory. He obtained the approval of company directors for a
package of concessions, including a guaranteed minimum rate for
unskilled workers and a ten per cent wage increase for all workers. As
at the government arsenals, these concessions persuaded workers to
call off the strike.59
Strikers at the privately owned shipyards at Nikolaev on the Black
Sea and Lange in the Baltic confronted managers with a range of
demands, most of them familiar from the petitions drafted by workers
in government yards. Prompt action by the owners of Lange, who
called in troops as soon as news reached Riga of the massacre in St
Petersburg, forestalled mass demonstrations by workers in support of
their demands. At Nikolaev, much to the consternation of some
workers, the petition included calls for basic civil liberties, such as
freedom of speech, press and assembly, and the right to strike
(included with these fundamental claims was a demand that manage-
ment 'pay no attention to a person's eyes when taking him on').
Notwithstanding the use of troops to deter protests, management at
both shipyards appear to have adopted a conciliatory stance. The
Social Democrat press pointed out subsequently that 'the management
at Lange "dismissed" all foremen and even engineers. But none of
them tried to look for another job, because they knew that in a few
days' time the director would yield to the wishes of workers and that
they would take up their positions once again'.60
Workers at the privately owned Tula Cartridge factory displayed
considerably more militancy than their counterparts at the Tula
arsenal. A petition to management, presented on 22 January, evoked
the same kind of conciliatory response seen elsewhere. Hours of work
were reduced; management adopted a minimum daily wage, offered a
day off in lieu of any overtime worked on Sundays, and even agreed to
a holiday on May 1 (in place of 21 November). Promises were made to
improve the factory premises and to find alternative means of protect-
ing property than the use of degrading body searches of workers as
they left the factory.61
The rest of the year witnessed further sporadic outbreaks of protest.
90 Defence imperatives and Russian industry, 1900-1907

The call-up of workers in St Petersburg in the summer prompted

protest strikes at Putilov and the Nevskii shipyards. In July, workers at
the Tula Cartridge factory again went on strike; this time the manage-
ment behaved in a much less conciliatory fashion, arranging a lockout
and dismissing 141 ringleaders and others deemed unsuitable for
re-employment by virtue of 'physical shortcomings'. At Sormovo,
labour activism culminated during December in a bloody confront-
ation between workers and Cossack troops in the factory environs.
The Cossacks took control of the plant until early the following year.
The company wrote to the Main Artillery Administration, seeking a
postponement of the date for the delivery of shrapnel. After a brief
investigation of the firm's affairs, the GAU sharply rebuked the
company for having taken on the order in the first place, when
(according to the report) it lacked suitable equipment and specialists.
However, the GAU authorities accepted the company's view that the
strike had caused unavoidable delay, and Sormovo escaped financial
penalty.62
Other firms adopted similar tactics in similar circumstances. Putilov,
for instance, had taken on an order for howitzers and shell in
December 1904, which were due to be delivered no later than August
1905. Putilov had the dubious distinction of being particularly strike-
prone during January and February 1905: the strike movement had
been launched and sustained by workers from this factory. In April,
the company asked for two month's grace. At the end of the year the
weapons had still not materialized; Putilov asked for a further delay of
eight months, blaming strikes, demonstrations and high labour
turnover for the disruption. The GAU imposed a modest financial
penalty, apparently unwilling to inflict too much damage on the most
prized enterprise in the private sector.63
The relatively brief duration of work stoppages in the armaments
industry during 1905 nevertheless took its toll on military production
and threatened output schedules for the foreseeable future. At state
arsenals, production increased during 1905, but completion rates were
down on the previous year. Fewer than three-quarters of orders for
rifles from the state arsenals were completed during 1905, compared to
a 100 per cent completion rate in the previous year. The fact that
production was not disrupted to a greater extent reflected the readi-
ness of management to make significant concessions.64
Managers were unlikely to let matters rest there, especially when
the shock waves of war began to diminish. The extent of the gains
made by workers embarrassed factory executives, threatening as they
 War and revolution 91

did the profitability of the enterprise and exposing the fragility of

managers' hold over the workforce. The financial consequences of
these concessions were not uniform throughout the defence industry.
At the Zlatoust ironworks, managers conceded wage increases of
around one-third. The plant suffered drastic financial losses as pro-
duction costs rose; here, as elsewhere in the state sector, management
was unable to recoup these losses by increasing contract prices. Pri-
vately owned firms stood a better chance of making good the losses
they incurred during the revolution, either by forming agreements
between themselves to force up prices or by instituting changes in the
organization of work, with the aim of boosting labour productivity.65
Workers in defence industry gained considerable ground during
1905. Wages rose and hours fell, in the private as well as the state
sector. These concessions reflected months of agitation by organized
groups of workers, taking advantage of their bargaining power. The
specific characteristics of the defence industry and the international
situation help to account for these dramatic gains. Workers derived
strength from the geographical concentration of the armaments indus-
try: apart from Putilov, in the south-west, and the Baltic and New
Admiralty yards, St Petersburg was home to Nevskii, Obukhov, and a
private powder works on the Schlusselburg side, and to St Petersburg
Metal, Phoenix and Lessner on the Vyborg side. Factory elders from
these districts kept in constant touch during the revolution; mean-
while, delegates from the nearby arsenals at Izhora and Sestroretsk
moved in and out of the capital. But, labour activism apart, the
working class stood to benefit from the nervous mood of managers,
who knew that prolonged stoppages would threaten current output
and jeopardize negotiations for new contracts.66

Retrenchment: the government perspective

As the immediate consequences of war and revolution died
down, the tsarist regime was forced to confront their economic and
military impact. The magnitude of the military losses sustained by
Russia immediately prompted the defence establishment to prepare
ambitious proposals that would repair the damage inflicted by the
Japanese and modernize the armed forces. Whether the resources
could - and even should - be found to finance rearmament was
another matter entirely. Other government departments submitted
competing claims for funding in the aftermath of revolution. Mean-
while, the government had to settle the bill for war. Thus, the financial
92 Defence imperatives and Russian industry, 1900-1907

legacy of war and revolution dominated government economic policy

at the end of 1905 and throughout 1906, relegating the question of
rearmament to a more modest place on the political agenda.
The immediate expenses associated with the war amounted to 2,350
million rubles, equivalent to the total state budget in a single year. This
impressive sum far exceeded government estimates of the costs of the
campaign. The costs of demobilization, and other outlays associated
with the end of the war, added 700 million rubles to the budget for
1906 alone. More than half of total war spending had been met by
borrowing, the remainder by note issues. Only minor adjustments
were made during the war to the prevailing rates of taxation. The
revolution intensified the financial crisis brought about by the war.
Russian bullion reserves began to fall during the autumn of 1905, as
gold flowed out of the country and the tsar's citizens demanded
payment in gold from their accounts: savings banks' deposits alone fell
by 13 per cent during the last quarter of the year. Ministers anguished
daily over the question of convertibility, hoping to maintain the illu-
sion of the gold standard by obtaining emergency infusions of foreign
aid. During the winter of 1905, the government relaxed the rules on
the issue of credit notes, which had to correspond to a prescribed gold
reserve. The amount of paper currency in circulation increased as the
months passed, a barometer of the political and economic crisis. In
December 1905, Kokovtsov travelled to Paris to reassure the French
about Russia's underlying political stability and credit-worthiness, and
to seek a new loan to deal with the crisis. After lengthy delays, made all
the more difficult to stomach because the imminent convocation of the
Duma implied a dilution of his budgetary supremacy, Kokovtsov
negotiated a loan in April 1906 for 2,250 million francs, or 705 million
rubles. 67
Russia's success owed much to the 'moral support' promised the
French in their dispute with Germany over Morocco. French creditors
had little choice but to prop u p the faltering regime: the alternative
was to see the value of their securities plummet still further, as hap-
pened during the peak of the revolution. But the tsarist government
could hardly count indefinitely on such self-interested acts of French
generosity. Serious doubts remained about Russia's credit worthiness.
The government's freedom of manoeuvre was also limited by the
stipulation attached to the loan, whereby Russia had to obtain French
approval for any further foreign borrowing during the next two
years. 68
Throughout 1906 the financial constraints on the tsarist regime
 War and revolution 93

continued to tighten. Annual payments on the state debt had trebled

since the turn of the century. The budget estimates for 1906 revealed a
projected deficit of 481 million rubles; on top of this, the government
had to find 330 million to cover the outstanding deficit in 1905 and to
meet payments on the loans floated in that year. The government
drew upon the sums made available step by step under the terms of
the April loan. Kokovtsov continued to remind his cabinet colleagues
of the need to prune their spending estimates, in order to restore some
semblance of financial normality. Things became worse rather than
better during 1906, because of the unavoidable follow-up costs brought
about by the war: the government approved expenditure on emer-
gency food relief and made further payments to Japan, on behalf of
former Russian prisoners-of-war. These measures, together with the
costs of containing civil unrest, added 155 million rubles to the over-
stretched budget and could only exacerbate Russia's precarious finan-
cial position.69
The Russian government had little option but to inaugurate a pro-
gramme of retrenchment. At the end of 1905, the Finance Committee
and the State Council warned the defence departments that their
spending plans would be curtailed 'until the financial position of the
country improves'. Kokovtsov continued to reiterate this message. In
September 1906, he told Stolypin to use his influence to stop the
'irresistible torrent of fresh claims for funds' from the War Ministry.
Anticipating one possible response, Kokovtsov pointed out that the
government could not find additional revenue: the country was
already suffering from a second poor harvest in succession, income
from redemption payments had ceased and receipts from private
railway lines had fallen. More revealing were Kokovtsov's incursions
into the realm of diplomacy, in the course of which he disputed the
War Ministry's contention that Russia should counter Japanese
imperialism in the Far East. He concluded ominously that Russia must
give priority to financial and economic recovery, which alone would
'create a proper foundation for military strength'.70
Before the new policy of retrenchment triumphed, battles had to be
fought and old scores settled. Out of office since April 1906, Witte
proved a jaundiced and fickle observer of the economic calamity that
Kokovtsov had inherited. Certainly, Witte had more cause than most
to bemoan the consequences of war and revolution. However unjust
the verdict, in view of the shared responsibility for the failures of
Russian diplomacy, Witte's enemies, such as Schwanebach, could
easily pin the blame on him for Russia's abortive far eastern adventure.
94 Defence imperatives and Russian industry, 1900-1907

His reputation never recovered. What political trust had once existed
between the Tsar and his former Minister of Finances evaporated,
largely because of the role Witte played in persuading Nicholas II to
issue the October Manifesto, a move the Tsar rapidly came to regret.
Bereft of influence, Witte did little more than issue statements of
self-justification and advice to his successor. The main thrust of his
argument was that the war and revolutionary upheavals undid what
he had achieved during the preceding decade. The events of 1904-5,
Witte maintained, destroyed the integrity of the currency which had
been established with such difficulty. They had brought about an
otherwise avoidable increase in taxation (sic) and in the national debt.
The priority now was to re-establish monetary discipline, by restoring
the convertibility of the ruble, as a precondition of attracting private
foreign investment. At the same time, Witte believed that the govern-
ment would find it difficult to avoid making fresh commitments: 'the
war will require huge outlays on the creation of a new fleet, the repair
of the army and the healing of many other wounds which the body of
Russia sustained as a result of the war'. Witte doubtless anticipated
that his successor would find it impossible to reconcile these prior-
ities. 71
Kokovtsov agreed with Witte, that there were no grounds for com-
placency in these troubled times. Having concluded a loan with the
French, Kokovtsov was determined to prevent a repetition of the
humiliation to which he had been subjected during the winter of 1905,
when he went cap in hand to Paris. He assured the French that Russia
had no intention of seeking further foreign loans. His main target in
the medium term was to ensure that Russia would be in a position to
repay the creditors who had kept faith with the tsarist empire during
the dark days of war and revolution. 72
However, Kokovtsov and Witte parted company over the strategy to
be pursued in the longer term. In February 1907, Kokovtsov set u p a
series of private meetings with his predecessor, to consider the finan-
cial position of Russia in the aftermath of the Russo-Japanese War.
Witte argued in favour of a rapid reduction in credit notes, which had
increased from 578 million to 1,170 million rubles by October 1905, and
for the swift restoration of the gold-backed currency. He recom-
mended that Russia pursue all means possible to attract a continued
inflow of foreign funds for developmental purposes, rather than
merely to prop up the gold standard. Kokovtsov disagreed strongly,
both on matters of detail and substance, maintaining that the revo-
lution had not been crushed completely and that developmental
 War and revolution 95

measures were therefore premature. In his memoirs, he argues that

war and revolution made it impossible to think of any 'constructive
economic policy'. The government had as its main task to settle
Russia's obligations with its creditors, by building up the gold reserves.
Only when the economic and political situation had improved would
he be willing to countenance an increase in the amount of gold in
circulation and thus in the domestic money supply.73
With the restoration of peace abroad and the repression of revo-
lution at home, Kokovtsov had the opportunity after 1906 to imple-
ment his policy. There was little sign that the recession was about to
come to an end. Throughout 1906 and 1907 the banks reported weak
demand for credit. On the brighter side, a deal Kokovtsov struck with
the French in 1908 provided not only for 300 million rubles to dis-
charge Russia's obligations under the 1904 loan, but also to obtain a
further 150 million rubles' worth of foreign currency, which boosted
the 'free balance' (svobodnaia nalichnost') at the disposal of the govern-
ment. Here lay the prospect of some relief from the constraints which
shackled the Ministry of Finances in 1906 and 1907.74
The debates that took place during 1906 and 1907 revealed that the
resources available to the government were strictly limited. The first
claim on any new loan had to be Russia's outstanding obligations to its
foreign creditors. There was only modest room for manoeuvre. In
November 1906, the government inaugurated an ambitious pro-
gramme for agrarian modernization. Russia's ailing industrial sector
could not call on state support in the midst of these momentous
changes. No less significant were the implications for foreign and
defence policy of Russia's delicate financial health. The constant
reminders of financial decrepitude reinforced the message that diplo-
macy and defence would be driven by financial policy, rather than the
other way round.75

Rearmament programmes, 1906-07

The debate about Russian rearmament took place in painful
circumstances. Russia's international standing had fallen to its lowest
ebb for fifty years. Financial resources were extremely limited. Russian
defence chiefs lost no time in seeking to make good the losses incurred
during the Russo-Japanese War. Inevitably, disagreements arose over
the questions of when and how to repair the damage inflicted by the
enemy. There were other, broader dimensions to the question of
rearmament. Russia had to bear in mind its treaty obligations to
96 Defence imperatives and Russian industry, 1900-1907

France. More important still, the tsarist regime hoped to keep pace
with the concurrent expansion in the military - and especially the
naval - strength of other European powers. In 1906, Britain launched
the first dreadnought, which changed the face of naval strategy and
rearmament. Germany followed suit in 1907. By 1908, the Anglo-
German naval race was in full swing.
As they licked their wounds after the Japanese victory in 1905,
Russian military leaders had other things on their mind than the
prospect of a naval arms race. The naval engagement at Tsushima
ended with the destruction or capture of virtually the entire fleet that
had been dispatched to the Far East in 1904. Losses of capital and
auxiliary vessels - a total of sixty-nine ships - amounted to 230 million
rubles, more than twice the annual budget for the navy as a whole and
certainly more than half the capital value of the imperial fleet in 1904.76
The stock of weaponry and other army equipment was also drastically
depleted. And yet the physical destruction of the ships and weaponry
in 1904-5 should be kept in proportion. Much of the existing military
capital stock needed replacement in any event. A group of young
officers in a new Naval General Staff expressed this view in an anony-
mous memorandum: 'even if our battleships had not been sunk, but
had remained in our hands, we should in any case have had to rebuild
our fleet. We have lost precisely those vessels that were no longer fit to
serve in battle, as recent experience has demonstrated: we have lost
what we no longer needed'. A leading economist endorsed this senti-
ment, adding that many of the lost vessels served no other purpose
than to maintain Russian admirals in the style to which they had been
accustomed. Seizing the opportunity created by defeat, the young
Turks in the General Staff maintained that the navy could now acquire
a wide range of modern vessels, including dreadnought-type battle-
ships, armoured cruisers and submarines, in order to keep abreast of
other European navies. Modernization, rather than mere replacement,
was the watchword.77
However, the need for ships that embodied state-of-the-art tech-
nology could only inflate the projected cost of rearmament. Modern
ships had to travel at faster speed, but at the same time to carry more
powerful naval armaments. They also had more resilient armour-plate.
These improvements in military shipbuilding did not come cheap.
Between 1906 and 1908 the Admiralty fought a running battle with the
Ministry of Finances over the scale and purpose of naval rearmament.
The Anglo-German naval race leant greater urgency to Russian naval
preparations, and at the same time raised the stakes of the game.
 War and revolution 97

The Admiralty's intention to restore the losses sustained at

Tsushima first became apparent in the summer of 1906. The Minister,
A. A. Birilev, resolved that the navy should be supplied with two new
battleships without delay. With this in mind, he approached Kokovt-
sov, to seek his agreement to the expenditure of 42 million rubles
during the next three or four years. This proposal reached the Council
of Ministers in October 1906. Somewhat lamely, Birilev acknowledged
that this could only be a stopgap measure: the formulation of a
comprehensive shipbuilding programme would have to wait upon
decisions taken by other major naval powers. Nevertheless, Birilev
asserted that the navy urgently needed to replace some of the vessels
lost in the Far East, in order to sustain the capacity to wage war at sea.
The Minister coupled this point with remarks about the employment
consequence of shipbuilding: 'a question-mark hangs over the live-
lihood of a hundred thousand people, who will be left to starve if
shipbuilding work ceases'. The need to embark promptly upon con-
struction of vessels was of general political significance. No doubt,
Birilev's appeal was carefully designed to win over the uncommitted
members of the cabinet, who had recent and painful experience of
working-class unrest in urban Russia.78
Kokovtsov instantly objected to this proposal, on the grounds that
the available resources did not permit even short-term measures of this
kind. In a caustic, and typically inelegant rejoinder, he remarked that
'in view of the numerous misfortunes and evils represented by the
sum of agrarian and industrial disturbances, and the destruction of the
normal order in the lives of the entire people, it is impossible to
attribute especial significance to the consequences that might follow
from the unemployment of a few thousand factory workers'. But
Kokovtsov's main argument against the scheme was that it formed no
part of any overall plan of naval strategy. This view, which was shared
by a majority in the Council of Ministers, also prevailed in the newly-
formed Council for State Defence (Sovet gosudarstvennoi oborony,
hereafter SGO), which considered the Navy Ministry scheme in the
following month. The SGO, under the chairmanship of a Grand Duke
who had no time for Birilev and who hoped to weaken the power of
his ministry, saw little merit in a scheme which provided for two new
battleships, but which offered no satisfactory plan for the defence of
the Baltic littoral. Birilev was forced to admit defeat, and he resigned at
the end of the year.79
In these circumstances, the navy chiefs had no option but to rethink
their plan of campaign. Following the injunctions of the SGO, the
98 Defence imperatives and Russian industry, 1900-1907

Admiralty formulated a more ambitious and coherent programme of

naval rearmament. The eventual realization of the new programme
owed much to the close personal interest that Nicholas II maintained
in naval matters. The Tsar recognized that the dreadnought spelled
the end of the traditional battleship. The largest Russia ship of the line
had merely four 12-inch guns, compared to ten on the new dread-
noughts. The dreadnought had advantages of speed and manoeuvra-
bility, as well as firepower. Nicholas pressed for its incorporation into
the Russian navy. The intellectual justification for his wishes was
supplied by the Foreign Minister, A. P. Izvol'skii, who urged that
Russia respond to the naval programmes under way in Britain and
Germany: 'Russia needs a battleship fleet, irrespective of concerns
about the defence of our shores ... we need to play a full part in the
resolution of impending international questions, from which Russia
cannot be absent'. The government believed that the possession of a
powerful fleet would make Russia a valuable partner in any future
alliance and enable it to act as arbitrator between the two largest naval
powers, Britain and Germany. As Stolypin put it, 'the fleet is a lever for
the expression of the right to express a voice in resolving world affairs'.80
The Tsar instructed officials in the Naval General Staff to draft a
range of schemes for naval rearmament. Four variants were hurriedly
produced. The most ambitious scheme envisaged four new squadrons,
two for the Far Eastern fleet and one each for the Baltic and Black Sea
fleets, at a total cost of 5,000 million rubles. Knowing full well that this
level of rearmament went completely beyond the resources of the
tsarist state, Admiralty officials agreed a 'minimum' programme. The
new minister, I. M. Dikov, returned to the SGO in the spring of 1907,
this time with a comprehensive ten-year programme of construction,
costed at 870 million rubles. The rationale behind the programme was
the need to defend the sea approach to Finland and the Baltic coast
and to create a modern, mobile fleet for action in foreign waters. The
cornerstone of the programme was the construction of a fleet of 180
destroyers and 120 submarines to defend the north-west seaboard
which, everyone agreed, was extremely vulnerable to attack by land
and sea. Apart from a new squadron for the Baltic fleet, the pro-
gramme entailed the repair and re-equipment of vessels in the Black
Sea, together with the provision of new cruisers to patrol the entrance
to the Straits. A further assumption behind the programme was that
ships would be dispatched to the Far East, if circumstances required:
there was simply no money for a new fleet in the Pacific. By contempo-
rary standards this so-called 'small shipbuilding programme' entailed
 War and revolution 99

the expenditure of enormous sums: 738 million rubles on vessels for

the Baltic Sea and 132 million rubles for the Black Sea fleet. The cost
reflected not only the number of vessels to be built, but also the
advances that had been made in European naval technology during
the previous decade. With the emergence of new types of cruiser and
destroyer, as well as the construction of the dreadnought by Britain
and Germany, the Russian authorities took the decision to replace the
vessels lost at Tsushima by much more powerful and heavily-armed
ships.81
The SGO sympathized with the need to improve the defence of the
Baltic coast. Such a strategy would not only safeguard the Russian
capital, but would also force the enemy to fight on land further west.
But members of the SGO rejected any scheme for an offensive fleet,
intended to operate further afield. The SGO was motivated largely by
the need to reconcile the competing claims of the two armed services.
In view of the prevailing financial constraints, its members decided to
curb the grandiose scheme for an entirely new ocean-going force.
However, the Tsar refused to accept this verdict and insisted on a
naval programme that incorporated battleships. The point of view
expressed by Izvol'skii accorded with his own preference for a battle-
ship fleet. A compromise of sorts was hammered out in cabinet.
Kokovtsov continued to paint a gloomy picture of the country's
v
financial position, Dikov eventually obtained the approval of his col-
leagues for the expenditure of 31 million rubles annually over the next
four years on the small shipbuilding programme, giving priority to
battleships, submarines and torpedo boats (plans that absorbed the
ongoing 1904 shipbuilding programme). The government made the
proviso that 'the release of these credits may only be allowed in
accordance with established procedures for the estimates, through
parliamentary channels'. Thus, financial constraints continued to
dictate a modest level of expenditure.82
Throughout 1906 and 1907, the navy continued to make the
running. Support for an ambitious programme of naval rearmament
came from organized groups beyond the corridors of government.
These groups did not always agree on the type of naval programme
best suited to Russia's needs. Agrarian interests demanded the creation
of a powerful fleet that would protect the passage of grain exports
from the Black Sea ports to the Mediterranean and to western Europe.
They tapped a deep well of rhetoric in the defence establishment
about the need for Russia to secure freedom of action on its southern
frontier and to protect the interests of 'fledgling Balkan states' in the
100 Defence imperatives and Russian industry, 1900-1907

face of the Turkish threat. On the other hand, Russian industrialists in

the central industrial region and in the north-west were more con-
cerned with the defence of the Baltic coast and the approach to St
Petersburg and other ports, which handled coal and raw materials
imports.83
These disagreements could not easily be reconciled. They were
masked, at least in part, by new pressure-groups that called for the
creation of a strong imperial fleet. The most active such groups were
the 'League for the renewal of the fleet' and the 'Russian naval union',
both of them connected with the Admiralty and the Naval General
Staff. Iu. V. Rummd', spokesman for the League, published a book
extolling the virtues of a strong fleet, 'as a means of defence and
international polities'. However, even he acknowledged that current
financial circumstances obliged Russia to set its sights more modestly,
on the defence of the Baltic littoral. Only when state finances
improved could Russia assert its interests further afield.84
The army, too, drafted highly ambitious plans for the replacement
and modernization of armaments. Here, the newly constituted
General Staff was the driving force. In December 1906, its military
planners placed before Rodiger, the new Minister of War, detailed
proposals for the immediate expenditure of 2,134 million rubles, in
order to reorganize and re-equip the armed forces. Nearly 600 million
rubles were earmarked for work on fortresses and railways. The Main
Artillery Administration drew up a list of its requirements, at a cost of
900 million rubles. An additional 144 million rubles would be needed
for annual maintenance, repair and replacement of armaments.85
These projections show how the lion's share of armaments outlays
would be consumed in the provision of new fortress artillery. The only
unusual feature was the proposal to reorganize field artillery into
six-gun batteries, replacing the eight-gun batteries, a measure that
took several years to reach fruition.86
Rodiger had the thankless task of assessing these proposals, before
they went to the Council of Ministers. He recognized that the size of the
programme 'precludes any chance of financial support'. Hard-nosed
realism compelled him to whittle down the estimates from 2,134 million
rubles to 425 million rubles, cutting the estimated annual outlays
by half. This still left significant sums for reorganization and equip-
ment. Rodiger's revised plans would establish new machine-gun units
(each infantry regiment and cavalry division was to be equipped with
five 8-gun batteries), seventy-four howitzer batteries, improved rapid-
firing artillery, in addition to new fortress artillery. The programme
 War and revolution 101

Table 2.2. Projected expenditure on ground-based armaments, 1906 (million

rubles)

Immediate Recurrent (per annum)

Field artillery1 112.91 30.14

Fortress artillery 704.47 7.64
Training2 1.63 1.72
Production facilities3 42.44 1.23
Other expenses4 34.34 1.34

Note:' 17 3"-gun batteries, 90 mortar batteries (122mm howitzers), 31 field

batteries (6" howitzers), plus costs of reorganizing field artillery into six-gun
batteries.
2
Two new artillery schools; fortress artillery school etc.
3
New powder, melinite and fuse factories; expansion of existing artillery
works.
4
Re-equipment of 13 mountain and 7 mortar batteries with rapid-fire pieces;
production of 100,000 rifles for reserve.
Source: E. Z. Barsukov, Podgotovka Rossii k mirovoi voine v artilleriiskom
otnoshenii, Moscow-Leningrad, 1926, pp. 54-5.

would enable the armed forces to make good the weaponry and
ammunition they had lost during the Russo-Japanese War. Overall,
however, the programme was conservative: Rodiger abandoned the
proposed reorganization of field artillery and reserved pride of place
for fortress artillery.87
Like his naval counterpart, Rodiger faced strong opposition to these
proposals from civilian members of the Council of Ministers. Kokovt-
sov not only raised the question of Russia's financial weakness, but
also drew attention to alleged deficiencies in Rodiger's proposals.
According to the Minister of Finances, 'a general plan for the reorgani-
zation of our armed forces still does not exist. The proposals of the War
Minister do not accord with the principles of the Chief of the General
Staff, and the war department has not based its demands on any
verifiable basis'. Kokovtsov knew full well that the War Ministry and
the General Staff had begun to talk about the need for reorganization
of the armed forces, but that internal disagreements about its scale and
scope delayed progress. To that extent, his argument was a valid one.88
More powerful forces undermined the War Ministry's plans. The
Tsar's personal commitment to naval rearmament represented the
most serious threat to their realization. Rodiger held back from
approaching Nicholas, believing it necessary to discover first the
102 Defence imperatives and Russian industry, 1900-1907

opinions of his cabinet colleagues. But any such approach to the Tsar,
in an attempt to assert the claims of the army, would have made little
impact. Nicholas was deaf even to the pleadings of close advisers,
including his uncle, Grand Duke Nicholas, who stressed that the army
deserved no less sympathy and attention than did the navy. This
lobbying was to no avail.89
The army's draft plans thus came up against the rival set of pro-
posals from the navy. Attempts were made to reconcile the two
programmes, notably in the Council for State Defence. The SGO had
been established to provide precisely the kind of overview of defence
preparations that was now imperative. Chaired by Grand Duke Nicho-
las, it brought together the two defence ministers, the chief of the
General Staff and his naval counterpart, and the various grand-ducal
inspectors of artillery and other branches of the armed forces. The
SGO considered the rearmament programmes at a meeting in October
1906, but rejected them on the grounds that they did not constitute an
overall programme of defence. Not even the Tsar could argue with this
conclusion.90
The defence departments continued to prepare programmes
independently. In truth, the defence ministries had to make the most
of the limited resources available to them, and these limitations, with
the consequent inter-departmental tussle for funds, probably did more
than traditional service rivalries to hinder genuine collaboration over
strategy and defence preparations. The climate for the realization of
substantial rearmament programmes in 1906-7 was not propitious.
Kokovtsov enjoyed considerable leverage, and argued that the need
for retrenchment outweighed the demand for large-scale rearmament.
Defence ministers could do little but wait for the Treasury to relax the
purse-strings, unless and until the international situation offered them
the opportunity to regain their bargaining power.

The critique of defence industry and the campaign for

reform
The years of war and revolution witnessed important initia-
tives and changes in the sphere of defence industry and military
procurement, as in many other areas of Russian political life. Prior to
1905, the tsarist bureaucracy had not been subject to any kind of
parliamentary scrutiny. Nor could taxpayers hold the management of
state armouries and shipyards accountable for their decision. The only
civilian check upon the use of funds, and upon the extent to which
 War and revolution 103

procurement targets were met, rested with the office of the State
Auditor. Other than this, defence production and military procure-
ment remained shrouded in mystery, their secrets known only to the
officials concerned.
The creation of the Duma transformed this state of affairs. The
defence budget, or at least part of it, now became subject to parlia-
mentary scrutiny. Major items of expenditure were brought before the
Duma for parliamentary approval (see next chapter). Given these
budgetary powers, parliamentary representatives were now in a posi-
tion to demand administrative changes from the defence ministries, as
a condition of the release of funds. In due course, the Duma would
insist upon the reform of management practices at state-owned enter-
prises. Its field of competence would also extend into the realm of
defence procurement, where parliamentary representatives saw scope
for improved planning.
The war against Japan led initially to the reassessment of manage-
ment at the GAU factories. Other state enterprises soon fell under the
spotlight. The author of a critical article in Artilleriiskii zhurnal argued
that the way forward lay in administrative reform, allowing manage-
ment much greater autonomy: 'the armouries and other state enter-
prises demand radical renewal, and in this respect the GAU might
follow the example of the Admiralty, which is placing its factories on a
commercial basis. The idealism that is evident in the actions and
service of the staff at the GAU factories is contradicted by the lack of
confidence in their activity that is expressed in the widespread and
multifarious supervision that fetters and destroys all initiative'. In the
short term, however, this voice went unheard, not least because the
Duma had to deal with an extensive agenda. Faced with the complex-
ities of land reform and the nationality question, the administration of
government armouries assumed less urgency. In addition, critics of the
status quo faced formidable resistance from officials in the GAU. It was
more difficult for the Admiralty to stand in the way of demands for
reform, largely because of the unparalleled disaster that had befallen
the fleet, but also because two state dockyards had until recently
functioned as commercial enterprises.91
The Urals ironworks rather than government armouries were the
first sector of defence production to feel the impact of reform. These
enterprises had always stood on the margin of the armament industry.
The new Ministry of Trade and Industry had neither power nor
inclination to block reform initiatives. No other government officials
were willing to justify existing procedures. The renowned ordnance
104 Defence imperatives and Russian industry, 1900-1907

factory at Motovilikha was the first in the firing line. Despite its
favourable location and other advantages, such as a recently-
concluded technical agreement with Krupp, the government
expressed grave doubts about the current management of the Perm
works. An inability to generate additional custom gave particular
cause for concern, especially in the light of recent investment in new
plant. Between 1904 and 1907, the government had sunk 2.7 million
rubles into the factory, more than three-quarters of all allocations to
the Urals ironworks. The value of fixed capital at Motovilikha
increased by more than 50 per cent. Meanwhile, the modest volume of
work it received meant that this new plant remained idle, and was
simultaneously depreciating. But the government flunked the oppor-
tunity to embark on a serious assault on production costs, in order to
restore the competitive position of Motovilikha. Instead, a less difficult
route was advocated to deal with the short-term deficit. Officials at the
Ministry of Trade and Industry recommended a 25 per cent increase in
the price charged for artillery and shell, justifying this measure on the
grounds that the War Ministry paid Perm only three-quarters of the
price charged by Putilov. They also conceded that unused assets must
be sold. However, the government decided not to follow the rec-
ommendations on prices, because the function of Perm, like other state
enterprises, was to 'regulate' prices, not to approximate prices charged
by the commercial sector.92
This uncompromising refusal to endorse an increase in prices and
reluctance to embark upon administrative reform left the financial
position of the Urals ironworks in a perilous position. The plant at
Motovilikha regularly failed to make a profit on its operations, making
a loss of 2.51 million rubles in 1907, on a turnover of 3.70 million rubles.
Losses would have been greater still, had management been required
to allow for depreciation. Management shifted part of the blame for
increased production costs on to the labour force. Costs doubled
between 1905 and 1907, partly as a result of concessions extracted from
management by striking workers. Other ironworks had a similar tale
to tell. But this did not tell the whole story. Zlatoust supplied 3-inch
shrapnel to the Ministry of War; at a price of 7.35 rubles this was more
than two-fifths higher than the price charged by the Izhevsk works,
also in the state sector. Other factories were not immune from the
pressures generated by revolutionary ferment, but they nevertheless
managed to avoid the kind of financial disaster that loomed at the
Urals ironworks, where losses increased by 132 per cent between 1904
and 1906.93
 War and revolution 105

Table 2.3. Performance of Perm Cannon Works, Motovilikha, 1905-1907

Work completed Work in arrears Col.2 -5-col.l

(million rubles)

1905 2.85 1.39 0.49

1906 4.10 5.47 1.33
1907 3.70 6.33 1.71

Source: Vsepoddaneishii otchet gosudarstvennogo kontrolera za 1908, St Petersburg,

1909, p. 141.

Other, more systemic reasons accounted for the high costs of pro-
duction. These included the predominantly casual attitude towards
materials and equipment that characterized management practice
throughout the Urals iron and steel industry. A report commissioned
in late 1906 by the Ministry of Trade and Industry made an unfavour-
able comparison between the arrangements at Perm and at enterprises
in the private sector. Its author, Professor V. I. Lipin, observed that the
director of a private firm would either monitor personally the progress
of work or delegate this task to a qualified engineer, who was required
to report back. No supervisor in the private sector would tolerate
shoddy work, and both he and the workers were rewarded for their
performance: 'the engineer and the craftsman alike have a vested
interest in the success of production, receiving a bonus for work that is
actually passed as fit, not just for work that has been completed'.
Engineers at Motovilikha spent little time on the factory floor. Without
the incentive to supervise work properly, quality inevitably suffered. A
high proportion of output at Perm failed to meet quality norms. In
1907, 22 per cent of production was rejected. This poor attention to
quality control did not exhaust the problems identified. Overhead
costs remained high, because each shop maintained its own com-
plement of carpenters, smiths and other ancillary staff; and each shop
devised separate arrangements for the supply of materials. Motovi-
likha had a notorious reputation for failing to complete its contracts on
time. Delays might have been pardonable during 1905, but there were
persistent complaints about its inability to complete work on time,
even when the situation had returned to normal.94
Clearly, more drastic action was required. Evidence presented to the
Duma in the winter of 1906-7 gave its members the kind of information
needed to justify a radical overhaul of procedures. The government
106 Defence imperatives and Russian industry, 1900-1907

finally yielded to parliamentary pressure and embarked on the

reorganization of the Urals ironworks. As we shall see, ministers even
contemplated the sale of ironworks to the private sector.
Procurement procedures also came under attack in the aftermath of
the war and revolution. It was widely held that the chaos evident
during the Russo-Japanese War necessitated a fundamental reassess-
ment. This consideration certainly shaped attitudes within the Duma,
whose members caught the public mood. Popular consciousness of
failure in the Far East extended into liberal newspapers. A well-
informed economist lambasted the Treasury which he likened to a
'private purse'. Government departments too readily concluded con-
tracts without paying sufficient attention to the standing of the sup-
plier. Sometimes, no price was agreed in advance. Meanwhile, unscru-
pulous contractors pocketed the advance and absconded.95
Russian industrialists also seized the opportunity to state the case
for reform of the system of procurement. Their spokesmen pleaded for
government departments, especially defence ministries, to allocate
orders in a more rational fashion, and not in the haphazard and
unplanned manner that was their custom. M. A. Tokarskii, repre-
senting entrepreneurs in the north-west argued that 'Russian factories
and enterprises producing supplies for the army and navy own specia-
lized and very costly equipment. Orders from these departments
arrive sporadically. As a result, enterprises can never allocate work in a
normal tempo and production, as well as the amortization of equip-
ment is very much more expensive than if orders were given taking
into account the full and regular utilization of all equipment in the
enterprise'.96
These complaints resurfaced time and again until the outbreak of
war in 1914. The tsarist government eventually acceded to this chorus
of criticism, by instituting a series of senatorial investigations, whose
devastating findings provided further testimony of the need for
reform. At the same time, a new and more jaundiced generation of
military officials joined in the chorus of complaint. Pressure for reform
derived from within the defence departments, as well as from without.
Stolypin gave something of a lead in the drive to reform existing
defence procedures. Two measures, in particular, assured government
critics in the Duma of his seriousness of purpose. The first was the
creation of a new post of deputy Navy Minister, with specific responsi-
bility for the performance of state dockyards. The holder of the post
chaired the Navy Technical Committee and the revamped Main
Administration for Shipbuilding and Supply (GUKS). This measure
 War and revolution 107

established a degree of control over the activities of naval planners,

and offered an opportunity to coordinate technical and economic
aspects of military shipbuilding. Secondly, Stolypin created a Naval
General Staff, charged amongst other things with the preparation of
estimates of Russian and foreign naval capabilities. Unlike its counter-
part in the army, the Naval General Staff was subordinated to the
ministry. Such were the administrative arrangements with which the
Admiralty embarked on the complex tasks of naval rearmament.97

The re-emergence of depression in the basic industries,

1905-1907: corporate agony and corporate response
The tribulations of the industrial economy during 1905
manifested themselves in a decline in total industrial production (see
table 2.4). Few sectors of the industrial economy escaped the down-
turn. Mining and ferrous metallurgy and the entire range of consumer
goods industries all suffered. Only the continued increase in machine-
building output offered a glimmer of hope in the otherwise depressed
market for manufactured goods. The following two years witnessed a
modest improvement, both in capital and consumer goods. However,
a close inspection of the data reveals a sharp decline in the output of
metallurgy and machine-building during 1906. The following year
brought a brief reversal of fortune. But this proved short-lived, and in
1908 these key sectors again suffered a drop in output. In that year,
iron and steel production was actually lower than it had been a decade
earlier. Nor did the engineering industry give any better prospect of
recovery. The key capital goods sectors remained firmly in the
doldrums.
In order to understand what gave rise to these short-term fluc-
tuations in industrial production, we need to remind ourselves of the
consequences of the 1905 revolution. The strike movement had a
catastrophic effect on the oil industry and, to a lesser extent, coal
mining. Prolonged political uncertainty in 1905-6 badly affected the
level of activity in construction and metallurgy, by discouraging indus-
trial investment. Nor could industry expect any relief from investment
in the transport sector. By 1906, therefore, the writing was on the wall
for many branches of heavy industry that had managed to escape the
worst ravages of the recession at the turn of the century. Firms
producing rolling-stock were particularly badly affected; Briansk, for
example, dismissed 2,600 workers during 1906 and 1907. Specialist
arms suppliers inevitably suffered. Nor did firms with a broader base
108 Defence imperatives and Russian industry, 1900-1907

Table 2.4. Gross industrial production, 1896-1910

(1896 = 100)

Metalworking
and
All industry Group A Group B Iron & steel machine-building

1896 100.0 100.0 100.0 100.0 100.0

1897 109.7 113.2 108.0 116.9 115.2
1898 116.5 129.2 110.2 136.2 134.3
1899 121.6 140.2 112.3 147.4 132.3
1900 127.2 153.2 114.3 176.8 132.4
1901 132.0 148.7 123.7 153.2 147.9
1902 132.2 137.5 129.6 129.7 136.1
1903 140.8 144.5 138.9 122.9 145.7
1904 151.8 162.5 146.5 141.9 151.8
1905 146.8 162.6 139.0 131.4 163.1
1906 159.4 168.3 155.0 116.7 155.7
1907 177.3 185.8 173.0 143.2 161.7
1908 177.1 172.3 179.5 135.0 144.4
1909 183.2 185.5 182.0 143.4 149.6
1910 209.7 199.4 214.9 153.5 162.2

Note: Group A comprises coal and coke, oil, other mining, ferrous and
non-ferrous metallurgy, metalworking and machine-building, construction
materials (excluding ceramics), sawn timber and veneer products, basic chemi-
cals and varnish. Group B includes ceramics, paper, woodworking, rubber,
perfume, matches, textiles, animal products, food, drink and tobacco.
Source: V. I. Bovykin, Formirovanie finansovogo kapitala v Rossii, Moscow, 1984,
pp. 22, 31.

escape: at Putilov, the labour force fell from a peak of 10,600 at the end
of 1906 to 7,200 in 1908. The setback to investment activity continued to
make itself felt as well.98
The decline in ferrous metallurgy during 1906 was matched by a
decline in output in metal working and machine-building. During
1907, coal, oil and steel registered a slight improvement in output, but
this did not extend to the engineering trades. In any case, this partial
recovery proved shortlived. In the following year, mining, metallurgy
and machine-building moved back into recession, from which there
seemed no escape. A report in 1908, on the iron and steel trades and
the engineering industry, warned that 'the outlook for the near future
gives no grounds for expecting a speedy recovery'.99
The fortunes of consumer goods industries followed a somewhat
 War and revolution 109

different path, but any improvement had only a modest impact on the
general level of industrial production. After a poor showing during
1905, a sharp upturn in the output of consumer goods took place in
1906, in contrast to the rather feeble increase in output in capital goods
industries. One factor at work was an increase in consumer purchasing
power, brought about by the wage increases conceded by employers
during the 1905-6 conflicts with labour. This upturn continued during
1907, but it was not sustained. By 1908, the outlook seemed no brighter
for consumer goods industries than in other sectors of the industrial
economy.100
The chief cause of the problems that beset heavy industry was the
continued stagnation in investment. No relief could be expected from
government quarters. Private investment showed a flicker of activity,
but nothing more. On average, between 1903 and 1909, sixty-five new
joint-stock companies were founded, but these ventures were only
half the size of those established during the boom years of the 1890s. It
remained difficult to interest investors in the market for industrial
securities; they preferred to place their funds in government secur-
ities.101
In such unpropitious circumstances, industrialists persisted with the
defensive strategy they had adopted at the turn of the century. They
continued to seek salvation in devices aimed at minimizing inter-firm
rivalry. However, the recently established syndicates did not magically
transform the fortunes of Russia's hard-pressed iron and steel indus-
try. Partly, this reflected disagreements within Prodamet, whose
member firms differed in terms of their steelmaking technologies,
labour productivity and the extent of vertical integration. This made it
difficult to agree on contract prices and necessitated tortuous deals to
compensate firms which felt they had a grievance. Over the short term,
furthermore, the syndicate deliberately kept prices down in regional
markets where it competed with outsiders, including members of a
rival syndicate of iron producers in the Urals, Krovlia. In the depressed
conditions of 1906, the energies that had gone into the formation
of Prodamet hardly appeared to have yielded lasting benefit to its
participants.102
By 1907, the direct intervention of government in the market for
railway products had already begun to strain the relationship between
firms in the iron and steel industry. Some participants wanted to
increase their share of orders, whilst other major producers (Russian
Providence and Makeevka Steel) resented being left in the cold. The
decision by Prodamet to syndicate the production of rails in 1909
110 Defence imperatives and Russian industry, 1900-1907

undoubtedly reflected pressure from these companies, which stood to

benefit from a private arrangement. In agreeing to syndicate rails, the
southern magnates must also have hoped to drive out Urals factories
from the market.103
The government continued to support the committee for the allo-
cation of rails. Russian ministers abandoned the principle that govern-
ment orders could only be sanctioned after an auction had taken place.
Instead, they acknowledged that orders, backed by appropriate
credits, could be placed directly with steel producers. By establishing
that it had a direct responsibility for the financial viability of private
enterprise and the maintenance of a basic level of capacity in the steel
industry, the government set an important precedent.104
However, the tsarist government by no means acceded to every
wish of Russian iron and steel producers. The reluctance of the
government to approve the formation of a giant steel trust is a case in
point. A scheme originated during 1907, at a time when the iron and
steel industry remained in the throes of depression (according to one
observer, 'an extremely strong steel industry has been propagated too
early in comparison with existing demand'). An anonymous French
financier commented that several iron and steel factories 'have long
dreamed of killing off their weaker competitors one by one'. At the end
of 1907, the Russo-Belgian Company and South Russian Dnieper
announced plans for a trust, which would have controlled around half
of pig iron output and three-quarters of rail production. The trust
proposed to close down smaller enterprises and pay off their share-
holders; it would thus be in a position to exploit remaining capacity to
the full. The proposals were enthusiastically supported by the BUP
and the Society Generate, which had interests in Makeevka, Russian
Providence and Ural-Volga, three of the weaker firms in the industry,
whose shareholders stood to benefit from the package.105
The government refused to sanction the project. A concerted cam-
paign of opposition to the trust was orchestrated by iron producers in
the Urals. Representatives of consumer interests, such as the zemstvos,
large landowners and Moscow manufacturers, fearful of the con-
sequences for iron and steel prices, also mobilized themselves in
opposition to the trust. In April 1908, the forum for opposition shifted
from the financial pages of newspapers to the Duma, where Octobrist
deputies mounted a vigorous campaign against the project. They
presented Stolypin with a memorandum, signed by 106 deputies.
Supporters of the trust fought a rearguard action in an attempt to keep
the project afloat. The leading business journal made the point that it
 War and revolution 111

would improve the confidence of foreign investors in the Russian

economy, at a time when their patience was being sorely tried. Stolypin
did not share this view. The government, as a consumer of iron and
steel - and at a time of fiscal stringency - was uncomfortable with yet
another attempt by industrialists to impose control over the market.106
In some ways, it was remarkable that the Russian government went
as far as it did in helping Russian businessmen. The institutions of
government were not devised with business interests in mind. On the
face of it, the formation of a Ministry of Trade and Industry in 1905
improved the access of industrial associations to government. The first
incumbent, V. I. Timiriazev, who held office for two brief spells (in
1905-6 and 1909) sympathized with private enterprise. Between
December 1906 and March 1907, he had actually been chairman of the
Confederation of Trade and Industry: the suggestion, put about by
Witte and others, that he was merely a 'chinovnik type' is unfair.
Indeed, Timiriazev was berated in some official circles for maintaining
too close a link with private enterprise. Some of his more imaginative
proposals derived from his belief in the necessity to work more closely
with private businessmen. But this philosophy aroused the ire of his
traditionally minded colleagues in government. Timiriazev went so far
as to entertain the formation of advisory councils within his depart-
ment, on which the Confederation of Trade and Industry, the Associ-
ation of Bourse Committees and civil servants would be represented.
But this potential breakthrough in tsarist administration collapsed
when he resigned. His successors, I. P. Shipov and S. I. Timashev,
although sympathetic to private industry, lacked the same radical
political vision. They both enjoyed the reputation of being indepen-
dent of business, indeed on taking office Shipov boasted of his ignor-
ance of trade and industry. He antagonized merchants and entre-
preneurs in Moscow and St Petersburg alike. Timashev's background
was in the Ministry of Finances; he, too, had no ties with business-
men.107
The new ministry enjoyed much less status and power than other
government departments, and this constituted the greatest stumbling-
block to the success of entrepreneurs in influencing government
industrial policy. The powerful Ministry of Finances not only deter-
mined fiscal policy, but also controlled railway freight rates, much
against the wishes of the new ministry. Within the Council of Minis-
ters, the Ministry of Trade and Industry had a relatively humble place.
For these reasons, Russian industrialists continued to labour under a
disadvantage.108
112 Defence imperatives and Russian industry, 1900-1907

Conclusion
Market uncertainties continued to dog manufacturing indus-
try in the aftermath of war and revolution. Demand for manufactured
goods remained depressed during the second half of 1905 and
throughout the following two years. The domestic market for capital
goods showed no signs of improvement, partly because of govern-
ment retrenchment and partly because of the loss of confidence
amongst private investors. Government orders for military products
dwindled once peace had been concluded with Japan. Prospects for a
revival of demand looked bleak. Neither investment nor consumer
spending offered any relief. The financial markets displayed a worry-
ing and persistent lack of confidence. The besetting uncertainties of
1905 - the working-class movement, the vexatious behaviour of
government, the condition of the financial markets - began to drive
Russian businessmen into new modes of thinking, in which political
activity became an option for the first time. None the less, they were
hamstrung by their ingrained subservience to the tsarist regime and by
deep-seated divisions, which prevented them from becoming an
organized business elite and developing into a coherent political
movement. Moreover, the continued recession deprived them of the
capacity to act decisively.
A hectic period of business agitation and organization, set against
the background of massive labour protest, yielded a modest outcome.
For a brief moment, Russian industrialists became embroiled in poli-
tical life, as activists in the fledgling political parties or the resurgent
municipal dumas and, more often, as passive supporters of the Octo-
brists or the short-lived business parties. But this flirtation with parlia-
mentary politics was both uncongenial and unrewarding to the major-
ity of industrialists. Business parties enjoyed a tenuous and ultimately
brief existence. No sooner had these parties appeared on the scene but
businessmen began to divide over questions of strategy. The All-
Russian Union of Trade and Industry vigorously opposed the creation
of industrial syndicates and supported free trade. The Progressive
Economic Party argued in favour of government subsidy to private
enterprise. It was impossible to reconcile these divergent views of the
role of government and the market. The overall impression created by
the events of 1905-6 is one of division, giving rise to business weak-
ness, rather than to strength.
Those employers attracted by the idea of a parliamentary form of
government found that in any case it offered no solution to their
 War and revolution 113

immediate economic woes. The volatile mood amongst Russian

workers, which was manifested in widespread stoppages of work
during 1905, did not abate in the following year. If business leaders
believed that political reform would provide some relief from their
economic troubles, they were quickly disabused of this notion. The
tentative liberalization of the political system did not resolve the
economic issues. Instead, it brought to the fore social groups which
either (as in the First and Second Dumas) had little respect for private
property or (as in the Third Duma) equated business with specu-
lation.109
Russian industrialists, like Russian industry, thus presented a sorry
picture. Set alongside government and the organized working class,
they were weak, divided and lacking in direction. Alfred Rieber points
out that some entrepreneurs, particularly in Moscow, still conceived of
'salvation in some form of political alliance'.110 Industrialists elsewhere,
notably in St Petersburg and south Russia, believed that the road to
corporate power and commercial profitability lay through economic
organization and not through dubious political experimentation. But it
was difficult to translate beliefs into benefits. The newly formed syndi-
cates in the basic industries, especially iron and steel, struggled to
improve the economic performance of their members throughout the
difficult years of war and revolution.
Having failed to engage in purposeful political activity to a sig-
nificant extent, business leaders concentrated instead on the creation
of pressure groups, which would represent the interests of industry
before the government. Two developments proved significant here:
the formation of a congress of representatives of trade and industry
and the establishment of a separate Ministry of Trade and Industry.
Industrialists now had an identifiable department of government
which they could lobby.
So far as the private arms trade was concerned, the revolution
instilled in businessmen the desire to recover the gains conceded to
workers during 1905. These concessions made sound business sense at
the beginning of the year (the war was still in full swing), just as they
did to the management of state armouries and dockyards. As the year
came to an end, however, business strategy began to take on a differ-
ent complexion. The revolution and the inescapable depression
encouraged a change of tactic on the part of firms that had hitherto
dabbled in armaments production. They began to embark on a course
which would transform their current status as participants in a
depressed and incoherent industry. In due course, firms in the Russian
114 Defence imperatives and Russian industry, 1900-1907

engineering industry would become a more assertive and potentially

more powerful force, with a greater awareness of their potential and
corporate identity. The arms trade ultimately became part of the new
entrepreneurial elite. In 1907, the opportunity to display entrepreneu-
rial energy and flex managerial muscles was scarcely in evidence.
Rearmament would provide just such an opportunity.
Part II

Rearmament and industrial ambition

MARCELLUS: 'Good now, sit down, and tell me, he that knows
Why this same strict and most observant watch
So nightly toils the subject of the land;
And why such daily cast of brazen cannon,
And foreign mart for implement of war;
Why such impress of shipwrights, whose sore task
Does not divide the Sunday from the week;
What might be toward, that this sweaty haste
Doth make the night joint-labourer with the day;
Who is't that can inform me?'
(Hamlet, Act I, Scene 1)
3 The defence burden, 1907-1914

Introduction: the economics and politics of Russian

rearmament, 1907-1914
The war against Japan and the revolutionary assault on tsarist
government left no political institutions unscathed and few shib-
boleths intact. The war and revolution - a 'moment of truth', in the
words of Teodor Shanin - had exposed the hollowness of Russian
imperial pretensions and underscored the vulnerability of the old
regime to popular protest. Military catastrophe might have been
expected to induce a prolonged diplomatic retreat. Other things being
equal, defeat should have occasioned a distaste and certainly a retreat
from anything resembling an active foreign policy. But things were not
equal. It is true that leading officials within the old regime counselled
moderation in foreign policy. The Ministry of Finances tried to rally
support for a policy of restraint in government spending after 1905,
which would have restricted the freedom of manoeuvre of the defence
departments. But countervailing forces were at work to undermine
this policy. France urged its ally to rebuild the Russian army, lest the
pressure on Germany diminish. Within the imperial corridors of
power, fresh initiatives were also being demanded. A new generation
of naval officers seized the opportunity to formulate an ambitious
programme for the Russian fleet. Crucially, the Tsar lent his support,
backed by advisers who invoked the image of Peter the Great in the
cause of naval rearmament. By 1910-12, Russia was committed to the
creation of a powerful and modern fleet in the Baltic and the Black Sea.
Costly projects to re-equip fortresses on the frontier with Germany, as
well as to acquire new weaponry, inflated the defence budget still
further.1
Thus, Russia had committed itself fully to the arms race by 1913, with
unambiguous consequences for military expenditure. Russia's active
117
118 Rearmament and industrial ambition

participation was in part dictated by international pressures, first and

foremost by the need to placate France. But rearmament also reflected
the momentum of internal politics, notably the revival of the Tsar's
power to affect decision-making. Government ministers argued in
private that Russia had become embroiled in a costly war against
Japan, as a result of the triumph of a court clique over the cabinet.
Rearmament helped to signal the eclipse of the 'united government'
that had been carefully assembled in the aftermath of the Russo-
Japanese War. An increased level of defence expenditure was the
inevitable result of these twin pressures, from the French military and
from the imperial household. But it also derived from the peculiarities
of rearmament, which entailed the acquisition of costly modern mili-
tary vessels. For these reasons, the rapid rate of increase in defence
spending cannot be reduced either to an 'arms race model' or to a
'bureaucratic model'. Technological imperatives combined with these
considerations to drive the Russian defence budget relentlessly
upwards.2
The budgetary consequences of rearmament impinged directly
upon domestic politics. In the first place, rearmament opened up the
possibility of parliamentary involvement in the sphere of defence and
foreign policy, responsibilities which the Tsar and his immediate
entourage jealously guarded for themselves. Given the sums involved,
the Tsar could not hope to achieve his goals completely without
parliamentary assent, devoutly though he might have wished to do so.
Astute politicians and military leaders took a different line, realizing
that they could win over the Duma, and thereby ally themselves with
'public opinion', in support of costly armament programmes. A related
development saw important questions of industrial administration
brought to the fore by the scale of rearmament.
The armament drive thus broached issues of political and economic
power. The commitment of resources to the armament industry
formed the backdrop to a struggle between two forms of ownership,
one based upon the autonomy of the profit-seeking entrepreneur, the
other a closely regulated and integral element of the fiscal system. To
remain committed to an unreformed state sector was to expose oneself
to charges of financial profligacy. Once again, the new parliament
could not be discounted. Duma deputies demanded that the govern-
ment relinquish its close supervision of such enterprises and place
them instead on a commercial footing, making each enterprise respon-
sible for its own financial performance.
 The defence burden, 1907-1914 119

The political transformation wrought by the events of 1905 thus

brought defence issues under the spotlight of parliamentary scrutiny
for the first time. Strictly speaking, the Fundamental Laws (April 1906)
gave the new Duma no right to comment upon or influence the course
of foreign and defence policy. However, major items of government
expenditure were brought before the Duma for its approval, including
the burgeoning naval estimates. The Duma did more than just concern
itself with financial irregularities within the defence ministries; its
members insisted, as a condition of approving the estimates, upon the
reform of defence management and administration.
If rearmament burdened the tsarist regime with the rising expecta-
tions of parliamentary representatives, what kind of burden did the
defence effort as a whole entail for Russian consumers and producers?
Russian peasants contributed taxes to pay for rearmament and sent
their young men to serve in the infantry. The two kinds of sacrifice
were closely correlated, in so far as the increased size of Russian land
forces helped to determine increased levels of defence spending.
Russian villagers might have been hard pressed to make the connec-
tion. But they may have begun to question the tsarist defence effort
when it impinged directly on their lives. The mobilization of rural
conscripts (in 1904 and, again, in 1914), the use of troops for internal
pacification (in 1905-7) and the recurrent presence of troops in rural
billets or on military manoeuvres perhaps caused the Russian
peasantry to reflect on the meaning of vigilance and the costs of
defence. One thing was certain: those who sought to increase the
burden of defence were unable to justify rearmament in terms of the
material benefits it yielded the Russian consumer. No one could
pretend that Russia required a navy to protect food imports. The
integrity of the Russian loaf did not hinge upon food imports, as it did
in Britain or Germany.3 But vigorous rearmament might be justified
more readily so far as food producers and manufacturing industry
were concerned. A strong navy in the Black Sea would protect the
grain export trade; its equivalent in the Baltic could protect imports of
coal and miscellaneous industrial inputs. The depressed metalworking
and machine-building trades could cash in on the arms race. Why
should these myriad interest groups not be harnessed to the chariot of
rearmament? The bulk of the population, meanwhile, had to be
content with the rhetoric of pan-slavism, which alone served to justify
the defence burden. But, in this troubled society, rhetoric provided a
fragile foundation for rearmament.
120 Rearmament and industrial ambition

Foreign policy, 1907-1914

If the central plank in Russian foreign policy during the 1890s
had been the alliance with France, the corresponding element in
foreign policy after 1905 became the diplomatic understanding with
both France and Britain. The French had lent indispensable financial
support during the Russo-Japanese War and revolutionary upheaval
in 1905. The British, whose relations with Russia reached their nadir in
1904, at the time of the Dogger Bank Incident, were prepared to listen
to Russian overtures. An agreement between the two countries was
finally sealed in 1907. The advantages to Russia of this understanding
were considerable, not least because Britain could be expected to
restrain its Japanese ally. Japan was still smarting after the treaty of
Portsmouth, New Hampshire, which had yielded less advantageous
terms than those to which, as victor, Japan felt entitled.4
The character of the Franco-Russian alliance was inevitably affected
by the Russo-Japanese War, which had exposed Russian military
vulnerability and financial weakness. A joint meeting of the French
and Russian General Staffs in Paris - the first for five years - took place
in April 1906, and it symbolized the shift that had taken place. A
decade earlier, the French had hoped to convince Russia that troops
should be concentrated on the border with Germany, but Paris had
none the less eventually conceded Russian anxieties about Austria-
Hungary, which was regarded in St Petersburg as no less serious a
threat to Russian interests. The relationship between France and
Russia now assumed a quite different complexion. Russia agreed to
recognize that Germany constituted the chief threat. If and when
German troops mobilized, the two partners would automatically and
jointly respond. By contrast, any mobilization by Germany's allies,
Austria-Hungary and Italy, would lead to preliminary joint discuss-
ions and, only if appropriate, to a mutual response. The French mili-
tary took the opportunity to cross-examine their allies about Russian
military preparations and defence capabilities. They expressed par-
ticular concern about the length of time it would take Russia to recover
from the losses sustained in the Far East, and about the timetable
drawn up in St Petersburg for the mobilization of Russian troops on
the frontier with Germany. In addition, they sought assurances about
the supply of uniforms, medical equipment and rolling-stock. Finally,
to add to the humiliation, the French demanded to know the state of
morale amongst Russian troops. Palitsyn, the new chief of the
reorganized Russian General Staff, sought to reassure his French
 The defence burden, 1907-1914 121

opposite number that the Russian army was making a satisfactory

withdrawal from Manchuria and that the army would be back to
normal peacetime strength, disposition and stocks within the next
twelve months. But he was unable to reassure the French over the
question of troop mobilization, and he was silent about the morale of
Russian troops. Keen to press home a temporary advantage, the
French urged the construction of additional railway lines that could
accelerate the movement of troops from the Russian interior to the
German border.5
The tsarist government did not see the alliance with France as a
reason for behaving any more aggressively towards Germany and its
allies. Unfortunately, the German government pursued precisely
those policies that were calculated to arouse traditional pan-slavist
fury. More specifically, Germany undertook to defend the interests of
Austria-Hungary with still greater fervour than during the late nine-
teenth century. The key demonstration of German loyalty towards its
ally came in 1908, when Austria annexed the principalities of Bosnia
and Herzegovina, a course of action underwritten by Berlin. The
precipitate annexation of slav-populated lands by the Austrians
aroused widespread opposition in Russia. The Serbian government
expressed acute anxiety about Austrian behaviour. However, in the
face of the Austrian threat, namely that concerted Russian opposition
would be met by an invasion of Serbia, Russia capitulated. In March
1909, Germany demanded that Russia officially accept the Austrian
action and dissociate itself from Serbian resistance. Paul Miliukov, the
eminent historian and leader of the Cadet Party in the Third Russian
Duma, aptly likened the Russian response to events in Bosnia and
Herzegovina to a 'diplomatic Tsushima'. Yet the tsarist regime had
little choice but to respond in the way it did, as Austrian diplomats
knew full well. A military response by Russia, acting alone, was out of
the question. The Russian government had to acknowledge the un-
palatable fact that France would not offer its ally the kind of support
that Germany was prepared to offer Austria-Hungary.6
Even diehard Russian admirers of imperial Germany were insulted
by German behaviour in 1908-9. But the Russian government con-
tinued to exercise diplomatic restraint, the logical outcome of military
and economic weakness. It did not follow that Russia would remain
permanently weak, or inferior to its European neighbours. The Prime
Minister, P. A. Stolypin, acknowledged that 'any policy at the present
time, other than a strictly defensive policy, would be the frenzied
action of an abnormal government'. However, he also noted that 'in a
122 Rearmament and industrial ambition

few years' time, when all is calm at home, Russia will once more speak
with her old authority' (zagovorit prezhnim iazykom).7 Until such time as
Russia recovered the poise of which Stolypin spoke, it had two
choices: either the government could acknowledge the superiority of
Germany and come to some understanding with Berlin, at the likely
expense of the alliance with France; or Russia could strengthen its ties
with France and Britain, in the hope that any further increase in the
influence of Austria-Hungary in the Balkans could be stifled. The first
choice had much to recommend it. At the very least, it would provide a
breathing-space, and a useful opportunity to remind France that the
alliance should not be taken for granted. On the other hand, such a
move would undo the results of many years of Franco-Russian diplo-
macy. The second choice entailed a logical extension of existing com-
mitments, even if it hardly constituted a reliable insurance policy, so
far as the Balkans were concerned.
In Persia and the Far East, Russia had less to worry about. The tsarist
regime reached an accord with Britain in 1907, which recognized that
both countries had interests to protect in Persia, Russia in the northern
half and Britain in the southern zone. This cleared the way for a
significant improvement in Anglo-Russian relations, even if it did little
at present to stem the encroachment of German economic interests in
the region. Russian military aims in the Far East were deliberately
low-key. The General Staff noted that 'the political result of the war
has made it necessary to confine ourselves to the comparatively
modest task of preserving the inviolability of our possessions in the Far
East', that is the defence of the Chinese Eastern Railway.8 To this end,
Russia maintained 64,000 troops in eastern Siberia and the Amur
province, mostly located in fortresses. They were equipped with 796
field guns, 72 howitzers and around 200 machine-guns. Resources did
not permit any addition to this modest complement. Similarly, Russia
displayed a minimal naval presence in the Pacific: one first-class and
one second-class cruiser, together with a handful of torpedo-boat
destroyers and submarines, had to suffice. Kokovtsov was properly
dismissive of the Russian naval presence in the Far East: 'none of the
submarines meets the requirements of modern defence and none can
venture far from its base. The situation is no better so far as the
destroyers are concerned. All twenty belong to the old type - small,
slow and poorly equipped with armaments'. He drew attention to a
shortfall of around 50 per cent in the number of officers and 30 per cent
in the number of ratings. But his analysis of Russian financial weakness
left no room for improvement.9
 The defence burden, 1907-1914 123

This lamentable chronicle of Russian weakness explains Russian

willingness to conclude an agreement with Japan. The rapprochement
took place with remarkable speed. On the Japanese side, too, an
understanding with Russia had much to commend it. Japan needed to
raise a loan in France, and its chances of doing so would be improved if
Japan could demonstrate a readiness to deal with France's main ally.
The rapprochement took a tangible form in 1907: Russia recognized a
Japanese sphere of influence in southern Manchuria, whilst Japan
acknowledged Russian rights in the north. This agreement was further
strengthened three years later, by which time Russian military prepar-
ations had failed to show much improvement. Significantly, Japan had
embarked on a programme of rearmament after 1909. The military
share of the Japanese defence budget rose from 24 per cent, in 1906, to
40 per cent in 1911. Funds were allocated to the modernization of
artillery and rifles, the construction of new naval bases in Korea and
the acquisition of four dreadnoughts. By 1910, the Japanese fleet was
twice as large as it had been in 1904. But the Japanese military did not
have its sights set on Russia; rather, rearmament was designed to keep
pace with the concurrent military preparations of the USA. By 1911,
rearmament was in full swing, in the Far East, as well as in Europe,
although for the moment Russia fell out of the race for supremacy in
the Pacific.10
Until Russian rearmament had been completed, the tsarist regime
was in no position to pursue an active policy in the Balkans, in support
of the slav population. The relatively harmonious relations between
Russia and Germany between 1910 and 1912 reflected this unpalatable
truth. However, there were limits to this policy of enforced
appeasement. The tsarist regime was prepared to support Russia's
clients in the Balkans. Russia disliked the thought that other powers
could take advantage of Ottoman weakness in order to gain control of
the Straits. Yet, by 1913, there was increasing evidence to suggest that
this was precisely what Germany intended. 11 By 1914, fortified by
evidence, as it believed, of Germany's determination to control the
Straits of Constantinople, the tsarist government was prepared to
fight. But was Russia sufficiently powerful militarily to resist German
and Austrian pressure, as it had singularly failed to do in 1909?
The dangers inherent in a policy of confrontation were articulated
on the eve of the war by former Minister of the Interior P. N. Durnovo.
In a famous memorandum, prepared for Nicholas II in February 1914,
Durnovo began by pointing out that war would be the inevitable
outcome of Anglo-German rivalry: 'the interests of these two powers
124 Rearmament and industrial ambition

are far too incompatible and their simultaneous existence as world

powers will sooner or later prove impossible'. A war between the two
powers would rapidly develop into a European conflict. In such a
conflict, he argued, the main burden of fighting Germany would fall
on Russia, because France was too deficient in military manpower to
play its part. But the war would have serious internal political con-
sequences for Russia, for example, by encouraging nationalist upris-
ings in Poland and in central Asia, against the central government.
Neighbouring states, such as Persia and Afghanistan, might be
tempted to exploit Russian preoccupations in central Europe.
In these circumstances, according to Durnovo, it made sense to
come to an understanding with the German Reich. The advantage of
such a policy should have been clear long ago: Germany and its ally
had stood to one side during the Russo-Japanese War, when it would
have been all too easy for them to exploit Russia's embarrassments in
the Far East. Instead, foreign policy had taken a different turn, and
the Russian government had drawn closer to the Reich's arch enemy,
thereby entailing 'the rupture of neighbourly, if not friendly relations
with Germany'. A rapprochement would serve to convince Berlin that
Russia had no fundamental quarrel with Germany: 'the vital interests
of Germany and Russia do not conflict'. Russia had nothing to gain
from the seizure of German territory. Durnovo also argued that it was
in Russia's interests to maintain favourable commercial relations with
Germany. This was a contentious point: the trade treaty of 1904 gave
several advantages to German exporters, while continuing, by means
of the tariff, to deny Russian agricultural producers equivalent access
to the German market. Russian exporters hoped for a revision of the
treaty in their favour. Durnovo made the reasonable point that any
concessions by Germany would obviously depend upon a prior poli-
tical understanding, and would be prevented by the rapprochement
with Britain. A Russo-German understanding would bring economic
and social benefits: 'the British and French .. live in their own
countries, removing from Russia the profits produced by their enter-
prises, down to the last kopek. The German investors, on the con-
trary, live in Russia for long periods and not infrequently settle down
permanently'. Finally, the political system of imperial Germany made
it the logical diplomatic partner of the tsarist state: 'it should not be
forgotten that Russia and Germany are the representatives of the
conservative principle in the civilized world, as opposed to the
democratic principle, incarnated in England and, to an infinitely
lesser degree, in France'. It made little sense to engage Germany in a
 The defence burden, 1907-1914 125

war, when both victor and vanquished would likely fall victim to social
revolution.12
However, this arch-conservative did not represent educated public
opinion in Russia at large, which was prepared to countenance a war
with Germany, if this was the price that had to be paid for a settlement
of the slav question. Although pan-slavism in Russia was neither
coherent nor well-organized, 'the cumulative effect of repeated frus-
trations helped to spread the fatalistic feeling that only a war could
resolve the series of humiliations that Russia had suffered'.13 The
tsarist government was prepared to become embroiled in war, because
it could no longer tolerate Austrian behaviour towards Serbia and
because it could now count on the unwavering support of France. But
would the Russian armed forces be equal to the task? The answer to
this question depended in large part on the content and realization of
the programmes of rearmament that had been drafted since 1906.

Defence planning and rearmament programmes, 1907-14

Defence policy in the interwar years was the product of con-
flicting priorities, departmental rivalries and budgetary constraints.
Separately, these problems were neither new nor insoluble. But when
they coincided, as they did after 1905, the enormity of the tasks
confronting the architects of defence policy assumed unprecedented
proportions. For a brief time, it appeared possible that newly created
institutions would provide the kind of strategic overview and coher-
ent planning that was required, particularly when resources were
limited. But these hopes were quickly dashed. And when Russia's
financial position improved, as it did by 1909-10, and the competing
rearmament plans jostled for attention, there was no mechanism in
place to ensure that funds were spent in accordance with an overall
strategic plan.
In the short term, it had to be decided whether Russian defence
priorities lay in Asia or Europe. Both theatres of operations could
mobilize plenty of advocates on their behalf. The war against Japan
bequeathed a legacy of suspicion between the two adversaries, leading
some strategists to press for a renewed commitment of forces to the Far
East. Russian military planners also dwelled upon the need to counter
British domination in southern Persia; even after the agreement had
been signed with Britain in 1907, Russia still felt it necessary to plan for
the defence of its interests in the Near East. In other quarters, the
emphasis switched to Russia's western frontier and to the need to
126 Rearmament and industrial ambition

prepare for a potential conflict with Germany. This involved more

than an increase in the strength of the army: the Baltic fleet had to be
strengthened, if the north-west coast were to be defended against the
threat from Germany. In the immediate aftermath of the Russo-
Japanese War, the traditional Russian preoccupation with the Balkans
diminished. But Austrian action in Bosnia in 1908 compelled strategists
to restate Russia's longstanding interests in south-eastern Europe.
Finally, the imminent expansion of the Turkish fleet, news of which
reached the Russian government in the spring of 1909, served to
complicate matters still further, by demanding a Russian response in
the Black Sea.14
However, it was one thing to identify these diverse strategic inter-
ests; reconciling them was quite another. In practice, the tense situ-
ation in the Balkans, as well as Turkish naval rearmament, called for a
strong imperial fleet in the Black Sea. But those who spoke in favour of
this option faced the wrath of naval spokesmen who insisted on the
primacy of the Baltic fleet, or even the Far Eastern fleet. The defence of
the frontier with Germany, similarly, posed difficult choices: there
could be no question of maintaining a substantial presence in the Far
East or the Near East, if Russia wished to offer a serious challenge to
German military power on the European mainland. As if the recon-
ciliation of these alternative conceptions of defence were not enough,
Russia's military planners operated against the background of spend-
ing constraints. Kokovtsov's looming presence hardly made it any
easier to engage in defence planning, and he was always ready to
exploit differences of opinion within rival services, in order to fend off
their ambitious claims for funds.
The task of providing a grand overall design for Russian rearma-
ment fell to the Council for State Defence (SGO). It did not enjoy any
conspicuous long-term success. Admittedly, the SGO took some cau-
tious and well-considered steps. For example, it inspired a secret
initiative early in 1908, to identify appropriate measures that might be
taken by all sections of government, including civilian ministries, in
order to improve the defence of the realm. Even the Ministry of
Education and the Holy Synod were asked to indicate possible projects
for state defence that might come under their aegis. The sums involved
were enormous - not surprisingly, given the open-ended nature of the
exercise. The transport ministry outlined a programme for the exten-
sion of railway lines in the Far East and the construction of a second
track along the length of the trans-Siberian, that would cost more than
500 million rubles. But these plans were always likely to be frustrated
 The defence burden, 1907-1914 127

by the evident shortage of resources, and the element of fantasy

merely served to underline the ineffectiveness of the body which
inspired them. 15
In some quarters, the very magnitude of the strategic tasks that
confronted Russia served as a justification for a modest defence policy.
In a paper prepared for the General Staff in December 1908, General
Alekseev, currently chief of staff of the Kiev military district, set out the
arguments in favour of caution. Russia's potential enemies included
Romania and Sweden, in addition to Austria-Hungary and Germany,
both of which had recently strengthened their position in the Balkans
and Turkey. Japan had embarked on a programme to rearm. Neither
Russia's grip on the Caucasus nor on Finland could be considered
secure. In this unfavourable climate, Russia had to concentrate on the
defence of St Petersburg and on the security of its western frontier.
This meant that measures should be taken to strengthen Kronstadt
and Reval; and that Russia should be prepared to abandon Poland, lest
Russian troops be cut off by a joint attack by Germany and Austria-
Hungary. Here was a programme that attempted to define strategic
priorities and to reconcile them with resource constraints. It was
difficult to argue that Alekseev's programme lacked internal consist-
ency. But it was always vulnerable to attack from those who supported
an offensive strategy, such as could be embodied in a strong Russian
fleet.16
Whatever the boldness of individual initiatives, the SGO failed to
generate a comprehensive defence programme. Criticism along these
lines surfaced in the Duma, during a debate on the defence budget in
1908, when Koliubakin, a Cadet deputy from St Petersburg, pointed to
the lack of an overall strategic plan and thus to the absence of any
proper coordination between the defence departments. The SGO
made an easy target, with its lack of experienced administrative staff,
its preponderance of Grand Dukes and its elevated position, making it
unaccountable to the Duma. When, at the end of 1908, the Tsar
abruptly disbanded it, few tears were shed. 17
With or without the Council for State Defence, Russia's defence
ministries continued to prepare programmes independently. Until
1910, they had to make the most of the limited resources available to
them. These financial limitations, with the consequent inter-depart-
mental tussle for funds, probably did more than traditional service
rivalries to hinder genuine collaboration over strategy and defence
preparations. The climate for the realization of substantial rearma-
ment programmes in 1907 and during much of 1908 was simply not
128 Rearmament and industrial ambition

propitious. Kokovtsov argued that the international situation was

more stable than it had been in 1906, when the military first projected
highly ambitious rearmament schemes. Rearmament, therefore, did
not deserve high priority.18 But, by 1910, circumstances had changed:
rearmament moved to the top of the agenda, because of the aforemen-
tioned changes in the international scene, a shift in the relative poli-
tical fortunes of the defence and finance departments, and broad
parliamentary backing for rearmament.
The capacity of the Russian army to carry out the tasks assigned it
between the wars depended, as before, upon the number of men in
uniform, their training and morale, and the supply of food, uniforms
and weapons. The disposition and organization of troops also pre-
occupied military planners. Because so many resources and so much
attention were devoted to military administration, recruitment and
troop disposition, these subjects require more than a bare mention. We
shall then focus upon the question of armaments, to which (at least
until 1913) relatively few resources were devoted.
Russia maintained a substantial military bureaucracy. The experi-
ence of the Russo-Japanese War convinced Nicholas II of the need to
expand the agencies responsible for defence planning and military
supply. With the end of hostilities, in June 1905, the War Ministry lost
its old, and by now defunct Staff Office. In its place, the Tsar instituted
a new General Staff. As in Germany, the General Staff operated
independently of the War Ministry; and the chief of staff reported
directly to the Tsar. In addition, inspectors-general of artillery, cavalry,
infantry and engineering enjoyed the right of direct access to the Tsar
for the first time. However, these changes failed to clarify the demar-
cation between the holders of these posts, on the one hand, and the
new General Staff and Minister of War, on the other. To compound the
problem still further, the SGO also intervened in the task of military
planning until its sudden abolition. In his memoirs, Sukhomlinov
describes these arrangements as a Tower of Babel: Russia lacked a
single forum in which the various voices could ultimately be encour-
aged to sing the same tune. 19
This administrative proliferation generated bureaucratic rivalries
and in-fighting, which the Tsar did nothing to discourage. Typically, a
plan of defensive measures worked out by Chief of Staff F. F. Palitsyn
in August 1908 aroused opposition, both within the General Staff and
the War Ministry. His opponents objected to Palitsyn's proposals to
redeploy troops along the western border, along the line of the
Niemen, Bug and Dniester rivers, with a second line of defence 200km.
 The defence burden, 1907-1914 129

further east, rather than their concentration in the north-west, where

they were vulnerable to a two-pronged attack through east Prussia
and Galicia. To cite another example, Minister of War Rodiger's insist-
ence on the re-equipment of infantry clashed with the SGO's insist-
ence upon the refurbishment and restocking of fortresses. At issue
here were irreconcilable differences between those who espoused a
mobile and flexible conception of future engagements in the field, and
those who adhered to the orthodox view of static, positional war.20
No obvious military interests were served by the kind of administra-
tive confusion described above. Instead, it played into the hands of the
Minister of Finances. Time and again, Kokovtsov adopted a simple
tactic: no funds could be released until the army chiefs had drawn up a
clear and coherent programme. The multitude of different bodies
could never generate this unity of purpose. All that they achieved was
a plethora of proposals, most of them involving substantial expendi-
ture. Eventually, in November 1908, the Tsar returned the General
Staff to the War Ministry and abolished the SGO. Having long com-
plained about the 'absolute chaos' in defence planning, Rodiger found
himself unable to take advantage of the new arrangements. Early in
1909, he was forced out of office, the victim of a right-wing campaign
that attacked him for supporting Guchkov's withering assessment of
the capacity of the top army commanders. The demands of office had
also taken their toll; Rodiger appears to have been completely
exhausted by the time his tenure of the War Ministry came to an
abrupt end. 21
Rodiger was succeeded by V. A. Sukhomlinov, who enjoyed much
greater authority and broader responsibilities than his ill-fated pre-
decessor. Now that the General Staff fell within his jurisdiction, the
new minister could oversee army supply, military intelligence and
topography, mobilization planning and military transport, in addition
to personnel and procurement. But the restoration of a degree of
departmental unity in the War Ministry under Sukhomlinov did not
immediately signify a political defeat for Kokovtsov. On the contrary,
the Minister of Finances ostensibly welcomed the new state of affairs,
because it brought defence planning and spending back into the
Council of Ministers. Given his domination of the cabinet, this was an
important development. 22
Notwithstanding his advocacy of retrenchment, even Kokovtsov
could not overlook the basic question of army strength. The war
against Japan had depleted the ranks of the Russian army and
denuded it of reserves. On the eve of the war, the army stood at just
130 Rearmament and industrial ambition

over one million soldiers and just under 42,000 officers; but by the
beginning of 1906, its strength had fallen to around 735,000 men and
29,360 officers. Steps were taken almost at once to increase the
numbers of reserve troops, by accelerating the rate of conscription. The
length of service in the infantry and field artillery detachments was
reduced to three years; other men henceforth were to serve for four
years. Two categories of reserve were created: one to back up field
troops, the other, comprising older men, to support troops in the rear.
By 1908, the army stood at 1.31 million men and 43,000 officers. Nor
were these the only significant changes that affected personnel. Before
he resigned, Rodiger encouraged older officers to retire and increased
the rates of pay for lower ranks and officers; poor salaries meant that
the shortfall of officers reached 60 per cent in some units.23
The tsarist government could hardly avoid measures such as these
to restore the strength of the army. Other important initiatives pro-
posed by the army came to grief, because of financial constraints. Even
quite modest and sensible proposals came under the knife. For
example, the Main Artillery Administration drafted plans in spring
1908 to stockpile raw materials, on the assumption that Russia might be
blockaded for a prolonged period (plans for a two-year blockade
required 28 million rubles, in order to secure the necessary materials).
But this proposal failed to find favour with the Ministry of Finances,
which eventually agreed to set aside a mere three million rubles, on
condition that this sum be reallocated from funds already approved
for the procurement of rifle cartridges.24
The primacy of Kokovtsov and the financial cutbacks upon which he
insisted also affected the army's traditional commitment to fortresses
on the border with Germany. Of course, doctrinal considerations also
operated here, as Sukhomlinov found when he proposed to scrap
some of the more decrepit structures. The new minister did not
support the allocation of scarce resources to fortresses, believing that
the funds could be better spent elsewhere: in his view, it made more
sense to plan for a strategic retreat from Congress Poland, and to
prepare for a counter-offensive launched from European Russia, than
to tie up troops and artillery in fortresses, over whose defence there
hung a question mark. However, the opportunity cost argument
found no favour with the Tsar and his advisers. The French, too,
baulked at the thought that Russia could allow Germany such an easy
passage into Poland. Sukhomlinov had to moderate his radical views,
and the programme he drew up in 1910 made ample provision for
fortresses.25
 The defence burden, 1907-1914 131

Weapons and ammunition had been consumed, seized or destroyed

during the war against Japan. Some emergency measures were taken
to replenish stocks. In the medium term, military leaders developed
more ambitious proposals. Rodiger advocated the adoption of more
manoeuvrable field artillery and new machine-guns, with correspond-
ing measures to train artillery and infantry officers in their use. The
diplomatic crisis that erupted in the Balkans in 1908 offered the War
Minister his first real opportunity to seize the initiative from Kokovt-
sov. In January, with the backing of the SGO, Rodiger requested 315
million rubles, in order to build up stocks of munitions that had been
lost three years earlier (55 million rubles); to purchase additional
machine-guns and field artillery (192 million rubles); and to build up
Russian armed forces in the Far East (68 million rubles). The Council of
Ministers agreed to support an approach to the Duma for all but 16
million rubles of this sum. Thus, three years after the end of the
Russo-Japanese War, the army finally received the means to fund a
modest rearmament programme. The acquisition of machine-guns and
the creation of the appropriate troop units were an important product
of this programme, indicating that the War Ministry did not always
give priority to the defence and improvement of fortresses.26 This
represented an important breakthrough: for the first time since the
Russo-Japanese War, the War Ministry had managed to get its way. No
doubt, Kokovtsov hoped that the allocation of 300 million rubles
would satisfy the appetite of the military. Certainly, Kokovtsov's sub-
sequent behaviour, which did nothing to endear him to Sukhomlinov
(he appears in Sukhomlinov's memoirs as 'the shallow Kokovtsov')
indicates that he had lost none of his appetite for budgetary disci-
pline.27
In Sukhomlinov's view, the Russian army suffered at least as much
from deficiencies in organization, as it did from financial constraints.
The improved disposition of available resources could reduce the gap
between the performance of the Russian army and that of the armies
of the Triple Alliance. Sukhomlinov noted that army battalions con-
tained anything from four to 10 companies, regiments consisted of two
to four battalions, artillery brigades might have from five to nine bat-
teries, leading to varying strengths in artillery from one army division
to another. One army corps had 16 battalions, another 68, with 56 and
168 artillery pieces between them. The Russian army was deficient in
howitzers (fewer than six per army corps, whereas Germany had three
times as many). Russia could afford also to organize its soldiers and
reserves more effectively, which Sukhomlinov proposed to achieve by
132 Rearmament and industrial ambition

creating three regional groupings, such that each infantry regiment,

artillery brigade and reserve contingent had a specific territorial
identity.28
In reorganizing field artillery, Sukhomlinov replaced the less mobile
eight-gun battery with a six-gun battery. This allowed him to create
extra reserve artillery brigades, attached to each reserve division.
Additional batteries of field howitzers (eighty-three in all, instead of
just twenty-nine hitherto) strengthened the army still further.
However, this programme was not realized without significant costs.
Norman Stone points out that the measures entailed additional
numbers of artillery officers, promotions and thus an increase in the
salary bill. Nor did these measures do anything to lessen divisions
within the army; indeed, they antagonized the 'patrician' element,
which stood to lose out to the younger, upstart officers who controlled
the new artillery batteries.29
Sukhomlinov also supported technical innovation in artillery.
During hisfirstyear in office (1909-10), the General Staff introduced an
updated 3-inch field gun and 122mm and 152mm howitzers, capable of
inflicting greater damage on entrenched enemy positions. However,
the decision to maintain the fortresses meant that most resources were
allocated to heavy fortress artillery, rather than to field artillery. Under
the 1910 programme, relatively few resources were devoted to heavy
field artillery.30
Improvements in transport also claimed Sukhomlinov's attention.
As with fortresses, more was at stake than military doctrine: large
amounts of cash were required as well. In 1908, Palitsyn and Alekseev
showed the way, by calling upon the army to examine all forms of
communication (road, rail and river), in order to weld them into a
single strategic framework. Their scheme foundered, partly because of
a shortage of funds and partly because of opposition to the proposals
from other elements within the General Staff. Sukhomlinov revived
the issue, emphasizing the importance of troop mobility in wartime
and thus the need to invest in railways and to integrate them into
military plans. But the expansion of military railway building had to
await the commitment of funds by the French.31
The extent to which the international and domestic political situ-
ation had changed within a year of Sukhomlinov's appointment was
evident in the preparation of a comprehensive rearmament pro-
gramme in February 1910. The plans envisaged an outlay of 715 million
rubles over ten years. This huge expenditure included 373 million
rubles for fortresses, 114 rubles for strategic railway lines and 81 million
 The defence burden, 1907-1914 133

rubles for heavy field artillery. The continued emphasis on the role of
the fortress is self-evident, although sums were assigned for coastal
fortresses (Vladivostok, Kronstadt), as well as for those along the
German border with Russian Poland. Sukhomlinov drew some
comfort from the fact that funds were now released for the reorgani-
zation of the army, in particular the standardization of the size of troop
units. The Duma approved the programme in April 1910. But his
victory proved something of a Pyrrhic one. Sukhomlinov's main aim
had been to improve the ratio of field artillery to infantry, but there
was precious little space for this aspiration in the final programme. The
needs of field artillery had come unstuck on the twin rocks of financial
constraint and service opposition.32
In 1912, Sukhomlinov devoted all his energy to the formulation of a
new and comprehensive programme for the reequipment and expan-
sion of the ground forces. The two Balkan wars (1912-13) provided the
War Minister with the justification he needed for this programme.
Increases in the size of the German army gave a further impetus to
Sukhomlinov's plans. In addition, plans were being prepared to
expand the size of the French army by one-third, through an increase
in the length of service from two to three years; the French would
naturally expect a reciprocal effort from their Russian ally. According
to the new programme, the needs of artillery would finally receive
proper recognition. In March 1913, the Tsar approved the expenditure
of 225 million rubles on armaments, including 181 million rubles on
artillery. Four months later, Sukhomlinov secured still larger sums for
a five-year programme, designed to increase the quantity and quality
of field artillery.33
The final piece in the jigsaw of military planning slotted into place in
1913, when the Tsar approved a 'great army programme' and a pro-
gramme of railway building on the western frontier. The Russian
military had already come to accept the French view that an offensive
against Germany should be mounted within 15 days of mobilization.
The new initiatives were designed to give further expression to the
planned offensive.34
The cornerstone of the 'great army programme' was an increase in
the size of the Russian army by nearly 500,000 men and just under
11,800 officers, an increase in its peacetime strength of nearly 40 per
cent and 28 per cent respectively. Infantry would benefit by the
addition of 266,000 new men, artillery numbers would grow by
126,000, and the remaining recruits would swell the ranks of sappers
and technical staff. This growth in numbers would be accompanied by
134 Rearmament and industrial ambition

the much-discussed reorganization of the army, the purpose of which

was above all to reduce the time taken to mobilize forces effectively.
Most of the additional recruits would form new army units, whilst the
remainder would bring existing infantry units up to full strength. The
programme envisaged an increase in the strength of heavy-calibre
field artillery batteries. By the time it was completed, in 1917, the army
would have a total of 8,358 pieces of artillery, including 6,048 light
pieces, 666 mountain guns, 1,176 light howitzers, 312 42-line guns and
156 powerful 6-inch howitzers. Finally, the programme contained - for
the first time - a rationale and detailed provision for military aviation.
These combined measures cost 433 million rubles. The Tsar gave his
blessing to the programme in October 1913. Sukhomlinov immediately
began to draft new recruits, well in advance of Duma approval for the
release of funds, which eventually followed on 22 June 1914, twenty-
seven years to the day before the German invasion of the Soviet
Union.35
With the adoption of the 'great army programme', the Russian
General Staff brought to fruition its preparations for a European war.
The programme represented the culmination of the view that the
Russian General Staff should mobilize troops against Germany with all
possible speed, a view that was shared by the military leadership in
Russia as well as in France. The underlying aim of the programme was
to effect the rapid mobilization of Russian troops and thereby threaten
any German incursion into France with retaliatory action by Russia.
But this was no 'Blitzkrieg' strategy, designed to head off a political
and social crisis at home by means of speedy victory abroad. Rather, it
was a long overdue attempt to improve the mobilization of Russian
troops, the rapid deployment of infantry and artillery at the front and,
once in place, their manoeuvrability. Both the French and the Russian
military leadership were broadly happy with the outcome of their
military planning.36
Budgetary restrictions until 1910 dictated modest measures as
regards Russian land forces. The reorganization of army units, the
recruitment of additional troops, the provision of extra firepower -
these were hardly the stuff of which dreams of military grandeur were
made. They were, nevertheless, important measures in themselves.
Anything more than this, such as improved fortresses, heavier calibres
of field artillery and especially new railway lines required substantial
additional funding. The 1910 army programme did little to redress the
imbalance between the army and the navy. Only in 1913 did the 'great
army programme' begin to chart a different course. What altered the
 The defence burden, 1907-1914 135

situation was the evident deterioration in international relations, the

readiness of the Duma to grant additional credits for the army and the
fact that Sukhomlinov's political skills (as he jubilantly boasted)
proved more than a match for those of Kokovtsov. But until 1913,
Russian planners, like those elsewhere in Europe, had to accept that
the real growth in defence budgets would derive from the imperative
to create large navies.
If Russian military planners entertained any doubts about naval
rearmament, they were quickly dispelled by the private utterances of
tsarist officials. It became axiomatic in the Russian Foreign Office that
naval requirements should be accorded priority. A. P. Izvol'skii, the
Minister of Foreign Affairs (1906-10), let it be known that 'states which
neglect the reconstruction of the navy after it has been lost inevitably
become second-rate powers'. Even the Minister of War was forced to
acknowledge that 'the fleet was bequeathed us by Peter the Great'.37
Nicholas II had no wish to abandon this legacy, and his views ulti-
mately settled matters in favour of the navy. It was largely because of
his personal intervention, in 1907, that the navy received funds to
begin work on the dreadnought programme. Nor could the Duma
conceive of a defence strategy in which the Russian navy played
merely a minor role: influential spokesmen, such as A. I. Zvegintsev,
the Octobrist deputy and chairman of the Duma defence commission,
adopted a pronounced pro-navy position in Duma defence debates.38
The problem was that Russian strategists had to decide what kind of
navy Russia needed and what it could afford. Broadly speaking, until
1910 navy planners concentrated upon needs of the Baltic fleet. The
deteriorating situation in the Balkans changed this assessment. The
challenge from Turkish rearmament and the commitment to the
freedom of Russian exports through the Straits urged on strategists to
articulate the interests of a strong Black Sea fleet. The new Navy
Minister, I. K. Grigorovich, as well as Izvol'skii's successor, S. D.
Sazonov, wished at the very least to see a Russian fleet in the Black Sea
that would not yield to the Turkish fleet in its size and capability. The
temporary closure of the Straits in October 1911 and again in April 1912
reinforced the view that Russia required a strong naval presence in the
Black Sea in order to assert the freedom of passage of grain exports to
western Europe. This viewpoint gained ground in 1911; by 1914, it had
triumphed.39
Until 1908, the navy had been obliged to draw up its rearmament
plans under the watchful eye of the Council for State Defence. With its
abolition, the navy possessed greater freedom of manoeuvre. In 1909,
136 Rearmament and industrial ambition

naval chiefs drafted an ambitious scheme for rearmament. A new,

ten-year shipbuilding programme envisaged the reconstruction and
modernization of all three fleets, in the Black Sea, the Baltic and the
Pacific. The scale of the proposals led to the establishment of a special
inter-departmental commission in August, which proved to be yet
another forum for tussles between the defence chiefs and the Ministry
of Finances, as well as between the army and navy. At successive
meetings of the commission, representatives from the Naval General
Staff and the Navy Ministry indicated that their comprehensive pro-
gramme of rearmament would cost a total of 1,090 million rubles. This
drew an immediate response from Sukhomlinov and his General Staff
officer, A. Z. Myshlaevskii, who complained that even this estimate
overlooked the need for expenditures on the defence of the proposed
new naval bases (at Reval, Nikolaev and Nikolaev-on-Amur) and on
training new complements of officers and men. According to Sukhom-
linov, the total cost was likely to be nearer 1,500 million rubles. It was
impossible to contemplate spending such extravagant sums on one
branch of defence. Other members of the commission reiterated the
point that had been made three years earlier, namely that the priority
was for the navy to defend the Baltic approaches in general and
Kronstadt in particular. The claims of the Black Sea and Far Eastern
fleets would have to wait. Grigorovich found himself under attack
from other quarters as well. Stolypin, although acknowledging that
'Russia cannot limit itself to the creation of a torpedo-boat or sub-
marine fleet', nevertheless wanted to know how the scheme could be
reconciled with the need for a defensive strategy.40
Kokovtsov, typically, spoke at length, complaining that he had not
been consulted in advance about the proposals, and implying that the
Admiralty had attempted to preempt a collective decision on the
country's future defence needs. In any case, he remarked sarcastically,
what role was left for diplomacy, when all powers - the Triple Entente,
Japan, Turkey, Romania and Sweden - were presupposed to be the
enemies of Russia? Finally, Kokovtsov dwelled upon the opportunity
costs of this level of defence spending. In the event, the commission
agreed to consider the shipbuilding programme in conjunction with
the projected reorganization and expansion of the army, resolving that
'the tasks of the navy must be set modestly, and unfailingly in accord-
ance with the tasks of the armed forces'. This meant a defensive role
for the Baltic and Far Eastern fleets and sufficient commitment to the
Black Sea fleet to make it stronger than the Turkish fleet.41
This decision proved only a temporary setback to naval rearmament.
 The defence burden, 1907-1914 137

Five months later, at the beginning of 1910, the Navy Minister

approached the Council of Ministers with a revised plan for the
expenditure of 730 million rubles on the fleet. As in 1907, the bulk of
the expenditure, some 641 million rubles, was to be assigned to the
re-equipment and expansion of the Baltic fleet, including 502 million
rubles for eight battleships, four armoured cruisers, four light cruisers,
18 destroyers and 12 submarines. Of the remainder, 56 million rubles
would be allocated to the Black Sea fleet and 34 million rubles to the
Pacific fleet. Taking into account the 33 million rubles that had already
been approved for shipbuilding, in the 1908-09 estimates, Grigorovich
requested just under 700 million rubles of new money. Once again,
the Tsar's vision of a grand imperial fleet had been placed on the
agenda. 42
Kokovtsov, meanwhile, had not given up hope of curtailing these
ambitious programmes. He held out before his cabinet colleagues the
prospect of tax increases; and, as everyone knew, changes to the
budget would inevitably involve the Duma indirectly in questions of
state defence. It was a clever tactic. The Duma did hold up the
estimates, by questioning the competence of officials in the Admiralty.
Some members of the Duma decided to oppose the release of fresh
credits, until further reforms had been made to the administration of
the state dockyards. It appeared that Kokovtsov had succeeded in
forcing a delay in naval rearmament. But further debate revealed that
the Duma was prepared in principle to look kindly on the Admiralty's
spending plans, provided they were recast. Duma spokesmen found
fault with the overriding emphasis in the scheme upon the expansion
of the Baltic fleet. Members urged that proportionately greater
resources be devoted to the expansion of the Black Sea fleet, because of
the export imperative and the growing threat posed by the Turkish
fleet. The resulting difference of opinion between the 'northerners' in
the Naval General Staff and the 'southerners' in parliament provided
ample reason for the lack of progress in naval rearmament during
1910.43
By the spring of 1911, the navy felt confident enough to prepare a
new programme of shipbuilding. This revived confidence may be
attributed to the fact that some administrative reforms had been
carried out to the satisfaction of the Duma. Under the new proposals,
which formed a draft law on the imperial fleet, immediate priority
would once again be given to the Baltic fleet. But over the next
twenty-two years, the Baltic fleet was to be transformed by the addi-
tion of two active squadrons and one reserve. So far as the Black Sea
138 Rearmament and industrial ambition

was concerned, the intention was to create a fleet that would be at least
half as strong again as those of other states which maintained navies in
those waters. This was a clear attempt to meet parliamentary concern
about the neglect of the Straits. The navy requested 513 million rubles,
to implement the first part of the programme for the reconstruction of
the Baltic fleet. When the plans came before the Council of Ministers,
in December 1911, the estimated cost had risen to 760 million rubles.
Eventually, the government agreed to approach the Duma for 162
million rubles, in order to strengthen the Black Sea fleet, whose needs
had become particularly pressing, as a result of the growing Turkish
naval presence, as well as to provide for more modern battleships,
torpedo boats and submarines.44
During the following year, the navy returned with fresh plans for
the Baltic fleet. Its officials came up with a so-called 'enhanced pro-
gramme' (usilennaia programma), designed to create two new naval
squadrons in the Baltic by 1919, together with a reserve squadron. The
programme provided for eight battleships, four battle cruisers, eight
light cruisers, thirty-six torpedo-boat destroyers and twelve sub-
marines. The civilian ministers again objected to the cost and, in
particular, to the lack of prior consultation. But there was no longer
any question of delay. After discussion in the Council of Ministers, and
with the enthusiastic support of the Tsar, the project went to the Duma
in March. Three months later the Duma approved a bill for the
expenditure of 421 million rubles on shipbuilding. Meanwhile, the
interests of the 'southerners' were not neglected. The 1911 shipbuild-
ing programme had recognized the claims of the Black Sea fleet. Now,
on the eve of the First World War, the government approved plans for
additional vessels - one destroyer, two cruisers, eight torpedo boats
and six submarines - to be built on the Black Sea, at a total cost of 110
million rubles.45
The result of this feverish activity was thus to inject substantial
resources into naval rearmament, and particularly into the creation
of a large battleship fleet in the Baltic, to which the bulk of resources
was devoted. Naval rearmament represented a triumph for Grigoro-
vich and the Naval General Staff. The intense pace of construction
was reflected in the fact that the construction of new warships
accounted for 55 per cent of the total naval budget by 1914, a far
higher proportion than in other countries. This activity meant full
order books for Russian shipyards. Advocates of the Russian fleet
believed that Russia would soon have a fleet to rival that of
Germany.46
 The defence burden, 1907-1914 139

The defence budget and fiscal policy, 1907-14

The armaments programmes outlined above led to pro-
nounced changes in the size and composition of the central govern-
ment budget. Total defence spending increased from 680 million
rubles in 1907 to 961 million rubles in 1913 (see table 3.1). Reported
defence expenditure increased at an average rate of just under 6 per
cent per annum, well in excess of the rate of growth of the budget as a
whole. Defence spending also grew faster than elsewhere in Europe.
In Germany, Britain and France, defence expenditure barely increased
at half the Russian rate. However, the exceptional rate of growth of
Russian defence spending is to some extent deceptive, because it
began from a low base in 1904-7: in 1903, the government had pegged
the war budget at its current level for the next five years, continuing
the practice adopted in 1899. Besides, as we shall see, the Russian
defence departments secured less for their rubles than did their
counterparts elsewhere. These considerations put the scale of the
increase in defence expenditure into perspective.47
The growth of the Russian defence budget concealed a huge dispa-
rity between the two armed services. While ordinary spending by the
War Ministry increased by just over six per cent between 1907 and
1913, the ordinary expenditure of the navy increased three times faster,
at a rate of 18.6 per cent. Most of this growth was concentrated in the
last three years of peacetime, and reflected the heavy costs of acquiring
modern warships, provided for in the small shipbuilding programme.
The Ministry of Finances estimated that defence consumed between
33 and 36 per cent of the total budget for 1907, figures that were arrived
at by attributing all extraordinary expenditure for that year to
defence.48 Adopting the same criteria, this proportion fell to 31 per cent
in 1908 and to 28 per cent in 1909, where it remained in the following
year. In 1911, it climbed back to 33 per cent. On the eve of the First
World War, defence spending amounted to just over one-third of the
total budget. The Duma broadly agreed with these estimates. The
defence ministries tended, not surprisingly, to underestimate their
share of the budget, putting it at no more than 25 per cent in 1908. But
their method of calculation failed to take any account at all of extra-
ordinary expenditure, and thus gave a no less misleading impression
than did the Ministry of Finances. But all these figures need to be
treated with caution. Some items, such as the expenses associated with
conscription, were charged to other ministries. In addition, the costs of
building and maintaining strategic highways and railways were
140 Rearmament and industrial ambition

Table 3.1. Government expenditure, 1900-1913 (million rubles)

War Navy Transport Finances Debt Trade & Extraordinary1 Total2

Industry

1900 332 89 367 280 267 - 284 1,883

1901 335 93 389 308 227 - 209 1,874
1902 343 100 446 334 290 - 365 2,167
1903 351 114 456 366 289 - 225 2,108
1904 372 113 449 350 298 - 831 2,738
1905 378 117 449 339 307 - 1,280 3,205
1906 393 112 477 353 357 32 1,152 3,213
1907 406 88 508 429 374 32 387 2,583
1908 463 93 571 432 398 33 273 2,661
1909 473 92 551 460 395 39 156 2,607
1910 485 113 537 409 409 39 124 2,597
1911 498 121 543 403 399 42 310 2,846
1912 528 176 555 425 394 54 449 3,171
1913 581 245 641 482 424 65 289 3,383

1
includes debt payments (842 million rubles, 1900-13), cost of Russo-Japanese
War (2,595 million rubles), state railways (1,198 million rubles) and officially
acknowledged rearmament expenditure (463 million rubles).
2
includes the following ministries and departments, not itemized separately:
Imperial household, Holy Synod, Interior, Justice, Foreign Affairs, Education,
Agriculture, State Audit Office.
Source: P. A. Khromov, Ekonomicheskoe razvitie Rossii v XIX-XX vekakh, Moscow,
1950, pp. 524-9.

frequently assigned to the budget of the Ministry of Transport, or to

the extraordinary account, where they attracted less international
publicity and parliamentary scrutiny.49
Within the budget of the War Ministry, additional resources were
found for military manoeuvres (2.8 million rubles in 1908, rising to 11.0
million rubles by 1913), as well as for pay, for the construction and
maintenance of barracks and for military training and education. The
sharp increase in appropriations in 1908 reflected improved pay, pro-
visions and housing. These items, as well as fodder for the huge
number of army horses, continued (as before) to absorb around half
the total budget. Much of the subsequent increase in the army budget
is explained by the growth in the numbers of men in uniform. The
sums devoted to military hardware, such as artillery, small arms and
ammunition, did increase in absolute terms: for instance, the Main
 The defence burden, 1907-1914 141

Artillery Administration reported in 1912 that the programme to

re-equip the army with field and mountain artillery had been com-
pleted, and promptly redirected resources towards the repair of guns
and the purchase of small arms. But these items never amounted to
more than 15 per cent of the total. The most notable change occurred in
construction, the other chief capital item. Expenditure on the moderni-
zation of fortresses loomed larger during the interwar period than it
had prior to the Russo-Japanese War. The share of the military budget
devoted to fortifications, barracks and other construction projects
roughly doubled between 1907 and 1913, reaching ten per cent of the
total. In 1914, it stood at 12 per cent.50
The rapid increase in naval expenditure was similarly accompanied
by changes in the composition of the budget. In 1908,43 per cent of the
navy budget had been devoted to the construction, repair and arma-
ment of military vessels. Five years later, this proportion reached 62
per cent, representing 193 million rubles. The share of the naval budget
earmarked for administration declined, helped by efficiency gains in
the naval bureaucracy in St Petersburg. According to N. V. Savich,
'eminence grise' of the Octobrist party and deputy chairman of the
Duma defence commission, this shift in the naval budget vindicated
the campaign by its parliamentary critics to improve the efficiency of
the ministry. Meanwhile, the costs of staying in the naval arms race
were increasing year by year. Savich commented that only 35 per cent
of the budget had been devoted to the construction of new vessels in
1908, whereas this proportion had risen to 55 per cent by 1914, well
ahead of the other chief naval powers, Germany and Britain. This
demonstrated that Russia had belatedly begun to catch them up. 51
The tsarist regime spent between 12 and 15 per cent of its total
military budget on weaponry of all kinds between 1904 and 1914. The
proportion spent on military hardware amounted to at least 20 per
cent, inclusive of military shipbuilding. By 1911-14, expenditure on
hardware represented one quarter of all defence expenditure. To give
a clearer idea of its impact on industry, one should take into account
defence-related capital expenditure, that is construction and hard-
ware. During the last full year of peace, the government spent 7 per
cent of its total budget on capital items associated with the defence
effort, more than three times as much as in 1907. This level of spending
(diluted by some orders placed with foreign suppliers) implied a major
boost to Russian manufacturing industry and the building trades.52
These increased levels of military expenditure testified to Kokovt-
sov's slackening hold over the Council of Ministers. Prior to 1911,
142 Rearmament and industrial ambition

Kokovtsov urged that the military should continue to observe strict

limits on spending, as had been agreed in 1899 and 1903. But the rapid
growth in military appropriations demonstrated that his attempts to
restrain the defence ministries met with diminishing chances of
success. Bearing in mind, furthermore, that 'economic-operational
expenditures' constituted a significant share of extraordinary spend-
ing after 1908, Kokovtsov's ultimate lack of success in curbing the
appetite of the armed forces becomes still more conspicuous. Army
chiefs were able to exploit the war scare in the Balkans during 1908, in
order to persuade the government of the need to increase defence
spending. The threat of war in central Europe in 1912-13 justified
additional outlays on fortresses, railways and artillery. In the most
striking demonstration of the new mood, the Russian navy extracted
huge additional amounts, in connection with the grandiose shipbuild-
ing programmes.53
In seeking to overcome the resistance of the Ministry of Finances to
higher levels of defence expenditure, both services were able to count
on the support of the Duma. There were dissenting voices, such as the
Cadet doctor Andrei Shingarev, who had been thrust into the lime-
light after the publication of his book, The Dying Village. Shingarev was
a thorn in the flesh of the government and constantly criticized the
defence estimates, for reasons that will be examined presently. But the
Cadets and parties to the left formed a minority in the Third Duma,
which was dominated by the Octobrist Party. The Octobrists provided
the chairman of the Duma budget committee (Mikhail Alekseenko)
and its defence commission (Alexander Zvegintsev), as well as the
most vocal speakers on defence issues, Alexander Guchkov and
Nikanor Savich.54 The Third Duma provided a valuable ally for the
Ministry of War during the Sukhomlinov era. The roots of this alliance
are not difficult to detect. Reforming elements within the War Ministry
counted upon the Duma to support administrative changes, in order
to reduce the influence of Grand Dukes in their capacity as inspectors
of artillery, engineering and so on. The Duma also endorsed the
shipbuilding programmes, particularly when it had secured reforms at
the Admiralty. The Minister appointed in 1911, I. K. Grigorovich,
became adept at fostering cooperation between the Duma majority
and his officials.55
Nevertheless, it would be misleading to suggest that the growth of
the defence budget reflected significant initiatives on the part of the
Russian parliament, given that the prevailing political system allowed
limited room for manoeuvre. The law of 8 March 1906 carefully circum-
 The defence burden, 1907-1914 143

scribed the Duma's budgetary powers; in effect, it ensured that the

Duma could neither initiate nor amend the budget estimates, but only
approve or reject them as they stood. In practice, the right of rejection
did not amount to much, in so far as the previous year's appropriation
remained in force, should the Duma reject the estimates. The estimates
presented by the War Ministry, in particular, were 'armour-plated', for
the simple reason that its budget already provided a firm base. Parlia-
mentarians complained that they could effectively scrutinize only 13
per cent of the army's budget, namely that part pertaining to new
appropriations, a degree of impotence matched only in respect of the
Holy Synod. By contrast, the navy estimates, like those for the minis-
tries of Finances, Trade and Industry, and Transport, were exposed to
greater glasnost, because the Admiralty constantly sought new appro-
priations. But, in the drama of naval rearmament and finance, the
Duma played second fiddle to the Admiralty, particularly after the
advent of Grigorovich. Further appropriations went through without
a murmur of dissent; the final sessions of the Third Duma and those of
the Fourth were notable only for the absence of parliamentary debate.
On set-piece occasions, such as accompanied the approval of the small
shipbuilding programme in 1912, government ministers and naval
chiefs paraded before the Duma. But to pretend that the finance of
Russian rearmament involved a partnership between government and
parliament was pure fiction.56
How did the Ministry of War and the Admiralty manage the budgets
at their disposal? Here, the Duma did manage to make its voice heard,
largely by drawing upon the deep well of discontent that had been
created during the Russo-Japanese War. Parliamentary representatives
maintained that accounting procedures in both departments left a
great deal to be desired. The Third Duma regarded officials in the
defence ministries as incompetent and even corrupt men, who had
been tarred with the brush of defeat in 1904-5. Even honest officials
were thought to betray a casual approach to the management of the
colossal sums at their disposal.
The charge most frequently levelled against the defence ministries,
at least until 1911, was that they failed to spend sums that had been
earmarked for specific purposes. Critics also accused defence officials
of indulging in exaggerated estimates of cost, in order to build up a
reserve of funds. These phenomena served as the pretext for reducing
the claims of the defence ministries on the budget prior to 1910-11.
Kokovtsov himself joined in the chorus of complaint, observing that
'the appropriation of credits ran far ahead of the realization of the
144 Rearmament and industrial ambition

projects' for which funds had been assigned.57 To some extent at least,
this mismanagement could be attributed to the behaviour of govern-
ment contractors. Some offered their services, without being suffi-
ciently prepared to handle contracts. By the time their irresponsibility
dawned on officials, the funds had already been committed. Suppliers
themselves told a different tale, of the reluctance of defence officials to
commit adequate funds, such as would enable them to embark on
projects with confidence. There was an element of truth in this accu-
sation. Defence departments tended to operate rigid accounting pro-
cedures; once funds had been assigned to a given project, officials
were reluctant to reassign them to another during the current financial
year. In other words, the critics had got hold of the wrong end of the
stick. Far from being too lax, accounting procedures were - if anything
- too strict. Greater flexibility in the allocation of funds might have
smoothed the relationship between customer and supplier, as well as
have improved the speed with which contracts were completed.58
By 1911-13, criticism still centred upon financial mismanagement,
but the focus had shifted. Hitherto, officials had normally been
accused of a reluctance or inability to use the appropriations that had
been approved. Now, their critics observed a tendency for the service
ministries to overrun the approved estimates. Typical of such com-
plaints were those delivered by Shingarev, during the debate on the
1911 budget. He accused the Admiralty of maintaining wholly unsuita-
ble vessels as a reserve, of failing to speed up the time taken to repair
vessels and of spending disproportionate amounts on administration.
The Russian navy failed to exercise sufficient budgetary discipline and
permitted spending on these and other items to spiral out of control.
Some historians have confirmed his unfavourable verdict on naval
administration, but without examining the operative factors, over
most of which the ministry had no control.59
Shingarev and his fellow critics had a valid point. Officials in the two
service ministries lacked skills in budget management, although it is by
no means certain that they were any more deficient in this respect than
their counterparts elsewhere in Europe. They received no proper
training. They were poorly paid - hence the frequent charges that they
had accepted bribes - and the career structure provided few incentives
to develop better skills. Sukhomlinov and Grigorovich recognized this
fact, but the hesitant steps taken to remedy the problem had little
effect before war broke out.60
The management of defence budgets, at a time of rampant rearma-
ment, inevitably subjected even the most assiduous officials to great
 The defence burden, 1907-1914 145

strain. It should be emphasized that the difficulties they faced were not
normally of their own making. The structure of the defence industry
and the technology involved in modern armaments conspired to
frustrate attempts in the defence ministries to make their budgets
stretch further, and even to maintain a reasonable control over spend-
ing. The main business of officials in the Admiralty was to draw up and
monitor contracts with suppliers of finished goods. But, in practice, the
number of suppliers was limited by the nature of naval technology,
which only a small number of firms possessed. These considerations
had a direct bearing on costs, because any attempt to keep them down
was undermined by the oligopolistic character of the industry and by
the complex and costly nature of the technology embodied in modern
naval vessels. Thus, any attempt to stretch the resources of the
Admiralty came up against obstacles which no government official,
however competent, could easily surmount.
The War Ministry found itself in a somewhat different position. It
had responsibility for different branches of the armed forces, such as
artillery and general military stores. Generally speaking, the War
Ministry dealt with a larger range of suppliers than did the Navy; the
question of having to cope with the cost implications of advanced
technology arose less frequently. But here, too, complaints arose about
the tendency of suppliers to collude, in order to force up prices. Some
officials connived at this practice and were rewarded for their dis-
cretion. This made the job of even the most scrupulous and honest
official more difficult.61
One other objective difficulty should be mentioned. The prewar
inflation in materials prices was reflected in the charges passed on to
government departments. This posed an acute problem, particularly
where the construction of fortresses and port installations was con-
cerned. It was also reflected in the cost of shipbuilding. Government
officials blamed Prodamet and looked further afield for supplies of iron
and steel. But, as we shall see, the inflation reflected the general
buoyancy of the prewar economy and the claims being made on
available capacity, rather than the activities of Prodamet. Wherever the
responsibility lay, however, the pre-war inflation compounded the
problem of budgetary planning.
A detailed breakdown of the defence budgets reveals the combined
impact of these various factors. Tables 3.2 and 3.3 show the extent of the
discrepancy between estimated and actual outlays on military goods
and facilities. The figures do not suggest that the service ministries were
becoming any more adept at bringing outlays and estimates into line.
146 Rearmament and industrial ambition

Table 3.2. The army budget: estimates and outlays, 1907-1913 (million
rubles)

Weapons Construction

estimate outlay % difference estimate outlay % difference

1907 36.5 35.1.. - 3.8 18.1 20.8 + 14.7

1908 37.5 35.3 - 6.1 17.0 20.2 + 18.9
1909 34.2 36.9 + 7.8 21.4 21.4 0
1910 36.7 39.4 + 7.5 34.0 36.0 + 5.9
1911 33.7 37.1 + 10.4 32.8 35.2 + 7.4
1912 28.9 30.6 + 6.1 33.4 42.7 + 28.0
1913 35.4 35.4 0 59.2 60.3 + 1.9

Source: Proekt gosudarstvennoi rospisi dokhodov i raskhodov na (1908.. 1915), 5 vols.,

St Petersburg/Petrograd, 1908-15.

Table 3.3. The navy budget: estimates and outlays, 1907-1913 (million
rubles)

Shipbuilding Military ports

estimate outlay % difference estimate outlay % difference

1907 25.4 34.8 + 36.6 8.3 8.3 0

1908 27.2 31.3 + 15.1 12.8 9.5 -25.5
1909 21.6 24.6 + 13.9 9.6 9.6 0
1910 29.5 26.2 -11.4 9.5 13.5 + 42.9
1911 43.4 55.3 + 27.6 11.5 11.9 + 3.3
1912 70.3 75.2 + 6.9 13.1 18.3 + 39.4
1913 103.1 108.1 + 4.9 28.9 39.1 + 35.6

Source: as table3.2.

The continual overrun in the budget for weapons between 1909 and
1912 suggests a failure to prevent suppliers from passing on price rises.
This was even more marked in the construction budget, which set
funds aside for fortresses and ports. Estimates for the creation and
modernization of ports proved particularly hazardous, reflecting the
impact of inflation in construction materials. Demand from the mili-
tary, combined with industrial and (later) railway investment, forced
 The defence burden, 1907-1914 147

i
up the price of brick, cement and timber. The picture revealed by the
naval budget is somewhat more complex. Here, too, actual outlays
tended to overrun estimates, except in 1910. Thus, the army normally
exercised a greater degree of control than the navy. But this was only
to be expected, given the more complicated questions of technology
with which officials in the Admiralty had to deal. Besides, the navy
demonstrated a remarkable improvement in its ability to predict likely
expenditure on vessels, although not on port construction projects
(compare the divergence between estimates and outlays in 1913, when
the budget was three to five times greater, with that in 1907-10). To this
extent, we can endorse the views of the erstwhile critics of the minis-
try, who on the eve of war conceded that its officials performed
creditably, at a time when the demands being made upon the
Admiralty had increased enormously.62
How did the tsarist regime finance this growth in defence spending?
One means at the disposal of the government was to reallocate
resources. This strategy could clearly only work if those in charge of
high spending departments - transport was the obvious case in point -
could be persuaded to moderate their own claims for funds. In public,
Kokovtsov preferred instead to emphasize the growth in ordinary
receipts, which increased the government's room for manoeuvre.
Finally, the government drew upon the so-called 'free balance' (svobod-
naia nalichnost') to obtain funds for rearmament, particularly after 1910.
In Kokovtsov's view, the growth of these reserves reflected the care
with which the Treasury had husbanded resources in the difficult
years after the war against Japan. His critics countered that the fund
was healthy, only by virtue of the French loan in 1909.
In the first instance, Kokovtsov hoped to curb the appetite of all his
cabinet colleagues. Although, in his memoirs, he took care to explain
that he never opposed reasonable demands, Kokovtsov vigorously
opposed grandiose and (as he maintained) unjustified plans for
rearmament. In 1909, he argued that the budget could not sustain the
levels of expenditure anticipated by the military: 'the yearly increase in
receipts, interrupted occasionally in years of poor harvests and sharp
economic depression, is hardly sufficient to satisfy the inescapable
increase in the most urgent state needs', amongst which he did not
number rearmament proposals. To approve these programmes would,
he argued, require a thorough reorganization of the budget and the
introduction of new taxes that would invite the Duma to intervene
indirectly in rearmament. Like Bethmann Hollweg in Germany,
Kokovtsov consistently sought to restrain armament expenditure, and
148 Rearmament and industrial ambition

for much the same reasons: to uphold 'sound finance' and to avoid
unwelcome parliamentary interference.63
Kokovtsov pursued other cabinet colleagues no less vigorously. In
some he found willing accomplices: when it became apparent that he
could hold out against the defence departments only with great
difficulty, it helped to have figures in the cabinet who could yield more
readily to his axe. Foremost among them was S. V. Rukhlov, appointed
Minister of Transport in January 1909. Rukhlov assumed responsibility
for one of the largest departmental budgets, and rapidly proved a
willing victim of budget cuts. Indeed, he took office after his pre-
decessor had been defeated over a proposal to spend 916 million rubles
on improvements to the railway network. Rukhlov believed that the
railway network had become a milch-cow for private industrialists,
who received large and lucrative government orders for rails and
rolling-stock. This was not a view that Kokovtsov shared, but it suited
his purposes admirably. In the words of Timashev, 'Rukhlov regarded
industry with the utmost hostility, counting its leading representatives
as people who were harmful from the point of view of the overall
interests of the country'. Contracts should be pared to the minimum,
as a matter of principle. For this reason, Rukhlov happily acquiesced in
pruning the railway budget. The construction of new lines declined
and orders for rolling-stock were cut back. In the quinquennium
1909-13 the annual average addition to the railway track barely
reached 850km, one-third of the rate of construction in 1899-1903.
Only in 1913 did total expenditure on the construction and operation
of the railway system exceed the peak it reached in 1908.64
The policy of retrenchment was less easy to enforce elsewhere. The
energetic and capable Minister of Agriculture, A. V. Krivoshein, who
entered office in May 1908, formulated ambitious plans for the
reorganization of land tenure and more extensive provision of credit
to agricultural producers. Amongst other things, he proposed an
increase in the lending powers of the Peasants' Land Bank. This
scheme entailed the issue of securities on behalf of the Bank, and
Kokovtsov opposed it, on the grounds that it would endanger invest-
ment in industrial securities, and might eventually require the govern-
ment to step in with additional funds to support the Bank. But Kri-
voshein could call upon the powerful figure of Stolypin to support the
claims of agriculture. As a result, his budget climbed steadily from 58
million rubles in 1908 to 136 million rubles in 1913: considerably less
than the staggering growth in the navy budget, but an impressive
increase all the same.65
 The defence burden, 1907-1914 149

Unlike Kokovtsov, Stolypin displayed greater willingness to fund

rearmament programmes by increases in taxation. But neither of them
believed in the need for a fundamental change in the fiscal system.
Stolpyin advocated a higher excise on the sale of vodka, to generate an
additional 65 million rubles. Kokovtsov tinkered with tax rates. He
introduced taxes on a wider range of consumer goods and increased
existing tax rates. He projected an increase in the tobacco excise, the
tax on cigarette papers, an increase in the stamp duty and a revision of
the tax on immoveable property in towns. But he believed that these
new rates would yield no more than 30 million rubles per annum, far
short of the sums required to satisfy rearmament programmes. Any
further increases in the price of vodka would, he believed, be self-
defeating, because they would discourage consumption. 66
Faced with the need to obtain additional sources of revenue, the
tsarist government chose to consolidate the existing fiscal system,
rather than to change it in any fundamental respect. The proportion of
revenue derived from direct taxation in 1913 stood at eight per cent,
much the same as before the Russo-Japanese War. The proportion of
revenue from indirect taxes, mostly taxes on personal consumption,
was around 21 per cent in 1913, the same as in 1904 (see table 3.4). Thus,
no major structural changes took place before 1914. The most obvious
fresh source of ordinary revenue would have been provided by an
income tax, for long the subject of acrimonious and inconclusive
debates in official circles. But a proposal by the Ministry of Finances to
introduce an income tax in conjunction with reduced rates of tax on
land and forests, eventually foundered on opposition from industrial-
ists and from other government ministers, who expressed alarm at the
possible impact of such a tax on industrial investment.67
In the event, significant growth in recurrent revenue (direct and
indirect taxes) was achieved in the prewar years. Recurrent revenue
doubled between 1900 and 1913. Receipts grew by 7.2 per cent between
1908 and 1913, compared to 4.7 per cent between 1900 and 1907. In
absolute terms, the most important items were government monopo-
lies and revenue from state assets.
In percentage terms, the fastest-growing source of revenue was
gross income from state monopolies. The government obtained huge
sums from the vodka monopoly. Introduced into four provinces in
1895 and progressively extended, by 1902 the vodka monopoly oper-
ated in the entire Empire. Increased sales, together with an increase in
the excise in 1905 and 1908 yielded gross receipts of 900 million rubles
in 1913; net receipts (after the deduction of administrative costs)
150 Rearmament and industrial ambition

Table 3.4. Government revenue, 1900-1913 (million rubles)

Direct Indirect Tolls & State State Extraordinary Total2

taxes taxes duties monopolies assets items1

1900 132 505 89 329 474 33 1,737

1901 131 470 95 439 494 164 1,963
1902 133 429 101 546 524 202 2,107
1903 135 440 107 606 571 171 2,203
1904 135 419 104 614 572 385 2,403
1905 127 409 100 686 553 794 2,819
1906 163 494 113 777 603 1,084 3,356
1907 183 510 123 791 636 143 2,485
1908 194 526 137 794 648 201 2,619
1909 199 530 152 814 708 163 2,689
1910 216 593 170 866 797 24 2,805
1911 224 630 190 890 888 3 2,955
1912 243 650 199 943 938 2 3,108
1913 273 708 231 1,025 1,044 14 3,429
annual growth rate (1900-1913)
5.8% 2.7% 7.6% 9.1% 6.3%

1
mostly government borrowing
2
includes redemption payments to Treasury, revenue from sale of assets etc.
Source: Khromov, Ekonomicheskoe razvitie, pp. 504-13.

amounted to around 664 million rubles. The government continued to

rely on this source, notwithstanding the reservations expressed by
Kokovtsov. Only in 1914, when Nicholas II dismissed Kokovtsov and
replaced him with P. L. Bark, did the Tsar urge that alternative sources
of revenue be found, principally by taxing unspecified economic
activity.68
The main income-generating state asset was the railway network,
which yielded 362 million rubles in gross receipts in 1900 and 814
million rubles in 1913, an average annual rate of growth of 6.4 per cent.
But the railway system was managed in a notoriously inefficient
fashion, and net receipts were always much smaller, perhaps only
one-third of the gross figure. Granted, a marked improvement in the
ratio of net to gross receipts took place after 1908. But this reflected
increases in tariffs for freight and passenger traffic, rather than sig-
nificant improvements in the performance of state railways.
Direct taxes, the receipts from which increased by 6.0 per cent
 The defence burden, 1907-1914 151

between 1900 and 1913, included a tax on industrial activity. But the
recession tended to restrict the potential for growth from direct taxes
until 1910; thereafter, this component of the budget grew steadily, and
the industrial tax yielded 150 million rubles in 1913. It took the form of
levy (osnovnoi promyslovyi nalog) on all commercial and industrial enter-
prises, which were also required to pay for a licence to trade (svideteV-
stvo). A supplementary tax was levied on the net profits of joint-stock
companies and their paid-up capital also attracted tax. Non-corporate
enterprises had to pay the supplementary tax on profits, in addition to
a tax to which they were all liable (the so-called rasklad, or apportioned
tax). Finally, all industrial enterprises were also liable to local govern-
ment taxes, levied by the zemstvos or by municipal authorities.69
The government justified its continued reliance on indirect taxes, on
the grounds that they were easy to collect and hardly noticed by
consumers. Such increases as took place between 1900 and 1908
derived from the growth in population in the Russian Empire, as well
as from an increase in consumer spending per head. Even critics of the
government acknowledged the favourable impact of a series of good
harvests. They also pointed out that the 1905 revolution had redistri-
buted income to consumers.70
The 'free balance' represented a final source of funds, whose great
advantage, from the government's point of view, was that it escaped
parliamentary scrutiny. This fund represented the Treasury's cash
balances, money in transit between government departments and any
excess of revenue over expenditure. From time to time, the fund was
swelled by the proceeds of foreign loans. The Ministry of Finances
drew upon it to cover any budget deficit that arose and to meet
emergency requirements, such as famine relief. In practice, the free
balance allowed the Ministry of Finances considerable freedom of
manoeuvre, for example, to check any fall in the value of government
securities held abroad, and to conclude fresh loans on more favourable
terms than might otherwise have been afforded a hungry supplicant.71
Critics of the arrangement alleged that the accumulation of the free
balance did not signify the underlying health of the economy,but rather
the underlying growth of government debt. On the eve of the Russo-
Japanese War the fund stood at 381 million rubles. The war considerably
depleted the free balance, which (according to official figures) stood at
just two million rubles in January 1909. By 1910, the balance had jumped
to 107 million rubles. In 1911, it stood at 333 million rubles; the next year
it climbed to 473 million rubles. By January 1913, the free balance had
fallen to 433 million rubles, rather less than the figure ten years earlier.
152 Rearmament and industrial ambition

On 1 January 1914, it stood at 514 million rubles. These increases were

attributed to various causes, such as the profits on grain exports and an
increase in the sales tax levied on alcohol. The fund was also swelled
by the proceeds from the loan that Kokovtsov began to negotiate with
French bankers towards the end of 1908.72
The Ministry of Finances made heavy raids upon the fund, to
redeem Treasury notes, to expropriate the Warsaw-Vienna railway
and to relieve victims of famine. But Kokovtsov also drew upon the
free balance, in order to finance the construction of new ports and to
help defray the costs of rearmament. By this means, in 1913, the
government financed the increase in troop strength, a decision that
required the immediate outlay of 346 million rubles.73
The growth in the free balance demonstrated that Kokovtsov had
moderated his previous opposition to foreign borrowing. Hitherto, he
justified his reluctance to negotiate fresh loans in unmistakably ortho-
dox financial terms: 'the conclusion of loans, even for productive
purposes, will all the same eventually have the same result as loans
concluded simply to cover unproductive expenditures, that is the
destruction of state credit and the financial situation of the country'. In
1908, however, against the background of the Bosnian crisis and with
the pressure to improve the capabilities of the Russian army, he
relented. Negotiations with the French were successfully concluded in
January 1909.74
Political pressures, therefore, were sufficiently strong to resist
fundamental change to government revenue. In the pursuit of a stable
fiscal system, Kokovtsov enjoyed conspicuous success. He also
avoided seeking further foreign credit after 1909. On the expenditure
front, his policies succeeded, to the extent that he managed to restrain
the defence departments - vigorously until 1908, somewhat less so
between 1908 and 1911. When it became impossible to stem the tide of
rearmament, the government derived additional resources for defence
at the expense of other claimants, particularly transport, and from the
revenue generated by rapid economic growth between 1908 and 1913.
Having defeated most claims from the defence departments for extra
funding until 1911, Kokovtsov was thereafter fighting a losing battle.

The economic impact of defence expenditure: the military

burden and opportunity cost
The unprecedented extent and pace of the European arms
race led contemporary economists to consider seriously for the first
 The defence burden, 1907-1914 153

time the economic impact of defence spending. The initial requirement

was to devise a method whereby the burden imposed by defence
expenditure could be measured. A pioneer in this field was the
American economist Alvin Johnson, who analyzed the defence spend-
ing of the great powers between 1875 and 1908, concluding that
'modern peace is unquestionably vastly more expensive than the wars
of an earlier period'. In 1908, he put Russian defence expenditure at
$1.77 per head, slightly above the figure for Austria. In Britain, he
estimated the figure to be two and a half times greater, whilst France
spent three times as much as Russia. Similar calculations were pre-
sented independently to the Duma in 1908. The disparity remained
huge on the eve of the war: in 1913, France spent more than two and a
half times as much per head of population, than did Russia. Germany
spent twice as much; and in Great Britain the figure was three times
greater than in Russia. However, this measure evidently minimized
the extent of the burden in Russia, because the enormous sums com-
mitted to defence were spread over a large population (170 million
people in 1913). From this point of view, but from this alone, Russia
paid a small price for its military expansion.75
Calculations such as these painted a misleading picture, on at least
two additional counts. First, Johnson failed to convey the fact that the
economies of continental Europe grew in size during the late nine-
teenth century and the early twentieth. In the second place, he over-
looked the extent to which economic growth opened up wide dispari-
ties in the level of economic development, making the defence burden
relatively heavier for less developed countries. A more appropriate
measure, not liable to the same criticisms, would have been to relate
defence expenditure to national income. But this practice only became
commonplace after the First World War, with the spread of interest in
national accounts, although - exceptionally - a Duma deputy from
Perm province attempted a rough calculation during a debate on the
1908 estimates.76
When defence expenditure is related to the capacity of the popu-
lation to sustain it, the relative burden of defence spending in imperial
Russia is magnified. Russian defence spending in 1913 exceeded that of
its European rivals, according to a range of estimates. It was heavier
than the corresponding burden in Britain, a country with the cross of
Empire to bear.77 Furthermore, if we deduct national income in kind,
and express Russian defence spending as a proportion of monetized
national income, the burden was almost twice as heavy as for the
economically more developed countries. Table 3.5 brings together
154 Rearmament and industrial ambition

Table 3.5. Defence/national income proportions in Europe, 1913/14 (per

cent)

Estimate A Estimate B Estimate C Estimate D

Britain 3.1 3.41 3.6 3.8

Germany n.a. 4.6 3.5 3.6
Russia 4.8 6.3 5.8 4.1 (7.1)2
France 5.0 4.8 n.a. 3.9

1
British Empire
2
The figure in brackets is derived by subtracting consumption of farm pro-
ducts in kind from net national product, and expressing total defence spend-
ing as a percentage of this figure.
Sources: Estimate A, lndustrielle Mobilmachungen: Statistische Untersuchungen,
Hamburg, 1936, p. 24; estimate B (1914), Quincy Wright, A Study of War,
Chicago, 1942, pp. 670-1; estimate C, G. Hardach, The First World War, 1914-
1918, London, 1977, pp. 150-1; estimate D, UK and Germany taken from
P. Flora, State, Economy and Society in Western Europe, 1815-1975,2 vols., Frank-
furt, 1983, vol. 1, pp. 382, 387, 442; the figure for France is taken from Niall
Ferguson, 'Germany and the origins of the First World War: new perspectives',
Historical Journal, 35, 1992, p. 751. Ferguson confirms Hardach's estimate for
Germany. However, according to Peter Witt, the share in Germany was 4.6 per
cent: see P. C. Witt, 'Reichsfinanzen und Rustungspolitik, 1898-1914', in
H. Schottelius and W. Deist, eds., Marine und Marinepolitik im kaiserlichen
Deutschland, 1871-1914, Dusseldorf, 1972, p. 177. The estimate for Russia is
derived from P. W. Gatrell, 'Industrial expansion in tsarist Russia, 1908-1914',
Economic History Review, 35, 1982, p. 105, and P. R. Gregory, Russian National
Income, 1885-1913, Cambridge, 1982, p. 57.

various estimates of defence spending as a proportion of national

income.
In Russia, as elsewhere, the preferred method adopted by con-
temporary economists critical of the regime was to express defence
spending in terms of its share of the budget. The results yielded
estimates of between 25 and 30 per cent in Russia. The Polish banker
and railway magnate Jan Bloch looked forward to a time, not far off,
when no modern state could afford to sustain a high level of defence
spending, simply because of the other claims on available resources.
Anticipating Alvin Johnson, he wrote that 'every day, new needs arise
and old needs are made clearer to the popular mind. These needs
remain unsatisfied, though the burden of taxation continually grows.
And the recognition of these evils by the people constitutes a serious
 The defence burden, 1907-1914 155

danger for the state'.78 In identifying this phenomenon, Bloch pin-

pointed one of the key problems in Russia. Here, more than anywhere
else in Europe, the defence budget was shrouded in secrecy. Even the
creation of parliamentary institutions in 1906 did little to lift the veil.
Russian economists and public figures were hampered by a lack of
data; besides, the political system hardly allowed politicians to alert
'the people' to the magnitude of the burden.
When government ministers sought to justify defence spending,
they argued in terms that would be familiar to modern economists,
namely that defence was a public good. Witte provided a clear expo-
sition of this concept in 1903, when asked to justify the increases in
taxation that accompanied an increase in the defence estimates: 'the
people bear the burden of military service and pay the greatest portion
of the taxes, and in return they have the inestimable consciousness,
which cannot be outweighed by any material benefits, that their
relatives, property and the whole fatherland are protected against
foreign foes'. As always happens with public debate on defence spend-
ing, its advocates were given to vacuous utterances. Typical of the
rhetoric is the grand statement that 'the state cannot avoid making
great sacrifices for state defence'. Few people - few, that is, of those
who were in a position to do so - bothered to ask why these sacrifices
were 'unavoidable'.79
Apart from resorting to arguments of the public good type, the other
frequently heard justification for defence spending is that it may
mobilize idle assets, particularly in a underdeveloped society. Unfortu-
nately, economists have reached no very definite conclusions about
the capacity of defence spending to perform this task. In a closed
economy, the increased aggregate demand implied by an increase in
expenditure might raise expectations of higher profits and, in turn,
stimulate new investment and employment opportunities, assuming
that there are no constraints on the supply of capital and labour. In an
open economy, on the other hand, an increase in the level of defence
expenditure might simply increase the demand for imports of military
goods, siphoning off scarce foreign exchange.80
From a developmental point of view, the wages and transfers paid
to members of the Russian army forces added to aggregate demand.
Had they not been conscripted, peasants were hardly likely to have
earned high wages in the rural economy. Troops quartered in garri-
sons or near towns revived local economic activity, especially with the
progressive dismantling of the regimental economy. Now that troops
no longer manufactured their own uniforms or grew their own food,
156 Rearmament and industrial ambition

their modest expenditures stimulated commercial transactions and

increased national income. Finally, the massive outlays on rearmament
played a major part in the rescue of heavy industry from a prolonged
recession; it is difficult to see how recovery could have come about
earlier in the absence of defence spending of this magnitude.
The growth in defence expenditure did imply a curtailment of
spending on infrastructure, although it failed to halt the programme of
land reform. But how much truth is there in the charge that increased
defence appropriations deprived Russia of health care or educational
facilities? On several occasions, parliamentary critics of the regime
confronted Russian defence ministers with the language of oppor-
tunity cost. A radical deputy from Irkutsk intervened in 1908 to ask
how many schools and factories had been sacrificed on the altar of
militarism, whose bill he put at 10 billion rubles over the course of two
decades. In a debate on the budget estimates for 1911, N. N. L'vov, a
Progressist deputy from Saratov, accused the government and the
Duma of giving priority to defence; meanwhile, the country 'is still
hoping that in vain that its most elementary needs will be satisfied ...
what will you show your constituents a year hence and what will you
tell them to justify the way in which you have interpreted your duties
to the country?' Kokovtsov, who had himself used the language of
opportunity cost in cabinet rejected the charge that the cultural needs
of the country had been forgotten ('more money is being spent on such
development than on defence'). He concluded his parliamentary
oration with the motto that 'progress and culture can be safe only
when a country is not left unprotected before its neighbours'. This line
was supported by conservative politicians, such as Durnovo, who
appealed to the image of imperial grandeur: 'in my eyes, all so-called
cultural needs retire into second place before the urgent necessities on
which depend the very existence of Russia as a great power'.81
These questions were taken up much later by Arcadius Kahan, in a
justly famous article on tsarist economic policies and Russian
industrialization.82 Kahan founded his critique of the tsarist budget on
its unproductive components, implying a failure on the part of the
government to devote resources to educational and welfare pro-
grammes. But what might the government have done in this respect?
A good place to begin is to ask how much more the government would
have needed to spend, in order to bring the education and health
budgets closer to some defined optimum. On the eve of the First World
War, both the zemstvos and the Ministry of Education called for the
employment of extra teachers in order to provide universal primary
 The defence burden, 1907-1914 157

schooling for children between the ages of eight and eleven, assuming
a staff:pupil ratio of 1:50. A calculation in 1915 indicated that an
additional 118,216 teachers were required (the existing complement
was 186,859 teachers), that is a shortfall of more than 60 per cent. Other
estimates, which built in assumptions about the drop-out rate amongst
peasant pupils, suggested that the shortfall was much less, perhaps as
low as 16 per cent or 36,670 teachers. Rules adopted in 1911 stipulated
that the central government had to support each primary teacher to
the extent of 390 rubles. Thus, salary costs alone would have added
between 14.3 million and 46.1 million rubles to the total education
budget, equivalent to between 10 and 32 per cent of the budget for
1913.83
Before attributing the failure to deploy these extra teachers to a
lamentable lack of initiative on behalf of the government, it is worth
considering the demand for primary education. Ben Eklof has shown
that peasants were willing and able to make non-institutional pro-
vision for the education of their children, in so-called free schools
(vol'nye skhkoly). Before the 1890s, these were the chief means by which
peasants acquired the basic skills needed in order to deal with officials
and other outsiders. Peasants had no time for any formal system that
emphasized character formation and the virtues of imperial govern-
ment and Orthodox religion. When the zemstvos jumped on the
educational bandwagon after 1890, they too found ample resistance to
their concept of primary education in the countryside. Peasants did
not think of schooling as an opportunity for upward social mobility:
'they saw schools not as a springboard to future careers but as provid-
ing tools to help cope with a world increasingly crowded with docu-
ments and, in particular, to avoid being duped, cheated or misled in a
hostile and treacherous environment'. These attitudes offered scant
hope for the development of the skills that have been associated with
'social capabilities'. Education did not overcome the social distance
between the world of the village and the 'modern' world beyond.
Additional spending on rural education would not in itself have
transformed deeply entrenched peasant attitudes. Russia undoubtedly
needed a better educated workforce; but to spend money within the
existing institutional framework was unlikely to have contributed to
that end.84
What about health care? In 1900, there were no more than 10,000
midwives across the Empire, of whom only one-fifth were zemstvo
employees. Midwives attended no more than two out of every
hundred confinements in the countryside. If we assume that each
158 Rearmament and industrial ambition

midwife received a salary of 300 rubles, it would have cost an

additional 30 million rubles annually to employ the extra 100,000
midwives needed in the villages. There was also a shortfall in the
number of doctors, although the ratio of doctors to total population
improved markedly between 1880 and 1910, from one per 58,000 to one
per 28,000. The government aspired to a norm of one per 10,000. To
employ the additional numbers of doctors at a salary of 500 rubles
would have cost no more than 3 million rubles per annum (this, out of
a zemstvo health budget in 1910 of 64 million rubles). Nor would it
have cost enormous sums to invest in basic rural health care facilities.85
But the argument that the government abandoned villagers to their
fate contains two questionable assumptions. One is that extra health
spending would have yielded improvements in the crude death rate
or in infant mortality. The other is that peasants would have availed
themselves of the potential facilities. The first assumption is dubious;
European demographic history suggests that such factors as higher
nutritional standards, attributable in part to improved inter-regional
trade, served to reduce mortality by increasing human resistance to
infectious diseases. In this respect, given its commitment to railway
construction, the government cannot be accused of getting it com-
pletely wrong. The second assumption is also of doubtful validity.
Ethnographic and literary evidence, such as the poignant short stories
written by Mikhail Bulgakov during his years as a zemstvo doctor in a
remote Russian village, testifies to peasant mistrust and even outright
hostility to institutionalized modern medicine. Women preferred the
village povitukha (midwife) to her professional counterpart. Peasants
presented themselves to the surgery only in extremis.86
For these reasons, we should hesitate before attaching too much
blame to the tsarist government for a misallocation of resources. We
have accounted for the high level of spending on defence and shown
how an argument for even greater spending, rather than less, could be
made. Furthermore, additional spending on education and health
would not in itself have benefited society, in the absence of more
fundamental changes in state institutions and social attitudes. A more
sophisticated budgetary policy could have targetted particular groups
or activities in order to maximize 'social capabilities', but this possi-
bility was certainly not part of official discourse at the time.
What, finally, of the spatial impact of armaments expenditure?
Studies in America showed that the post-1945 development of nuclear
missiles and supersonic aircraft was associated with the relocation of
defence industry to Texas and California.87 This dramatic shift in the
 The defence burden, 1907-1914 159

geography of production had no equivalent in pre-1914 Russia. It is

true that the development of a modern shipbuilding industry stimu-
lated investment and employment in the Baltic provinces, in Riga,
Reval and Tallinn, and on the Black Sea littoral at Nikolaev. But, for the
most part, the growth of the armaments industry tended to follow the
existing location of industry, rather than to open up new locations.
Enterprises in St Petersburg and the Urals tended to dominate
weapons production, as they had done during the reign of Peter the
Great. The regional economic consequences of defence spending,
particularly for industry, formed no part of the tsarist agenda. Serious
attention only began to be given to the subject after 1914, when it
formed part of the debate about the relocation of defence industry to
regions less exposed to attack across Russia's western frontiers.

Conclusion
A profound contradiction was embodied in Russian defence
strategy before 1914. In large measure, these shortcomings reflected
underlying and unresolved differences of conception between the
army and navy. In the immediate aftermath of the war against Japan,
attempts had been made to devise a strategic plan upon which both
armed services collaborated. But the momentum was not sustained. As
a result, by 1914 it was difficult to discern any coherent purpose in
defence planning. The army leadership sought to provide Russia with
the means to defend its borders from German or Austrian attack:
hence the emphasis given to the maintenance of fortresses on the
western border. The planned disposition of troops and military mater-
iel also served to prepare Russia for an offensive against Germany, a
policy with which the French saddled the Russian military leadership.
But the re-equipment and reorganization of land forces left Russian
troops poorly equipped with key armaments, in particular light field
and heavy artillery. For its part, the Admiralty increasingly espoused
the doctrine of an offensive fleet. The commitment of resources to the
expansion of the Black Sea fleet, in particular, testified to the triumph
of this conception.88 The hugely expensive commitment to a national
fleet, based upon modern battleships, pandered to the court's ideal of
Russian imperial grandeur and to a more widespread vision of
enhanced national esteem. The promised investment in railways and
fortresses, designed to improve Russia's capacity to mobilize troops
against Germany, shows that Russia did not just pay lip-service to the
alliance with France. But Russia proceeded to devote huge sums to the
160 Rearmament and industrial ambition

imperial fleet; and this commitment of resources suggested that

Russian nationalism triumphed over the objectives embodied in the
Franco-Russian alliance.
Several forces were at work to determine the size and trend of the
defence budget. First, the overall context of defence and foreign policy
served to maintain the gathering momentum of defence spending.
Russia was simply unable to choose between meeting its obligations as
a great power and accepting second-rank status on the international
stage. Its size and geographical location in Europe deprived Russia of
the chance to live a quiet life in the backwaters of international politics.
The leading players in the drama of national politics reinforced the
high-profile position that Russia occupied. The Tsar, in particular,
backed ambitious plans for naval expenditure. Sukhomlinov cleverly
exploited war scares, in order to extract additional spending on the
armed forces. The Duma supported and, on occasion, demanded an
increase in spending on the army. Initially, its members adopted a
more circumspect and critical attitude towards the navy. But, ulti-
mately, the Duma accepted the bill for battleships. Finally, the new
technology embodied in modern armaments and military vessels
imposed inflation on the defence budget; this, together with the
increase in army size, drove military spending relentlessly upwards in
the five years before the outbreak of war.
Given the limited resources available in the aftermath of the Russo-
Japanese War, the Ministry of Finances exercised its right to scrutinize
spending plans. The Duma found it could exercise some influence,
especially over the naval budget, in order to press for administrative
reforms, designed to ensure that the Admiralty obtained value for
money. Subsequently, the Duma - with its built-in majority - proved a
willing ally of the old regime, in the pursuit of the arms race. Only a
few liberal dissidents were opposed in principle to the expansion of
military spending. But they did not confront the fundamental issue,
namely that more radical changes in institutions and society were
required, before the redirection of resources could have any lasting
benefit. However, any influence the Duma once commanded over
events quickly evaporated. The same applied to the role played by
Kokovtsov. When the pressure for rearmament became unassailable,
as it had by 1911, Kokovtsov was forced to admit defeat. Neither he
nor the Duma any longer stood in the way of the military ambitions of
tsarism.
 The economics and politics of
industrial recovery

Introduction: the transformation of market conditions in the

basic industries, 1908-1914
Between 1908 and 1913, the output of large-scale industry in
Russia grew at an average annual rate of more than 9 per cent (in
current prices) and more than 7 per cent (in 1913 prices). These were
impressive rates of growth, approximating to the rapid rate of growth
of industrial production during the 1890s, and far in excess of the
modest rates achieved between 1900 and 1907, when growth barely
exceeded 1.5 per cent per annum.1 All sources agree on the fact that
industry performed impressively during the last peacetime quinquen-
nium. However, the reasons for this renewed upsurge in industrial
production have never been properly explored or resolved. In this
chapter, the opportunity is taken to review the explanations and to sift
through the evidence. The initial assumption is that, since the revival
of growth coincided with Russian rearmament, some kind of relation-
ship existed between the two phenomena. However, it is also possible
that industrial growth and rearmament were unrelated, or (in the
language of the statistician) 'autocorrelated'.
Contemporary observers failed to agree on the causes of prewar
industrial growth in Russia. Some, like Ivan Ozerov and Finn-
Enotaevskii, maintained that by 1910 the state had once again become
a significant customer for manufactured goods, notably for rails, trans-
port equipment and armaments. Tugan-Baranovskii took a similar
line. However, none of these writers believed that state orders played
the decisive role in fostering industrial recovery and expansion. Soviet
economists and economic historians were divided over the mains-
prings of industrial growth. Liashchenko argued that 'the boom of
1909-1913 was to a considerable degree the result of new expansion of
railway building', although he went on to draw attention to the
161
162 Rearmament and industrial ambition

growth of urban consumption and of investment in agricultural equip-

ment and farm buildings. But Iosif Gindin dismissed the suggestion
that the boom had anything to do with railway construction, observ-
ing that railway construction during 1909-1913 was no greater than it
had been since the slump in orders at the turn of the century. In
Gindin's view, 'the growth in group A industries rested upon an
extension of the capital stock of industry, significant additions to the
urban infrastructure and some growth in the gentry economy'. L. A.
Mendel'son attached prime importance to rural purchasing power:
'the most important factor was the acceleration in the development of
(agrarian) capitalism in Russia after the 1905 Revolution'. According to
this interpretation, the growth of a rural bourgeoisie increased the
volume of grain marketings and created a more buoyant source of
demand for manufactured goods. This trend was further accentuated
by the upturn in agricultural prices, including export prices.2
Amongst non-Soviet scholars, Alexander Gerschenkron came closest
to espousing the views of Mendel'son. Gerschenkron maintained that
the driving force behind the boom was domestic civilian demand,
boosted by the Stolypin land reforms. The growth in consumer spend-
ing, according to Malcolm Falkus, also induced new investment in
consumer goods industries. On the other hand, Olga Crisp, noting the
increase in government spending on railways, shipbuilding and arma-
ments, was reluctant to attribute overriding importance to consumer
purchasing power.3
Russian businessmen were equally at a loss to interpret the changes
taking place between 1908 and 1913. Obviously, they realized that
industry was deep in the throes of recession in 1908; and they took a
pessimistic view of the options open to them during the depth of the
slump. Some spokesmen had a high opinion of the potential demand
for manufactured goods that would be unleashed by the government's
land reform programme. Nikolai Avdakov, the leading figure in the
south Russian iron and steel industry, believed that the Stolypin
reforms would eventually 'create a huge consumer market'. But even
like-minded businessmen realized that this happy outcome lay a long
way off. In the meantime, industry sought more direct forms of
government intervention, in order to stimulate investment and
output.4
Rearmament, and the boost it entailed in public expenditure,
eventually offered Russian industrialists a way out of the recession.
This is not the same as saying that entrepreneurs in iron and steel and
engineering pinned their hopes on defence contracts, to the exclusion
 Industrial recovery 163

of all other opportunities. Such a strategy would have been risky and
unrealistic, and businessmen did not embrace it. But, as they struggled
to weather the storm, industrialists did believe that the government
should be reminded of its responsibility to industry. How much lever-
age could they exercise in pursuit of this goal? The direct involvement
of businessmen in the political process had been short-lived, and its
practical consequences unremarkable. In 1908, during the depths of
the recession, industrialists could but pin their hopes on officials in the
new Ministry of Trade and Industry, anticipating a sympathetic
hearing. But, even if some sections of government were prepared to
examine the catalogue of poor financial performance, redundancies
and foreign competition, this was a far cry from gaining a total victory
over the combined forces of government, some of whose representa-
tives looked askance at business practices and derisively upon
business protestations. Merely to pinpoint the magnitude of the crisis
demanded a massive publicity campaign. To develop a strategy, suffi-
cient to compel the government to take the recession seriously, was
still more difficult. To extract a promise of government action repre-
sented the supreme challenge. In the event, the tsarist government
never developed a coherent industrial policy. Industrial recovery was
a by-product of rearmament. So far as the old regime was concerned,
the revival of industry occurred in a fit of absence of mind.5

The failure of the business lobby, 1907-8

The industrial recession provoked Russian industrialists into a
flurry of activity, designed to bring their plight to the attention of
government. This represented a change of tactic and a return to
conventional lobbying of government ministers. In 1905-6, industrial-
ists had flirted with political activity. By 1908, they had reverted to the
exercise of such collective entrepreneurial voice as they could muster.
Throughout 1907 and 1908, business journals and newspapers were
filled with articles bemoaning the lack of government aid to industry.
The government could always retort that businessmen themselves had
divergent views on the desirability and potential scope of government
intervention. Certainly, the spokesmen of heavy industry never
adopted a unified stance on such matters as tariff protection and
railway freight rates, where government made an indirect impact on
the conduct of business. Whatever the magnitude of their past dis-
agreements, however, Russia's leading industrialists decided to sink
their differences and to concentrate on the issue that united them,
164 Rearmament and industrial ambition

namely their conviction that the tsarist regime did not recognize or
respond to their basic needs. The 32nd congress of the south Russian
iron and steel industry, in November 1907, passed a resolution, urging
the Confederation of Trade and Industry to request that the Minister
of Trade and Industry convene a special conference on the crisis in the
iron and steel and metalworking industries. The conference eventually
took place in May 1908.6
This was probably the most important, and certainly the most pres-
tigious business-government conference in pre-revolutionary Russia.
The relevant government departments all sent representatives: the
Ministry of Finances and the Admiralty each had three representa-
tives, the State Auditor's Department and the Chief Administration
of Land Reorganization and Agriculture both sent two spokesmen,
whilst the ministries of Interior, War, Transport and Justice each had a
single representative. The Ministry of Trade and Industry had the
largest presence, with twelve representatives. The Duma was allocated
11 seats. Three experts, including the eminent former factory inspector
1.1. Ianzhul', were also invited to attend, making a total of forty
representatives from non-business interests. From the business side,
the four leading banks took part, namely the Russian Bank for Foreign
Trade, the International Bank, the Northern Bank, and the Azov-Don
Bank. Ten seats were assigned to members of the Confederation of
Trade and Industry, including such leading figures as N. S. Avdakov,
E. L. Nobel, I. S. Kannegiser, Iu. V. Rummel' and S. I. Mikhin, and four
to the Society of Factory Owners and Manufacturers. In addition,
thirty-six representatives participated from industry. Among the major
iron and steel producers Hartmann, Briansk, the Russo-Belgian
Company, the Donets Company, South Russian Dnieper, Russian
Providence, Nikopol-Mariupol, Taganrog, Kramatorsk, and the New
Russia Ironworks were all represented. Most of these firms belonged to
Prodamet. Also present were leading engineering firms, notably
Putilov, the Russian Locomotive Company, Nevskii Shipbuilding, the
Nikolaev Shipbuilding Company, Sormovo, and the Kolomna Engi-
neering Company. Prominent among the voices for the engineering
industry were the Confederation of Northern and Baltic Engineering
Industry, and the Confederation of Agricultural Machine-building
Industry. Sundry other groups, such as bourse committees, railway
managers and the editor of Vestnik finansov took up the remaining
places.7
A background paper, submitted by the Confederation of Trade and
Industry to the New Minister of Trade and Industry, I. P. Shipov,
 Industrial recovery 165

sketched the position of the iron and steel industry in gloomy colours.
Amongst world producers of iron and steel Russian producers were
virtually alone in suffering a fall in demand for their products: only in
Austria did industry find itself in a similar position. The background
papers also made the point that the crisis had deepended since
business representatives first petitioned for action, in the autumn of
1907. As evidence of their concern, the Confederation cited the reluc-
tance of the Duma to approve funds for a significant expansion of the
stock of locomotives and wagons, the continued fall in the rate of
railway construction and the reduction in market demand occasioned
by financial uncertainties. Between 1902 and 1906, only eighteen of
Russia's fifty-three iron and steel companies had regularly paid divi-
dends to their shareholders, while a further thirteen ventures made
losses and issued dividend payments only intermittently. Thirteen
other companies paid no dividends at all. Eight others were in the
hands of the official receiver. Only one new firm came into existence
during this period. In 1907, Russia's rolling mills produced at less than
three-fifths of capacity. Factories producing iron and steel for the
construction industry and the railways were even more badly affected
by the slump.8
Most of the speakers agreed that heavy industry was in the throes of
a deep depression, but disagreed about its magnitude and they cer-
tainly disagreed about the remedies that might be taken to deal with it.
Several Duma delegates argued that industrialists themselves had to
accept responsibility for the 'crisis of overproduction' and that they
should not expect the government to bail them out. Pleas for greater
government spending on the construction of state lines should be
ignored. However, the Moscow entrepreneur Jules Goujon argued
that the government could instead offer incentives to private com-
panies to build more lines and to lease to the private sector those state
lines where modernization of track and rolling-stock was urgently
required. Without such concessions, it was thought unlikely that
private railway companies would embark on a programme of con-
struction. The government had drafted regulations in June 1905,
whereby the state guaranteed payments on funded debt and private
companies were allowed to suspend payments to shareholders during
the construction of new lines, but these had not been implemented
extensively. The government had extended concessions to private
companies to build lines in the northern Don region and between
Bakhmach (north-east of Kiev) and Odessa. But calculations of the
volume of iron and steel likely to be consumed on these projects only
166 Rearmament and industrial ambition

served to emphasize how much more was needed. Given its present
size, the private sector could not by itself rescue Russian industry from
the doldrums.
Other speakers dwelled on the current uncertainty in the financial
markets that deterred new investment. For example, municipal
authorities had all but halted new projects for lack of funds. The
Briansk Ironworks had accepted a contract from the municipality of
Ekaterinoslav to build a water supply, but this was the exception that
proved the rule: Briansk was willing to accept municipal bonds, in lieu
of immediate settlement of its account. More generally, speakers
argued that the government had an obligation to improve domestic
household consumption of iron and steel. Everyone seemed to have
an anecdote about the use of wood by peasant households and crafts-
men, who simply lacked the resources to acquire iron.9
But the outcome of the 1908 conference was disappointing to the
private sector. The government refused to commit itself to the expen-
diture of additional funds on railway building or on other projects,
such as the construction or modernization of ports. Nor did the
government react sympathetically to the idea that it should devise
some form of industrial credit to alleviate the decline in industrial
investment. In a cabinet meeting, the government also resolved that it
could show no special favour to private engineering producers, such
as those in the armaments industry, since the 'interests of state
defence' dictated that the military procurement agencies should be
free to choose the most suitable supplier, whether from the state or
private sector. The immediate outcome of the conference therefore
offered little satisfaction to the private sector. Iron and steel producers
left the conference, reflecting upon the fact that their limited influence
imposed no necessity upon the tsarist government to accede to their
demands. Perhaps they would enjoy greater success in pressing other
claims?10

Business-government relations, 1908-14

With what degree of success were other, subsequent efforts of
business pressure groups crowned? The most common complaint
concerned the level of protection to domestic industry. Here,
organized business had, in the past, registered some notable victories.
The government acceded to a request from southern coal and iron
producers for the imposition of tariff protection during the 1880s. The
government also imposed tariffs on a wide range of engineering
 Industrial recovery 167

products. In most instances concerning the iron and steel and engi-
neering industries, the government continued after 1908 to afford
protection to domestic producers. But ministers adopted a selective
approach towards tariff protection. This meant that some industrial
producers were bound to be disappointed. In 1911, the government
agred to admit pig iron free of duty. In another instance of govern-
ment flexibility, in 1908 and again in 1911, the association of agri-
cultural equipment producers failed to persuade ministers to reverse
Witte's decision to admit certain categories of agricultural machinery
free of duty.11
Company law traditionally generated almost as much heat as did
the tariff. Russian industrialists complained that the legislation on
corporations was both anachronistic and obstructive. The formation of
a joint-stock company involved a laborious and time-consuming pro-
cedure, which required promoters to prepare a submission for the
Council of Ministers. Typical of government attitudes towards corpo-
rate affairs was its policy on industrial syndicates. The existing legisla-
tion on industrial combinations dated back to a statute of 1845, which
stipulated a hefty fine or imprisonment for merchants and industrial-
ists who had combined to raise the price of food or other necessities, or
who cut prices, with the intention of driving other suppliers out of
business. New legislation was projected in 1903, but never promul-
gated. Although the government made it clear that it would adopt a
less draconian interpretationof the 1845 statute (indeed, it encouraged
the formation of Prodamet), industrialists remained unhappy about
the legal position. In 1910, a government commission of inquiry began
work under the chairmanship of P. I. Miller, deputy Minister of Trade
and Industry, to consider the law relating to syndicates and trusts.
Industrialists were not represented on the commission, but, in accord-
ance with established practice, they submitted evidence to it. The
commission found that government could not prevent the formation
of syndicates, but that it had a duty to monitor their activities and
curtail any 'abuses', such as the 'unreasonable' inflation of prices. To
this end, the government should order goods from suppliers who
adhered to acceptable standards of behaviour and could, in extremis,
order goods from foreign suppliers. The commission did not make
further progress on this subject until the eve of the war.12
By 1913, the government began to adopt a more lenient attitude
towards the principle of industrial syndicates, even though, in prac-
tice, it did nothing to stifle public attacks on the iron and coal syndi-
cates. Timashev, the Minister of Trade and Industry, and Kokovtsov
168 Rearmament and industrial ambition

went so far as to argue that Russia's growing participation in the world

trade in manufactures demanded that domestic industry become more
'organized'. This view corresponded closely to that expressed in the
journal of the Confederation of Trade and Industry, which asserted
that 'international competition demands strong organization of each
sector of industry'. The final report of the commission, in 1914, stated
that historical experience in Russia and western Europe indicated that
syndicates tended to stabilize, rather than raise prices. The report
concluded that government had sufficient powers to undermine any
syndicate, by adjusting the tariff, manipulating freight rates or levying
export duties. But any such action required careful consideration.13
Russian industrialists expressed relief at the findings of the commis-
sion. But their respite from public opprobrium was short-lived. In 1914,
the overt hostility towards syndicates within some quarters of govern-
ment reached a crescendo, and the government prepared to act
against the two most powerful groups. Fortunately, from the entre-
preneurs' perspective, the government adopted neither a tough nor a
coherent approach. A faction within the Ministry of Transport gained
a temporary ascendancy and began to play a more influential part in
the formulation of industrial policy. It began by targetting the commit-
tee for the allocation of rail orders, which had been devised to protect
the interests of the leading rail producers. By 1907, some officials began
to have misgivings about its activities. A joint submission to the
Council of Ministers by the ministers of Transport and Trade and
Industry (two departments which did not always see eye to eye on
matters of industrial policy) observed that the committee had under-
mined competition between suppliers. In addition, 'the profits that
firms have received from their dealings with the state allow them to
reduce the price of products sold on the market, below the limits
tolerable to other enterprises'. The outsiders, they went on, were
understandably unhappy with these arrangements. Ministers agreed
that in the present depressed conditions the abolition of the committee
was unthinkable. Four years later, however, when industry had recov-
ered, S. V. Rukhlov, the Minister of Transport determined to dismantle
the established clique of suppliers. In the event, Kokovtsov persuaded
his colleagues to approve the continuation of the committee, 'not for
economic reasons, but for reasons of state'. In other words Kokovtsov,
in line with the views he had expressed about syndicates in general,
defended the decision to preserve the oligopoly of rail and rolling-
stock producers.14
Rukhlov then turned his attention to the coal syndicate, Produgol'.
 Industrial recovery 169

Taking a leaf out of the book of the Miller commission, he decided to

buy coal from firms which did not belong to the syndicate. The
difficulty he faced in implementing this policy was illustrated by the
inability of the outsiders - all of them smaller ventures - to deliver on
time. Rukhlov was forced instead to import coal from western Europe.
In 1914, his patience finally snapped. Taking advantage of Kokovtsov's
departure from government, Rukhlov brought a prosecution against
Produgol' and Prodamet, with the backing of the Minister of Justice.
Only diplomatic intervention by the French and Belgian governments,
seeking to protect their investments in the Russian coal and iron
industries, brought the legal action to an abrupt end.15
The government's attachment to state enterprise stuck in the throats
of industrialists no less than its periodic assaults on industrial organi-
zation. Representatives of private enterprise at the 1908 conference on
the metalworking and machine-building industry urged the govern-
ment to renounce state ownership of industrial assets. The tsarist
government hardly appeared likely to follow this advice. Entre-
preneurs, therefore, concentrated instead on the terms which
informed government procurement of manufactured goods, such as
railway equipment and rails for the state lines, and military goods.
These regulations were denounced as unfair and unreasonable. The
procedures for the procurement of manufactured goods were set out
in detailed regulations, first introduced in 1887, and modified in 1900,
the text of which ran to more than 100 pages. It was not, however, the
mass of detail in itself which aroused the ire of industrialists. Rather,
they complained that the government conferred specific advantages
on state enterprises. For example, the government gave recurrent
subsidies to state ironworks, dockyards and armouries which, as a
result, supplied goods at lower prices. In effect, these subsidies were
concealed, by virtue of the fact that the state factories were not
required to provide for the depreciation of their assets and did not
have to take their overhead costs into account when preparing their
invoices. Other forms of concealed subsidy included the provision that
state works need pay neither the industrial tax nor any insurance
premiums. The issue of insurance was brought into sharp relief by a
major fire at the Obukhov shipyards, which necessitated an emer-
gency rescue package, which came out of Treasury funds. Russian
businessmen wanted to change other aspects of procurement policy.
They urged the government to ensure that only manufacturers, and
not middlemen, were invited to tender at auctions. More important -
and more controversial - was the proposal that the government
170 Rearmament and industrial ambition

relinquish its power to levy a financial penalty on private enterprises,

in the event of delays caused by industrial action. The government
refused to accede to this request, on the grounds that management
had to accept its share of responsibility for order in the workplace.16
The slump in industrial production did prompt the government to
address the issue of procurement. In November 1908, the Tsar
approved the formation of an inter-ministerial commission under State
Auditor P. A. Kharitonov, charged with the task of drafting fresh
legislation on 'state procurements and economic operations'. The com-
mission met between February 1909 and February 1911, against the
background of inquiries being conducted by Neidhardt and Garin into
the affairs of the defence industries. On the face of it, the position of the
private sector might appear to have been weakened by the senatorial
investigations, which uncovered evidence of fraud and corruption in
the award of government military and other contracts. However, the
business lobby mounted a clever rearguard action, conscious perhaps
of the fact that the government now had every reason to look more
favourably on private enterprise, offering as it did access to advanced
foreign armaments technology. Business spokesmen even used the
evidence of corruption, in order to press for legislative change. The
journal of the Confederation of Trade and Industry argued that such
practices as undisclosed payments to government officials could best be
countered by reform of the procurements system. The unspoken
assumption was that private entrepreneurs or their agents need not
engage in underhand or fraudulent practices, once the unfair advan-
tages conferred on foreign and state suppliers were removed. In
November 1909, the Confederation of Trade and Industry drafted its
own proposals, not only to protect domestic producers from foreign
competition, but also 'to regulate the participation of state factories in
concluding government procurements' and 'to monitor the allocation
of orders from a commercial point of view'.
For its part, the Kharitonov commission sought to remove 'the con-
ditions which prevent many people from taking part in the fulfilment
of state orders' and, thereby, to encourage greater competition. Appro-
priately enough for a commission headed by the State Auditor, cost-
cutting aims were not far from the surface. Kharitonov and his col-
leagues concluded that contracts made on the basis of open auctions
(torgi) were most desirable. No potential supplier was thereby excluded
and (it was somewhat optimistically asserted) the unscrupulous fixer
and dealer had less room for manoeuvre. But, as the defence depart-
ments were to find, this policy was easier to preach than to practise.
 Industrial recovery 171

The Kharitonov commission urged upon the government the need to

preserve the position of Russian industry and to promote those
branches of industry 'which, for one reason or another, do not at present
exist in Russia'. In a yet more radical departure from current practice,
Kharitonov also proposed the establishment of a 'council for state pro-
curements', headed by the Ministry of Trade and Industry, with the
participation on an equal footing of representatives from private indus-
try and government. Despite various disagreements about the details,
the commission finally sent a project to the Council of Ministers. Not
surprisingly, objections from the major procuring ministries put paid to
this initiative. Rukhlov, who never lost an opportunity to berate private
entrepreneurship, believed that the Kharitonov commission had con-
ceded too much ground to the private sector and (he perversely argued)
had given a clear signal to domestic suppliers to increase their prices.
The cabinet rejected the proposal, on the grounds that it limited the
freedom of manoeuvre of the main government agencies.17
Industrialists took little comfort from government procurement
practices during the slump. The Confederation of Trade and Industry
maintained that the government had not done enough to ensure that
orders were placed with domestic suppliers, bearing in mind 'the dire
situation of the Russian engineering industry'.18 The government took
no direct responsibility for the consequences of industrial depression.
No government official was prepared to let himself be steamrollered
into offering tangible support for the private sector, particularly if this
meant redirecting resources away from the state sector. Nevertheless,
business opposition to state enterprise had been aroused and could
not easily be dismissed. Armaments production and procurement
would become the main battleground for the struggle between state
and private enterprise.
The record of inter-ministerial division 'underlines the difficulty of
arriving at any simple formula for the relationship between industry
and government in Russia'.19 These divisions were evident in other
spheres of government industrial policy. Proposals to involve
industrialists formally in the arrangements for procurement unleashed
a stream of objections. Usually, the large spending departments were
those most anxious to retain freedom of manoeuvre. However, the
exercise of choice depended upon the ability of alternative suppliers to
meet technical specifications, delivery dates and prices. The Ministry
of Transport, seeking to obtain sources of coal from firms outside the
coal syndicate, came unstuck and resorted to administrative measures
against Produgol', a sure sign of ministerial powerlessness to use the
172 Rearmament and industrial ambition

economic weapon. Industrial recovery offered businessmen a chance

to exert greater economic leverage and to pose a more serious chal-
lenge to state-owned enterprise.

Industrial development, 1908-1914

The public and private protestations and aspirations of
Russian industrialists were played out against the background of
pronounced changes in industrial output and industrial structure.
Russian industry climbed out of the depths of the recession which it
plumbed in 1907-8. On the eve of the First World War, output, invest-
ment, prices and profits all testified to rapid growth. In the basic
industries, a range of additional demands upon mining and metallur-
gical enterprises strained their capacity to the utmost. Iron and steel
firms, faced with higher charges for inputs, bought out their suppliers,
in an attempt to secure iron ore on more advantageous terms. The
strain on steel producers in turn caused customers to complain that a
deliberate attempt was being made to starve them of supplies of metal,
in order to force prices ever higher. In machine-building, established
firms consolidated their status and new firms appeared on the scene,
particularly in the developing branches of electrical engineering and
shipbuilding. Here, too, a handful of large conglomerates again domi-
nated the market. In some branches, however, domestic firms were
unable to compete with imports.
The published data on industrial production tell a story of depress-
ion and recovery. The output of capital goods branches of industry
('group A', according to the conventional soviet classification) grew by
12.9 per cent per annum, whilst consumer goods industries ('group B')
grew by 4.7 per cent. But the rapid growth in 'group A' industries took
place from a low base. 'Group B' industries grew more slowly, but from
a less depressed base (see table 4.1).
The growth of real output in heavy industry affected all sectors.
An increase in demand from the railways and from industrial con-
sumers underpinned the growth in sales of coal. Fresh investment in
manufacturing industry signified a new level of confidence in the
industrial economy. By 1911, and throughout the following three
years, the installation of new plant in mining and manufacturing
helped to maintain the momentum of industrial growth. Although the
market for new equipment was shared with foreign suppliers, its
growth afforded plenty of scope for Russian enterprise. Investment
also breathed new life into the construction industry.20
Table 4.1. Gross industrial production, 1908-1913 (million rubles)

Output Output Group A Group B Group A Group B

(current prices) (constant prices) (current prices) (current prices) (constant prices) (constant prices)

1908 4,351.4 4,678.9 1,394.2 2,957.2 1,499.1 3,179.8

1913 6,559.4 6,559.4 2,564.0 3,995.4 2,564.0 3,995.4

Source: Dinamika rossiiskoi i sovetskoi promyshlennosti za sorok let, Moscow, 3 vols., 1929-30, vol. 1, pp. 66-77, 106-7; vol. 2,
pp. 176-7. The shares allocated to group A and B are derived from I. F. Gindin, Russkie kommercheskie banki, Moscow, 1948, p. 158.
The relevant price index is taken from S. Bobrov, lndeksy gosplana, Moscow, 1925, p. 91.
174 Rearmament and industrial ambition

The growth of output of consumer goods did not lag far behind. It
was most marked in rubber, footwear, woollens, fats and some food-
stuffs. Gindin was surely correct to identify the dynamism in these
branches of industry with the growth in total urban consumption.
However, the evidence on urban real incomes is quite sparse. Urbani-
zation created pressure on available housing space, which even sig-
nificant housebuilding did not alleviate; rents rose accordingly. The
crucial element in consumption was not the increase in urban real
income, which must have been modest, but rather the increase in the
size of the urban population, which displayed different patterns of
consumption than those of their rural counterparts.21
Data on industrial employment also testify to the pronounced
recovery. Between 1908 and 1913, total numbers employed in large-
scale industry increased by more than 29 per cent. Again, there is an
evident disparity in the rate at which the two broad groups of industry
absorbed labour. Employment in capital goods industry increased by
39 per cent, but in consumer goods the increase was a more modest 21
per cent. As can be seen in table 4.2, in the three years preceding the
outbreak of war, employment in group A industries increased by 10
per cent per annum; group B only matched this rate of increase during
the last full year of peace.
This increase in the size of the industrial labour force was accom-
panied by a modest reduction in the length of the working day. Total
hours worked in industry probably increased by around 30 per cent
between 1908 and 1913. This implies that labour productivity (output
per man-hour) increased by around 10 per cent. But this increase was
confined to group A industries. In group B industries, output per
worker hardly increased at all.
Productivity increases in heavy industry helped to furnish
improved profit levels. Along with credit from the major commercial
banks, and with capital raised on the stock market, higher profits
generated resources for investment. According to Strumilin, the total
value of industrial assets (in large-scale and small-scale industry)
increased from 2,861 million rubles in 1908 to 4,116 million in 1913. Most
of this increase took place between 1911 and 1913. In these three years
alone, the estimated value of capital assets increased by 27 per cent.22
The climate of confidence was maintained by the mainly covert actions
taken by the tsarist government. When, during the final quarter of
1912, international events undermined confidence, the government
reactivated the stock market 'Red Cross', in order to maintain share
 Industrial recovery 175

Table 4.2. Industrial employment, 1900-1913 (1900 = 200)

Employment Group A Group B

millions Index

1900 2.000 100 100 100

1901 2.100 105.0 104.1 105.8
1902 2.101 105.0 104.8 105.3
1903 2.081 104.1 100.7 107.3
1904 2.078 103.9 101.0 106.9
1905 2.094 104.7 101.8 108.1
1906 2.138 106.9 101.8 111.7
1907 2.211 110.6 106.2 114.6
1908 2.229 111.4 104.7 117.7
1909 2.279 113.9 108.3 119.2
1910 2.399 119.9 113.2 126.2
1911 2.556 127.8 125.7 129.8
1912 2.670 133.5 135.2 131.9
1913 2.882 144.1 145.9 142.4

Source: L. E. Mints, Trudovye resursy SSSR, Moscow, 1975, p. 40.

prices. The State Bank underpinned the resources and the lending
capacity of the chief commercial banks, whose role as industrial credi-
tors assumed greater importance with each passing year. The joint-
stock banks, drawing upon Treasury funds, private deposits and
foreign funds, committed resources to industry on a long-term basis,
helping to reorganize enterprise and to finance new ventures. In the
financial sector, too, reorganization took place, with foreign (especially
French) participation: the powerful Russo-Asiatic Bank came into
being in 1910, by the amalgamation of the Russo-Chinese and the
Northern banks. By 1914, it accounted for 13 per cent of total liabilities
of the commercial banks, followed by the International Bank (with 10
per cent), the Foreign Trade, Azov-Don and Trade-Industry banks,
with around eight per cent of the market apiece. Each bank had its
own network of clients. Much more than in 1890 or 1900, the decisions
taken in the boardrooms of mining and manufacturing companies
reflected the strategies and interests of leading commercial banks.
Their functions assumed critical importance in the development of
armaments and shipbuilding.23
176 Rearmament and industrial ambition

Iron and steel: patterns of production, consumption and

industrial organization
The iron and steel industry began its slow escape from recess-
ion during 1909. In 1908, total output of rolled iron and steel amounted
to 2.42 million tons, ten per cent below the peak reached at the turn of
the century. In the following year, output finally reached the 1900
figure (2.67 million tons), and in 1910 it stood at 3.02 million tons. Each
subsequent year registered an increase in production, which peaked at
4.04 million tons in 1913. Leading producers proclaimed higher rates
for the utilization of available capacity. In 1907, output of pig iron
barely exceeded 55 per cent of potential capacity; the proportion was
lower still in respect of construction materials and railway products. In
the following year, one-third of all blast furnaces lay idle in south
Russia. Three years later, in 1911, this figure had dropped to 13 per
cent. The upturn was marked by other indicators, such as the
behaviour of prices. In 1908, rolled steel sold at the factory gate for one
ruble per pud; in the following year the price had climbed to 1.26
rubles. By 1913 the price stood 50 per cent higher than in 1908. Share
prices also began to revive.24
What factors may be adduced to account for the growth in iron and
steel consumption that underlay the increased utilization of available
capacity and this revival in business confidence? The industry's
product mix provides helpful clues. In 1908, the modest level of output
of rails, beams and channels indicated a depressed level of investment
in railway construction and in industry. Demand for iron and steel was
maintained by agricultural machine-building, electrical goods and
other light engineering products, rather than by heavy engineering.
Household consumption remained reasonably buoyant, to judge from
the behaviour of roofing iron, which serves as a reasonable proxy for
domestic consumption. Government purchases of iron and steel were
much lower in 1908 than at the turn of the century, accounting for less
than 30 per cent of iron and steel consumption (by weight) in 1908,
significantly below their 38 per cent share in 1900.25
Between 1911 and 1913, investment in railway construction recov-
ered. The market was inundated with orders for rails and related
items, such as axles and tires. Prodamet boasted orders for 850,000 tons
of rails in 1913, compared to 500,000 tons a year earlier. In the last full
year of peace, the output of rails accounted for 18 per cent of total steel
production, compared to 12.5 per cent five years earlier. Production of
sheet and strip metal also increased as a proportion of the total,
 Industrial recovery 177

Table 4.3. Iron and steel consumption, 1908

Consumer Volume % Value %

(000 tons) (million rubles)

State 868 29 133 24

Households 459 15 161 29
Other private purchase 770 26 176 31
Other1 901 30 90 16

1
mostly semi-finished products
Source: N. N. Sawin, K voprosu o potreblenii metalla i metallicheskikh izdelii v Rossii,
St Petersburg, 1913, p. 6.

reflecting a revival in industrial investment. Prodamet had orders for

442,000 tons of sheet in 1913, representing a 70 per cent increase on
orders in the previous year. The growth in output of beams and
channels also testified to the recovery in industrial investment. Anec-
dotal evidence suggests a surge in demand for iron and steel from
manufacturers of agricultural implements and machinery. Meanwhile,
household purchases - again, using roofing iron as a proxy - fell as a
proportion of total output, from 12.6 per cent in 1908 to 9.7 per cent in
1913. Most noteworthy, according to the journal Finansovoe obozrenie,
was the increase in iron and steel destined for the new shipbuilding
programmes, the effects of which already began to be felt in 1911.26
The commission on the condition of the iron market provided
confirmation of the pattern of consumption in 1913 and of the pros-
pective demand in 1914. Demand from the state-owned railways for
new construction amounted to 262,000 tons. The maintenance and
replacement of existing lines required an additional 377,000 tons. Iron
and steel needed for the manufacture of wagons and locomotives
accounted for an extra 737,000 tons. Together with orders from the
private sector, the railway's consumption of iron and steel amounted
to 1.51 million tons. This level of consumption put all other sectors in
the shade. Other government departments put their requirements as
follows: 50,000 tons for state armouries; a further 50,000 tons for the
Chief Quartermaster's Department (GIU); and between 82,000 and
165,000 tons for the immediate needs of the navy. Port construction
undertaken by the Ministry of Trade and Industry accounted for a
further 16,000 tons. As can be seen from table 4.4, demand in 1914 was
projected to grow still further, as a result of new railway building.
178 Rearmament and industrial ambition

Table 4.4. Consumption of iron and steel, 1913-14 (000 tons)

1913 1914

State railways
construction of lines 262 1
/DD
maintenance & repair 377 1
locomotives 246 410
passenger wagons 246 262
freight wagons 262 377
Private lines (total) 131 262
State defence requirements:
GAU arsenals and armouries 50 50
GIU 50 50
state shipyards 82 116-1661
Port construction 16 33-50
Agricultural machinery 164 197-213
Oil industry 98 131-147
Other metalworking and machine-building:
St Petersburg2 n.a. 131
Moscow n.a. 328
Poland 197 229
Baltic3 16 16-32
Odessa 49 49
Kolomna-Sormovo combine n.a. 32

1
Including 100-150,000 tons required in 1914 for large shipbuilding pro-
gramme
2
Not including Putilov and Nevskii factories
3
Not including demand from newly-built shipyards
Source: TsGIA f.23, op.27, d.120,11.6-7.

At around 1.6 million tons, government demand for iron and steel
amounted to at least two-fifths of total consumption in 1913. The
government expected to purchase around 2.1 million tons for its
various programmes in the following year, or around half of all
projected output. Part of the increase in consumption can be ascribed
to the direct impact of government orders for military vessels on
private and state shipyards. In addition, rearmament created a
climate in which these yards and other factories invested in new
plant, fuelling the expansion in ferrous metallurgy. At a conservative
estimate, armaments absorbed around 10 per cent of total iron and
steel output in the last year of peace. If we were to include railway
construction, part of which reflected a commitment to strategic lines,
 Industrial recovery 179

the share of steel production allocated to defence would be much

higher.
Much remains obscure in the iron and steel market on the eve of the
First World War. According to one authority, writing in 1913, 'private
consumption of metal, in the form of products for the needs of
manufacturing industry, agriculture and direct mass consumption
represents by volume and by value a highly important influence, and
private consumption in Russia has no less influence on the growth of
production than does railway construction and the state requirements
for the army and navy'.27 But it seems doubtful that the growth in
production owed quite as much to household consumption as Savvin
believed. Certainly, there is evidence of growth in private agricultural
investment, which called forth a response from the iron and steel
industry. Nor should the stimulus that came from factory building and
the creation of new urban infrastructure be overlooked. Nevertheless,
government demand on the eve of the war once more assumed the
significance that it enjoyed at the turn of the century. Although the
boom in iron and steel production between 1910 and 1913 seems to
have been more broadly based than it was during the 1890s, the
stimulus of government demand played the crucial role during the
second phase of industrialization.
Against the background of this revival, the relationship between
consumers and suppliers of iron and steel underwent a dramatic shift.
No longer did the financial press carry articles complaining of excess
capacity in the iron and steel industry. Instead, talk of under-invest-
ment and restrictions on output gained wide currency. The emotive
term 'metal famine' became a familiar and recurrent theme in the four
years before the First World War. It now fell to the consumer, rather
than the producer, to demand government action. The government
itself took a closer interest in the affairs of the iron and steel industry.
Complaints of a shortage of metal first surfaced in the north-west. In
the chief industrial centres of St Petersburg and Riga, manufacturers
demanded a reduction in the duty on imported pig iron. The govern-
ment refused to act, on the grounds that the shortfall was small in size
and temporary in character, being caused mainly by an outbreak of
cholera in the Donbass. Supplies could be re-routed from state iron-
works in the Urals. There was a degree of complacency in the govern-
ment response, which overlooked more ominous trends at work in the
market for iron and steel. In particular, leading producers in Ukraine
began to retain pig iron, in order to convert it into rolled iron and steel,
whose price had risen more rapidly than pig. Shortages intensified
180 Rearmament and industrial ambition

during the second half of 1910. Stocks of pig iron dwindled rapidly.
Consumers in the central industrial region now began to complain of
shortages. Few consumers expected the Urals ironworks to offer any
relief. Against this background, the government permitted the import
of 164,000 tons of pig iron at reduced rates of duty.28
The situation eased slightly, but by 1913 consumers of iron and steel
once again petitioned the government to take action, in the face of
delays and shortages. Conscious of its own interests in the matter, the
government convened a commission to regulate the domestic iron
market. Twenty officials, representing the ministries of the Interior,
Navy, Finances, War, Trade and Industry, Transport, Agriculture and
the State Auditor's office attended a conference in December 1913. Also
present were 66 spokesmen for industry, including representatives of
Prodamet, the Urals iron syndicate Krovlia, iron and steel federations
and individual steel producers. Manufacturing industry was repre-
sented by various industrial associations, bourse committees, railway
companies and engineering organizations, including Prodvagon and
Prodparovoz, the two syndicates that administered sales of wagons
and locomotives.29
The commission was chaired by V. P. Litvinov-Falinskii, director of
the industrial division of the Ministry of Trade and Industry.30 He
began by reminding the audience of the differences between current
circumstances and the conditions five and a half years previously. In
1908, industry had been in the depth of the slump, with firms reporting
under-utilized capacity. Now, capacity was strained, metal was in
short supply and prices were rising. The decision to import pig iron
free of duty in 1911 'had had no effect on the iron and steel industry', a
remark that immediately put producers on the defensive. The pro-
ceedings revealed the extent of the antagonism between suppliers and
consumers. Consumers bemoaned the inflation in iron and steel prices
and, especially, the delays in delivery, for which they held Prodamet
responsible. Iron and steel producers pointed to the growth in output
that had taken place in recent years and the projected growth in the
medium term.
Iron and steel producers were justified in stating that pig iron
output had increased, by close on 50 per cent between 1909 and 1912
(see table 4.5). However, the rate at which pig iron was marketed had
increased by only 28 per cent, and sales had actually fallen in 1912.
Thus, 'given the present high prices for iron and steel, factories prefer
not to release pig iron on to the market, but instead to process it
themselves into a more expensive product'. During the second half of
 Industrial recovery 181

Table 4.5. Production and sale of pig iron, 1908-1913 (million tons)

Output Processed Reserves Sales

(31 Dec.)

1908 2.80 n.a. 0.78 n.a.

1909 2.87 2.80 0.70 0.80
1910 3.04 3.08 0.46 0.92
1911 3.59 3.44 0.37 1.03
1912 4.20 3.99 0.44 1.02
1913 4.64 4.34 0.53 1.15

Sources: col. 1-3 Obshchii obzor glavneishikh otraslei gornoi i gornozavodskoi promy-
shlennosti, 2 vols., St Petersburg/Petrograd, 1913-1915, vol. 1, p. 33; Statisticheskii
ezhegodnik, Petrograd, 1914, p. 192; col. 4 TsGIA f.23, op.27, d.120,1.4; Narodnoe
khoziaistvo v 1915g., Petrograd, 1918, p. 289.

1912, producers accumulated large stocks of pig iron, giving rise to a

sharp price increase, from 47 kopeks per pud in 1910 to 65 kopeks per
pud in 1913.31
These trends revealed a significant change in the prevailing market
conditions. In Russia, as in pre-war Germany, syndicalization never
took a complete hold of the market. Where a gap existed, suppliers
tended to 'overproduce'. The sale of crude ingots, billets and rails was
subject to tight quotas. But no restriction applied where these products
were required for a factory's own consumption. Iron and steel pro-
ducers manufactured larger quantities of products where quotas were
less rigorous (for example, they exported bar steel, wire, plate and
forgings). As trade picked up, firms began to use less of their quota in
crude iron and, instead, produced finished goods, with the higher
value-added that they embodied. This behaviour accounts both for the
rapid growth in output of iron and steel during the prewar quinquen-
nium, notwithstanding the operation of Prodamet, and for complaints
about the 'metal famine'.32
A similar trend, though less marked, operated in the market for iron
and steel shapes. Between 1908 and 1913, the production of shapes,
forgings, sheet and strip increased by more than two-thirds, but by
1913 a higher proportion of output was retained within the factory for
processing. Correspondingly less iron and steel came on to the market.
Sales of rolled iron and steel increased by 38 per cent between 1909 and
1912, whereas the volume of iron and steel retained and processed at
the point of production increased by 75 per cent. Factories which
182 Rearmament and industrial ambition

sought more lucrative contracts tended to produce finished goods

themselves, to a greater extent than hitherto. The industrial boom
gave iron and steel producers the opportunity to obtain profitable
work and recoup some of the losses they had sustained during the
recession.33
However, more was at stake than the relative returns from the sale
of pig iron and the production of iron and steel products. During this
period, members of Prodamet sought to improve their bargaining
position within the syndicate. By increasing their output of pig iron,
which was not subject to quota restrictions, they could strengthen
their claim for a larger share of the quotas for iron and steel when
these next came up for renewal. Fierce battles over quotas took place
during 1911 and 1912, resulting in victory for the powerful French-
backed giants, the South Russian Dnieper Company, the Donets Steel
Company at Druzhkovka, the Briansk Ironworks and the Russo-
Belgian Company. Their behaviour undermines claims that the syndi-
cate directly restricted output of pig iron. But it also shows something
of the problems that faced the consumer.34
Promises and projections of increased output did not satisfy con-
sumers of pig iron, especially spokesmen for the agricultural
machinery and railway companies. They made loud complaints at
Litvinov-Falinskii's commission. To their concern about rising prices,
they added the charge that many iron and steel producers deliberately
refused new orders. Prodamet made a stout defence of its policy:
'several consumers, in placing orders, do not reckon with the con-
ditions of contemporary mass production, according to which our iron
and steel industry is equipped; they place orders without sufficient
planning and foresight (planomernosf), for small quantities and for
shapes that are not available (nekhodovye profilia)'.35 It argued that
major consumers, such as the railways, could avoid this problem, if
only they were willing to maintain stocks of iron and steel; but instead
they kept coming back to their suppliers with petty orders. The
Admiralty placed orders for as little as 200kg of steel at a time! Many
consumers changed their specification each time they placed an order.
For example, the North-West Railway ordered 2,750 tons of iron and
steel in one twelve-month period, but spread this amount over 284
separate orders; the managers ordered an additional 750 tons, in more
than 900 different specifications! This argument failed to mollify iron
and steel consumers, who pointed out that what the syndicate
regarded as petty orders were vital to the success of investment in rail-
ways and to the armament programmes. But railway executives and
 Industrial recovery 183

officials from the Ministry of Transport and Admiralty promised to try

to rationalize their orders in future.36
One way of tackling the problem was to locate suppliers who did
not belong to Prodamet. The Admiralty tried to pursue this tactic
during 1912, when it began negotiations with the Kolomna works,
whose Kulebaksk plant produced more steel than the parent company
needed. Admiralty officials hoped to obtain steel for hulls and boilers
at a lower price than Prodamet charged, although their main concern
was to improve the speed at which the contracts could be completed.
In the end, the managing director of Kolomna, A. P. Meshcherskii, was
unable to comply with the terms of the contract, which went to
Prodamet. However, the government extracted a promise that the
syndicate would compensate the Admiralty for failing to meet the
deadline, by guaranteeing to pay for imports.37
Evidently, the defence departments had a different set of priorities
from those of the Ministry of Trade and Industry. Back in 1908, the
Admiralty had planned to import non-ferrous metal on behalf of the
Obukhov works. This proposition occasioned a stiff note from the
Ministry of Trade and Industry: 'taking into account the general
difficulties experienced by our metallurgical industry and the totally
insufficient provision of work in the current year, the transfer to
foreign suppliers of orders that could be handled in Russia is highly
undesirable'. 38 The Artillery Administration and the Quartermaster's
Department subsequently proposed to import 50,000 tons of iron,
representing their entire requirements for a single year. The Admiralty
asked that state yards be allowed to import up to one-quarter of their
steel plate requirements, 8 per cent of steel forgings for turbines and
rotors, 6 per cent of forgings for propellor shafts and 11 per cent for
other items. These requests went against the spirit of the regulations
agreed in 1907, which limited purchases from foreign suppliers to cases
of extreme urgency or absolute necessity and, on this occasion, the
military failed to get their way.39
In a remarkably sanguine conclusion to its deliberations, Litvinov-
Falinskii's commission calculated that the worst of the crisis was over.
There had been a clear shortfall in the supply of iron and steel in 1910
and 1911, but domestic production was able to satisfy demand in 1912
and promised to keep pace with the growth of demand in 1913 and
1914. None the less, in order to provide an additional safeguard, the
government decided in July 1914 to permit the import of 330,000 tons
of iron during the next eighteen months, indicating the importance
the government attached to measures designed to overcome any
184 Rearmament and industrial ambition

supply bottlenecks. For all the talk in the press about the nefarious
activities of Prodamet, the syndicate escaped with only a few bruises
from this encounter with its customers.40
Output grew, therefore, but not rapidly enough to satisfy the claims
of iron and steel consumers. The taut market conditions reflected the
sudden and intense impact of government spending on the eve of the
First World War. Government devised various strategies to improve its
access to iron and steel supplies, but the magnitude of the task set by
its officials posed problems for client and supplier alike.41 Although
their aggregate consumption was large, government departments
tended to place frequent orders for small quantities of metal. Industrial
consumers behaved in a similar erratic fashion. Many customers, par-
ticularly those involved in rearmament, placed orders for newer and
more specialized kinds of steel, demands which might have been
easier to accommodate had producers not been forced to work under
such intense pressure.
To the charge that Prodamet forced up the price of iron and steel
was added the accusation that its members failed to invest in
additional capacity. This claim was repeated by Tsukernik, in his
classic account of the syndicate.42 He noted that the capacity of blast
furnaces in south Russia averaged 426 cubic metres, whereas the norm
for furnaces built elsewhere (in 1911-13) averaged 600 or even 700
cubic metres. But the comparison is a weak one: many of Russia's
furnaces dated from the 1880s and 1890s and the recession - not the
behaviour of Prodamet - made it difficult to conceive of investment in
large, new furnaces. As the market improved, several large furnaces
were built. Several firms (Donets-Iurevsk, Chaudoir of Ekaterinoslav,
New Russia Ironworks, Briansk and Kramatorsk) planned to have new
furnaces operating in 1914 or 1915. Tsukernik's argument is also under-
mined in other respects. He compared the daily output of furnaces in
south Russia and the United States. In 1913, one-third of Russian
furnaces had a capacity lower than 200 tons, whereas in America the
corresponding proportion was only one-tenth. In America, one-third
of all furnaces had a capacity in excess of 500 tons; no Russian furnace
could match this size. But this comparison is also not very apt, because
the American market was larger and more robust than the Russian.
Tsukernik himself noted the progress that was made in expanding the
size of furnaces in Russia. In 1895, the newest furnace boasted a
capacity of around 160 tons of pig iron; by 1913, one-third of all Russian
blast furnaces exceeded 270 tons capacity. Finally, Tsukernik observed
that Russian factories used relatively more manual labour in auxiliary
 Industrial recovery 185

tasks, which elsewhere tended to be mechanized. But this practice

simply reflected the relative abundance of cheap labour in the
Ukraine; elsewhere, new plants did adopt mechanical means to lift
and carry pig iron.43
In steel production, Tsukernik again accused the industry of lagging
behind the United States in furnace capacity, and of failing to
mechanize production, for example in loading the furnace. But he
overlooked the construction of new steel works at the New Russia
Ironworks and Nikopol-Mariupol in the years preceding the outbreak
of war. Where rolling mills are concerned, Tsukernik was on some-
what stronger ground. Rolling mills retained old technology until
1909, but thereafter steam power was progressively replaced by elec-
tric power, first at Briansk and then at Taganrog and Makeevka.
However, this innovation was less marked elsewhere. The factories
that played the biggest role in Prodamet and had the highest profits
were also the least well-equipped with electric power. The syndicate
allowed the largest firms to reap profits, without the need for technical
improvements. The others, in order to compete, could not afford to lag
behind technologically. In short, the innovating firms tended to be the
outsiders, rather than the stalwarts of Prodamet. But the suggestion
that Prodamet hindered the adoption of new technology is, at best, a
half-hearted one. Even Tsukernik admitted that progress did take
place, conceding that the industry employed indigenous technical
personnel to a greater extent than hitherto, a point made by John
McKay in his authoritative study of foreign entrepreneurship. 44
For all the rhetoric deployed in attacking Prodamet, in zemstvo
boards, in the Duma and in some engineering circles, its critics missed
the point. Whilst stories circulated of the damage inflicted by the
syndicate on the industrial economy - stifling technical change and
creating shortages of basic inputs - the iron and steel industry under-
went profound structural changes. New combines came into being,
exercising market power, by virtue of having integrated backwards,
into coal and iron ore mining and, occasionally forwards, into metal-
processing. By 1913, twelve iron and steelworks had acquired more
than thirty iron ore mines. The three largest steel producers - Briansk
(with five mines), South Russian Dnieper (two) and the Russo-Belgian
Company (five) - produced around 300,000 tons of iron ore, equiv-
alent to almost one-half of total output in the Krivoi Rog basin. Briansk
cornered part of the market for coal; Makeevka Steel, South-Russian
Dnieper, the New Russia Ironworks and the Russo-Belgian Company
all expanded the output of coking coal from mines under their control.
186 Rearmament and industrial ambition

The rise in the market price of iron ore (by around 25 per cent between
1908 and 1913), coal and pig iron gave a competitive advantage to
enterprises which now had access to their own sources of supply.
Backed by powerful French and Russian financial institutions, these
combines could exercise enormous leverage.45
In the meantime, the difficulties that confronted consumers of iron
and steel should not be laid at the door of Prodamet. The chief
difficulties originated elsewhere and reflected the scale of aggregate
demand on the eve of war. The syndicate simply provided a
whipping-boy, a convenient focus for widespread anti-corporate
sentiment. More profound changes - vertical integration, the creation
of powerful metallurgical and machine-building combines - attracted
much less attention. It was here, in the boardrooms of banks and
industrial enterprises, rather than in government commissions or in
parliament, that the revival and restructuring of the iron and steel
industry were planned and carried out. The alarums and excursions
over Prodamet were something of a sideshow.46

The engineering industry, 1908-1914: the civilian dimension

The upsurge in industrial production after 1908 was par-
ticularly marked in the engineering industry. The most reliable esti-
mate implies that the gross output of all branches of machine-building
increased from around 278 million rubles in 1908 to 478 million rubles
in 1913, an increase of 72 per cent in 1913 prices. In the single year
1912-13, output probably increased by at least 25 per cent. These were
impressive rates of growth.47
Much more difficult a task is to distinguish between the separate
components of Russian machine-building, particularly in 1913 (in 1908
they can be derived from the industrial census). A set of estimates for
machine-building output in 1913 appears in table 4.6.
It should be emphasized that only the figure for agricultural
machinery commands complete confidence, although all the other
estimates are the result of detailed reconstruction from several sources.
Marked differences emerged in the performance of individual
branches of engineering between 1908 and 1913. The output of trans-
port equipment increased by 14 per cent and industrial equipment by
23 per cent. But the output of agricultural equipment and shipbuilding
more than doubled, by 104 and 115 per cent respectively. The output of
electrical equipment rose by a staggering 760 per cent.
The market for transport equipment, largely railway rolling-stock,
 Industrial recovery 187

Table 4.6. Gross output of machine-building, 1908-1913 (large-scale

industry, million rubles, 1913 prices)

1908 1913

Industrial equipment 97.2 (34.9%) c.120.0 (25.1%)

Transport equipment 87.7 (31.5%) c.100.0 (20.9%)
Shipbuilding 54.0 (19.4%) c.116.0 (24.2%)
Agricultural machinery 29.7 (10.7%) 60.5 (12.7%)
Electrical equipment 9.5 (3.4%) 81.6 (17.1%)
Total 278.1 478.0

Source: derived from Dinamika rossiiskoi i sovetskoi promyshlennosti, Moscow, 3

vols., 1929-30, vol. 2, pp. 128-41; vol. 3, pp. 10-11, 18-20, 52-79, 176. The
equipment price deflator is taken from P. R. Gregory, Russian National Income,
1885-1913, Cambridge, 1982, table I.I cols. C.I and C.I.

remained depressed for much of this period. The output of wagons

increased rapidly between 1910 and 1913, but the production of loco-
motives failed to regain the volume reached in 1908. The industry
never again operated at the level of output that had obtained during
the first years of the century (see table 4.7). The Ministry of Transport
pursued a policy of ruthless retrenchment throughout this period.
State lines were instructed to increase the carrying capacity of their
existing stock and to repair locomotives wherever possible. Orders
from private companies failed to compensate for the decline in
government purchases. The only bright spot in this otherwise gloomy
predicament was that the market, limited though it was, remained in
Russian hands. This sorry story is confirmed by the experience of
individual factories. In 1900, at the peak in its fortunes, the Kharkov
Locomotive company employed 3,491 workers. By 1908, the workforce
had been slashed to just 936, a decline of two-thirds. Only in 1913 did
the workforce regain its 1900 level. Workers were once more engaged
on the manufacture of goods wagons; others built agricultural
machinery. For much of the period, the locomotive shops here and
elsewhere operated at around 20 and 25 per cent of capacity.48
This pattern of diversification was repeated at other factories. The
beleaguered Nevskii shipyards concentrated on the manufacture of
merchant and military vessels, helped by the funds that poured in
from the State Bank. The Hartmann factory at Lugansk turned to the
production of boilers and iron and steel forgings and castings, while
188 Rearmament and industrial ambition

Table 4.7. Output of rolling-stock, 1900-1913

Wagons Locomotives

1900 n.a. 1,005

1901 25,627 1,225
1902 24,419 1,160
1903 21,049 922
1904 22,754 1,198
1905 27,054 1,157
1906 22,352 1,266
1907 15,506 823
1908 9,970 658
1909 6,389 525
1910 9,076 441
1911 8,878 433
1912 12,033 313
1913 20,492 609

Source: P. G. Ivanov, Ocherk istorii i statistiki russkogo zavodskogo parovozostroe-

niia, Petrograd, 1920, p. 4; D. P. H'inskii and V. P. Ivanitskii, Ocherk istorii russkoi
parovozostroitel'noi i vagonostroitel'noi promyshlennosti, Moscow, 1929, p. 100.

other firms manufactured a wide range of general engineering pro-

ducts. However, this did not extend to the production of vehicles, let
alone aircraft. With the exception of the Russo-Baltic Engineering
Company based in Reval, the manufacture of motorized vehicles and
aircraft hardly existed in 1913, and even this enterprise was known
more as an assembly works than as an independent producer of motor
cars. As a consequence of these various changes, the share of transport
equipment in total Russian machine-building production fell from
around one-third to one-fifth between 1908 and 1913.49
The agricultural machine-building industry fared much better. The
market grew, partly because of the improvement in cereal prices and
partly because new territory was being brought under cultivation.
Between 1908 and 1913, Russian producers began to manufacture
harvesters and threshing equipment on a larger scale. No major new
enterprises appeared on the scene; instead, production grew rapidly at
the existing specialist suppliers, such as the subsidiary of International
Harvester at Liubertsy (outside Moscow), and Helferrich-Sade of
Kharkov. Production grew more rapidly than at the general engi-
neering firms.
 Industrial recovery 189

Russian producers were not able to meet domestic demand in its

entirety, especially where more complex items of machinery were
concerned. In aggregate terms imports still accounted for more than
two-fifths of domestic consumption, slightly above the share in 1908.
But in this period Russia reduced its dependence upon imports of
ploughs, harvesters and threshing equipment. Only in the case of
advanced agricultural equipment, such as steam traction engines (Mo-
mobili), that were purchased by large landowners, did Russian firms
fail to keep up with the growth of demand. Russian firms were
hampered by the fact that the technically more sophisticated items of
agricultural machinery were imported free of duty. But the industry
did manage to obtain some concessions in 1912, such as subsidies for
the production of lokomobili and steam threshing mills, tax relief for
firms that competed in product markets with foreign firms, and
favourable terms of credit.
Foreign penetration of the Russian market was not the only con-
straint on further growth of the industry. Arguably, the main difficulty
that beset producers of agricultural machinery was the increased
control over the market imposed by organized consumer interests. The
zemstvos, major customers for farm tools and machines, agreed with
each other about the price they were willing to pay for the product.
Producers complained that their customers failed to settle their
invoices promptly: Russian peasants, many of whom were organized
into consumer cooperatives, asked for as much as three years' credit.
This had serious consequences for the financial position of firms,
twenty-five of whom were owed 38 million rubles by customers on the
eve of the First World War. Attempts by producers to organize them-
selves, in order to improve their bargaining position and to maintain
prices, never succeeded in this industry. Unlike those branches of
manufacturing that supplied rails, roofing iron or locomotives, the
agricultural machine-building industry was characterized by a hetero-
geneous product mix, which is why syndicates never emerged. In
addition, the government agreed to protect the interests of consumers
and never tolerated serious attempts to create a monopoly. As a result,
the industry remained more competitive than other branches of engi-
neering. Profits remained modest. Specialist suppliers did as best they
could. The larger engineering firms did not regard this branch of their
activity as particularly lucrative. Other activities, such as shipbuilding,
offered better prospects.50
The manufacture of electro-technical equipment developed with
remarkable rapidity, albeit from a low base. In 1903, domestic
190 Rearmament and industrial ambition

production was valued at no more than 12 million rubles. During the

recession this figure is unlikely to have increased. But table 4.6 tells a
story of dramatic growth between 1908 and 1913, when output grew
almost nine-fold. By 1913, electrical engineering accounted for 17 per
cent of total machine-building output, compared to less than 4 per cent
five years earlier.
Foreign direct investment played a crucial role in the early stages of
this branch of industry. German capital accounted for half the total
investment in electrical engineering by 1913. Notable ventures
included subsidiaries established by AEG in 1901 (in Kharkov and
Riga), by Siemens-Schuckert in 1912-13 (in St Petersburg), and by
Westinghouse (in Moscow, in 1898). In 1907, AEG came to an agree-
ment with the General Electric Company, giving the German firm the
right to exploit the Russian market. AEG and Siemens-Schuckert
accounted for around three-quarters of total output.
The growth in market demand was met in part by imports,
especially from Germany. Total imports of electrical goods, however,
grew at less than half the rate of domestic production. As in other
branches of the engineering industry, the degree to which imports
penetrated the market for electrical goods varied from one kind of
product to another. Generally speaking, Russia imported two-thirds of
electrical goods. Virtually all valves, electrical fixtures (armatura) and
switches were imported. On the other hand, a significant degree of
import substitution had taken place in other products, and by 1913
most cable, batteries and low voltage equipment were produced
domestically. Foreign investment also created the conditions for the
early stages of import substitution in such products as turbines and
high-voltage equipment. It is difficult to quantify the sources of dom-
estic demand, but it seems clear that the expansion of the market for
low-voltage equipment, such as telegraph and lighting, derived from
government through its purchases for state railways, dockyards and
the military.51
Industrial equipment is a more complex aggregate than any of the
other branches of engineering, comprising such diverse products as
boilers, pumps, sewing machines, textile machinery, food-processors,
internal combustion engines and machine tools. This branch of the
machine-building industry grew modestly between 1908 and 1913.
Some sub-branches grew more rapidly than others. Domestic output
of sewing machines, internal combustion engines and boilers grew
steadily, as did the manufacture of lifting machinery. By 1913, domestic
firms supplied 64 per cent of the rapidly growing market for sewing
 Industrial recovery 191

machines, 48 per cent for internal combustion engines and 79 per cent
for boilers. Other branches were less impressive: domestic industry
accounted for only 23 per cent of the large market for textile machinery
and only 12 per cent for steam engines. Printing equipment was
entirely foreign-made. On the other hand, the famous firm of Semenov
in St Petersburg manufactured high quality cigarette and tobacco
processing equipment, and had the market virtually to itself.
The modest revival of production of industrial equipment was
reflected in the experience of individual enterprises. The slump at the
turn of the century led Phoenix Engineering to make half its workforce
redundant; by 1902, employment had fallen to just over 200. As the
firm began to recover from the depression, employment increased to
around 350 in 1910. The ensuing boom brought the total to 750 by 1913.
Phoenix began to establish itself as a manufacturer of machine tools.52
In view of its crucial importance subsequently, during the First
World War, the machine tool industry deserves special attention. This
sector made little progress between 1900 and 1910. No new specialist
firms came on the scene, nor did the existing specialist firms manage to
expand their capacity. Most of the growth in output that took place
between 1900 and 1910 appears to have been the result of 'in-house'
production of machine tools. After 1910, however, machine tool pro-
duction increased. Domestic output probably amounted to 1.5 million
rubles in 1910 and 2.8 million rubles by 1912. Notwithstanding this
growth, domestic production satisfied only one-third of total con-
sumption, largely of simple lathes for turning metal and wood.
Imports, predominantly from Germany, accounted for more advanced
items, in particular pressing machines, turret lathes, and boring and
planing tools. The import statistics, which are difficult to unravel,
suggest that Russia imported machine tools to the value of 3.0 million
rubles in 1910, 7.4 million in 1911, 8.0 million in 1912 and 12.7 million
rubles in 1913. This gave imports around 70 per cent of the market.53
The expansion of the domestic machine tool industry was hampered
by two constraints. The first of these was the limited size of the market,
which did not extend beyond a few dozen engineering firms in the
Baltic, St Petersburg, Moscow and Kharkov. Specialist producers sup-
plied these enterprises with custom-built tools. The low level of
demand imposed small production volumes, which kept prices high
and reinforced the underdevelopment of the market. Besides, the
largest engineering firms - Putilov, Kolomna Engineering, Briansk
Ironworks - normally supplied their own requirements, which cur-
tailed the market still further. The small market limited the scope for
192 Rearmament and industrial ambition

standardization. Even workshops in the same factory laid down differ-

ent specifications for machine tools. The machine tool industry thus
displayed in microcosm all the hallmarks of the machine-building
industry as a whole, namely a lack of specialization and standardi-
zation, reflecting the varied tastes and traditions of individual fac-
tories.54
The government did not - indeed could not - alleviate this difficulty.
Granted, the state ordered machine tools for state railway workshops,
state ironworks, armouries and shipyards. But the level of demand
was not very significant and the government, like most clients, tended
to order small quantities of varied types of machine tool. The govern-
ment, it argued, had no alternative but to order from foreign suppliers,
who were technically more competent and more reliable.55
Problems of market demand were compounded by the structure of
the Russian tariff. The 1903 tariff levied duty on machines according to
value, affording greatest protection to the cheaper and least sophisti-
cated items, such as heavy-duty milling, planing and drilling tools.
More valuable items, such as modern milling and turret lathes, escaped
relatively lightly. The tariff reinforced the existing differential between
the cost of foreign and of domestic machine tools, and gave no
incentive to Russian engineering firms to produce more sophisticated
items. Those in favour of the all-round development of the Russian
machine tool industry argued that the government should introduce a
tariff that protected the producer of complex items and, in particular,
deterred customers from importing parts for assembly in Russia.56
The Russian engineering industry contained several large and well-
equipped firms, many of them having been in existence for at least half
a century. A handful of firms made their entry after 1908 into branches
of the industry where they were able to specialize, as, for example, in
armaments and machine tools. But the outstanding names in the
industry in 1913 had already been established by the 1890s or earlier:
Putilov, Sormovo, Kolomna and Phoenix. These firms either began to
specialize in armaments, or opted, as before, for a broad mix of
engineering products. In both cases, the industrial boom stimulated an
increase in investment. The capital stock of engineering factories
increased from 98 million rubles in 1900 to 129 million in 1908 and 161
million rubles in 1911. At the well-established firms, however, the plant
grew like coral, with newer shops superimposed upon existing, and
technologically less modern areas of the plant. As a result, bottlenecks
began to develop, because the factory could only function at the pace
of its slowest part. The giant engineering firm Sormovo was a case in
 Industrial recovery 193

point. The assembly shop could handle up to 280 locomotives each

year, but the rolling mill was equipped to produce steel for the
equivalent of 130 units and the boiler shop for fewer than 100. Similar
problems beset the manufacture and assembly of boilers at the Briansk
Engineering plant.57
The market for engineering products in Russia remained small and
fragmented. The industry produced a wide range of products, usually
at the cheaper end of the market. Specialization entailed too many
risks. An early student of the industry, V. I. Grinevetskii, blamed
entrepreneurial deficiency for the lack of specialization, rather than
the size of the market, but this does not seem to have been the main
factor. In the most dynamic branches of machine-building, such as
military shipbuilding, the expansion of opportunity called forth a
dynamic entrepreneurial response. The limited market also dis-
couraged standardization, as in the manufacture of rolling-stock, but
the government did little to promote this process, allocating numerous
orders in small quantities. In any case, this market contracted after
1907, barely recovering on the eve of the war. The capital required to
build, equip and operate a machine-building plant also constrained
the expansion of the industry: in particular, considerable amounts of
working capital were needed, because of the low rate of turnover of
production and the need for large stocks of fuel and raw materials. As
if these difficulties were not enough, Russia suffered from a dearth of
skilled workers and technical staff: compared to western Europe and
the United States, the ratio of technical staff to workers on the shop-
floor was distinctly unfavourable. Last, but not least, the structure of
the Russian tariff no longer suited conditions in the industry. In 1903,
the revision of the tariff did away with the imposition of duty accord-
ing to the weight of machines, and imposed duties in accordance with
their value, a system that afforded least protection to more complex
and higher-value machines. The tariff also permitted the import of
machine parts at a similar rate of duty to that imposed on completed
machines. Rather than manufacture complete machines, especially of
the more sophisticated kind, many engineering firms assembled
machines from parts that had been imported from western Europe. 58
The most dynamic branches of the engineering industry on the eve
of tHe First World War stood in sharp contrast to one another. Agri-
cultural equipment producers faced a growing, and potentially enor-
mous mass market for their output. But this branch of the industry
attracted few new entrants between 1905 and 1914. The shipbuild-
ing industry, on the other hand, was built on the foundations of
194 Rearmament and industrial ambition

government contract work. In the years before 1914, as we shall see, it

presented a dynamic picture, marked by rapid growth in output and
employment, the formation of new enterprises and technological
change. The contrast is evident in the differential growth of share
capital. Between December 1911 and December 1913, the subscribed
capital of engineering firms virtually doubled; but the sharpest
increase was reserved for firms in receipt of government orders, par-
ticularly armaments. Their proportion of total share capital increased
from 32 per cent to 45 per cent. In this sector, more than in any other
branch of Russian industry at this time, with the possible exception of
electrical engineering, capital investment, research and development
assumed prime importance. By the same token, it was here that foreign
capital and expertise would have their greatest impact.59

Conclusion
The growth and fluctuations in demand for the products of
the iron and steel and engineering industries corresponded closely
with government spending programmes. The production of rails, axles
and metal tires accounted for a substantial proportion of iron and steel
output, around one-third in 1898 and one-fifth in 1912. The manufac-
ture of rolling-stock accounted for one-third of engineering output in
1908. Most of this output was purchased on behalf of state lines. The
inclusion of orders for iron and steel or finished products from other
government departments, such as the Admiralty, increased still more
the proportion of output consumed by government: total government
demand accounted for around two-fifths of the products of the iron
and steel industry in 1913. What kind of relationship between
industrialists and government was implied in these statistics, and how
did it manifest itself?
The government strove at all times to avoid the impression that it
was merely a soft touch for private industry. There were plenty of
government ministers, members of the State Council and other
influential figures whose attitude to private enterprise remained luke-
warm, if not hostile. During the 1890s, when the Ministry of Finances
occupied a central role in economic policy, Witte - by virtue of his close
ties with the Tsar, and by means of judicious handouts to the nobility -
managed to head off these attacks, and to keep secret the extensive
character of government aid to industry. But a less astute person at the
helm of the Ministry, or a change in the circumstances under which it
operated, could easily upset these policies.
 Industrial recovery 195

The depression witnessed a cautious policy of relief to the struggling

firms in heavy industry, especially in iron and steel. Under Witte, this
assistance took a largely surreptitious form. Special subsidies were
agreed; the government set up the committee for the allocation of rails
and approved the statutes of Prodamet. However, Witte's opponents
hounded him from office in 1903. The authority of the Ministry of
Finances, weakened by Witte's departure, nose-dived. After the Russo-
Japanese War, with the resources of the Treasury seriously depleted,
the Ministry did not have the means to rescue industry from its
profoundly depressed condition, even had the political will been there
to do so.
Russian industrialists, for their part, organized themselves in
defence of their economic interests. The Association of Southern Coal
and Steel Producers, having taken a prominent part in the nego-
tiations leading to the formation of Prodamet, continued to press the
claims of ferrous metallurgy. No organization of equivalent power and
influence existed in the engineering industry. A national confeder-
ation of firms in the engineering industry only gained adherents in
1916. Prior to that time, the most significant associations were the
Confederation of Northern and Baltic Engineering Industry, formed
in 1902, and the Confederation of Agricultural Machine-Building
Industry, established in 1906. By 1913, these associations represented
thirty-seven and fifty-three enterprises respectively, but their influ-
ence upon government was minimal. The associations periodically
sent delegations to government departments, in order to lobby for
changes in corporate law, the tariff or procurement policy.60
The formation of a new Ministry of Trade and Industry in 1905 went
some way towards improving the access of industrial associations to
government. Timiriazev was certainly sympathetic to private enter-
prise, and was berated in some circles for maintaining too close a link
with private enterprise. However, the initiatives he launched came to
an end with his resignation. His successors lacked the same radical
political vision. The new ministry enjoyed less status and power than
other government departments, and this constituted a stumbling-
block to the success of entrepreneurs in influencing government
industrial policy. The Ministry of Finances not only determined fiscal
policy, but also managed to keep industrialists at arms' length. In these
circumstances, industrialists appeared vulnerable and impotent.
Yet, for all the public lamentation about industrial crisis, the relation-
ship between government and business underwent a subtle change
between 1908 and 1914. The political weakness and the manifest
196 Rearmament and industrial ambition

shortcomings of industrial associations disguised the growth of a

different kind of corporate power. Changing economic strength
manifested itself in the emergence of powerful integrated steel and
engineering combines. Granted, the increase in aggregate demand
after 1910 created taut market conditions and put pressure on govern-
ment to control the behaviour and organization of business enterprise.
But many of the complaints emanated from quarters that could be
ignored, such as the zemstvos, municipal authorities, and parlia-
mentary speakers. The central government had fewer qualms about
footing the bill for iron and steel and for capital ships, once it
embarked on the cause of rearmament. And the major engineering
firms reorganized themselves, in order to absorb the rising costs of
industrial inputs.
The record of industrial growth, therefore, does not tell the whole
story; indeed, the statistics of output can be quite misleading. With
hindsight, it is evident that the basic industries grew rapidly between
1908 and 1913. Contemporary businessmen, closely involved in their
own enterprises, obviously had a quite different perspective on output
and investment from that adopted by later generations of economic
historians. Only after 1910 did businessmen begin to contemplate their
affairs with anything approaching optimism; and only in 1912 did they
exude real confidence. For much of the period their prospects looked
bleak. Order books and employment told a story of recession. Nor did
government policy across a range of issues offer much succour. The
efforts of businessmen in the capital goods industries to persuade
government to take a more sympathetic view of their plight met with
little success. In retrospect, then, rearmament and its associated
demands did rescue the basic industries from the recession. But this
was a fortuitous outcome; no-one in government regarded rearma-
ment as a device to aid industrial recovery in the private sector. If
anything, the orders generated by rearmament were expected to go to
established enterprises in the state sector. More would be needed than
protestations of corporate agony, however eloquent or sincerely held,
if rearmament were to bring relief, as it eventually did, to Russia's
hard-pressed businessmen.
 The armaments industry: the search
for identity and influence, 1908-1914

Introduction: the organization and reorganization of the

armaments industry
The specific characteristics of defence industry, tsarist ideology
and Russian economic backwardness impart a multiple fascination to
the study of the armaments industry. Like any sovereign state, the
tsarist regime had no choice but to concern itself with matters relating
to the output of defence goods. These it preferred to entrust to
government-owned arsenals, shipyards and ironworks. To leave the
production of military goods to the commercial sector exposed the
government to the whim of the entrepreneur, whose prime concern
was with the survival of his business. If entrepreneurs colluded, then
the government, being their sole customer, would be unable to enforce
competition in the arms trade. In practice, the tsarist regime rarely
needed to confront these issues prior to 1905. Whether the govern-
ment could or should close off for good the opportunities for the
private sector remained an intermittently articulated question of prin-
ciple that was ultimately decided by the practical needs of
rearmament.
Few entrepreneurs were brave or foolish enough to enter the 'arms
bazaar'. The risks of entering this peculiar market required little
emphasis. In the uncertain world of defence production, it made little
sense to invest heavily in new plant or to recruit skilled workers, only
to find that the government cut off their life-blood, whether by with-
drawing orders altogether, by privileging the state sector or by import-
ing arms. Even if private businessmen claimed and retained a modest
share of the defence market, the government could complicate business
plans, by adjusting or even abandoning its requirements. None the
less, after 1905 the armaments option began to commend itself to
established firms in the private sector. New entrants to the industry
197
198 Rearmament and industrial ambition

also appeared on the scene. How this process came about, with what
consequences for state enterprise, and whether the fears of state
'subordination' to capitalist entrepreneurs were realized, form the
subject of this chapter and the next.
Armaments production had traditionally been dominated by state
armouries and dockyards. Long familiarity with the task of weapons
manufacture conferred on them the capacity to cope with the
demands of military customers. Recent events, too, had demonstrated
that the state enterprises played an indispensable part in the procure-
ment process. During the 1890s, state-owned arsenals dealt effectively
with the task of equipping the armed forces with modern rifles. Nor
could government yards be faulted during the Russo-Japanese War,
when they coped more than adequately with the tasks suddenly
thrust upon them. It seemed prudent to continue to rely upon govern-
ment enterprises in the future.
On the other hand, powerful arguments could be advanced in
favour of a greater reliance upon private contractors. Many of the most
important private firms enjoyed close links with foreign firms, by
virtue of the patronage extended simultaneously by financial institu-
tions in St Petersburg and Paris to Russian and west European arms
producers. The tsarist government acknowledged that private enter-
prises had access to advanced foreign armaments technology. But
could the government allow private entrepreneurs to dominate the
armaments industry, with the attendant risk that private businessmen
could dictate prices, technical specifications and other contract terms?
Although it was as yet unclear how much leverage the arms trade
possessed and in what ways it would seek to exercise that leverage,
this risk was sufficiently great to convince the government of the need
to retain a substantial portion of armaments-producing capacity in the
hands of the state.
The tsarist government could not, however, ignore arguments in
favour of reform of the state sector. Influential members of the Duma,
by no means sympathetic towards private enterprise, argued that
administrative reform of government armouries and shipyards made
sound financial sense. Pressure for reform emanated also from Russian
businessmen, who complained that they faced unfair competition on
prices, because the losses incurred by state enterprises were offset by
government subsidies. There was an element of truth in this claim: the
state sector was obliged to keep prices low, in order that it could
'regulate' prices charged by the private sector. But the high costs of
production that characterized state enterprises meant that losses were
 The armament industry, 1908-1914 199

inevitable. Government subsidies to state-owned enterprises thus had

the air of permanence about them.
Debates about the relative merits of state and private enterprise
were played out against the background of genuine economic
uncertainty. The crucial issue was investment, to which problems of
recruiting and retaining labour took second place, until the eve of the
war. The government had to consider what resources were available to
finance the new investment that was badly needed, especially at the
GAU factories. The situation was not promising, bearing in mind the
policy of retrenchment to which the Ministry of Finances rigidly
adhered. The reform of state dockyards meant that they were required
to finance investment from their own resources. But would internally
generated funds suffice? The replacement of capital at existing enter-
prises was not the only issue involved. The government also came
under pressure to allocate funds for the construction of new enter-
prises in branches where current capacity was regarded as inadequate,
particularly in fuses, explosives and cartridges. These proposals to
expand the state sector generated additional criticism from the private
sector. Capital investment in defence industry became the touchstone
of attitudes and policy towards state and private enterprise.
The balance between the two forms of ownership began to shift after
1900. Between 1900 and 1913, the private sector doubled its share of the
defence industry, in terms of employment, from 12 to 23 per cent. This
shift was particularly marked between 1908 and 1913. It owed virtually
everything to the spectacular programme of naval rearmament. In 1900,
around one-third of the labour force in the military shipbuilding indus-
try was employed in the private sector. In 1908, with the contraction in
the workforce at state yards, the proportion rose to two-fifths. On the
eve of the First World War it stood at just under three-fifths.1 The ship-
building programmes allowed existing private firms to obtain new con-
tracts and to recruit new workers, and also inspired the creation of a
handful of powerful new ventures. The attempt to fend off the inter-
lopers' challenge would require managerial acumen, improved
productivity and the exercise of political skills by those who admin-
istered state shipyards and arsenals. It is with these that we begin.

The management, finance and status of state enterprise,

1908-1914: government shipyards
As Russia embarked upon naval rearmament, it gradually
dawned on the imperial regime that the dockyards in its possession
200 Rearmament and industrial ambition

were ill-equipped for the task. Each yard manifested its own amalgam
of problems, which related chiefly to plant size, layout and capital
equipment. The four yards in the Baltic had been built and equipped
with smaller vessels in mind, not the enormous battleships around
which the Tsar intended to build his fleet. The government also had to
decide whether or not to invest in the construction of entirely new
yards in the Black Sea, where the single state-owned facility had
recently passed into private hands. Financial constraints made it
doubtful that the government could sanction the construction of an
entirely new state yard to handle the Black Sea shipbuilding pro-
gramme.
The government intended to improve the potential of the state
sector, enabling it to address the tasks of rearmament in a more
professional fashion. But the measures taken did not always serve that
purpose. In particular, the desire to make state shipyards financially
independent of the Treasury conflicted with their pressing needs for
new investment. Prior to 1908, the navy determined the level of
financial support to the Izhora factory and the 'New Admiralty' yards
in St Petersburg. The ministry assigned a budget, which specified the
funds available and laid down strict conditions as to their use. As
formerly privately owned yards, the Baltic and Obukhov dockyards
already operated as self-financing enterprises. The distinction did not
matter before 1908, because the level of activity at Russian shipyards
remained modest. But it was a different matter after 1908, when
rearmament began to gather pace and new investment became an
urgent priority.
The government chose precisely this moment to extend the prin-
ciple of self-finance to all shipyards under its jurisdiction. This decision
followed criticism within the Duma about accounting practices in the
state sector, and in particular the lack of a mechanism for monitoring
production costs. With the adoption of the 1907 shipbuilding pro-
gramme, the navy planned to order new vessels from state yards. But it
became apparent that this decision would add around 15 per cent to
the total cost of the programme. Shifting the burden of financial
responsibility on to the shoulders of the state yards was an attempt to
encourage them to reduce production costs, whilst at the same time
drawing the teeth of parliamentary critics. The Admiralty had little
choice but to accede to the demand for reform.2
The new regulations required all four shipyards to finance capital
investment from internal resources, without recourse to the Treasury:
'no credits from the Naval Ministry for the maintenance and activity of
 The armament industry, 1908-1914 201

the factories will be assigned. Their expenses will be covered from

sums obtained from orders and from other internal sources and, in
case of necessity, from the factories' reserve capital'. According to the
new rules, the price agreed with the Main Administration for Ship-
building and Supply (GUKS) embodied an allowance for profit, which
was calculated as a percentage of the production cost. The regulations
made no mention of the actual percentage allowable on each contract,
stating merely that the profit should ensure that the procurement price
did not exceed the price quoted by either private or foreign suppliers.
By placing this ceiling on procurement prices, the government
avoided a straightforward cost-plus contract for military vessels.3
How would the state shipyards operate under this new dispen-
sation? In practice, government officials determined prices in accord-
ance with an outdated assessment of profits required to finance capital
investment. That is, officials took into account the technology in
shipbuilding that existed at the turn of the century, on the assumption
that the basic elements of production costs remained constant. How
unrealistic was this assumption may be seen from the remarks made by
plant managers at the end of 1911, by which time the financial position
of state yards had become quite desperate. The Baltic and Admiralty
yards reported that profits had plummeted by 40 per cent and 80 per
cent respectively, and that reserves had been drastically depleted.
Debts incurred before 1908 had a prior claim on profits: 'our profits,
and the reserve and amortization funds have a purely accounting
significance and do not represent cash in hand, because the question of
debt has not been resolved and because the Baltic factory has been
obliged to write off the debts outstanding from the Admiralty'.4
The new regulations came into force at a time when the condition of
buildings and plant at government shipyards left a lot to be desired. At
Obukhov, the water supply, generating plant and especially the steel
mill appalled government inspectors. Other needs, not directly associ-
ated with shipbuilding, but no less important, also suffered from
neglect. Obukhov lacked school and leisure facilities for workers and
their families, whilst a newly-built canteen catered for 50 people, less
than 2 per cent of the workforce. The Admiralty yards gave even
greater cause for concern. An official report spoke of 'antiquated'
capital equipment. Machine tools functioned at slow speed. Most
alarmingly, 'a significant decline in orders took place, because the
workshops of the New Admiralty were unable to compete with private
producers'. The Admiralty appealed for an immediate injection of
funds to finance reconstruction and investment in new equipment.
202 Rearmament and industrial ambition

But the Minister of Finances and the State Auditor insisted that the
dockyards should finance their own investment. After a fierce battle in
the Council of Ministers at the end of 1909, the project collapsed.5
Even the most highly-regarded yards suffered under the new
regime. At the Baltic yards, profits generated during the heady days of
1904 and 1905 enabled the management to accumulate a large reserve
fund. By 1909, this stood at 2.5 million rubles. But the yard could not
keep up with demands being made upon it. Advances on major
contracts amounted to 30 million rubles, but this sum was earmarked
for materials and other operating costs associated with the battleship-
building programme. The factory did not have sufficient revenue to
cover operating expenses on other contracts, let alone to accumulate
additional reserves. A request for 18 million rubles from the Main
Shipbuilding Administration got an unsympathetic and unhelpful
hearing. Officials urged that the factory should use its reserves to cover
any shortfall between receipts and outgoings, a suggestion that went
quite against the spirit and letter of the regulations that had been
introduced in 1907, which stipulated that the reserves were to be used
for capital investment, not to cover operating expenses. The situation
worsened during the following two years, because government
departments failed to settle their invoices on time. By December 1911,
the reserves had completely disappeared. An urgent request went out
for the funds to acquire machine tools for the machine shop and
foundry. Admiralty officials tried to avoid the injection of fresh funds
from the budget, proposing instead to transfer funds from Izhora to
the Baltic account. The directors of Izhora, not surprisingly, would
have nothing to do with this proposition.6
If such a miserable fate befell even these well-managed yards, it is
hardly surprising that the 'New Admiralty' yards, with a much poorer
reputation, got into difficulties. Notwithstanding the increased
volume of work and the growth in the value of gross output, the yards
failed to increase profits, either in absolute terms or as a percentage of
output (see table 5.1).
As the shipbuilding programme gathered momentum, Admiralty
officials counterattacked. In a submission to the Duma in April 1912,
Grigorovich pointed out that the revolution in shipbuilding tech-
niques had left previous accounting assumptions and rules in tatters.
Management could not function properly, unless the framework of
shipbuilding costs was substantially revised. Rising costs reflected
primarily changes in shipbuilding technology, as well as inflation in
raw material prices and wages. State yards could not top up their
 The armament industry, 1908-1914 203

Table 5.1. Profile of the 'New Admiralty' yards, 1908-1912

1908 1909 1910 1911 1912

Gross output
(million rubles) 4.14 5.35 6.12 8.45 6.96
Profit1 4.9% 4.0% 2.3% 1.9% n.a.

1
Expressed as percentage of output
Sources: TsGAVMF f.401, op.6, d.37, 1.186; Vsqjoddaneishii otchet po morskomu
ministerstvu zo 1906-1909, St Petersburg, 1910, p. 21; ibid., za 1913, p. 308.

reserve and amortization funds as the regulations required them to do,

and it was unfair to pin the blame on managerial shortcomings.7
In fact, under the more liberal financial regime, management did
initially exercise some flexibility in handling labour costs. Cuts in
wages served as a crude yet effective means of making economies. The
director of the Izhora works reported that he had reduced wages in
1909: 'if this were not done, the factory would lose work, and in view
of the serious unemployment problem workers themselves have been
prepared in their own interests, as well as those of the factory, to get
more work and to receive modest wages, rather than to be laid off
because of a lack of work'. At the Baltic yards, the average daily wage
fell from 2.32 rubles in 1908 to 2.26 rubles in 1909. By 1911 wages had
fallen to 2.04 rubles. However, there were limits to this strategy, and in
1912-13 - as the entire industry worked at fever pitch - wage rates
once more picked up sharply. Other factors also eroded the capacity of
management to keep production costs under control, notably
increases in raw material prices.8
In principle, one solution to the financial difficulties described above
would have been to increase the rate of profit allowed to the state
yards. But to have done this would have raised procurement prices
and thus have undermined the principle on which the state sector
operated. An alternative course of action was to inject funds directly
from the Treasury. Both devices involved a departure from the prin-
ciples embodied in the 1908 regulations. The government ruled out the
first solution, on the grounds that state factories should continue to
keep their prices below those of the private sector. Only a few con-
tracts - and with the Artillery Administration, rather than the body
responsible for shipbuilding - were renegotiated.9
Predictably, the Ministry of Finances strongly opposed the second
204 Rearmament and industrial ambition

solution. The naval procurement administration (GUKS) had already

approached the Admiralty in 1908 with a request for 21 million rubles,
to finance capital reconstruction over a three-year period at the
Obukhov, Izhora and Admiralty yards. The Navy Ministry whittled
this proposal down to 15 million rubles, but kept intact a proposal for
an additional nine million rubles, in connection for work on the new
battleships. This proposal came before the Council of Ministers in
September 1909. The State Auditor challenged it, on the grounds that
state yards invariably 'frittered money away'. Kokovtsov objected as
well, and the Council of Ministers turned down the requst.10
The financial problems described above eventually evoked a differ-
ent response. First, factories used funds from current reserves, such as
they were, in order to finance running repairs to capital equipment.
Second, some emergency credits were transferred by the Ministry
from other items to the state yards, in order to fund new investment.
In 1912, the government released 6 million rubles, in order to purchase
equipment for work on armoured cruisers. Third, the advances on the
growing volume of orders allowed factories to settle some of their
debts to private suppliers and to conclude contracts for new equip-
ment. At the same time, management withheld payments to other
factories within the state sector, and other claims within the state
sector on state shipyards were written off. In effect, the financial
problems faced by state yards were transferred to other state factories,
such as Perm and Izhevsk, which supplied steel and other items to
shipyards.11
The government eventually decided to opt for expansion. First to
feel the benefit of greater generosity was Izhora, whose crucial import-
ance as the sole source of armour-plate did not need to be emphasized.
The navy estimated that a complete refit of Izhora would cost around 9
million rubles, to bring its armour-plate producing capacity up to
10,000 tons, five times larger than atpresent, and to instal a press with a
10,000-ton load. With these improvements, designed to enable the
factory to produce stronger armour-plate for gun decks and turrets, it
was hoped that Izhora would reach the technical level of Krupp. The
programme of expansion did indeed yield impressive results. By 1913,
the factory produced 14,000 tons of armour-plate, of a quality and at a
price that compared favourably with foreign suppliers.12
The Navy Ministry also allocated ten million rubles to Obukhov for a
programme spread over five years, designed to bring the yards 'into
order'. This programme included the expansion of ordnance produc-
ing capacity. In 1912, Obukhov received a further 3.2 million rubles to
 The armament industry, 190&-1914 205

fund the acquisition of equipment to build 14-inch naval guns. Overall,

these investments increased the capital stock at Obukhov, from 27.4
million rubles in 1910/11 to 30.2 million in 1912/13. On the eve of the
war, Obukhov was five times bigger than it had been twenty years
earlier.13
The government also agreed to a major investment effort at the
impoverished Admiralty yard. Orders poured in for work on two
battleships and on armoured cruisers. Private shipbuilders, such as the
newly created Noblessner, also subcontracted work to the yards. From
the advances that accompanied these orders, management financed
some modest capital investment. But most of the increased investment,
for example to manufacture gun turrets, came directly from the
government: more than seven million rubles in 1913 alone.14
The decision to inject fresh funds from government represented a
vote of confidence in the state yards and a conscious decision to retain
significant capacity in state hands. One touchstone of this policy is
revealed by the government's response to privatization proposals. In
the middle of 1912, the government learned that the Russian Ship-
building Company (Russud) was interested in leasing the Admiralty
yards. Russud cited as precedent the previously agreed lease of the old
state yards at Nikolaev to the French-backed Nikolaev Company. But
naval officials on the Shipbuilding Commission rejected the applica-
tion and the precedent that had been cited: 'Nikolaev had only repair
workshops, which were entirely unsuitable for the construction of
large modern vessels. The Admiralty yards are in a quite different
position. Here everything (wharves, rail transport and so forth) is
already to hand'. 15 Soon after this decision, the newly-formed Franco-
Russian Wharves brought forward a similar proposal, which the
Commission also rejected, on the grounds that it would only benefit
the private firm, which sought to improve its competitive position
vis-d-vis Putilov. The Council of Ministers subsequently took up the
proposal. The Ministry of Finances objected that the bidder was not a
genuinely Russian-owned business. The Admiralty backed the
scheme, on the grounds that funds were otherwise unavailable to
modernize the Admiralty yards, which lacked proper engineering
workshops and could only repair or build hulls. If the lease went
ahead, the state would eventually have returned to it a modern and
well-equipped shipyard, comparable to those owned by Putilov. But it
should not be thought that the Navy Ministry had suddenly become
converted to the principle of private enterprise. Rather, officials
wanted to use the funds from the deal to finance the construction of a
206 Rearmament and industrial ambition

new state yards, equipped to produce gun turrets. The estimated cost
of a new venture was put at 6.3 million rubles, which would be used to
build and equip a state-owned rival to the powerful - and privately-
owned - St Petersburg Metal Company. Persuaded by this argument,
the government eventually approved the lease in July 1914.16
By 1911, the dispensation agreed three years earlier had virtually
broken down under the financial pressures induced by the scale of
naval rearmament. The Duma took advantage of the opportunity
created by the financial embarrassment of the Admiralty to press for
further administrative reforms. The government could not avoid - and
the Duma could hardly refuse - the injection of additional funds in the
form of new shipbuilding orders, which in turn generated advances
that helped to reduce the desperate financial position of enterprises in
1911-12.17
The results of a quinquennium of government support for state
shipbuilding are seen in the fact that the state yards received around
36 million rubles in government grants for new investment between
1908 and 1913. Some of the enterprises found additional funds from
internal sources. The value of the capital stock at the state yards
amounted to at least 140 million rubles at the beginning of January
1914. The shipyards accounted for at least a quarter of all state-owned
fixed capital in industry. They employed thousands of workers. In
terms of assets and labour force, they remained at the centre of the
Russian shipbuilding industry.18

State arsenals and ironworks

The faith placed by the tsarist government in the state sector is
further confirmed by decisions to finance the expansion and construc-
tion of enterprises under the jurisdiction of the Main Artillery Admin-
istration (GAU), as well as to retain significant capacity in the Urals
iron and armaments complex. In the case of government arsenals,
there was never any question of renouncing state control. The main
issue concerned the degree of investment needed in order to maintain
their productive potential. Their needs were generally held to be
modest, given that the rearmament projects of the GAU lacked the
scale and scope of the naval programmes. The Urals ironworks posed a
different set of problems. Most of them were unglamorous, decrepit
and consequently short of supporters within official circles. But they
did maintain a huge labour force. What would a stricter financial
regime imply for ironworks such at Votkinsk, Zlatoust or the huge
 The armament industry, 1908-1914 207

Table 5.2. Employment at state armouries, 1890-1914

1890-1900 1902 1904-05 1908-09 1913-14

Armouries
Izhevsk 8,000(a) 4,781 ll,000(a) 6,684(b) ll,000(b)
Tula 7,035(d)2 3,759 n.a. 4,029(b) 7,000(b)
Sestroretsk l,725(d)2 982 n.a. l,460(b) l,460(b)
Cartridge
Lugansk n.a. 974 n.a. l,200(b) 2,490(b)
St Petersburg n.a. 1,553 n.a. n.a. l,200(c)
Fuses
St Petersburg
Tube n.a. 5,033 n.a. n.a. 5,500(c)
Samara
(est. 1910) n.a.
Explosives
Kazan n.a. 1,529 n.a. n.a. n.a.
Okhtensk n.a. 1,980 n.a. n.a. n.a.
Shostensk n.a. 1,529 n.a. n.a. n.a.
Ordnance
St Petersburg
Ordnance 975(d)2 742 n.a. 800(b) l,000(b)

Total1 n.a. 26,117 46,6793 31,734 47,4004

1
Total includes employment at the three first-rank and three second-rank arse-
nals (St. Petersburg, Briansk, Kiev; Warsaw, Tbilisi, Khabarovsk), whose chief
function was to repair ordnance and gun carriages, and to prime cartridges. The
total also includes other GAU enterprises (various workshops, pharmaceuticals
factory and firing range). Clerical workers are included in the total.
2
1900
3
1906
4
56,601 in 1914
Sources: (a) E. K. Germonius, 'Izhevskii oruzheinyi zavod i rol' kazennykh
zavodov v dele oborony', Russian Economist, vol. 2,1922, p. 2904; (b) Fabrichno-
zavodskie predpriatiia Rossiiskoi imperii, St Petersburg, 1909; second edn., Petro-
grad, 1914; (c) E. E. Kruze, Peterburgskie rabochie v 1912r-1914 godakh, Leningrad,
1961, pp. 72-3; (d) figures for 1900, from L. G. Beskrovnyi, Armiia iflot v nachale
XX veke, Moscow, 1986, pp. 73, 87. 1902 data from N. M Lisovskii, Rabochie v
voennom vedomstve, St Petersburg, 1906, pp. 8-9. Total employment derived
from War Ministry documentation, cited in G. K. Miftiev, 'Artilleriiskaia prom-
yshlennost' Rossii v gody pervoi mirovoi voiny', kandidatskaia dissertatsiia,
Leningrad, 1953, p. 100.
208 Rearmament and industrial ambition

Table 5.3. Estimated expenditure on machine tools by GAU, 1908-1914

(rubles)

Armouries Powder Fuse Cartridge Explosives Total 1

1908 58,400 218,600 15,500 49,000 18,800 360,300

1909 70,600 195,500 99,000 67,900 33,600 466,600
1910 115,100 259,900 44,800 36,100 65,700 521,000
1911 185,550 209,400 66,000 73,800 22,400 552,800
1912 224,650 248,600 64,400 110,630 44,750 693,100
1913 220,000 171,400 63,300 83,700 51,200 592,600
1914 138,350 291,400 44,600 58,000 37,000 569,400

1
Excludes allocations to the arsenals listed in note to table 5.2 (in 1913 these
amounted to a further 90,000 rubles).
Source: Smeta voennogo ministerstva po GAU, St Petersburg, annually, St Peters-
burg, 1908-13.

plant at Motovilikha? Should the government accept proposals to

privatize some or all of the ironworks? In the end, these proposals
came to naught. This left the state with more than a dozen lame ducks.
Even fairly unambitious measures to rationalize capacity achieved
only modest success. With the notable exception of Motovilikha, the
state ironworks remained an albatross around the neck of the tsarist
regime.
The armouries under the aegis of the GAU had reduced their
capacity considerably in the aftermath of the war against Japan. But,
from this depleted base, they grew rapidly in the years before the
outbreak of the First World War (see table 5.2).
It remains to be established whether these enterprises were able to
finance a corresponding increase in investment. The only means at our
disposal to answer this question is provided by estimates of the
resources secured by the GAU for the acquisition of machine tools.
Table 5.3 implies that investment more than matched the increase in
the'labour force. In 1908, the total GAU budget for machine tools was
equivalent to ten rubles per worker; in 1913 the corresponding figure
was 12.5 rubles.19
As the figures suggest, the government made no attempt to insist
that these enterprises operate on self-financing principles. Government
armouries continued to be funded, as before, from the GAU budget.
The results of budget expenditure at individual plants were often quite
impressive. The cartridge works at Lugansk and St Petersburg were
 The armament industry, 1908-1914 209

re-equipped, 'chiefly with the assistance of domestic engineering

industry'. The GAU spent 600,000 rubles on new equipment for the
Shostensk powder works in 1913, increasing its capacity by 50 per cent,
to around 6,000 kg of explosives. Tula received generous assistance
with an ambitious re-equipment programme, at the cost of running up
colossal debts with the Treasury.20
In a further contrast with practice elsewhere in the state sector, the
GAU advocated the construction of new enterprises, with some
success. In 1909, officials brought forward two proposals, for the con-
struction of an explosives factory and a fuse factory, both to be located
in Samara. The total cost was put at more than 4 million rubles. Only
the explosives factory attracted sufficient funding at first, although the
project turned sour when construction costs rose, because of the
inflation in the prices of cement, brick, timber and labour. By the end of
1910, when the fuse works received government approval, construc-
tion costs were already one-third over budget. When it was completed,
in 1911, delays in the delivery of measuring instruments from St
Petersburg held up production, as did the failure of the GAU to
approve specifications for new fuses.21
It is difficult to assess the profitability of these enterprises. The issue
failed to generate the same degree of heat in public discussions as did
the financial condition of state shipyards, where the scale of invest-
ment sometimes beggared belief. Certainly, the dismal appraisals often
made of the financial condition of government enterprises did not
apply to the Izhevsk arsenal. Izhevsk made a profit from its steel-
making capacity, which allowed management to keep control over the
price of inputs and - by enabling Izhevsk to sell steel to other custom-
ers - subsidized the armoury.22
Another difference between practice at government armouries and
state shipyards emerges in the choice of client. Managers of most GAU
enterprises could not and did not rely exclusively on contract work for
the army. Throughout the pre-1914 period, they accepted orders from
other clients, permitting them to spread their overhead costs over a
larger volume of output than would otherwise have been the case. For
example, the three armouries had a combined capacity of 525,000 rifles
in 1912, but produced a mere 37,000 in 1911 and no more than 47,000
rifles in the following year. Faced with this miserable volume of orders,
managers chased and secured work on behalf of other government cus-
tomers, such as the Ministry of the Interior and the Ministry of Agricul-
ture. The armouries even acted as sub-contractors to private arms firms.
The Tula armoury had orders worth 40,000 rubles from private clients.23
210 Rearmament and industrial ambition

By contrast, against the background of rearmament, the proportion

of work undertaken for the civilian market by Urals factories con-
tracted. In 1911, virtually one-third of all output from the state iron-
works was purchased by private customers. In the following year, this
proportion dropped to one-quarter. In 1913, it fell to below one-fifth,
mostly pig iron and steel ingots. The financial consequences of this
shift did not always bode well. The ironworks sold their products at a
high price during the so-called 'metal famine' of 1911-12. But what
they gained on the swings, they lost on the roundabouts. The law
forbade private customers to advance funds to state factories, which
could only harm their cash flow. Hence, the financial problems of the
Urals ironworks proved difficult to surmount.24
The continued lack of profitability made it difficult to find funds for
investment programmes. Zlatoust, producing shell and rifles, regularly
made a loss, because of its high overhead costs, resulting from the
dispersed character of the plant and the consequent time and effort
spent in moving goods from one point to another. The financial
position of factories was not entirely a function of managerial incom-
petence. Managers had no control over the prices set by the procure-
ment agencies, whose officials thereby helped to determine the fate of
the ironworks. Some enterprises seemed preordained to make a loss.
The Ministry of War paid only 3,150 rubles per cannon to Perm,
whereas Putilov received 4,000 rubles. The Ministry of Transport, by
contrast, paid Sormovo and Putilov only 22,500 rubles for locomotives,
but paid 33-34,000 rubles for the locomotives it purchased from
Votkinsk: even at this price, however, Votkinsk made a loss.25
The provision of capital to major enterprises remained a constant
nightmare. The inflexible system operated by the Treasury meant that
a factory that exhausted the funds available for one purpose might
have to suspend operations, even though other credits had not been
committed or spent in full. Management could not predict exactly the
mix of products it intended to produce in a given year and, therefore,
could never be certain of its precise input requirements. Other fac-
tories got round this problem by concentrating on a smaller and more
uniform range of products. Zlatoust and Votkinsk, producing a wide
range of products, constantly found themselves in financial difficul-
ties.26
Management also complained that government departments
delayed the settlement of invoices, compounding the problem of
working capital. In 1912, the outstanding combined claims of the Urals
ironworks reached 15 million rubles. A year later, the figure stood at 19
 The armament industry, 1908-1914 211

Table 5.4. Total output and defence production, Urals ironworks, 1908-1914

Total Shell production Total defence

(million rubles) (%) (%)

1908 12.76 32.3 n.a.

1909 13.65 36.7 n.a.
1910 17.17 41.9 47.4
1911 19.68 35.0 37.1
1912 20.40 44.1 48.8
1913 21.00 51.21 56.31
1914 25.00 58.2 63.8

1
Interpolated figure
Sources: Col. 1 Vsepoddaneishii otchet gosudarstvennogo korttrolera za 1908 ... za
1915, St Petersburg, 1909-16; col. 2 derived from Miftiev, 'Artilleriiskaia promy-
shlennost", appendix 2; col. 3, shell and cannon output, from Smeta gornogo
departamenta na 1913; ibid., na 1914; ibid., na 1916, St Petersburg, 1912-15.

million rubles, more than half of it due from the War Ministry. To this
extent, the increase in government orders merely exacerbated their
financial problems.27
In the face of parliamentary pressure, the state adopted a series of
reforms, designed to address some of the besetting problems of the
Urals ironworks. The Duma advocated the adoption of proper com-
mercial accounting procedures, the recruitment of more highly-
qualified technical personnel on a 'voluntary' basis, greater special-
ization of production, inter-enterprise cooperation in the allocation of
orders, especially for shell, and the reduction of 'excessive' stocks of
raw materials. Their purpose was to reduce the backlog of unfinished
orders and to eliminate enterprise debt.28
These changes eventually reached the statute book in December
1910, and appear subsequently to have had the desired effect. Govern-
ment inspectors made fewer complaints about the lack of attention
given to the storage of raw materials and to the inadequate care of
instruments and other equipment, complaints that had been regularly
aired earlier in the century. But not all projected reforms were imple-
mented: the production of shell continued to be dispersed, rather than
concentrated at two or three enterprises, as the Duma proposed. Other
reforms also proved difficult to implement in Russian conditions. The
management of the Perm Cannon Works at Motovilikha endeavoured
to ensure that supplies of raw materials did not exceed actual
212 Rearmament and industrial ambition

requirements for current production, but this was only feasible where
factories were not isolated. In the Urals, of all places, it was vital to
maintain adequate stocks, lest deliveries be interrupted.
The performance of Motovilikha gave grounds for cautious opti-
mism. A substantial amount of money (nearly three million rubles) had
been spent on the factory after 1907, in line with the recommendations
of the Sol'skii commission. Output increased from 2.7 million rubles in
1908 to 4.9 million rubles in 1911; in the following year it reached 5.9
million rubles. By 1911-12, as a result of the reforms mentioned above,
the Perm factory as a whole began to show a profit: a genuine profit,
too, allowing for depreciation, and taking account of its tax liabilities.
Although defective production (brak) remained a problem, and
although the storage of materials left a lot to be desired, many of the
criticisms that had previously been levelled at the factory now lost
their force.29
Nevertheless, the government could not afford to be complacent.
The production of artillery at Motovilikha showed a loss in 1912.
According to the State Auditor, 'equipment is inadequate and most
work (such as the manufacture of gun carriages) is done manually'.
The main problem was the modest volume of orders, making it impos-
sible for management to standardize production. Until such time as
the factory was given additional orders, it would continue to be
plagued by high unit costs. Other reports also adopted a critical tone. A
confidential assessment made several sharp criticisms of the Perm
works: the technology for the manufacture of large calibre shell was
outmoded, and only the low cost of producing smaller shell allowed
the factory to make a profit. In the artillery workshop, labour costs
were low, but the productivity of capital left a lot to be desired.30
These criticisms gave a group of private businessmen an oppor-
tunity to claim the Perm plant for themselves. In 1912, Putilov and
M. E. Verstraete (chairman and vice-chairman respectively of the
Russo-Asiatic Bank), E. K. Grubbe (chairman of the Siberian Trade
Bank) and Zurov (from the Russian Trade and Industry Bank) reques-
ted a lease of twenty years on Motovilikha. They pointed out that the
Admiralty urgently needed 14-inch guns. Obukhov was capable of
producing up to fifty guns each year, but the navy needed around
eighty. The government would have to order the shortfall from
foreign contractors, if steps were not taken to develop production
facilities at Perm or elsewhere. Perm already had one large press (3,000
tons); with additional investment, it could produce 14-inch guns
within six months. They concluded that private enterprise, with the
 The armament industry, 1908-1914 213

involvement of French technical assistance, could complete the

modernization programme quickly. By contrast, if matters were left in
state hands, the enterprise would inevitably experience delays in the
provision of the necessary credits.31
Strong objections were expressed by a shadowy group, called the
'Perm National Society'. Its members pointed out the strategic import-
ance of the factory, located deep in the interior of Russia (the other
main state-owned artillery works, at Obukhov, was located close to
the western border of the Empire and relied upon imports of fuel and
pig iron). In addition, only state ownership of Perm and Obukhov
prevented the production of heavy artillery from becoming a private
sector monopoly: negotiations were already under way between
Putilov and Parviainen over the joint production of heavy artillery
(see below), and the Perm proposal was clearly designed to neutralize
a potential competitor from the state sector. The objectors also
observed - perhaps disingenuously - that the new private consortium
would import large numbers of foreign workers to the Perm works,
threatening the livelihood of up to 6,000 workers. The most persuasive
argument used against this proposal in the Council of Ministers was a
familiar one: state ownership of the Perm works guaranteed that the
government would not be wholly bound by the prices set by the
private sector, in this instance for heavy artillery. This was a sensitive
issue: the government believed that private monopolies had pushed
up iron and steel prices, and was unwilling to see the same fate befall
the armaments industry. It has been argued that the government did
not object in principle to the greater involvement of private capital in
defence industry, because it concurrently (November 1912) approved
a projected artillery factory on the Volga, financed by a consortium
headed by the International Bank. But this venture was quite different
from the Motovilikha proposal, because the former involved an addi-
tion to capacity and posed no immediate threat to the Perm works. In
the event, the Council of Ministers concluded that 'the removal of the
Perm Cannon Works from state administration, and the transfer of
responsibility to a private joint-stock company, must be seen as
unwelcome and even harmful from the point of view of the proper
supply of armaments to the army and navy, at the cheapest possible
price'.32
The government continued, therefore, to keep faith with Motovi-
likha. In 1913, the Ministry of Trade and Industry requested more than
6 million rubles for the reconstruction of the factory, part of a proposed
allocation of 11 million rubles for all state ironworks. The main purpose
214 Rearmament and industrial ambition

was to develop the manufacture of heavier calibres of artillery (viz.

14-inch and 16-inch), an area in which other European powers were
investing heavily. The money was used to build a new Martins
furnace, a massive new forging press (7,000 tons, more than twice as
large as the existing press), a new artillery workshop, plus additional
furnaces, cranes and other equipment. The programme of reconstruc-
tion began in June 1913, with the release of 4 million rubles. In April
1914, the government drew up plans to allocate a further 13 million
rubles to Motovilikha.33
The implementation of this programme proved less straightforward.
Russian factories could supply some of the equipment easily enough,
but no Russian enterprise had the kind of experience needed to advise
on the creation of a facility for the manufacture of heavy artillery. A
previous technical agreement with Krupp, concluded in 1904, came to
an end in 1913. But in any case this was for the manufacture of shell. It
would be necessary to look elsewhere for the relevant assistance; we
shall pick up this story later on.
As happened at government armouries, and (more reluctantly) at
the state shipyards, the decision to support expansion in the Urals
inevitably meant the commitment of government funds. The Duma
approved new spending plans in 1912 and 1913, the opposition having
been silenced by the reform proposals that had already been initiated.
As a result of this expansion, the most important armaments suppliers,
such as Motovilikha and Zlatoust, created additional munitions
capacity on the eve of the war.
Investment, therefore, provided the key to the retention by the state
of direct control over armaments manufacturing capacity. Without the
injection of resources in new equipment to manufacture armour-plate,
naval ordnance and heavy artillery, the government might as well
have bade farewell to its attempts to influence the course of arma-
ments production through its ownership of assets. However, the
decision to invest in government dockyards, ironworks and arsenals
was a belated one, giving private firms an opportunity to establish a
foothold in the rapidly growing market. Government shipyards, in
particular, struggled to replace worn-out assets; and, until 1911, they
made no net addition to the capital stock. The financial difficulties
under which they laboured until shortly before the war helped to
open the door to the private sector.
 The armament industry, 1908-1914 215

The formation of a private arms industry: the search for

collective identity
Russia possessed little in the way of a developed private
armaments industry prior to 1910, a year that witnessed a wave of
company creation and reorganization. Several private firms engaged
in defence work, but they operated independently, on a modest scale,
and without any conviction that defence contracts could yield long-
term rewards. No Russian firm dominated the industry in the manner
of European giants, such as Schneider, Vickers or Krupp. Russia lacked
the equivalent of these specialist suppliers of armaments.34 The rela-
tively small size of the Russian market compelled engineering firms to
engage in the manufacture of a broad range of products. Even firms
that ostensibly concentrated upon armaments (such as the Tula Car-
tridge Company) maintained a diverse product mix. Putilov, one of the
few Russian businesses (like the world-famous Krenholm Cotton mill)
that enjoyed a reputation abroad, came closest to the image of a
Russian Krupp. But Putilov did not specialize in armaments and
offered a varied menu of products that included railway and other
non-military products. The same applied to other leading engineering
firms, none of whose directors remotely considered themselves before
1910 to be part of a nascent arms trade.
For years, leading engineering firms had regularly regaled an unsym-
pathetic government with a sorry tale of empty order books and idle
plant. Attacks on the privileged position of state enterprise fell on deaf
ears. The government resolved to stand firm, on the grounds that
procurement agencies should be free to choose the most suitable
supplier, without privileging the private sector.35 The rhetoric of
industrialists failed to shift the government from its entrenched posi-
tion. But all was not yet lost. In the very process of articulating their
grievances, private entrepreneurs could appreciate how much they
had in common with one another. To that extent, rhetoric played a
vital role in the creation of identity amongst manufacturers in the
capital goods industries. However, the government would not be
moved by conference speeches. Private producers who recognized the
potential scope of defence contracts would have to come up with a
different strategy, if they were to survive.
By 1910, the battle for survival was over; two years later, defence
producers positively glowed with confidence. Firms that had hitherto
merely dabbled in armaments invested in new plant, took on
216 Rearmament and industrial ambition

additional workers and turned themselves into major defence con-

tractors. Their ranks were swelled by several important newcomers. As
a result of these developments, no less marked in military shipbuilding
than in other branches of defence, private arms merchants shed their
traditional sense of inferiority to government enterprise. By 1914, after
a lengthy struggle to gain a foothold in the defence market, they were
in a position to mount a powerful challenge to the entrenched state
sector. The arms trade in Russia had come of age.
The creation of large and powerful armaments firms, often linked
with one another, precipitated the kind of criticism of collusion and
monopoly power that surfaced in western Europe at the time. In
Russia, the criticism took on a sharper edge, because of the deep-
rooted aversion in certain quarters of the political establishment to
industrial enterprise in general, and to trusts in particular. The scene
was set for a bitter struggle between those, on the one hand, who
upheld traditional state-owned enterprise and those, on the other,
who supported the newcomers in the private arms trade. This struggle
was evenly balanced, so long as armaments technology stayed fairly
static and government demand for armaments remained modest. But
with the burgeoning demand for armaments and the revolution in
armaments technology, the barriers to entry fell away. Opportunities
arose for private firms to enter the market, backed by powerful finan-
cial institutions and foreign firms, with untrammelled access to capital
and advanced armaments technology.

Rearmament, revival and reorganization

The initiative in forging a domestic privately-owned industry
in armaments and shipbuilding rested with a new generation of
dynamic entrepreneurs, with a background variously in government,
banking and the engineering profession. Many of them left govern-
ment service, in order to pursue a career in banking. It is difficult to
uncover evidence of their personal opinions and aspirations. Unlike
politicians, they tended to leave no track in the memoir literature.
Unlike full-time officials, their deliberations do not figure in the public
record. Many business archives, which might shed light on their
ideology and policies, failed to survive the war and revolution.
However, they did leave traces of themselves in the actions of the
corporations they headed. One should beware of ascribing 'personal-
ity' to a joint-stock company, whose behaviour will reflect the influ-
ence of different factors and individuals. With this qualification in
 The armament industry, 1908-1914 217

mind, however, it is possible to reconstruct something of the aims and

strategies of leading entrepreneurs.
All of them were driven by a common goal, namely to establish a
modern and internationally competitive industry. They were familiar
with government bureaucracy, but at the same time maintained their
distance from its more conservative elements. The most prominent
member of this entrepreneurial core was Alexei Putilov, the forty-year
old son of the founder of the company that bore his name. Putilov
served in the Ministry of Finances between 1890 and 1905, a typical
career pattern for business leaders in the arms trade. After he left
government office, apparently because of right-wing complaints that
he sympathized with 'the radicals', Putilov moved into the world of
commercial banking, becoming director of the Russo-Chinese Bank. In
1908, he took control of the Putilov company. Other leading entre-
preneurs emulated this career path. A. I. Vyshnegradskii, who became
closely associated with the engineering conglomerate Kolomna-
Sormovo, also had an eminent father, the former Minister of Finances.
Vyshnegradskii had numerous contacts at home and abroad, having
worked in the department responsible for negotiating foreign loans.
Like Putilov, with whom he was closely associated, Vyshnegradskii
joined the Russo-Chinese Bank in 1902, and served as managing
director of the International Bank from 1906 until the revolution. The
exotically-named K. K. Racouza-Soutschevsky, who (in 1904) became
Schneider's permanent representative in Russia, had also served 'on
special assignment' with the Ministry of Finances between 1892 and
1897, before leaving to join the Trade and Industry Bank. A. A.
Davydov, whose varied interests included directorships of Siemens-
Schuckert and the machine-builders Hartmann, worked for the Minis-
try of Finances from 1895 to 1897, before joining the International
Bank. They were all proteges of Witte, which made them outsiders in
the bureaucratic milieu dominated by Kokovtsov and determined
them to make a mark in a different sphere.36
Other members of the arms trade entered the industry after receiv-
ing an education at the polytechnic schools in St Petersburg and Riga.
These professional engineers included M. S. Plotnikov, associated with
Lessner, and I.S. Kannegiser, the head of the giant shipyards at
Nikolaev. Plotnikov's career took off when he joined the Loan and
Discount Bank. He had a knack for making useful contacts in the
Admiralty. One of its officials commented that 'he commanded such
influence that - if I'm not mistaken - the ministry placed no contracts
without his knowledge, if not his agreement'. Kannegiser was a close
218 Rearmament and industrial ambition

friend of the directors of the International Bank. Both men became

leading lights in the machine-building industry during the First World
War. Like Putilov and his associates, they had no sympathy for the
privileges enjoyed by the state sector.37
A third group originated in the world of commercial banking. Fore-
most amongst this group were A. P. Meshcherskii, Iu. I. Ramseier, G. A.
Bloch and la. I. Utin, all of whom used their expertise to reorganize
engineering firms, such as Sormovo and Kolomna. Meshcherskii's
meteoric rise made him virtually synonymous with the fortunes of
Kolomna, whose assets and influence he jealously guarded, leading
him to enter negotiations with the Bolsheviks after the October Revo-
lution. Some of these bankers, such as S. S. Khrulev, who sat on the
board of the Tula Cartridge Company, had a background in law. Unlike
his colleagues, Khrulev also published specialist works on finance.38
These were the men responsible for a programme of corporate
expansion in the nascent armament industry. They followed a simple
basic strategy, which in the first instance involved raising new finance
on the St Petersburg stock exchange, in order to modernize and
expand the capacity of the parent firm. Coupled with the share
flotation went a decision to acquire interests in businesses that were
closely allied to armaments or shipbuilding, including steelworks and
general engineering firms. Finally, they devised a package of financial
and technical assistance from foreign firms, such as Schneider or
Vickers, which raised their profile and gave them bargaining power
vis-d-vis the state sector. All potential arms producers stood in great
need of fresh funds to finance the programme of expansion that would
take them into the first division. In addition to funds for capital
investment, they also required an adequate supply of working capital,
in view of the long lag between the receipt of a contract and final
settlement of an invoice. These basic needs required that the leading
joint-stock banks in St Petersburg involve themselves closely in the
affairs of the armament industry.
By 1914, three basic groups stood out.39 The first group was united
under the umbrella of the newly-formed Russo-Asiatic Bank, largely a
creation of the Banque de l'Union Parisienne. The Putilov Company
(whose managing director, Alexei Ivanovich, was also in charge of the
Russo-Asiatic Bank) stood to be the chief beneficiary. In 1911, the
banking consortium put together a package on Putilov's behalf,
increasing its share capital from 16 to 25 million rubles. Another
favourite tactic adopted by the group was to acquire an existing
venture and restructure it completely. Typical examples of financial
 The armament industry, 1908-1914 219

Table 5.5. The Russian arms trade, 1908-1913: selected indicators

1908 1913
Firm (date of Capital1 Labour Output Capital1 Labour Output
incorporation) million million million million
rubles rubles rubles rubles

Putilov (1873) 12.0 7,200 12.7 25.0 13,5002 23.9

Baranovskii (1912) n.a. 150 5.0 800 4.5
Parviainen (1910) n.a. 500 0.3 10.0 1,600 5.4
Sormovo (1894) 10.0 12,000 15.0 10.0+ 11,000 20.0-22.0
Kolomna (1871) 10.0 10,200 15.0 15.0 12,0003 17.0
St Petersburg
Metal (1857) 3.6 1,700 4.0 5.4 3,000 9.6
Tula Cartridge
(1898) 6.0 1,300 4.97 9.0 6,500 12.0
Briansk4 (1887) 24.2 4,165 9.0 35.3 8,166 22.8
Nikopol-Mariupol
(1896) 6.6 1,890 5.64 15.4 3,000 9.58
Lessner (1898) 1.1 600 2.0 4.0 1,260 3.2
Phoenix (1868) 1.2 350 0.54 2.4 500 1.2
Schliisselburg
(1884) 3.6 1,200 - 4.5 1,970 3.0

1
capital refers to share capital, and excludes reserves and obligation capital
2
January 1914 (12,000 on 1 January 1913); excludes Putilov Wharves
3
Excludes 4,000 employed at Kulebaksk steel mill
4
Steel mill only + 1912
n.a. = not applicable; a dash indicates no data found
Sources: LGIA f.1314, op.l, d.66,1.20 (Parviainen); S.B. Okun', ed., Putilovets v
trekh revoliutsiiakh, Leningrad, 1933, pp.xvi, xxvi (Putilov); other data from
Fabrichno-zavodskie predpriiatiia, 1909, second edition, Petrograd, 1914; and E. E.
Kruze, Petersburgskie rabochie v 1912-1914 godakh, Leningrad, 1961, p. 41.

reorganization were Baranovskii and Parviainen. The first of these was

a small venture, employing only 150 men in 1908. The Russo-Asiatic
Bank, together with the BUP and Schneider, reconstructed Bara-
novskii as a joint-stock company, with a share capital of 5 million
rubles. The St Petersburg firm of Parviainen, like Baranovskii, began
life as a small unincorporated business (tovarishchestvo). Originally
established by the Finnish businessman Otto Brunstrom in 1899, it took
on a new identity as the Russian Shell and Munitions Company. In
1910, the new company was floated on the stock market, with a share
capital of 10 million rubles. Two years later a fresh share issue, with the
220 Rearmament and industrial ambition

active participation of French institutions, took the capital to 18 million

rubles. This recapitalization enabled Parviainen to enter the shipbuild-
ing industry, although these plans were scrapped within a year (see
below). The proceeds from the eventual sale of the wharves under
construction at Reval went to finance expansion of the munitions plant
in the capital.40
A second major group was organized around the International
Bank. Racouza-Soutschevskii described this, somewhat misleadingly,
as 'the Vickers group'. It comprised St Petersburg Metal, the Tula
Cartridge Company, Sormovo, Kolomna Engineering and Nikopol-
Mariupol. Lessner also 'fell within the sphere of influence of this
group'. A well-established general engineering firm, whose expertise
lay in the production of engines and boilers, Lessner entered the
defence market for the first time. By 1912, its products included shell,
mines and other munitions. The Loan and Discount Bank was also
associated with this group, and took a controlling stake in Lessner. Its
chairman, Iu I. Ramseier, sat on the board of Lessner, Phoenix,
Kolomna and Sormovo. The consortium headed by the International
Bank enabled the Tula Cartridge Company to raise new capital,
increasing its nominal share capital to nine million rubles. Lessner's
share capital increased from 1.65 million rubles in 1911 to 4.0 million
rubles in 1913. By 1914, Lessner planned a new munitions factory on
the Black Sea. This group also stood to gain in scope and power by the
inclusion of the future Tsaritsyn works, currently under construction
on behalf of Vickers.41
The International Bank was not just interested in adding to its
portfolio of arms producers, but in forging productive links between
them. Its acquisition of a controlling stake in iron and steelworks
offered great potential. The Bank had interests in major engineering
plants, such as Kolomna and Hartmann, and in steelworks, such as
Nikopol-Mariupol. The Nikopol-Mariupol Mine and Steelworks had
been established at the height of the iron and steel boom and had a
rolling mill in Ekaterinoslav province, as well as iron-ore, coal and
manganese workings in the same area. It is not difficult to see the
advantages of bringing such a firm within the orbit of the group. By
1908, the labour force stood at just under 1,900 and output was valued
at 5.64 million rubles. Between 1911 and 1913, the share capital was
increased from 6.6 to 13.2 million rubles, making it second only to
Putilov in terms of capital. Yet another share issue followed in 1913-14,
taking the capital to 15.4 million rubles, a virtual trebling of capital in
the space of three years. The labour force stood at 3,000, and output
 The armament industry, 1908-1914 221

had risen to 9.58 million rubles. Having been a general iron and
steelworks, Nikopol-Mariupol now began to concentrate on the pro-
duction of armour-plate for the navy. A report to shareholders in 1914
indicated that the factory was replete with orders. The directors fore-
cast an excellent dividend and announced plans to build a new factory
in Ekaterinoslav.42
Having begun to supply shell to the Artillery Administration at the
end of the nineteenth century, Sormovo played an important role
during the Russo-Japanese War. The firm compensated for the decline
of orders for transport equipment by manufacturing munitions on
behalf of the GAU. At Kolomna, the AGM of shareholders in 1910
heard a report from the chairman to the effect that funds were needed
to finance the installation of new sources of mechanical motive power
(diesel engines) and to reorganize the locomotive shop. In 1910, the
share capital was increased from 10 to 12 million rubles. In 1912, a
further increase was approved, taking the nominal share capital to 15
million rubles.43 Phoenix Engineering Company was smaller in size
than other defence contractors, even than Baranovskii. The company
conformed to the usual pattern of general engineering, with a range of
products that included machine tools, hydraulic presses, shell, car-
tridges and torpedoes. Between 1908 and 1914, Phoenix expanded
rapidly. Its share capital increased from 1.2 million to 2.4 million rubles.
Significantly, the board took on a different complexion: Ramseier and
Plotnikov joined the descendants of the original English founders on
the board.44
The final enterprise in the group, St Petersburg Metal, maintained a
diverse product mix, including pumps, boilers and heaters, presses
and lifting equipment, turbines, gun and torpedo emplacements and
shell. The support of the International Bank enabled the company to
increase its capital to nine million rubles, and to begin the construction
of a shipbuilding yard at Ust-Izhora, south-east of St Petersburg, on
the Neva.45
A third group, organized around the Private Commercial Bank
(Chastnyi Kommercheskii Bank), concentrated on military shipbuilding,
developing a stake in Becker shipyards and the Franco-Russian
Company. Its activities are considered in the following section.
This level of financial support, against the background of Russia's
fervent entry into the arms race, yielded spectacular results for corpo-
rate participants. The first hallmark of their gathering strength was
investment in new plant. Plans to expand capacity at Putilov were
quickly realized. Between 1910 and 1913, Putilov constructed a new
222 Rearmament and industrial ambition

steel-making facility, equipped with 40-ton presses. Other sections of

the factory were overhauled, and Putilov completed the electrification
of the entire works. One-third of the capital raised through the 1911
share issue financed an extension of the firm's ordnance manufactur-
ing capacity. Between 1912 and 1914, Putilov spent more than six
million rubles on its artillery shop. At Baranovskii, where mechanical
motive power doubled between 1908 and 1913, the directors drew up
grand designs for expansion. They proposed to construct a completely
new plant, to be built at Vladimir, for the manufacture of explosives
and set aside eight million rubles for this project in the financial year
1913-14.46
Nor did the International Bank allow its clients to lag behind. At St
Petersburg Metal, total mechanical horsepower more than doubled.
Safeguarding its existing share of the civilian market, Kolomna con-
tinued to construct a new locomotive works and expanded the
capacity of its rolling mill at Kulebaksk. The value of fixed capital at the
engineering works increased from 11.6 to 15.4 million rubles between
1906 and 1913.47
Some companies offered products which they had already success-
fully sold to the government. Putilov continued to develop the
capacity to manufacture heavier calibres of artillery, in collaboration
with Schneider. Kolomna used its new capacity to supply shell and
naval munitions, as well as steel to government enterprises, from its
iron and steel works. Other firms entered the market by manufactur-
ing a new product. Schneider was again instrumental in helping the
newly-established Baranovskii company, by undertaking to share its
patents for 34-second time fuses, in return for a percentage payment
on any orders the Russian firm received. By February 1914, the firm
had signed a contract to supply explosives to the War Ministry; the
following month it agreed to supply the Admiralty with smokeless
powder. Baranovskii thus became a genuine competitor to the long-
established Schliisselburg company, which had a much larger labour
force, but had a lower capitaMabour ratio.48
Where a private firm could offer neither a new product nor an
enticing deal with a foreign firm, it had to resort to less subtle means to
secure government contracts. The Tula Cartridge Company, in desper-
ate straits in 1908, turned bribery into a regular business practice. GAU
officials were induced to look favourably on the struggling firm. This
crude strategy paid immediate dividends: by 1909, the Tula factory
produced one-fifth of all cartridges. Four years later, the proportion
was still rising.49
 The armament industry, 1908-1914 223

By the chief criteria of output, labour and capital, the arms trade was
dominated by the enterprises that came under the umbrella of the
Russo-Asiatic Bank. Between 1908 and 1913, the value of goods pro-
duced by Putilov nearly doubled, from under 13 million rubles to
nearly 24 million rubles. The shift at Putilov towards armaments
continued to gather momentum. In 1908, armaments accounted for
around 30 per cent of production. Two years later, more than two-
fifths of Putilov's production was destined for military use. By 1912,
this proportion had risen to 46 per cent. In 1913, artillery alone
accounted for two-fifths of total output. Specialist suppliers within the
group, such as the Tula Cartridge Company, did equally well. The
value of gross output increased even more rapidly than at Putilov,
from five million rubles in 1908 to 12 million rubles by 1913. Output of
munitions at Baranovskii amounted to 4.5 million rubles by 1913, well
in excess of the state works at Tula, Sestroretsk and Izhevsk. By 1913,
even a relative newcomer such as Parviainen was larger than many
state works: on the eve of the war, Parviainen was handling orders
worth more than 10 million rubles, mostly from the Admiralty and
Ministry of War. But it was dwarfed by Putilov, which had contracts
worth an astonishing 125 million rubles by January 1914.50
But how successfully did these firms utilize the resources at their
disposal? The pattern of labour productivity is one criterion of success,
and we can construct a crude measure of this variable, based upon the
material presented in table 5.5. Important differences emerge between
one firm and another. At Putilov, output per worker showed a barely
perceptible increase, the growth in output being matched by an
equally rapid increase in employment between 1908 and 1913. A
slightly bigger increase took place at the firms associated with the
International Bank, namely Phoenix, St Petersburg Metal, Briansk,
Sormovo and Kolomna. But both armaments groups included very
weak performers. Output per person fell sharply at the Tula Cartridge
Company and at Lessner Engineering, two firms that shared the same
date of incorporation. There is no simple explanation for this differ-
ence in outcome. The first-named was a specialist arms supplier,
well-established in the field; the second developed a profile as a
general engineering firm, making some attempt to specialize in arma-
ments before 1914.
Nor was growth at breakneck speed without financial pitfalls.
Putilov represented the most extreme example. Professor Girault has
demonstrated that Putilov found itself in acute financial difficulties by
the end of 1913, with total liabilities amounting to 16.52 million rubles
224 Rearmament and industrial ambition

and assets that were lower than those publicly stated. The situation
failed to improve during the following year. The company reported
profits of 2.87 million rubles in 1914, on a turnover of 26 million rubles,
but this favourable account contrasted sharply with the reality: accord-
ing to one analyst, Putilov managed to conceal losses of 1.14 million
rubles in 1914. It is not difficult to see why the firm should have
recorded a loss. A confidential report on the firm, prepared on behalf
of the Banque de l'Union Parisienne, made a withering indictment of
Putilov's financial position. Funds had been spent without proper
accounting procedures having been followed. Management paid
excessive dividends to its shareholders, instead of making adequate
provision for the depreciation of assets. This last charge carried a
serious connotation, in view of the fact that the physical fabric of the
plant was reportedly 'decrepit'. Putilov resembled the colossus with
feet of clay, absorbing huge amounts of capital in an inherently risky
environment.51
Within the group assembled by the International Bank, Briansk - a
relative newcomer to shell production - managed a profit of only 10
per cent, despite its participation (along with Sormovo) in informal
agreements on shell prices. The company's modest rate of return was
attributed to the inexperience of management and labour alike. By
contrast, Sormovo generated profits of 80 per cent on its munitions
contracts. However, these profits were not great in absolute terms, and
other contracts did not prove so successful. The projected moderni-
zation of the plant required the outlay of more than five million rubles,
but the financial position of the company made it impossible to con-
template finding such sums from internal resources. By 1912, the
company had not paid a dividend for four of the last five years. In
these circumstances, the directors looked around for a firm with which
it could merge. They found a willing partner in Kolomna Engineering.
Potential competition from the state sector, and the emergence of fresh
competitors on the scene, made such inter-firm agreements and amal-
gamations the logical outcome of the hothouse environment of arma-
ment production.52
The links between Kolomna and Sormovo were designed initially to
improve the companies' prospects in the market for steamships. The
director of Sormovo, A. I. Lessing, proposed a merger between the two
firms, in order to reconstruct the Volga merchant fleet. The scheme
attracted strong support from the International Bank and the Loan
and Discount Bank. The prime movers were Meshcherskii, Ramseier
and Vyshnegradskii. By the middle of 1912, the two companies worked
 The armament industry, 190&-1914 225

in tandem. A letter addressed to the GAU from the board of Sormovo

requested that the Artillery Administration order machine-guns from
Kolomna and the wheeled supports from Sormovo, 'in order to use the
two factories in the most appropriate manner'. Overhead and adminis-
trative costs would be reduced. The projected rationalization of pro-
duction would concentrate steel-making at Kulebaksk, the production
of forgings, special steel and shell at Sormovo, reserving machine-
building projects for the Kolomna plant. New investment would be
financed by a share issue. In May 1913, a joint meeting of shareholders
agreed to proceed on this basis. No formal merger took place: Russian
law did not recognize mergers. None the less, the two companies
cooperated closely over the completion of orders for the War Ministry.
In 1913, the companies divided up an order for military transport
ships, making Sormovo responsible for boilers and engines, and giving
Kolomna the work on hulls and other items. By the end of the year, the
two firms were in receipt of orders worth 78 million rubles.53
By 1913, the extent of inter-firm collaboration had become evident
through the multiple directorships claimed by a small handful of St
Petersburg financiers. The original core of entrepreneurs was swelled
by other men who served on company boards. By 1913, the armament
industry displayed a web of inter-locking directorships. Putilov
himself sat on the board of three other companies with a defence-
related profile. His close colleague, A. K. von Dreier - like Putilov, a
former civil servant in the Ministry of Finances - held two other
directorships in the defence industry, notably as vice-chairman of
Nevskii Shipbuilding. K. K. Spahn also sat on the boards of two
defence companies. K. M. Sokolovskii was associated with three other
armament firms. The remaining members of the Putilov board, I. M.
Peroni and L. A. Bischliager, also held office in other defence firms.
Racouza served on the board of Putilov, Parviainen, the Russo-Baltic
shipyards and the newly-formed Optical Company. These men seem
to have collected directorships, as Moscow merchants collected
impressionist paintings.54
They ruled over an industry that had grown frantically in the years
before the outbreak of the First World War. Much of their activity had
been devoted towards the reorganization of businesses into joint-stock
companies. In association with the banks, which nominated many of
them to company directorships in the first place, they raised new
capital to finance investment in new buildings and equipment: this,
rather than the plough-back of profits, represented the main source of
funds. Only in one instance did private enterprise establish an entirely
226 Rearmament and industrial ambition

new corporate venture outside shipbuilding, an innovation made

possible only by a massive commitment of foreign capital (p. 241).
Shipbuilding manifested most dramatically the process whereby the
balance of power in defence production tilted towards private enter-
prise. The period between Tsushima and the outbreak of the First
World War witnessed the creation of large and powerful private ship-
yards, which by 1913 employed more than 23,000 workers, three times
as many as in 1908. As a result of this rapid increase in employment,
the private sector overtook the state shipyards. On the eve of the First
World War, private firms employed half as many workers again as did
the state yards.
The small number of private shipbuilding firms reorganized them-
selves, raised fresh capital and modernized during this period. The most
notable examples included the Nikolaev dockyards and the Becker
yards. Even more significantly, several new firms entered the market:
chief amongst these were the Russian Shipbuilding Company ('Russud'
for short), the Russo-Baltic Company, Putilov Wharves, the Franco-
Russian Company and the submarine specialist, Noblessner. New and
old ventures alike shared a common goal, namely to exploit the growth
in the size of the market for military vessels in Russia, whose most strik-
ing manifestation were the shipbuilding programmes adopted in 1907
and 1910-12. Unlike the emergent arms firms, which were obliged to
retain an interest in non-military goods, as well as in small arms, artillery
or ammunition, the shipbuilding firms specialized, either in the pro-
duction of hulls, armour-plate, marine propulsion or in naval ordnance.
The newcomers established a share of the market by offering the navy
access to modern shipbuilding and weapons technology, which they
derived by virtue of their close ties to foreign armaments firms.
Of the well-established companies, the Nevskii shipyards presented
a curious case. The company had a chequered history, surviving the
slump at the turn of the century only by virtue of a rescue package put
together by the State Bank (in 1908, according to Kokovtsov, Nevskii
was 'in effect a state enterprise'). After a further shaky period, which
the Russo-Japanese War did nothing to alleviate, the company found
itself with enormous debts, in excess of 20 million rubles. Cutting its
losses, the government returned the company to the private sector.
Nevskii had a lot to offer a private buyer, because the firm made
high-quality torpedo-boat destroyers. On the other hand, Nevskii
lacked the capacity to produce specialized forgings and castings for
other shipyards. This had been the government's original intention,
but the growing burden of debt made it impossible to realize.55
Table 5.6. Russian military shipbuilding, 1908-1913: basic indicators

1908 1913

Company Capital Labour Output Capital Labour . Output

(date of incorporation) (million rubles) (million rubles) (million rubles) (million rubles)

Nikolaev (1895,1911) 26.3 2,150 4.96 7.0 5,600' 8.16

7,90a2
Russud (1911) n.a. 10.0 2,600 -
2,9002
Putilov Wharves (1912) n.a. - 2,400 10.90
3,70c2
Russo-Baltic (1912) n.a. 10.03 2,600 -
3/0002
Franco-Russian
Wharves (1911) 12.5 1300 _ 12.5 2,100 8.00
Crichton (1897) - 800 - - 1,000 -
Noblessner (1913) n.a. 3.0 2,000 -
2,70a1
Nevskii (1891) 8.54 3300 6.20 10.0 3300 14.24

Becker (1909)4 n.a. 11.0 2,000 _

Lange & Son (1898)4 - 450 0.7 n.a.

1
monthly average for April to December 1913 2 January 1914 3 increased to 20.0 million in March 1914
4
Becker, in receivership until 1911, merged with Lange & Son in 1912. n.a. indicates not applicable; a dash indicates no data found.
Sources: TsGAVMF f. 512, op. 1, d. 536,1.7; Fabrichno-zavodskie predpriiatiia, 1909, second edn, Petrograd, 1914; Finansovoe obozrenie, 1914,7, p. 9;
E. E. Kruze, Peterburgskie rabochie v 1912-2914 godakh, Leningrad, 1961, p. 41; K. F. Shatsillo, 'Inostrannyi kapital i voenno-morskie programmy
Rossii nakanune pervoi mirovoi voin/, Istorkheskie zapiski, 69,1961, pp. 78-9,93; and Russkii imperializm i razvitie flota v 1906-1914gg., Moscow,
1968, p. 240.
228 Rearmament and industrial ambition

The sale of the Nevskii yards in 1911, to a consortium headed by the

Russo-Asiatic Bank, released the government from a long, costly and
almost fruitless association with the company. The new owners
unveiled ambitious plans for corporate investment and moderni-
zation. The Russo-Asiatic Bank transferred the company's shares to its
most famous client, the Putilov Company, which paid 6 million rubles
for them in 1912. In the following year, Putilov and the Russo-Asiatic
Bank began the long-overdue process of technical construction at
Nevskii. A new share issue brought the nominal capital up to 10
million rubles. In what had already become a familiar tactic, the Bank
brought in foreign expertise, in order to realize the longstanding plan
to turn Nevskii in to a specialist supplier of iron and steel to other
shipbuilders.56
The strategy pursued by the Russo-Asiatic Bank considerably
strengthened the position occupied by Putilov in the private sector.
The St Petersburg engineering giant began to build a shipbuilding
facility in the capital in 1912, two years after its directors first discussed
the possibility with the Russo-Asiatic Bank and with the German firm
Blohm und Voss. In 1912, Putilov's shareholders approved the con-
struction of wharves, costing a total of 14 million rubles. The govern-
ment immediately placed an order for two light cruisers and eight
torpedo boats. At the end of the year, the company formed a sub-
sidiary, Putilov Wharves, under the management of Orbanovskii, a
representative of Blohm und Voss. This association aroused fierce
opposition in Paris. When, in 1913, Putilov approached the BUP for
additional funding, the French extracted a promise that Schneider
would be given equal treatment with the German firm in future orders
for marine engines. With these deals in place, Putilov's position in the
market for military vessels became secure: having invested 450,000
rubles in fixed capital during 1912, Putilov followed this up with 6.7
million rubles in 1913 and 4.4 million in 1914. With this level of
investment, the firm held out the enticing prospect of import substitu-
tion in warship construction.57
This strategy was repeated elsewhere. In 1912, the Russo-Baltic
Shipbuilding and Engineering Company made its debut, with a share
capital of 1Q million rubles. Once again, the Russo-Asiatic Bank took
the lead: along with the Russian Trade and Industry Bank and the St
Petersburg Private Commercial Bank, it held three-quarters of the
shares. The initial share issue was soon found to be insufficient, and
the banks issued an additional ten million rubles' worth of shares. As
with Nevskii, the banks inaugurated a programme of vertical integra-
 The armament industry, 1908-1914 229

tion: the new firm supplied finished vessels and marine engines, but -
its charter of incorporation boasted - intended also 'to process metals
and forge finished goods, construct and operate hearths, Martins and
electric furnaces'.58
The directors of the new company had their eyes on the wharves
currently under construction at Reval, on behalf of Parviainen. The
government had already awarded contracts for two cruisers and six
torpedo boat destroyers. The proposed acquisition of these yards
avoided the need to create new capacity. In May 1913, the sale went
ahead, at a price of 7.1 million rubles, giving the Russo-Baltic Company
the title to Parviainen's contracts with several French and German
firms, notably Schneider, Vulkan and AEG. The directors also floated
an ambitious proposal to acquire the Putilov Wharves, for which
purpose they called for an increase in the share capital of Russo-Baltic
to 35 million rubles. Had this plan gone ahead, the Russo-Baltic would
have become the largest company in the entire defence industry. In
the event, the plan went awry, not because the financial institutions
baulked at the prospect of another huge capital issue, but because the
government intervened. Ministers looked askance at the potential
creation of such a large venture in private hands, rivalling the govern-
ment presence in the Baltic shipbuilding industry.
The government need not have worried, because the firm's fortunes
failed to live up to the original expectations. The Reval shipyards were
still unfinished at the end of 1914, by which time the Russo-Baltic
Company was in serious financial straits. Ambitious plans to build
cruisers and destroyers had to be postponed. The firm suffered a
devastating shortage of working capital. Eventually, a consortium of
French and Russian banks agreed to issue fresh debt ('obligation
capital') to the tune of 7.5 million rubles, against which they would
extend fresh credit. These measures only exacerbated the company's
underlying financial weakness. The Russo-Baltic venture finally came
to grief during the First World War. In overcommitting itself, the
company followed the fate that befell the Putilov arms giant.59
As in land-based armaments, new products offered new opportuni-
ties to the private sector. Submarine construction, which formed part
of the shipbuilding programme adopted in 1912, was a case in point.
Private enterprise entered the market, by creating a specialist supplier
in 1913, under the name of Noblessner, with an initial share capital of
three million rubles. Two main parties were involved in its creation,
the Nobel industrial group and the Loan and Discount Bank. Plotni-
kov, the managing director of Lessner, who enjoyed close ties with
230 Rearmament and industrial ambition

Grigorovich, took a leading part. Under the corporate plan, Nobless-

ner subcontracted orders for finished vessels to members of the Nobel
group: Nobel itself agreed to supply diesel engines, Lessner and
'Russian Whitehead' would supply torpedoes and cooling equipment
and Atlas the shrapnel and feed heaters. Noblessner assumed respon-
sibility for the manufacture of hulls. The group took two-thirds of the
orders for submarines for the Baltic fleet, although it failed to make any
inroads into the Black Sea market, which was cornered by the Baltic
yards, Nikolaev and the Nevskii company. Other problems com-
pounded this disappointment: the yards at Reval took an interminable
time to complete and delays prevented the launch of a single sub-
marine by Noblessner until 1915.60
On the Black Sea, the government allowed the private sector a free
hand. The Nikolaev shipyards had already been in existence for almost
two decades. A newcomer, the Russian Shipbuilding Company
appeared on the scene in 1911. But both were essentially children of
the prewar rearmament boom. The decision to build a Black Sea fleet
entailed the construction of ships at Nikolaev or Sevastopol. Nikolaev
commended itself as a good location for shipbuilding, having adequate
deep-water facilities, well-equipped yards and good supplies of fuel
and steel, which cost 15 or 20 per cent less than in St Petersburg and
Reval. The Black Sea programme opened up a golden opportunity for
the private sector. The existing state works had fallen into disrepair by
the end of the nineteenth century, and in the straitened times after
1905 no one believed that it was feasible to construct a new state
facility.61
The prospects for a successful private venture on the Black Sea did
not look very bright in 1907. The expansion of capacity during the war
against Japan had saddled the Nikolaev yards with a heavy burden of
debt. The company remained in acute financial difficulty after 1906,
because government orders had been slashed and no private contract
work could compensate for this collapse in the market. The directors
reported to shareholders in 1908 that 'the Russian government con-
tinues to limit its orders to what is absolutely necessary. Those orders
that have come our way have been rare and of little account... With
the reduction in the quantity of orders competition has correspond-
ingly increased and prices have dropped.' The directors could report
no improvement in the following year. The prices paid for commercial
vessels did not cover costs. The only crumb of comfort was that 'the
calm that has descended on Russia has allowed us (in 1909) to intro-
duce changes into the organization of work, thanks to which sig-
 The armament industry, 1908-1914 231

nificant economies of outlay on labour have already been achieved'.

These included a decision to increase the hours worked at the ship-
yard from nine to ten, thus restoring the status quo ante 1905.62
None the less, the financial position of the company left much to be
desired. In 1908, it had been encumbered with fresh debt, when it
acquired a neighbouring engineering company. The chairman of
Nikolaev, I. S. Kannegiser justified the purchase on the grounds that
it would give the firm access to a facility that supplied boilers and
shell, and would reduce overhead costs, but the acquisition proved
costly. By 1910, the board desperately sought to keep the company
afloat, and even talked about re-launching Nikolaev as a producer of
agricultural machinery or bridges. In the same year, approaches were
made to the St Petersburg stock exchange, to have the company taken
into receivership. Coincidentally, as the affairs of the company
reached rock bottom, the Black Sea shipbuilding programme was
launched.63
In July 1911, Nikolaev assumed a new existence as the Obshchestvo
Nikolaevskikh Zavodov i Verfei. The reorganization took place as a
result of a joint initiative by French and Russian banks. The underlying
strength of the new company depended upon substantial financial
support from French creditors and upon technical agreements struck
with foreign firms, in particular with Vickers and Thorneycroft (see
below). Throughout 1911 and 1912, the shipyards at Nikolaev hummed
with activity, as the yards themselves were rebuilt, with new slipways,
engineering workshops, a new power station, hydraulic presses and
new shell, boiler and castings shops. At the AGM in January 1913, the
company informed its shareholders that the factory was working
round the clock to process orders for the government and for commer-
cial customers. By the beginning of 1914 the company employed 6,700
men, more than twice as many as twelve months previously. During
the second half of that year, the workforce stood at an astonishing
10,600. But gains in labour productivity seem to have disappeared; the
yards swallowed up as much labour as possible, with the result that
output per person in 1913 stood at virtually the same level as in 1908.
The company reported very modest net profits: only 233,000 rubles in
1912-13 and 454,000 rubles in 1913-14. This was barely one per cent of
total capital employed.64
No sooner had the Black Sea programme received official approval
than Nikolaev found itself with a close rival for the new contracts. The
Russian Shipbuilding Company was the creation of the International
Bank, whose previous attempt to collaborate with Nikolaev had been
232 Rearmament and industrial ambition

Table 5.7. Nikokev Shipbuilding Company, 1904/5-1913/14

Gross output (million rubles) Labour force (annual average)

1904-05 6.66 2,717

1905-06 5.93 2,396
1906-07 1
8.43 2,144
1907-08 J
1908-09 4.48 2,013
1909-10 n.a. n.a.
1910-11 n.a. 1,800 (June 1911)
1911-12 n.a. 2,200 (December 1911)
1912-13 8.16 3,200 Pecember 1912)
1913-14 n.a. 6,700 (December 1913)
8,180 (January-May 1914)
10,600 (December 1914)

Source: TsGAVMF f. 512, op. 1, d. 1782,11. 2-20b.; d. 285,1.15; d. 536,11. 7,28,58.

rebuffed. The company's backers intended that Russud should act as

an assembly plant, with the various ship components being supplied
by steel and engineering firms elsewhere in south Russia, all of them
affiliated with the Bank. The directors anticipated that the government
would favour Russud on patriotic grounds, because the company
lacked the close ties with foreign capital that distinguished Nikolaev
(Russud could point to nothing more than an innocuous technical
agreement with John Brown). As a 'national' company, Russud hoped
to trump the Nikolaev yards.65
The nationalist card played only a modest role in the decision of the
tsarist government to place orders for battleships with Russud. More
important a consideration was the hope that Russud would compete
with its rival and keep prices down. This explains the alacrity with
which the government placed an order for two battleships with
Russud, even before the company had formally been constituted in
1911. The decision of the government came as a blow to the ambitions
of Nikolaev (and, incidentally, makes nonsense of the argument that
the French company had the Navy Ministry in its pocket). The Inter-
national Bank brokered an agreement, giving rise to a new conglomer-
ate. The Russo-Belgian steelworks supplied iron and steel, Nikopol-
Mariupol supplied armour-plate and the Kharkov Locomotive
Company agreed to deliver boilers. Kolomna undertook to supply
 The armament industry, 1908-1914 233

special steel and diesel engines; gun turrets would be manufactured by

the St Petersburg Metal Company.
Before long, however, the two shipbuilding rivals came together,
forging a powerful private presence on the Black Sea. In 1912, the two
companies decided to collaborate. The new arrangement commended
itself to shareholders: Russud stood to gain from the turbine-manufac-
turing facilities at Nikolaev, whilst Nikolaev could call upon the
financial resources of the International Bank. In a move calculated to
appeal to the tsarist government, the International Bank bought out
the French stake in Nikolaev. Soon after, in April 1913, under the
watchful eye of the Bank's chairman, A. I. Vyshnegradskii, the two
companies signed an agreement which committed them to act in
common over the price and delivery date of cruisers. One year later,
the two firms set up a joint technical office. But once again one should
not exaggerate financial results: the alliance anticipated net profits of
2.7 million rubles in 1914-15, on a projected output of 30 million rubles.
This was hardly excessive, and reflected the heavy costs of capital
amortization.66
Nevertheless, the significance of the formation of two large and
powerful shipbuilding companies in south Russia cannot be exagger-
ated. Their evolution demonstrates the crucial importance of financial
backing from Russian banks and the technical assistance obtained
through foreign armaments firms. This powerful combination created
a modern, privately-owned shipbuilding industry on the Black Sea,
just as it had done on the Baltic and in other sectors of the defence
industry.
The new and the revived firms in the private sector could hardly
expect government orders to drop into their lap. Tantalizing though
the prospect might be of lucrative contracts, the government would
inevitably drive a hard bargain, counting on the state sector and the
plethora of new firms to create a competitive market. Nor would the
award of a contract put an end to the problems that confronted
defence firms. Having invested in new plant - the price to be paid, in
order for the government to take them seriously - and having outlined
ambitious schemes for expansion to sometimes sceptical shareholders,
company directors had to keep their businesses afloat beyond the
short term. They were haunted by the prospect that the government
might ditch them, no sooner than they had entered the market. They
had to strengthen their bargaining position in a competitive market.
Hence, the moves taken by the major financial institutions in St
Petersburg to encourage collusion between their clients, to foster joint
234 Rearmament and industrial ambition

technical agreements, to promote vertical integration and to propose

more formal associations.
The groupings and joint ventures described above conferred on
their members a sense of corporate identity and power, quite different
from the conspicuous weakness and lack of confidence that char-
acterized the defence producers who attended the conference on the
iron and steel and engineering industry held in 1908, during the
depths of the recession.
Did these links amounted to an incipient 'military-industrial
complex' in late tsarist Russia? It is difficult to know what use, if any,
entrepreneurs made of the contacts they had established during their
previous time in government. Given the nature of the industry,
secrecy tended to prevail, and when the veil was lifted momentarily; as
it was during the senatorial investigations in 1909-11 (see chapter 6),
they revealed dealings between minor officials and small businessmen,
not the kind of contact between industrialists and government minis-
ters or high-ranking civil servants that would testify to significant
business-government links. The more important element in the private
sector was the close association between entrepreneurs in the same
industry, and between industrialists and financiers, rather than the
links between industry and government. The development of inter-
firm agreements and combines, such as the Kolomna-Sormovo group,
testifies to the growth of corporate power, which was all too ready to
exploit its access to capital and technology, in order to challenge and
supplant the hitherto dominant state sector. As a crucial ingredient in
this campaign, foreign assistance to the nascent Russian arms trade
deserves separate consideration.

Foreign investment and technical assistance

Russian industrialization during the late nineteenth century
drew heavily on foreign investment. The import of capital was accom-
panied by the provision of technical advice and managerial expertise.
Many foreign businessmen demonstrated a long term commitment to
the development of industrial enterprise, by reinvesting profits and
training a new generation of Russian managers and workers. After
1905, however, direct investment increasingly gave way to passive
portfolio investment by foreigners. In addition, Russian banks took
upon themselves the responsibility for mobilizing funds, organizing
enterprises and obtaining technical assistance. During the boom years
of the 1890s, the engineering industry - including the nascent defence
 The armament industry, 1908-1914 235

industry - had barely been touched by the invigorating hands of

foreign capital; most of the inflow of funds was directed towards
extractive industries, such as coal and oil, and metallurgy, rather than
machine-building. It was a very different story during the pre-1914
boom. Foreign armaments firms expressed a keen interest in the
Russian market. One evident reason for their discovery of Russia was
the scale of the rearmament programmes upon which the tsarist
government pinned so many hopes. Other considerations also loomed
large. The tsarist regime had explicitly committed itself to place orders
with domestic producers, save in those circumstances where no
Russian factory could supply the product. Foreign firms could realis-
tically hope to gain access to the Russian market, only by establishing a
subsidiary or buying into a Russian company.67
The strategies pursued by the various parties clearly betrayed their
different intentions. The tsarist government hoped to minimize its
purchases from abroad, in order to protect the balance of payments. At
the same time, the government hoped to gain access to modern
armaments technology. Domestic arms suppliers knew that they were
being given a clear run in the expanding Russian market, but their
success depended on their ability to demonstrate that their products
matched European standards of quality and performance. The surest
way of bringing plant and product up to contemporary best practice
was to involve foreign companies. The commercial banks acted as
brokers in the marriage plans that were drawn up between foreign
and Russian firms. Companies such as Vickers, Krupp and Schneider
knew that they could never flood the Russian market with weapons
and ships manufactured abroad. The only sensible strategy was to
participate in the creation or reorganization of Russian firms, using
foreign financial resources and technological lead as bargaining
counters. For these reasons, foreign investment and technical assist-
ance in the defence industry increased at the very moment when they
ceased to play as significant a role as they had hitherto in other sectors
of the economy.68
Foreign capital and technology played a key part in the moderni-
zation of existing enterprises. Technical reports prepared by foreign
engineers often revealed how much was to be done, in order to bring
dockyards and engineering workshops up to scratch, whether they
belonged to the state or were in private hands. The French shipbuild-
ers, Augustin Normand, calculated that it would cost 6 million francs
(2.26 million rubles) to modernize the equipment at the Crichton
dockyards in St Petersburg. On the other hand, the prize was great: an
236 Rearmament and industrial ambition

order for nine torpedo boats, worth a total of 48 million francs, on

which profits of 10 million francs could confidently be expected. This
represented a return of around 16 per cent on a total investment of 13
million francs over five years. Typically, the French firm committed
itself to more than the supply of funds, part of which would be
contributed by the Cre'dit Lyonnais: the deal included the provision of
technical support and skilled French workers.69
The defence market also opened up opportunities for foreign
machine-building firms with a more general profile, whose only means
of circumventing the tariff was to set up business on Russian soil.
Having once entered the market, there was no telling what opportuni-
ties might arise. The Augsburg-based engineering firm, MAN con-
cluded a deal with the Nikolaev dockyards in 1908, in the hope of
securing a government contract for diesel engines to be installed in
Russian warships. The German firm planned, in addition, to investi-
gate the civilian market for other products. The following year, MAN
opened negotiations with the long-established engineering firm of
Felzer, based in Riga. The negotiations were protracted, because Felzer
attached lengthy conditions to its acceptance of the offer. Eventually,
the two parties struck a deal in 1912. But by then the Russian govern-
ment had already decided to place the order for diesel engines with
the conspicuously Russian firm of Kolomna.70
The most significant links between foreign capital and the Russian
armament industry were those forged between Schneider and the
firms under the umbrella of the Russo-Asiatic Bank. Specialist firms
such as Baranovskii and Parviainen achieved a position of influence
with remarkable speed, thanks to the French technical assistance they
could dangle before officials from the War Ministry and Admiralty.
Without the backing of Schneider, it is doubtful whether either firm
could have made such rapid headway. But these activities were
dwarfed by the scale of assistance offered to the Putilov Company. In
July 1907, Putilov signed a deal with Schneider, under which the
French firm agreed to supply Putilov with technical specifications and
working notes for the manufacture of artillery. In return, Putilov
undertook to deal solely with Schneider, a clear indication that the
underlying aim of the French armaments giant was to challenge
Krupp, with whom Putilov had already been in contact. From Putilov's
point of view, the agreement had the inestimable advantage that
Schneider offered exclusive access to the new technology, giving
Putilov a competitive edge over its Russian rivals, including those in
the state sector. Putilov undertook to pay Schneider 100,000 francs per
 The armament industry, 1908-1914 237

annum for its assistance, and an additional eight per cent on any
orders it received for artillery from the tsarist government.71
Notwithstanding the accountants' criticism of management prac-
tices at Putilov (see above), Schneider found it impossible to abandon
Putilov. The French firm put pressure on financial institutions in Paris
to inject further cash into the business. Too much was at stake:
Schneider was keen to retain a position of influence in the potentially
lucrative Russian defence market, the more so as Krupp was waiting in
the wings. In January 1914, a consortium of German banks offered to
assist Putilov in increasing its share capital from 25 to 45 million rubles.
This led to a counter-attack from Schneider, which stressed to French
bankers and to the government that diplomatic interests required a
new French initiative. News of the German offer was leaked to the
French press, to the predictable outrage of the public. The eventual
outcome, agreed in February 1914, was to give Putilov access to French
capital (total equity, with new French investment, now stood at 40
million rubles, excluding bonded debt), in return for French represen-
tation on the Putilov board. In addition, the banks extended fresh
credit to the Russian company, 55 per cent of which was now in the
hands of BUP, the Societe Generate de Belgique and Schneider. But
Putilov had a huge appetite for capital and its debts piled ever higher:
the French connection did not save Putilov from an ignominious
financial collapse during the First World War.72
In shipbuilding, too, foreign capital was drawn into the web of
rearmament, company formation and reorganization. Putilov's pene-
tration of the market hinged upon a deal done with the German firm
of Blohm und Voss, which sank 5 million marks in Putilov Wharves;
other foreign firms were also tempted to participate. But the most
noteworthy expression of foreign activity came in the Black Sea indus-
try. Towards the end of 1910, Kannegiser, the long-suffering chairman
and managing director of the Nikolaev dockyards, travelled to Paris to
hold talks with representatives of the Societe Generate, the company's
major creditor. He reached agreement with the bank, on the under-
standing that the company would do all in its power to obtain an order
for at least one battleship for the Black Sea fleet. The Societe Generate
undertook to lend up to 11 million rubles, in return for payment
equivalent to one per cent of the total orders received, in addition to
interest payments. The profits would be shared equally between Niko-
laev and its creditor. Furthermore, the French bank undertook to help
the Russian company find suitable foreign technical assistance.
Officials of the company travelled to France and Germany, in order to
238 Rearmament and industrial ambition

study contemporary battleship construction and new propulsion tech-

nology.
Eventually, with the firm encouragement of the Societe Generate,
Nikolaev dockyards turned to Vickers and Thorneycroft, both of
whom agreed to supply details of battleship and destroyer construc-
tion exclusively to the Black Sea yards. Vickers undertook 'to act in an
advisory capacity, both as to the layout of the works and to the
preparation of tenders, estimates of costs, working plans and guidance
of the construction work'. In return, the British firm would receive
£45,000 for its drawings and £75,000 for each battleship built at Niko-
laev. Several German firms also agreed to supply technical drawings
and models for turbines and for a new floating dock. The reorgani-
zation of the Russian firm in July 1911 involved a huge consortium of
French and Russian banks. Two-thirds of the shares in the new
company went to the Societe Generate and its French associates. Six
Russian banks also took shares and placed their representatives on the
board.73
The flavour of Vickers' commitment is conveyed best in a letter sent
from Nikolaev by the British firm's representative, who sought per-
mission for his staff to become more closely involved: 'they will simply
guide the Russian foremen in charge as to how the work is to proceed
through the various operations, examine same for correctness and also
to arrange with the various chiefs to progress the work in such a way
as to avoid delay in the completion'. There is no better expression of
the optimism of the technical specialist, faced with a technical chal-
lenge - in this instance, the manufacture of turbines. In due course,
however, Vickers would be obliged to adopt a more realistic approach
to the tasks posed by investment in Russia; subsequent correspon-
dence from Nikolaev made critical comments about the aptitude and
work practices of Russian workmen, which we shall consider in the
following section.74
Such agreements between Russian and foreign corporations
indirectly enabled the tsarist government to tap advanced western
armaments technology, whilst relieving the government of the need to
build additional defence plants. Was it inconceivable that enterprises
in the state sector would follow suit?
The attempt by foreign enterprise to reorganize state arsenals signi-
fied a shift in government attitudes. Hitherto, the regime discouraged
foreign investment in state-owned arsenals and dockyards. The
government did not prevent managers from concluding agreements
with foreign firms for the provision of technical assistance; indeed, the
 The armament industry, 1908-1914 239

Motovilikha works had come to just such an understanding with Krupp

in 1904, in order to help with the manufacture of shell. But, in the hot-
house atmosphere created by the international arms race, foreign firms
queued up to offer not just technical advice, but also investment.
The plant at Motovilikha - large, well-established, but badly in need
of an overhaul - represented the greatest prize. In 1913, Russian
bankers, with the blessing of Putilov, tied an offer of technical assist-
ance from Schneider-Creusot to their unsuccessful application to lease
the Perm works from the tsarist government. Soon afterwards, the
question arose of producing heavy artillery pieces at Perm. The pro-
gramme could only go ahead if the factory were re-equipped with
bigger furnaces, more powerful forging presses and workshops. Some
of this equipment could be supplied easily enough from domestic
sources, but no Russian firm had the experience needed to advise on
the creation of a facility for the manufacture of large-calibre ordnance.
The technical agreement with Krupp was due to lapse in 1913: in the
circumstances, the tsarist government hoped to encourage the
maximum possible interest in Perm.
The Department of Mines invited leading foreign armaments firms
to submit projects for the projected modernization of the plant, which
was due to be completed within two years. Tsarist officials were
especially hopeful of bids from Armstrong, Whitworth and Schneider-
Creusot, arguing that these are 'first class firms, with great experience
and brilliant achievements in the production of large calibre artillery
and heavy mines and armour-piercing shells'. Several firms, these
included, duly tendered for the project in the autumn of 1913.75
By the end of the year, the future of the Perm works had become
entangled with international power politics. In December the French
government entered the lists, offering to provide the Russian govern-
ment with a substantial railway loan, provided, amongst other things,
that Russia supported the bid from Schneider-Creusot. This was not
the first time that the French had attempted to attach conditions to the
loan. French bankers had done this during preliminary negotiations
with Kokovtsov in the summer, and the French government had also
intervened subsequently to state that it would link a loan to the
construction of additional strategic railway lines, details of which were
to be stipulated by the French general staff. By the beginning of 1914
the French had agreed to make the funds available to government, but
the negotiations could still be jeopardized by the fate of the Schneider
bid. Kokovtsov accordingly urged upon Timashev the desirability of
pursuing the Schneider option.76
240 Rearmament and industrial ambition

Throughout January 1914, a commission headed by Timashev's

deputy, Konovalov, considered the various bids. The company offered
assistance with the production of shell and artillery over a twelve-year
period, not just with the immediate task of supplying heavy artillery
pieces. However, the Department of Mines seemed unwilling to make
such an open-ended commitment. There were other disadvantages to
the Schneider proposal: for instance, it envisaged the creation of a
workshop at Perm, capable of producing between seven and eight
guns of 14-inch or 16-inch calibre, whereas the tsarist government
required a shop with a capacity of twelve guns. The Armstrong pro-
posal attracted support from the government's technical advisers, who
noted that the British firm could produce the machine tools required
for the production of heavy calibre artillery and could also draw upon
its experience in equipping other foreign armaments factories.77
The spokesman for the Ministry of Finances took a different view,
maintaining that it was unreasonable to ignore the claims of the
French firm, particularly when Russia was considering a British bid (by
Vickers) to build a new ordnance works at Tsaritsyn. Much was at
stake: the value of the projected reconstruction of Perm amounted to
around eight million rubles. Upon its completion, Russia would
possess a plant similar in scale and technical modernity to other
leading European firms. The French authorities were unwilling to see
the decision go against Schneider. The new ambassador, Paleologue,
held urgent talks with Sazonov, Sukhomlinov, Grigorovich and Bark,
finally raising the issue with Nicholas II, when he presented himself at
court for accreditation at the beginning of February 1914. The Council
of Ministers met to consider the matter at the end of the month. On
technical and financial grounds, the Armstrong bid was preferable. But
political issues were at stake. In particular, French financiers would be
unwilling to lend further funds to the Russian government, if these
were to be used to boost the order books of a British arms contractor.
The government eventually decided to support the Schneider option,
but only after attaching certain conditions: the French had to provide
the capacity for twelve guns and to order from Armstrong those
machine tools that it could not produce itself.78
In the event, therefore, the government bowed to French pressure,
but not before they had made it clear that Schneider had to adhere to
the technical brief prepared by Armstrong. A Soviet account of the
affair suggested that it illustrated Russian subordination to foreign
capital, but this is rather a narrow interpretation of the evidence. After
all, Russia obtained a loan it badly needed (and on terms acceptable to
 The armament industry, 1908-1914 241

the Russian General Staff), without making any concessions on the

details concerning the technical modernization of a key element of its
armaments industry. From the point of view of the defence industry as
a whole, the involvement of Schneider improved the potential per-
formance of Motovilikha and encouraged the defeated rival firms to
look for another foothold in Russia. Their avid search for Russian
partners and for new sites to develop would only add to the overall
capacity of the industry.79
In Vickers' case, the road from Perm led straight to Tsaritsyn, a town
on the Volga. In the years immediately preceding the First World War,
the British armaments giant launched an ambitious scheme to establish
a large gun foundry factory in the heart of Russia. The projected
enterprise constituted a major rival, not only to state-owned works,
such as Obukhov and Izhevsk, but also to Motovilikha, the object of
Vickers' unsuccessful bid. Plans were drawn up in mid-1912 for a
'Russian Krupp', in which the British firm would supply technical
advice on construction and operation, while financial support would
be forthcoming from the International Bank and the Loan and Dis-
count Bank. The names of people like Ramseier, Utin, Blokh, Khrulev
and Vyshnegradskii again figure prominently. They proposed to form
a new company, the 'Russian Artillery Works Company Ltd.'
(RAOAZ), with a share capital of 15 million rubles, of which Vickers
had an option to purchase one-third. The St Petersburg Metal
Company also held an option on shares, giving the proposed venture a
foothold in the market for naval armaments for the Baltic fleet.
Lesenko and Fedorov, directors of St Petersburg Metal were therefore
added to the board. For its part, Vickers would receive 10 per cent of
the profits for ten years, rising to 17.5 per cent of any profits in excess of
10 per cent of capital. Vickers undertook to supervise the construction
of the plant, to arrange the delivery of any components that needed to
be imported, and to send specialist engineers to Tsaritsyn.80
The tsarist government responded at once to this initiative, granting
the new company an order in May 1913 for large-calibre artillery, even
before construction of the plant had commenced (Vickers planned an
annual capacity of 20 guns). Such enthusiasm is not difficult to under-
stand. The bid held out the prospect of producing new naval artillery,
of a quality unavailable from any other source. In addition, Vickers
mooted still more ambitious plans for the new company, which
involved the manufacture of armour-plate, shell and even small arms.
Neither this scheme nor, indeed, the supply of heavy artillery made
any progress before 1915. But the negotiations testified to the close
242 Rearmament and industrial ambition

involvement of foreign armaments firms in the Russian defence

industry and the enthusiasm of the government for any Russian
venture that entailed greater access to advanced armaments tech-
nology. It was hard not to be seduced by Vickers' reputation and the
British firm's promise to act as technical consultants to the new enter-
prise for up to fifteen years. This chapter in Anglo-Russian commer-
cial relations emphasizes yet again the scope that rapid technological
change allowed new entrants to the armament industry.81
Foreign investment created the opportunity for new firms to enter
the sphere of defence production, either as subsidiaries of foreign
companies or as entirely new ventures. Foreign companies were keen
to exploit the growth in the market for defence and associated pro-
ducts in Russia. Citroen set up a subsidiary in conjunction with the
Kolomna Company, which would import gears and other equipment
from the parent company in France. Russian Renault followed the
same pattern. Schneider set up the Optical Company in 1914, to
supply measuring instruments and optical devices to the armed
forces. In a slightly different vein, the Russian subsidiary of the Shef-
field steelmakers, Thomas Firth, which had traded since the begin-
ning of the century as 'Salamander' of Riga, in 1908 began to supply
large calibre shell, building a new plant for that purpose, with
machinery imported from Britain. The company history proudly pro-
claimed that the product - 4.7-inch and 12-inch armour-piercing shell
- satisfied the rigorous quality requirements of the tsarist govern-
ment.82
These instances of foreign investment in new ventures paled into
insignificance when set alongside the ambitious scheme launched by
Vickers, but they demonstrate the key importance of technical assist-
ance obtained from foreign armaments firms. The powerful (for some
contemporaries, even hypnotic) combination of foreign capital and
technological assistance created a modern shipbuilding industry on
the Black Sea and the Baltic littoral, and improved the potential of
other sections of the armament industry. Nor did the proposals
involve any infringement of Russian sovereignty: no foreign firm
could push its luck with a regime that could choose from amongst
several avid contenders. The question remains, however, why foreign
investment by Vickers, Schneider, Citroen and others assumed a
direct form, at a time when indirect investment prevailed in most
other sectors of industry. The answer must be, in part, that the com-
plexity of the technological tasks posed by contemporary weapons
systems encouraged foreign firms to exercise close supervision over
 The armament industry, 1908-1914 243

capital and labour. It is to the issue of employment and work practices

that we now turn our attention.

Employment, work conditions and work practices in the

defence industry
Total employment in the Russian defence industry grew from
under 86,000 in 1908 to just over 120,000 in 1913, an increase of 40 per
cent. This was well in excess of the growth of total industrial employ-
ment, which grew by 29 per cent during the same period.83
The most remarkable feature was the rapid growth of employment in
privately owned shipyards. Largely as a result of this increase, the
private sector accounted for 56 per cent of total employment by 1913,
compared with 44 per cent in 1908. But the influx of government orders
between 1912 and 1914 also led to a sharp increase in employment in
government dockyards and GAU factories. At the state armouries, the
workforce stood at 56,600 in 1914, an increase of two-thirds since 1912.84
From what source did these workers originate and how were they
recruited? Evidence on the recruitment practices of state works is
unfortunately quite sparse. Such sources as are available suggest that
labour was recruited, as before, predominantly from the local popu-
lation. At Izhevsk, the workforce consisted largely of the descendants
of the original workers, who had been ascribed to the factory during
the pre-emancipation period. A study of the St Petersburg Tube Works
reveals that workers came from villages in the neighbouring provinces
of Olonets, Tver, Pskov, Novgorod and Vitebsk, where neither agri-
culture nor rural industry could support the growing numbers of
people. However, not all recruits to factory production were recent
arrivals from the village: close to a third of those taken on in the early
twentieth century were former army conscripts, whose presumed
obedience to authority commended itself to management. At the
explosives factory at Okhtensk, the workforce was recruited from
neighbouring provinces in the north-west, although some workers
originated from as far afield as the mid-Volga.85
The labour force expanded much more rapidly at private shipyards
than it did at state yards. At the Nikolaev yards, the labour force had
fallen from a peak of 2,700 in 1905 to 2,100 in 1908-10. But after 1911, as
the company took on orders for battleships and smaller vessels, the
management hurriedly took on fresh contingents of workers. In April
1913, employment stood at 5,400; twelve months later, it reached 8,300.
Vickers' agents reported that Nikolaev recruited workers from the
244 Rearmament and industrial ambition

Table 5.8. The labour force in the armaments industry,

1900,1908 and 1913

1900 1908 1913

A State sector
1. GAU factories 27,000 33,000 47,400
2. Department of Mines 25,408 30,730 27,552
3. Shipyards 13,929 11,173 16,970
B. Private sector
1. Shipyards 7,450 8,720 23,100
2. Other armaments1 1,600 .2,000 5,000

Total 75,387 85,623 120,022

1
It is impracticable to identify every single private firm within the metalwork-
ing and machine-building industry, to calculate the proportion of workers
engaged on military production at such factories, and then to sum the figures.
Instead, one can derive a rough figure by taking the number of workers
employed in these branches of industry and applying a coefficient, repre-
senting defence output as a proportion of total output (viz. 26.2 per cent for
the defence share of machine-building and 5.3 per cent for chemicals). The
authoritative Soviet source, L. E. Mints, Trudovye resursy SSSR, Moscow, 1975,
p. 87, cites a figure of 352,100 as the workforce in metalworking and machine-
building in 1913, private and state enterprise (on USSR territory). The equiv-
alent total for the Russian Empire (applying a coefficient of 0.815) is 432,900.
The number of workers employed on defence work was 113,420 (26.2 per cent
of 432,900). Applying the same procedure to Mints' figure for chemicals (83,500
workers, including those in state-owned explosives works), we derive a figure
of 5,430 workers. This yields a total of 118,850 workers who were employed in
the production of manufactured goods for the armed forces. Since the known
workforce in defence production in 1913 (less the unknown number for
private non-shipbuilding) was 115,000 (cols. A.I, A.2, A.3 and B.I in table 5.8),
the residual figure was around 4,000 (119,000 less 115,000). This figure is
probably an underestimate: the labour force at such well-known firms in St
Petersburg as Baranovskii (800), Parviainen (1,600), and Lessner (1,260) would
alone account for most of this total (figures from E. E. Kruze, Peterburgskie
rabochie v I912-1914gg., Moscow-Leningrad, 1961, p. 41, and Heather Hogan,
'Labor and management in conflict: the St Petersburg metalworking industry,
1900-1914', PhD Michigan, 1981, p. 49). Giant firms such as Kolomna Engi-
neering would also need to be taken into account. On the other hand, some of
these big armaments producers also handled shipbuilding contracts (St Peters-
burg Metal, Putilov), and their labour force may already be accounted for. A
figure between 4,000 and 6,000 is probably not too wide of the mark, and thus a
figure of 5,000 appears in table 5.8, row B.2, col.2.
 The armament industry, 1908-1914 245

surrounding villages. By contrast, the newly-established shipyard

Russud was obliged to send recruiting agents to the central industrial
region and the north-west in search of skilled workers. Management
also increased the length of the working day, wiping out the gains
made by workers during the 1905 revolution.86
Most of the growth in employment at state works between 1908 and
1913 - and in the private sector, too - is explained by the fact that workers
who had been laid off during the postwar slump were once more
offered jobs. Throughout the industry, the workforce was predomin-
antly male, although, by 1912, women were being employed as brakovsh-
chiki, that is quality controllers, at some GAU arsenals. Women were
employed in a supervisory role at the Okhtensk explosives factory; in
1911 they made up a quarter of the total labour force. Most of them, like
their counterparts at the Tube Works, were wives of male employees.
But the chief beneficiaries of the rearmament boom were younger
males. The government set age limits on employment; the GAU regula-
tions did not permit men and women to stay on once they had reached
the age of fifty. Juvenile labour was allowed by a law passed in 1906, and
around 5 per cent of the workers registered at the Tube Works before
1914 were between fourteen and seventeen years old.87

If we assume that the ratio of workers in shipbuilding and non-shipbuilding

was the same in 1900 and 1908 as it was in 1913, then the figure for non-
shipbuilding in 1900 would be around 1,600 and in 1908 would be around
2,000. Thesefiguresappear in table 5.8, row B.2, cols. 1 and 2.
Sources: A.I from G. K. Miftiev, 'Artilleriiskaia promyshlennost' Rossii v period
pervoi mirovoi voiny', kandidatskaia dissertatsiia, Leningrad, 1953, p. 100 (the
1902figurein the source, 26,117, is adjusted upwards by 4%, in line with the
trend in employment at the Tula Cartridge works, as given in A. A. Korolev,
'Finansovo-ekonomicheskaia deiatelnost' Tul'skogo patronnogo zavoda v
kontse XlX-nachale XX vv.', h istorii Tul'skogo kraia, Tula, 1972, pp. 38-40;
Miftiev's figure for 1909, 31,734 is adjusted in line with armaments index in
table 5.12 below, to yield an estimate for 1908); A.2figurefor 1900 is taken from
Otchet gornogo departamenta za 1900-01, less 27.6%, representing the average
proportion of work completed for private customers; the 1908 and 1913 figures
are from Smeta gornogo departamenta na 1909 and ibid., na 1913, less 21.6% and
18.3% respectively (proportions from ibid., na 1914, pp. 21-2); A.3 from L. G.
Beskrovnyi, Armiia i flot v nachale XX veka, Moscow, 1986, pp. 198-9 and K. F.
Shatsillo, Russkii imperializm i razvitie flota nakanune pervoi mirovoi voiny,
Moscow, 1968, p. 223. The figures exclude the minor state workshops attached
to ports at Kronstadt, Nikolaev and Sevastopol; B. 1 from Beskrovnyi, Armiia i
flot, pp. 198-9 and Shatsillo, Russkii imperializm, p. 240, both citing an
unpublished dissertation by A. M. Falkov. Figures in B.2 derived by methods
explained in the accompanying note. See also note to table 5.10.
246 Rearmament and industrial ambition

The character of work at several GAU factories (although not at the

state arsenals) dictated the pattern of recruitment. Most of the work at
the Tube Works and the explosives factories was semi-skilled, consist-
ing of straightforward and repetitive operations with simple machine
tools. Some craftsmen were employed as brassfounders, pattern-
makers and toolmakers, and others operated more complicated kinds
of machinery, but these were in the minority. The main skill required
at Okhtensk was in the manufacture of percussion compounds, but
the bulk of work was semi-skilled or unskilled. Even large ordnance
factories and the Urals ironworks required unskilled labour for a range
of tasks.88
But the state ironworks were not typical of the armament industry.
At the arsenals, much higher standards of skill were required. The
manufacture of small arms involved a high level of skill. It took 1,424
separate, intricate and precise operations (involving specifications of
between 0.127mm and 0.025mm) to produce a rifle. The manufacture
of machine-guns involved more operations and an even greater
degree of precision. In order to deal with these tasks, management at
the Tula armoury and at the Izhevsk arsenal continued to seek to
recruit second and third-generation workers from the craft schools
attached to the factory. But these did not always provide adequate
numbers of new entrants, and it was necessary to think about improv-
ing material inducements in the state sector.89
The turnover of labour continued to affect the armament industry.
After 1908, this was no longer the result of involuntary movement.
Instead, workers left of their own volition, causing problems for the
hard-pressed managers of arsenals, dockyards and private works. A
study of the St Petersburg Tube Works, based upon the analysis of
15,375 workers' passbooks, captures the high rate of labour turnover in
the period before the First World War. Between 1908 and 1913, the
labour force increased by 2,100, but the net change disguises the fact
that more than 6,700 workers were taken on, whilst 4,600 were dis-
charged. The data in table 5.9 demonstrate the tendency for manage-
ment to lay off workers during slack times (1907,1909-11). But it also
suggests the voluntary severance of workers in 1912-14 from the
enterprise, as they sought to improve their prospects by looking for
more highly-paid work elsewhere.90
At times of intense activity, as at the turn of the century and during
the prewar boom in shipbuilding, the management of individual
factories risked losing labour to their rivals. What kinds of incentive
did management offer, in order to retain the services of skilled
 The armament industry, 1908-1914 247

Table 5.9. Turnover of workers at St Petersburg Tube Works, 1907-1914

Taken on Discharged Net increase/decrease

1907 52 654 - 602

1908 769 361 + 408
1909 52 492 - 440
1910 98 448 - 350
1911 126 891 - 765
1912 2,113 522 + 1,591
1913 3,555 1,888 + 1,667
1914 4,556 2,518 + 2,038

Source: S. V. Murzintseva, 'Izuchenie formirovaniia i sostava rabochikh tru-

bochnogo zavoda po dannym pasportnykh knig, 1907-1914gg.', Rabochie Rossii
v epokhu kapitalizma: sravnitel'nyi poraionnyi analiz, Rostov, 1972, pp. 61,66.

workers? First, managers rewarded workers who stayed at one factory

for a minimum length of time. In the state sector, workers who had
been employed for more than three years were entitled to up to six
weeks' unpaid leave, provided they deposited a surety of two weeks'
pay with the administration, a clear sign of management's keenness to
retain scarce skilled labour. The management of the Okhtensk works
allowed workers a one-month holiday after three years' service, on
half-pay, provided that they had behaved 'properly and diligently'.
This entitlement was in addition to the statutory holidays (amounting
to 25 days in all) at government enterprises. At the Tube Works,
management introduced a system of wage scales, differentiated
according to length of service. The practice was common elsewhere in
the state sector.91
Government regulations allowed managers discretion to reward
loyal workers in other ways. For example, workers who made a
'necessary and useful' contribution to the work of the factory were
entitled to government lodgings, depending on availability, at a subsi-
dized rent. Workers in government dockyards were also offered
interest-free loans to cover expenses connected with family events,
such as weddings and funerals, and to recoup losses incurred as a
result of fire and flood in the home.92
How successful were these strategies? Individual arsenals and dock-
yards engendered powerful loyalties among the workforce. Many
workers had been at the Okhtensk explosives factory for ten or twenty
years, and 'a person who was working for only five or six years was
248 Rearmament and industrial ambition

considered by the others to have arrived recently'. At the St Petersburg

Tube Works, half of the workers who were surveyed between 1907 and
1914 had been employed for more than five years. The relative advan-
tages of working in the state sector tended, as before, to instil a sense of
loyalty on the part of the workforce.93
The shift towards the private sector raises interesting questions,
because it implies that work was increasingly being handled by men
and women who enjoyed less protection against exploitation than did
their counterparts in the state sector. Some of the benefits that state
employees received have been mentioned earlier, notably accident
insurance and restrictions on the hours of work. Why, then, did
workers flock to the new private factories, and what persuaded them
to remain?
Government reforms at the beginning of the twentieth century
maintained a welfare differential between the state and private
sectors. In June 1903, the government promulgated a law for workers
in factory industry. The legislation afforded compensation for indus-
trial injury, provided that the worker could demonstrate negligence by
the employer. Payments were computed in accordance with average
earnings of the employee over the last years of his or her service.
State-owned enterprises were explicitly excluded from the act's pro-
visions. Instead, the relevant government departments were asked to
prepare fresh regulations for workers in enterprises under their aegis.
Supplementary legislation was eventually introduced in June 1904,
with effect from 1 January 1906, for workers in state arsenals, and in
March 1906 for workers in the dockyards. Many of the provisions of
the 1903 law were built into this new legislation, but there were
important clauses that gave them an advantage over workers in the
private sector. For example, workers in private industry could not
claim compensation for industrial injury, if management insisted that
the injury was attributable to negligence on the part of the worker.
These were not grounds for denying compensation to workers in the
state sector.94
The procedure for submitting claims was also rather more straight-
forward for state employees than for workers in private industry.
Claims were dealt with by the factory administration, rather than by
the factory inspectorate, whose numbers were grossly inadequate to
the size of the problem. This arrangement had its disadvantages:
managers at state works might, and often did, dispute a claim. With no
independent assessment of claims, it was simply the word of the
foreman against the worker. Archival evidence testifies to the desper-
 The armament industry, 1908-1914 249

ate plight of workers who were left without any source of support
during such disputes. But, if the claim was approved, the terms were
generous by prevailing standards. In the case of the disability allow-
ance, the method of computation was as follows: the worker's earn-
ings over the twelve months preceding the event were divided by the
total number of days worked; this daily average was then multiplied
by 260 (representing the estimated number of days worked in Russian
industry), yielding an annual figure. Two-thirds of this sum was then
paid to the worker if he was completely incapacitated, or paid to his
widow in the event of his death. In practice, workers at Okhtensk
received full pay for up to four months in the event of injury. After that
time, if the worker did not return, he was retired on the pension,
calculated in the above manner. If, upon his death, the employee's
next of kin proved to be incapable of work, because of physical or
mental infirmity, they received a pension for life.95
The contrast in provision is also clear in respect of sickness. Govern-
ment regulations stipulated that workers in state enterprises had the
right to see a doctor free of charge if they were ill and the right to up to
two months' free hospital treatment, if their complaint was the result
of conditions of work. Their relatives were entitled to treatment free of
charge as outpatients, although they had to pay if they were hospita-
lized. The Okhtensk works, already equipped with a small infirmary,
built a seventy-bed hospital in 1910 for workers who needed specialist
treatment, obviating the need for workers to travel to St Petersburg for
treatment. From 1904 onwards, workers at government enterprises
were also compensated in the event of permanent disability as a result
of an illness contracted at work. Should the illness result in their death,
their families were likewise compensated. Artem'ev, the doctor at
Okhtensk, maintained that these regulations were capable of so broad
an interpretation that most workers (especially after the further easing
of the regulations in February 1907), retired on an 'unofficial' pension.
This was worth on average 9.25 rubles per month, equivalent to
one-third of their former earnings.96
These provisions found no place in the 1903 statute and thus were of
benefit exclusively to state employees. Factory owners put up pro-
longed resistance to the extension of sickness insurance to their work-
force. The government brought a project to the Duma in 1908, but it
did not reach the statute book until 1912. The law of 23 June 1912
required factory owners to establish sick clubs and insurance associ-
ations, extending sickness cover to workers for the first time. But the
legislation did not remove any of the disparities between the state and
250 Rearmament and industrial ambition

private sectors. As in 1903, the laws deliberately excluded workers in

government enterprises, leaving them in a more favourable position.97
Many of these benefits served to emphasize just how arduous and
dangerous work in the armament industry could be. This was obvi-
ously the case in the manufacture of explosives. A graphic account of
the risks to which workers were exposed was provided in 1911 by the
factory doctor attached to Okhtensk. The nature of the job brought the
risk of flashes and explosions; 225 such instances recorded between
1897 and 1911 had left six people dead and several more injured. On
average, there were between ten and fifteen instances each year,
although the pressure of work during the Russo-Japanese War, when
work carried on round the clock, led to twenty-four instances in 1904
and fifty-three in 1905. Artem'ev doubted that these accidents were
attributable to the carelessness of inexperienced workers: in his
opinion, older workers sometimes failed to exercise appropriate care.
Other risks included the inhalation of toxic fumes and, still more
insidious, the progressive disability that resulted from working with
fulminate of mercury in the production of TNT. He noted that the
1,400 workers at Okhtensk, along with their dependents - a total of
5,631 people - made more than 25,000 separate visits to the surgery in
1910.98
It would be wrong to minimize the difficult and often dangerous con-
ditions experienced by workers in defence industry. But it seems likely
that other workers were more at risk from industrial accidents. High-
risk occupations included coal and gold-mining and work on Russia's
railways and waterways. Fourteen per cent of railway workers suf-
fered some kind of injury in 1910; 11,255 men were severely injured or
killed. In 1908, one-third of all miners in south Russia suffered injury.99
Private entrepreneurs recognized the disparity between workers in
the state and private sectors. But their deep-seated aversion to legisla-
tive interference in worker-employer relations seems to have taken
precedence over their concern that they might lose workers to the
state sector. Industrialists desperately put off the day when they
would be obliged to make concessions to labour. Significantly, their
opposition to legislation evaporated in 1912, at the very moment when
poaching by the state sector assumed more threatening proportions.100
One should neither idealize the situation of workers in state indus-
try, nor think that the businessmen in the arms trade were permanen-
tly set against their workforce. The government, for example, did not
tolerate trade unions in state-owned premises - a point made by Social
Democratic members in the Third Duma - whereas legal collective
 The armament industry, 1908-1914 251

organizations of workers in the private sector enjoyed a limited exist-

ence after March 1906. The government was capable of harsh
measures, as in 1913, when it locked out workers at Obukhov who had
gone on strike. In September 1913, a special commission on the strike
movement in state arsenals threatened 'resolute action' against ring-
leaders, although it coupled this with a recommendation that wages be
increased. By contrast, there were good reasons why private
industrialists treated workers relatively more favourably, especially
after 1912. Private firms were keen to obtain and retain orders, by
demonstrating their competence and reliability. Faced with lucrative
defence orders and unwilling to risk fines for delay or non-fulfilment,
they dealt gingerly with strikes in the immediate prewar period. Their
colleagues in other branches of industry pressed for a much tougher
stance, in the face of an upsurge of labour protest after 1912.101
Workers in the private sector of defence industry were probably
better off in 1913 than they had been five or six years previously, and
certainly at an advantage compared to other categories of the labour
force. The British engineer, Allan Monkhouse, who spent a year at
Kolomna in 1911-12, describes the key role played by the factory
inspectors:
they seem to be state-appointed guardians, to whom the workmen
turn every time there is any friction between themselves and the
employers. Work-people who claim to have been wrongfully dis-
missed, under-compensated for accidents or illness, defrauded of pay
due to them, or illegally fined for accidents, breakages, etc., immedi-
ately take their case to the factory inspector, whose duty it is to take
the matter up with the employers and act as arbitrator. In a works as
big as this, there is a factory inspector always on the premises.102
Yet the factory inspector was but one figure in the landscape of labour
relations before the First World War. Management, too, had to adjust
to new conditions in the labour market, by adopting a more concilia-
tory approach to labour.
A different argument has been advanced by Heather Hogan. She
demonstrates that employers in St Petersburg sought to recoup the
concessions that workers had extracted during the 1905-6 revolution.
Managers adopted more subtle tactics, in order to improve the produc-
tivity of labour. They could not launch an overt attack upon Russian
workers, who now had the legal right to organize. Nor did they place
any greater emphasis upon longer hours, or have recourse to punitive
measures, in order to enforce discipline. Instead, managers displayed a
pronounced tendency to plan for the 'scientific' organization of work.
252 Rearmament and industrial ambition

When these initiatives deskilled the labour process, reduced piece

rates and entailed intrusive time and motion studies, workers went on
strike. But Hogan's argument does not command universal assent. Her
critics acknowledge that some engineering firms did attempt to
increase the pace of work, and that some of them succeeded, but argue
that the industry showed little evidence of the collective implemen-
tation of scientific management techniques.103
Evidence from the shipbuilding industry on the Black Sea shows
that entrepreneurs elsewhere faced enormous obstacles in enforcing
changes in work routines, even on 'green field' sites. Vickers' English
representative complained to his employers that Russian workers
were possessed of a 'spirit that is not conducive to rapid progress.
They inform you everywhere that when the work at present in hand is
completed there will be nothing else to do, so why hurry the work'. In
addition, the foremen 'are not interested enough in their work and are
very antagonistic to any new methods, and what few suggestions have
been adopted is only after great pressure has been brought to bear
upon them'. As a result, 'English methods can only be adopted grad-
ually'. The documentation reveals a lack of adequate supervision of
labour, reminiscent of some state yards at the beginning of the century.
In these circumstances, it is hardly surprising that labour productivity
at the Nikolaev dockyards scarcely improved at all between 1908 and
1913. On the other hand, labour productivity at the Nevskii shipyards
increased sharply, implying that managerial initiatives enjoyed greater
success in St Petersburg than they did in Nikolaev.104
The growth of employment in the private sector certainly improved
the bargaining power of labour, causing considerable disquiet
amongst managers by 1914. The manager of one state yard urged the
government to accelerate the delivery of material inputs, lest he be
forced to lay off workers and lose them to the private sector. At the
privately owned yards of Russud, the management feared that any
temporary interruption to supplies would encourage workers to seek
work in other yards. They responded by increasing wages and making
other concessions. The alternative was to risk incurring tough financial
penalties from the government, in respect of delays to the completion
of contracts. Worse still, a private firm might find itself starved of work
in the future. Some managers did indeed adopt a tough stance
towards workers. In the arms trade, however, the potential threat to
enterprises of being blacklisted by government loomed larger in the
consciousness of industrialists than did the threat to blacklist recalci-
trant workers.105
 The armament industiy, 1908-1914 253

Armaments in the industrial economy: an overview

The physical output of individual items of military hardware is
not difficult to ascertain, but this disaggregated information is of limited
use to the economic historian, who is more likely to be interested in the
value of gross output than the manufacture of individual rifles or naval
artillery. The historian of rearmament will respond by pointing out the
uneven and erratic character of armaments production, which makes it
difficult to draw a composite picture of output; this in any case has little
meaning from the point of view of tsarist military preparations. Cer-
tainly, two obvious features of pre-revolutionary armaments pro-
duction were the absence of any common trends in the output of differ-
ent items and the fluctuations in the output of any given item. Such
trends in output have to be understood in the context of supply norms.
The government placed orders in accordance with prevailing supply
norms: if these were satisfactory - if the stocks of shell, for instance,
corresponded to the norms laid down - then there was no need to place
fresh contracts. To take one example, between 1908 and 1913 the pro-
duction of cartridges at state factories increased five-fold, whereas the
output of fuses and field artillery pieces declined.106
Nevertheless, the economic historian cannot evade the responsi-
bility to attempt an exercise in aggregation, in order to establish the
position that the armaments industry occupied in the broader
economy, as well as to analyze the manner in which available
resources were used.
Notwithstanding the difficulties described above, a reasonable
approximation can be made of the value of defence production in
general and armaments production in particular. The starting-point of
any such calculations is the industrial census carried out by Soviet
statisticians in the difficult conditions of 1918. The census identified
2,287 enterprises that had operated without interruption between 1913
and 1918. Respondents from this sample of firms were required to
categorize their output according to end-product for each successive
year. The results established that, in 1913,5.3 per cent of total industrial
production could be classified as 'defence' production, meaning that it
was ultimately purchased by or on behalf of military procurement
agencies. The same source also yields an estimate of the proportion of
machine-building production, destined for military use. In 1913, 26.2
per cent of the output of 120 engineering enterprises represented
military production. This included small arms, artillery, ammunition,
military vessels and so forth.107
254 Rearmament and industrial ambition

Table 5.10. Aggregate defence production in 1913 (million rubles)

Military share in production of:

Total
industrial Defence Machine- Metal- Chemicals
production production building working

7,358 390 138 14 18

Source: col. 1 from Dinamika rossiiskoi i sovetskoi promyshlennosti, Moscow-

Leningrad, 1929-30, vol. 3, pp. 176-7. Col. 2 represents 5.3% of this total, based
upon the proportions reported in Trudy TsSU, vol. 26, Moscow, 1926, part 1,
p. 41. Col. 3, 26.2% of total reported machine-building, from Dinamika, vol. 3,
pp. 176-7; col. 4, 5.3% of total reported metal-working; col. 5, 5.3% of total
chemicals production, from the same source. The underlying data have been
adjusted, in order to incorporate raw materials, which were listed separately.

The application of these percentages to the available data on total

industrial production and machine-building production in 1913 yields
the results shown in table 5.10. In 1913, armaments production, defined
as the output of military hardware (including military vessels) and
ammunition probably accounted for 44 per cent of all industrial output
destined for the defence sector.
Comparing these estimates with the defence appropriations dis-
cussed in chapter 3, the value of total defence production was equiv-
alent to two-fifths of tsarist Russia's defence budget in 1913. It will be
recalled that the state armaments budget in 1913 amounted to around
180 million rubles. The estimated value of gross output of all arma-
ments amounted to around 170 million rubles (see table 5.10). Bearing
in mind that the government purchased the net output of the arms
industry, and that part of armaments spending paid for imports, these
estimates are broadly compatible.
How does this compare with the situation in 1908? In principle, it
should be possible to reconstruct the value of military output, by
drawing upon the scattered information contained in the 1908 indus-
trial census. But the aggregation of this data would involve consider-
able effort. A less laborious procedure is to backcast from 1913, by
applying an index of defence spending. The appropriate index, along
with an estimate of military production for the period 1908-13, is
shown in table 5.11.
Adopting a similar procedure, we can derive an estimate of arma-
ments production between 1908 and 1913. Table 5.12 implies that
 The armament industry, 1908-1914 255

Table 5.11. Defence production, 1908-1913

Index of defence spending Value of defence production

(million rubles)

1908 69 269
1909 71 277
1910 73 285
1911 73 285
1912 87 339
1913 100 390

Source: col. 1, total defence expenditure from P. W. Gatrell, 'Industrial expan-

sion in tsarist Russia, 1908-1914', Economic History Review, 35, 1982, p. 104,
deflated by the index in P. R. Gregory, Russian National Income, 1885-1913,
Cambridge, 1982, pp. 254-5, table F3; col. 2 from table 5.10, backcast to 1908.

Table 5.12. Armaments production, 1908-13

Index of armaments Value of armaments production

expenditure (million rubles)

1908 43 74
1909 41 70
1910 44 75
1911 57 97
1912 73 125
1913 100 171

Source: col. 1, armaments expenditure from Gatrell, 'Industrial expansion',

p. 105, deflated as in table 5.11; col. 2 derived from table 5.10, backcast to 1908.

armaments output accounted for 28 per cent of total military pro-

duction in 1908, rising to 44 per cent in 1913.
Throughout the period 1908-13, the most significant component in
the total output of armaments was shipbuilding. There are no direct
figures for the total value of naval construction in 1913. Nevertheless, it
is possible to derive the value of output at the four main state ship-
yards from official figures, and to offer an approximate value for
output in the private sector, based upon data on labour productivity at
the leading private shipyards. Similar procedures can be adopted for
1908. The results, which should be regarded as approximate, are
presented in table 5.13.
256 Rearmament and industrial ambition

Table 5.13. Military shipbuilding, 1908 and 1913 (million rubles)

1908 1913

State yards 30 49
Private yards 18 80
Total 48 129

Source: col. 1, output of state yards taken directly from Vsepoddaneishii otchet
morskogo ministerstva za 1906-09, St Petersburg, 1911, pp. 186,202-3,211; private
sector output is calculated by applying a coefficient of output per person in
two yards (Nevskii and Nikolaev dockyards), derived from table 5.6, to the
labour force in private yards in 1908. The labour force for 1910 is given in L. G.
Beskrovnyi, Armiia iflot Rossii v nachale XX veka, Moscow, 1986, pp. 198-9, and is
estimated for 1908 by applying an index of expenditure on shipbuilding,
derived from Gatrell, 'Industrial expansion', p. 105. Col. 2, output of state
yards, Vsepoddaneishii otchet morskogo ministra za 1914, Petrograd, 1915,
pp. 285-96; private sector output is calculated on the same basis as col. 1 above,
i.e. 1913 output per person in four shipyards (including Putilov Wharves and
Franco-Russian Wharves from table 5.6), multiplied by the private sector
workforce in 1913.

Armaments accounted for around 2.2 per cent of gross industrial

production in 1913; employment for around 4.2 per cent. These pro-
portions would, of course, be rather higher during the last full year of
peace (1913-14). On the face of it, there was scope to reduce the labour
force in the armament industry, particularly those workers engaged
on military contracts in the Urals ironworks. But crude accounting
methods, coupled with a good dose of hindsight, fail to tell the whole
story. It is easy to recommend cuts in the labour force; it was difficult to
recommend and impossible to implement on a large scale at the time.
Employment in the state sector, as we have seen, was bound up with
deep-seated concepts of a 'patrimonial' responsibility towards Russian
workers, making it inconceivable to envisage a savage programme of
redundancies. Even if this strategy had been attempted, the pressing
considerations of rearmament would have frustrated it. All enter-
prises, private and state alike, more than matched increases in their
capital stock with additional labour. The armaments industry absorbed
workers at a faster rate than any other sector in the industrial economy
of prewar Russia. This helps to explain why armaments took over from
railways as the motor of growth before 1914.
Russia possessed a large armaments industry, relative to those of
 The armament industry, 1908-1914 257

other European powers. In France, armaments accounted for less than

1 per cent of total industrial production in 1913, less than half the
corresponding figure in Russia. In Britain, the armament industry
probably accounted for between 1 and 2 per cent of the total labour
force, whereas in Russia the figure was in excess of 4 per cent.108 In
Russian conditions, the frantic pace of rearmament underlined the
habitual entrepreneurial tendency to hoard labour in pursuit of satis-
factory completion rates. It is hardly surprising that Russian business-
men responded to the challenge of armaments by recruiting large
numbers of additional workers, whereas developed industrial societies
adopted a more capital-intensive strategy. The greater the demands
placed upon Russian defence enterprises, the faster they absorbed
labour. This is not to say that the armaments industry lacked new
plant, merely that the balance continued to be tilted towards labour, as
the relatively cheaper factor of production. Hence, the large con-
tingents of newly-recruited workers found modern and ancient equip-
ment side by side on the factory floor. In this manner, rearmament
imperatives disclosed the curious mixture of growth and backward-
ness that was the hallmark of prewar Russia.

Conclusion
After the hiatus associated with the end of the war in the Far
East, and the postwar retrenchment, the armament industry received
an avalanche of orders. The technology embodied in modern arma-
ments, as well as the volume of orders, also required - and in some
instances inspired - a new kind of productive effort.
The state sector faced criticism from within parliament and from
private entrepreneurs. In the event, the state retained and even
expanded its direct control over the manufacture of armaments and
military vessels. Existing plant was modernized, largely by means of
fresh injections of funds from the government budget. The labour
force, already large, continued to grow. By 1913, the state sector
perhaps had a higher ratio of capital to labour than in 1900 or 1908, but
this is not saying much. Whether that investment yielded dramatic
improvements in productivity of labour is more difficult to assess.
Some managers made rigorous attempts to reduce costs, by cutting
their overheads, taking steps to reduce wastage of inputs or by increas-
ing the pace of work on the factory floor. Others appear to have drifted
along in complacent fashion, basking in the knowledge that they
enjoyed the protection of highly-placed officials in government. Such
258 Rearmament and industrial ambition

factories retained large numbers of auxiliary workers and administra-

tive personnel, partly for economic reasons (including the fear that
such workers might be permanently lost to the private sector), and
partly because they saw the protection or security of labour as one of
their chief tasks, enabling them to claim a potential role in wartime.
Proposals to close down some of the least profitable state enterprises
and to transfer others, including the Motovilikha factory, to private
ownership eventually came to naught. The defence departments had
_no wish to lose existing armaments capacity. Had Motovilikha been
sold or leased, only Obukhov and the St Petersburg Ordnance factory
would have been left to supply naval and field artillery respectively.
Privatization aroused equally strong feelings in the Mining Depart-
ment and from conservative groups in the State Council. The involve-
ment of private capital, largely French, in the technical reorganization
of the Perm plant represented a significant departure. Schneider's
involvement had two desirable consequences, improving the potential
performance of a major enterprise and encouraging Vickers, the
defeated foreign rival, to look elsewhere for a foothold in the Russian
defence industry, thereby adding to overall capacity.109
What, then, did the tsarist government obtain for its money? Some
of the most prominent names in armaments production consolidated
or developed a reputation for good quality. The Izhevsk arsenal, the
Baltic shipyards, Izhora and Motovilikha works yielded to no one in
the quality of their product and stood the test of international com-
parison and competition. On the other hand, there is no sign that the
state sector was the locus of technical innovation or innovation in
management style, as happened in some of the government armouries
in the United States.110
The government probably took the correct decision in limiting the
number of contracts it placed with the state sector. A larger volume of
orders to state works would have created additional bottlenecks. But
there was no question of the state relinquishing its direct control over
armouries and dockyards, nor is there any compelling economic argu-
ment why it should have done so. The differential in production costs
between the state and the private sectors in 1914 (probably between 10
and 20 per cent) was not so great as to indicate a massive misallocation
of resources. In any case, ideological and strategic considerations
added to the safety of the state sector from the threat of privatization
or emasculation.111
The private arms trade faced an uncertain future in the aftermath of
the Russo-Japanese War. There was no guarantee that the tsarist
 The armament industry, 1908-1914 259

procurement authorities would favour the commercial sector with

orders for armaments. In 1908, government officials went out of their
way to disown the private sector and to display a protective concern
for state enterprise. Until 1910, at the earliest, private defence contract-
ors had to satisfy themselves with the crumbs from the table. There-
after, however, they managed to gorge themselves on the cornucopia
of government orders.
The growth of corporate power in the defence industry offered the
private sector a way out of the multiple dilemmas that confronted it
during the recession. The emergence of a commercial defence industry
was marked by a plethora of inter-locking directorships, by collusion
between independent ventures in bidding for contracts (see the next
chapter), and ultimately by amalgamation and integration. The con-
tacts between foreign firms and established Russian firms or new
entrants to the defence industry enabled the private sector to carve a
significant slice of the total Russian market for armaments. If the state
sector had the advantages that came from its entrenched position,
from the support of leading government ministers and from its price
competitiveness, the private sector could offer the procurement
authorities the opportunity to tap advanced western armaments tech-
nology, without the government having to bear the costs of construc-
ting new plant. The confidence exuded by businessmen derived from
the realization that the private armaments and shipbuilding industry
had become an indispensable element in the tsarist defence effort.
Yet the euphoria that was evident at shareholders' meetings dis-
guised several underlying problems. One was the burden of servicing
the huge debt that many new and reconstructed firms had acquired
during the boom years. If the government switched orders elsewhere,
or the banks pulled the plug on their clients, they would be in
desperate straits. Another problem concerned labour practices. The
private sector needed to recruit and retain skilled labour; 'deskilling'
may have offered one solution to the problem, but there was plenty of
working-class resistance to the initiatives contemplated by manage-
ment. Managers risked a great deal, if they sought outright confront-
ation with the workforce.
Would the Russian defence effort have been improved, had
resources been allocated differently? Why did the regime decide
against imports of armaments on a large scale? Should the government
have relied more heavily on the private sector, or less? These questions
entail a consideration of procurement decision-making, which forms
the basis for the following chapter.
 The economics and politics of
defence procurement

Introduction: decision-making in defence procurement

The specific characteristics of defence industry have frequently
fostered a close relationship between government and its suppliers.
Both parties to the contract are driven together by the high stakes
involved. American defence analysts have described the 'non-market,
quasi-administrative buyer-seller relationship' that is the hallmark of
the process of weapons procurement.1 The government hopes to
acquire the particular product or weapons system within the time-limit
and budget stated in the contract. Rigorous quality controls must be
implemented, in order to ensure that the product conforms to the
required performance standards. For these reasons, firms in the
defence industry do not have the same kind of autonomy available to
other firms. Their behaviour and performance excite the close interest
of government.
For their part, private arms manufacturers press for allowances to be
made, in respect of the risks and uncertainty associated with defence
production. The creation of new weapons systems entails high devel-
opment costs, which are borne in the first instance by the arms con-
tractor. Funds are tied up in research laboratories. Uncertainties sur-
round the final costs of any production programme, especially where
the technology is new. Furthermore, the purchaser may be required to
alter product specifications at short notice, disrupting the production
process. The industry is also vulnerable to sudden shifts in government
policy, which could force the abandonment of a weapons system. For
the contractor, therefore, armaments production can be a risky
business. One way of minimizing those risks is to establish a positive
working relationship with the customer.
The close relationship between government and industry is evident
in the kinds of incentives that are made available to private firms, to
260
 Defence procurement 261

offset the obstacles and risks described above. These include guaran-
teed rates of profit, as well as other forms of financial assistance, such
as subsidies and loans. Such terms are often built into defence con-
tracts. Economic historians have used evidence of these and other
practices to speak of a partnership between defence firms and govern-
ment, which extended to the participation of business leaders on
government committees that discussed weapons systems and defence
procurement. But the 'special relationship' did not yield unmitigated
advantages for the private arms trade. The British Admiralty, for
instance, in adding new firms to the official list of contractors, could
also remove firms. As a result, they would not only lose British govern-
ment contracts; their damaged reputation would also render them
vulnerable to the loss of export orders.
In relying for the most part upon government armouries and ship-
yards, as well as upon foreign deliveries, the tsarist regime tradi-
tionally avoided the peculiarities of a special relationship, prior to the
war against Japan. After 1905, that relationship was finally consum-
mated. But to think in terms of 'partnership' would be to underesti-
mate the resistance within some parts of the Russian government to
private enterprise. Underlying this opposition was the fear that the
arms trade would, by collusion or some such nefarious practice, extract
a high price from the regime for its cooperation. Shotgun marriage,
rather than partnership, would be a more appropriate term for
government-business relations.
Procurement agencies did not yet comprehend how much leverage
the arms trade possessed, or in what ways defence producers would
seek to exercise that leverage. How much expertise could government
officials bring to bear on the complex issues involved in new weapons
and shipbuilding technology? How would they respond to the rapid
pace of technological change? To these problems were added the
vexed question of the acquisition of foreign weapons and military
vessels. Here, a delicate balance had to be struck between, on the one
hand, the axiomatic insistence that Russia minimize its dependence
upon foreign suppliers and, on the other, the need to acknowledge the
financial support offered the tsarist state by foreign governments.
Procurement officials had to weigh the consequences of their rec-
ommendations and decisions, both for domestic industry and for
Russia's relations with its main ally.
Weapons procurement in prewar Russia entailed other issues,
besides questions of commercial involvement and import strategies.
The impetus for reform in defence procurement, unleashed by military
262 Rearmament and industrial ambition

defeat and political upheaval, was carried forward as a result of

profound changes in the character and scale of rearmament. The
adoption of the 'small shipbuilding programme' in 1907, and of
additional weapons programmes in 1910 and 1911, imposed new tasks
and obligations upon the Ministry of War and the Admiralty. The first
and most obvious change was the size of the budget which the
procurement authorities now had at their disposal. The provision of
extra resources brought additional responsibilities, particularly in view
of the parliamentary scrutiny of accounts. In the past, the State Auditor
examined departmental budgets with a critical eye, but if he
uncovered evidence of the mismanagement of funds, his findings
went no further than the offices of state. Now, procurement officials
were exposed to the spotlight of publicity; to use a different metaphor,
a vigilant parliament might be expected to wash any dirty linen in
public.
The difficulties of choosing the right contractor were compounded
by the need to keep to a minimum delays in the completion of
contracts. Procurement officials bore the ultimate responsibility for the
satisfactory completion of work on schedule. This was a heavy burden
to bear. Failure to ensure that work was completed on time implied
that Russia's armed forces would fall behind their rivals in qualitative
terms. The risks attendant upon another Tsushima did not need to be
laboured. Officials had little scope to affect the progress of orders,
which might be affected by industrial disputes or bottlenecks, whether
caused by the Russian climate or other exogenous factors. But, if a
major programme were badly delayed, these officials would be
charged with negligence or incompetence. The dilemmas that con-
fronted those in charge of military procurement should not be under-
estimated. They had a duty to ensure that work was delivered
promptly; but, at the same time, their masters told them to exercise
caution in the award of contracts, in order to obtain maximum value
for money. The reconciliation of these objectives would tax the most
professional and hardworking official in the defence departments.
Faced with difficult choices - whether to purchase from foreign or
domestic suppliers and, if the latter, from state or private works -
procurement officials understood that their behaviour and decisions
were subject to closer scrutiny than at any time hitherto. They
laboured at a considerable disadvantage. The domestic and inter-
national context within which they operated had changed dramati-
cally since the beginning of the twentieth century. Yet the conditions
in which they worked had not altered. Procurement officials were
 Defence procurement 263

poorly paid, had little prospect for career advancement and, in con-
sequence, lacked motivation. A job that called for greater professional-
ism and expertise offered no more tangible rewards by 1914 than it had
a decade previously. We shall begin by examining some of the con-
sequences of government indifference to their career structure.

The arms lobby and the procurement process

Eckhart Kehr argued that arms suppliers manipulated govern-
ment and public opinion, in order to secure contracts. Leading firms
helped to manufacture war scares, as well as armaments.2 There is,
however, no evidence that Russian industrialists either manipulated
public opinion or exercised a direct influence over foreign and defence
policy. Industrialists obviously had opinions about the course that
Russian foreign policy should take. For example, many Moscow mer-
chants individually and collectively espoused the cause of Russian
nationalism and favoured an active government policy in the Balkans.
The group around the textile magnate P. P. Riabushinskii was par-
ticularly vocal in this respect, and took the opportunity to publicize its
views in the press. But they echoed the widespread view among the
middle class that Russia had a mission to act in Europe on behalf of
fellow slavs. Economic considerations played only a modest part in the
formation of this sentiment. Nor did armament firms engage in the
offensive.3
On the other hand, abundant evidence has come to light that arms
suppliers lobbied government officials, in order to secure defence
contracts. This practice is unsurprising: the nature of the product
commits defence contractors to the lobby of government. In Russia,
this behaviour became a hallmark of the newly emergent arms trade.
But did the lobby betoken the strength of monopoly capital, as Soviet
historians used to argue? Or did it reflect, rather, the weakness of the
industry, in the face of budgetary constraints and challenges from
other potential suppliers? Was there, indeed, anything distinctive
about the behaviour of arms suppliers? One of the early historians of
the Russian bourgeoisie believed that lobbying, with its attendant
features of bribery and corruption, was a pronounced element in
business behaviour. According to this account, Russian industrialists
wasted energy and capital on the unproductive pursuit of officialdom,
instead of investing in new technology, as any self-respecting entre-
preneur should have done. But in the competitive environment of
many Russian industries, their conduct was perfectly understandable.
264 Rearmament and industrial ambition

In armaments, where conditions of monopsony prevailed, lobbying

became an essential business practice.4
The representatives of private firms assiduously cultivated contacts
with officials in government departments. Former government
officials infiltrated company boards. Colonel Soskinovskii, an ex-
Admiralty man, represented the Nikolaev yards before the Main Ship-
building and Supply Administration (GUKS); Noblessner's interests
were looked after by Captain N. Karpov. I. Pushchin, a top official in
GUKS, was employed by the Russo-Baltic Company and the Sormovo
engineering works; upon retiring, he promptly joined the Russian
subsidiary of the German firm Schichau. The shipbuilding conglomer-
ate Nikolaev-Russud scooped the pool, by recruiting Admiral I. F.
Bostrem, the former deputy Navy Minister. Other ex-government
employees recommended themselves, because they could offer advice
on naval technology: Admiral Krylov, for instance, served as a consul-
tant to a number of private shipyards. Other firms made a point of
picking up former civil servants from the Ministry of Finances. The
Putilov board included several directors - Putilov himself, A. A.
Davydov and von Dreier - from this fertile source. Such men were
valuable, not only because of their technical expertise, but also because
of the links they preserved with government personnel. Yet they were
not recruited solely in order to lobby for contracts. Many of them owed
their appointment to the big commercial banks, who wished to have
their men in positions of influence within the firm.5
Arms suppliers regularly made informal approaches to government
officials after 1908, to enhance their standing and competitive position.
The representatives of the private sector found a receptive audience
amongst those responsible for defence procurement. This became clear
from the results of a lengthy investigation, conducted during 1910 and
1911 by Senator N. P. Garin into the behaviour of the military procure-
ment agencies, in particular the Main Artillery Administration (GAU)
and the Chief Quartermaster's Department (GIU). But Garin's inquiry
and subsequent report ranged well beyond the lobby.6
Garin investigated defence procurement in the military districts
(voennye okruga) of St Petersburg, Moscow, Kiev, Odessa and Kazan.
Private firms were compelled to make available their commercial
correspondence and financial accounts. Garin devoted much of his
final report to the financial overspend in the procurement process. He
complained that the staff in the GAU and GIU had no incentive to
conclude defence contracts on terms that were financially advan-
tageous to the government. Instead, officials connived at the attempts
 Defence procurement 265

by potential suppliers to subvert the procurement system. Officials

employed by the GIU were particularly likely to line their pockets
with bribes and other inducements, failing to subject contracts to close
scrutiny. In the GAU, they turned a blind eye to collusion between
arms suppliers.7
This aspect of the behaviour of procurement officials attracted a
good deal of attention from Soviet historians. Missing from their
accounts, however, is the explanation that Garin gave for the corrup-
tion and inefficiency that prevailed in the main agencies. Garin inter-
preted the behaviour of procurement officials as a function of the low
quality of personnel that could be recruited, especially given the poor
rates of pay they received. The personnel at the GAU and GIU tended
to be men whom other government departments had turned down;
the unsuccessful candidates were thus deprived of the higher salaries
that they would have otherwise have commanded. Once employed in
defence procurement, they faced a miserable future. The procurement
departments offered nothing in the way of specialist instruction
which might make up for the lack of training available at the cadet
officer schools and other military education establishments. Further-
more, their responsibilities became more complex with each passing
year, but rates of pay did not rise commensurately: salaries remained
at the levels fixed during the reign of Alexander II. Meanwhile, the
army had doubled in size during the intervening half century, and
weaponry had become more sophisticated and expensive. Garin
observed that 'the work falling to each individual official has
increased many times. In addition, whereas formerly many items of
military subsistence were produced in the regimental economy, now
they are procured by the GIU'. Promotion prospects, like the rate of
pay, were poor. A less inspiring and satisfying career would have been
difficult to find.8
The men recruited into the administration of procurement thus
tended to be second-rate and poorly paid, and easily prey to bribery
and corruption. Garin exempted most of the GAU officials from this
latter charge, but was no less critical of the artillery administration,
which delayed the confirmation of contracts, made abrupt changes to
specifications and even dispatched the wrong parts to be assembled at
workshops hundreds of miles away. Garin advocated improvements
in training and salaries. He advised that mundane clerical and book-
keeping jobs could be performed equally well, if not better, by civil-
ians, rather than by military men. Officers would then be free to use
their military and technical knowledge in more appropriate ways.
266 Rearmament and industrial ambition

They could at least acquire a degree of professional status, pride and

commitment.9
The Tsar, however, brought Garin's revealing investigation to an
abrupt halt at the end of 1911. Furthermore, he refused to sanction the
publication or even internal circulation of Garin's findings. Why the
sudden change of policy? Nicholas II appears to have acceded to the
wishes of officials in the Ministry of War, backed by the newly installed
Sukhomlinov, who objected vigorously to any inquiry that smacked of
outside interference. Initially, Sukhomlinov and his staff had gone
along with the investigation, because an outright refusal to cooperate
would have inflicted further damage on the already heavily criticized
Ministry. But they did so reluctantly, and Sukhomlinov managed to
withhold information from the team of investigators, such as that
relating to the stocks of equipment held in readiness for mobilization.
Towards the end of 1910, he warned the Tsar that Garin's inquiries
were undermining the confidence and activities of procurement
officials in the GIU. Nicholas heeded the implied advice and asked
Stolypin and the Ministry of Justice to close the investigation. The
government decided not to prosecute the officials who had violated
the law.10
At first sight, Sukhomlinov's actions provide another damning
indictment of his ministerial performance. But this conclusion would
not be entirely fair. Sukhomlinov and Garin shared a common vision
of a professional bureaucracy. The Minister of War agreed that his
personnel should be encouraged to devote their time to military
training and education, rather than to the performance of routine
administrative and 'policing' duties, which could be entrusted to
properly trained civilians. To that extent, there was common ground
between the two men. Unfortunately, this admirable vision required a
substantial investment of time and money.11
Meanwhile, Garin's investigation uncovered evidence that private
firms paid retainers to insiders in the GAU and GIU or rewarded them
with cash or shares, in exchange for detailed information that would
help them in preparing a bid for a government contract. But the level
of corruption can hardly be called impressive. Most of the firms named
were small fry, such as the Polish firm of Lilpop, Rau and Levenstein
and the engineering company, K. Rudzkii, based in Warsaw and
Ekaterinoslav: 'between 1899 and 1909 not one order to these firms
was approved without bribes'. Two well-documented cases neverthe-
less revealed that substantial sums of money also changed hands.
The newly formed submarine firm, Noblessner channelled bribes to
 Defence procurement 267

officials in the Admiralty through the Loan and Discount Bank, in

order to counter the competition posed by the state-owned Baltic
works. The managing director of the long-established Tula Cartridge
Company N. E. Ponafidin, systematically paid 1 per cent of the value of
contracts for cartridge cases and cupro-nickel to officials in the GAU.12
The emergence of an arms lobby and of informal contacts between
contractors and procurement officials should be seen in the context of
an uncertain market. Arms suppliers desperately needed to bring
themselves to the attention of the government and to secure contracts,
given their peculiar vulnerability: 'the plant (wrote one leading arms
manufacturer) is huge ... any thought that orders for military vessels
will stop at some stage is quite frightening'.13 In addition, Russian
entrepreneurs in this unusual industry pleaded for more forward
planning (planomernosf) in the distribution of orders, a view sup-
ported by Garin. Forward planning by the GAU would help to
improve productivity: 'if there is some certainty about orders for
several years ahead, and about the repetition of similar types of order,
then the adoption of best practice techniques will make production
more straightforward and advantageous, leading to a significant
reduction in costs'.14 The attempt to forge a relationship with the
procurement agencies could be justified, not only as a survival tactic,
but also as a device to promote the improved use of available capacity.
Garin advocated a radically new approach to procurement, in which
formal negotiations between the government and a network of sup-
pliers would replace the prevailing atmosphere of secrecy and corrup-
tion. There was much to be said in favour of the creation of an
institutionalized forum in which a working relationship between
industry and government could be devised. The establishment of a
formal body in which both parties were involved would remove many
of the grievances that industrialists currently articulated. It could
educate officials about the technical problems associated with the
manufacture of different products. It could help to reduce the time lag
between the decision to acquire a particular product and the confir-
mation of a contract. And it could eliminate many of the labyrinthine
procedures involved, especially in the procurement of uniforms and
boots, dispelling the doubts entertained by some of the best firms and
encouraging them to participate.15
Some businessmen were certainly guilty of attempts to suborn pro-
curement officials; others probably escaped detection by being too
subtle. Large firms had other strategies up their sleeve. They could
exercise control over the market, by forming agreements between
268 Rearmament and industrial ambition

themselves as did Kolomna and Sormovo in machine-building and the

two shipyards of Nikolaev and Russud. They could trade on their
indispensability to government. Whether the government could flex
its own muscles in response depended upon the performance and
potential of the state sector and upon the extent to which the govern-
ment was prepared to exercise its option to buy from foreign firms.

The introduction of system: the formation of the

Shipbuilding Commission
Garin's report made no mention of shipbuilding, but the
institutional model he advocated seems to have been based upon the
arrangements recently created for the procurement of military vessels.
From 1908 until 1917, no major shipbuilding contract was awarded
without the approval of a government commission, in which procure-
ment officials, technical experts, accountants and (on occasion) private
contractors took part. In deciding the criteria for the award of con-
tracts, this commission busied itself with the internal affairs of state
and private enterprises alike. Its deliberations provide valuable
insights into prevailing attitudes and procurement practice. The back-
ground to its formation also reveals the struggle that surrounded any
attempt at institutional reform in late imperial Russia.
The approval of the 'small shipbuilding programme' in 1907 made it
imperative to proceed with administrative reform of the Navy Minis-
try. Its current practices were criticized within the Duma and by liberal
and conservative newspapers alike. Stolypin, in particular, believed in
the necessity for reform of the Admiralty's existing procurement pro-
cedures. He initiated plans for a new authority that could take over
naval procurement from the Ministry. However, naval officials did not
give up their powers without a fight. When reform was ultimately
imposed, Admiralty officials managed to retain considerable authority.
In the autumn of 1908, the Admiralty got wind of a projected 'chief
administrative commission for shipbuilding'. Under the draft project,
sponsored by the Ministry of Finances and backed by the State Audi-
tor's office, the commission was empowered to consider all aspects of
shipbuilding, including technical details of construction. To that end,
its chairman could invite 'specialists in various branches of shipbuild-
ing and construction' to take part in its proceedings. The plan made
private businessmen, as well as engineers and technical specialists,
eligible to participate, in the guise of invited consultants.16
From the point of view of the navy, the most offensive aspect of the
 Defence procurement 269

proposals concerned the dilution of ministerial authority. Two repre-

sentatives each from civilian ministries (Finance, Trade and Industry,
and State Audit), as well as from the War Ministry, would join
Admiralty officials in administering state shipyards, and planning and
monitoring procurement. The commission would thus - uniquely -
constrain the Admiralty, whose officials also objected to the open-
ended manner in which outsiders might be invited to take part. The
Deputy Navy Minister, S. A. Voevodskii, found these proposals par-
ticularly irksome, at a time when (as he put it) the Ministry was making
'every effort' to confront the problems arising from the consequences
of the Russo-Japanese War. The Minister, Dikov, conveyed these views
in writing to Stolypin.17
However, the formation of an inter-departmental commission was
not without precedent, as other members of government were quick to
point out. The State Auditor argued that the programme of artillery
rearmament between 1900 and 1908 owed its success to such a body,
which possessed powers in excess of those envisaged by the projected
commission on shipbuilding. In these circumstances, the Ministry had
to accept some kind of control on its activities.18
In a parallel draft, prepared by the Admiralty, the navy rejected any
representation from the Ministry of War and from the Council of
Ministers, on the grounds that the commission's brief was to consider
economic aspects of shipbuilding, and not 'questions concerning naval
rearmament in general'. This tactic was designed to counter the argu-
ments put forward by the State Auditor, who urged that the GAU and
General Staff be included on the commission, in order 'to assist the
creation of communication between the fleet and the army'. The
Admiralty also insisted that only 'approved and well-informed' men
could be invited to attend the commission's deliberations, and rejected
the participation of private businessmen, whom it deemed insuffi-
ciently informed to participate.19
The statutes of the Shipbuilding Commission (Soveshchanie po
sudostroeniiu) eventually received imperial assent on 10 December
1908. In its final form, the Commission had one representative (rather
than two) from the three civilian ministries. The Ministry of War failed
to get any seat at all, putting paid to any hope that the Commission
would serve as a forum for debate between the two defence depart-
ments. Nor, to their acute disappointment, were private entrepreneurs
allowed to participate in the deliberations of the new body, except
when summoned to answer questions relating to proposed contracts.
To a considerable extent, therefore, the intense lobbying by the
270 Rearmament and industrial ambition

Admiralty had borne fruit. However, the presence of three representa-

tives from the navy, together with the Chairman (ex officio, the Deputy
Navy Minister) did not give the Admiralty an automatic majority on
the Commission, because along with the three representatives from
civilian ministries, the chairman of the Council of Ministers appointed
his own nominee. From this point of view, the commission appeared
to be finely balanced. The right given the Chairman to nominate
temporary members, with equal rights to those of permanent
members, could tilt the balance one way or the other.20
According to article one of the regulations, the commission had 'to
consider the economic and financial questions arising from the pro-
posed measures for construction and equipment of warships and for
the supply of new naval bases in accordance with the shipbuilding
programme'. The commission could thus consider the prevailing
economic circumstances, advise on the choice of particular contractors
and examine the conditions under which contracts were to be carried
out. In addition, the commission considered requests that might be
made by contractors for financial support or (what amounted to the
same thing) for relief from financial penalties that attached to delayed
completion of work. The only aspect of the naval rearmament pro-
gramme which was explicitly excluded from its purview were the
technical details of ship construction and armament. Once such details
had been determined, all remaining matters of procurement were
supposed to come before the commission.21
The Admiralty had thus gained important concessions during the
course of discussions about the formation of the proposed commission,
which did not have the power to consider technical questions; still less,
didit have the right to raise questions relating to the rearmament pro-
gramme in general. Its responsibility was confined to the implemen-
tation of a given policy. Furthermore, representation from other
departments of government had been whittled down. If the chairman
found himself unable to agree with a majority decision in the commis-
sion, he could take the issue up with the relevant ministry and, if
necessary, refer the matter to the Council of Ministers. Finally, a crucial
amendment allowed the Chairman the right to pack the new body
with supporters of the Ministry.
The commission exemplified many of the best and worst features of
tsarist bureaucratic administration. Its members, who included such
well-known experts as Admiral A. N. Krylov and K. P. Boklevskii, the
dean of the shipbuilding faculty at the St Petersburg Polytechnic, were
dedicated and well versed in matters concerning ship construction
 Defence procurement 271

and naval rearmament. Meeting weekly, often for five hours or more,
the commission demonstrated an impressive capacity for the detailed
consideration of naval construction programmes and the finances of
Russian shipyards. At the same time, the Admiralty tried to subvert the
work of the commission, by allocating orders without seeking its prior
approval. Some orders were approved directly by the Main Admin-
istration for Shipbuilding (GUKS). In such instances, the Ministry
incurred the wrath of such men as Boklevskii, and of Stolypin himself,
but their displeasure seems to have caused naval officials few sleepless
nights.22
No less disconcerting were the suspicions that the commission
entertained towards private enterprise, suspicions that Boklevskii, in
particular, did his best to counter. Boklevskii was at one time portrayed
in Soviet historiography as the 'delegate of monopoly capital'. In fact,
he maintained an objective stance towards the private and public
sectors, arguing that the commission should be guided in the main by
considerations of available capacity, production costs and completion
schedules, rather than by preconceived ideas about the desired destiny
of contracts. Quite simply, the shipbuilding commission never became
the poodle of private enterprise. Leading private businessmen, such as
S. I. Mikhin, A. K. Voigt and Tokarskii (representing, respectively,
Sormovo, Putilov and the Confederation of Northern and Baltic
Engineering Industry) had been invited to attend a special meeting to
consider the 1907 shipbuilding programme. But they were conspicuous
by their absence from the new commission. Private enterprise, there-
fore, had to fight its own corner, without any institutionalized access to
government. If a 'special relationship' did exist, it was not to be found
in the corridors of the shipbuilding commission.23

Foreign or domestic supply?

The principle that the Russian government should give prio-
rity to domestic suppliers in awarding defence contracts had often
been enunciated, but repetition simply served to underline its inef-
fectiveness in practice. As long ago as 1860, an imperial edict had
instructed government departments to order finished goods from
Russian factories wherever possible. However, the ministries chiefly
responsible for purchasing manufactured goods (the Admiralty and
the ministries of War and Transport) made no such undertaking and
ignored the ruling. In 1902, following the recommendations of a
special commission, government regulations for the first time required
272 Rearmament and industrial ambition

each department to provide the Ministry of Finances with a schedule

of orders that had been placed abroad. But the Ministry had no power
to veto contracts awarded to foreign suppliers, and the information it
gathered was allowed to gather dust in government files. The events of
1904-5 in any case rapidly undermined the position of the Ministry of
Finances. During the war against Japan, the government placed sub-
stantial defence orders with foreign firms.24
When the war ended, however, the government took more pur-
poseful steps to control ministerial purchasing overseas. In February
1907, the government introduced fresh regulations, requiring each
department to inform the newly established Ministry of Trade and
Industry of any proposed foreign order in excess of 10,000 rubles, and
to justify the award of such contracts to foreign firms. The Ministry
had the right to challenge such contracts and to raise specific cases
with the Council of Ministers. Russian industrialists, deep in the throes
of the recession, hailed this move as a much-needed concession; others
hid their private delight behind fulsome praise for the decision to put
'national interests' first, by protecting the balance of payments. One
leading banker and industrialist noted that 'our balance of payments
suffers from foreign orders for defence, and especially for naval pur-
poses'. But words were not enough. A battle began to ensure that this
new principle was upheld and, in particular, that orders would only be
placed abroad if the items in question could not be supplied by
domestic producers.25
Abundant opportunities existed to circumvent the new regulations.
Municipal authorities and railway companies, as well as central
government departments, placed orders with Russian merchant
houses, which imported goods from Britain or Germany, in order to
lessen the risk of detection. Another tactic was to ensure that the value
of each order did not exceed 10,000 rubles, the limit at which the
regulations came into effect. Procurement agencies could also insist on
a certain product specification, in the knowledge that only foreign
suppliers could meet those terms.26
These regulations did not apply to private enterprise, which could
only be prevented from ordering goods abroad by an outright ban on
imports. This was out of the question. The government did encourage
private customers to seek out domestic sources of supply. New regula-
tions had been introduced in 1903, enabling the State Bank to extend
loans to domestic shipping companies that bought Russian-built
vessels. The Bank could advance up to two-thirds of the cost, at a
privileged rate of interest. Between 1903 and 1906 these loans averaged
 Defence procurement 273

just under 2 million rubles per annum. However, the practice fell
victim to government retrenchment, and the loans ceased in 1906. In
any case, domestic producers laboured under other disadvantages.
Foreign suppliers received (or insisted upon) more generous advances,
and their products were subject to less stringent inspection procedures
than those applied to domestic goods.27
The Admiralty paid lip-service to the principle of import substitu-
tion, but subverted the principle as occasion demanded. There were, of
course, several advantages in ordering naval vessels from foreign
suppliers, notably speed of delivery and (often, but not always) price.
But these tactics brought the Admiralty into frequent conflict with the
Ministry of Trade and Industry, and sometimes, as over implemen-
tation of the 1907 shipbuilding programme, with the government as a
whole. The cornerstone of the small shipbuilding programme was the
planned construction of four new battleships. Admiralty officials
urged that the order for turbines and boilers be given to a firm in the
forefront of naval technology. Vickers appeared to be the most obvious
choice. In June 1907, the Deputy Navy Minister informed the Council
of Ministers that the Ministry had prepared a draft contract with
Vickers for two battleships. Under the terms of this contract, Vickers
would receive £386,000 for turbines, £219,000 for boilers and £400,000
for other work associated with the construction of the first battleship.
The construction of the hulls and fitting out the ships would take place
in Russia, using Russian labour and materials.28
These proposals immediately encountered opposition from the
Ministry of Trade and Industry. Shipov argued that there was no need
to involve Vickers or any other foreign firm in the implementation of
the shipbuilding programme. Turbines and boilers alike could be
manufactured, under licence from Parsons, by the Franco-Russian
Company in St Petersburg. The matter came up for consideration at
the Council of Ministers in November. The Navy Minister amplified
his arguments in favour of Vickers. Apart from the fact that it was a
leading supplier of turbines and boilers, and could be relied upon to
deliver these items promptly, Vickers offered further advantages, in
helping to define the specification of armaments on the vessels. The
British firm outlined a project for the construction of a battleship of
21,000 tons, fitted with a total of twelve 12-inch guns, distributed
between four turrets. By contrast, the state shipyards offered to fit only
ten guns, mounted in five turrets. Other members of the Council of
Ministers were not impressed by these arguments. Instead, they took
the view, outlined already in a memorandum submitted by the
274 Rearmament and industrial ambition

Confederation of Trade and Industry, that 'domestic and not foreign

factories should be involved in such crucial national matters as the
rebuilding of the Russian fleet'. The cabinet took the view that the
Russian shipbuilding industry currently experienced the 'utmost diffi-
culty'. Economic, rather than technical aspects of the question were of
paramount importance.29
This did not signal the end of the Admiralty's attempt to involve
foreign enterprise in the production of battleships. After the cabinet
meeting on 13 November, the government set up an inter-depart-
mental commission to arrange for tenders to be submitted. By March
1908, eighteen tenders had been received, including eight from foreign
companies and five from Russian factories (the remainder were pro-
jects submitted by Russian engineers). Among the foreign projects was
one submitted by Vickers, a somewhat futile gesture in view of the fate
of the previous contract. The commission tried to circumvent the
wishes of the government and came out in support of a tender from
the Hamburg firm of Blohm und Voss. When he heard of this proposal,
Kokovtsov fired off a sharp note to Dikov. However, Kokovtsov's
objections to the proposed deal did not draw upon the traditional
argument about domestic industry; instead, he observed that 'such an
assessment by the commission of the various projects may have an
extremely unfavourable impact on French public opinion and seri-
ously affect the progress of our negotiations for indispensable foreign
credit'.30
No doubt with this warning in mind, the Main Administration of
Shipbuilding and Supply recommended to the Council of Ministers
that the contract be given to the state-owned Baltic yards. The contract
stipulated that the state shipyard would supply the hulls for two
battleships and that the order for turbines would be subcontracted to
the Franco-Russian Company. However, the key element in the con-
tract was the technical assistance to be provided by the British ship-
builders John Brown. This proved to be the pattern for the future. Yet,
notwithstanding the decision that had been reached, the Admiralty
succeeded in ordering at least one turbine from the German firm AEG,
on the pretext that disagreements over the terms of the contract with
the relevant Russian supplier held up progress.31
The Ministry of Trade and Industry continued to urge the defence
departments to purchase industrial equipment from Russian suppliers.
In 1908, Shipov cited the depression of trade in support of this policy.
The Deputy Navy Minister made a lame attempt to demonstrate that
orders for machine tools normally went to Russian firms. What he did
 Defence procurement 275

not mention was that these were essentially agencies that imported
foreign manufactured goods. The government held firm to the prin-
ciple that priority be given to Russian firms. In 1913, for example, the
State Auditor secretly acknowledged that the cost of the 1912 ship-
building programme (421 million rubles) could have been reduced by
almost 30 per cent, if the government had approved the award of
contracts to foreign producers. But fiscal arguments were now out-
weighed by the need to use domestic industrial productive capacity to
the full.32
This policy should not be seen as a straightforward concession to
private enterprise. Balance of payments considerations played the
major part in government thinking on this subject. But, once the
government had agreed a set of principles for foreign orders, Russian
businessmen could legitimately urge the government to enforce the
1907 regulations. In the depth of the 1908 slump, the Confederation of
Trade and Industry sent evidence to Stolypin that the navy had
ordered torpedo boats and barges from British firms. Stolypin
extracted an assurance from the Admiralty that no such orders had
been placed. This did not satisfy the industrialists, but they could make
the government aware of the strength of feeling and attach their
rhetoric to the government regulations in force.33
What weakened their position, however, was the availability of
state-owned capacity. A decision to award contracts to Russian fac-
tories did not necessarily entail an order to the private sector. Gen-
erally speaking, orders for hulls and naval armaments went to Russian
producers, not because of lobbying by the private sector, but rather
because of pressure from sections of government, in particular, the
Ministry of Trade and Industry, and from the Shipbuilding Commis-
sion, on which the shipbuilders were unrepresented. Increasingly, as
firms such as the Franco-Russian Company and the St Petersburg
Metal Company moved into the production of turbines and boilers,
domestic factories received orders for more complex items, as well as
for hulls and naval armaments. The major factor now was the reali-
zation that foreign enterprise would supply technical assistance and
advice. As Vezhbitskii put it in 1908, 'there are already signs of specific
technical agreements between Russian factories and foreign firms,
which recognize that they can only use their productive capacity by a
certain kind of businesslike agreement with the Russian enterprise'.34
The bulk of orders before 1907 comprised defence products (see
tables 6.1 and 6.2). The beginnings of a decline in foreign orders can be
detected in 1909, but it is difficult to tell whether this trend was
276 Rearmament and industrial ambition

Table 6.1. Orders placed abroad by government departments, 1901-1910

(million rubles)

War Navy Transport Total % Defence

1901 3.05 19.02 2.23 25.93 85

1902 2.18 17.41 1.43 22.26 88
1903 2.55 10.09 1.50 15.70 80
1904 16.91 21.33 1.57 41.83 91
1905 73.13 68.42 4.93 148.05 95
1906 4.44 18.08 2.38 27.78 81
1907 5.61 12.37 3.46 25.34 71
1908 3.15 7.07 2.24 16.22 63
1909 2.56 5.72 1.78 14.53 57
1910 4.93 n.a. 1.48 n.a. -

Note: figures include import duties

Source: Otchet otdela promyshlennosti za 1911, St Petersburg, 1912, pp. 146-7.

Table 6.2. Foreign share of military orders, 1907-1910

War Navy

Weapon outlays Foreign Shipbuilding Foreign

orders orders

(million rubles) (million rubles)

1907 35.1 5.6 16 34.8 12.4 36

1908 35.3 3.2 9 31.3 7.1 23
1909 36.9 2.6 7 24.6 5.7 23
1910 39.4 4.9 12 26.2 n.a. n.a.

Source: as for table 6.1; expenditures derived from Proekt gosudarstvennoi rospisi
dokhodov i raskhodov, St Petersburg, 1907-10.

sustained or reversed as rearmament gathered pace in 1910. The War

Ministry ordered around ten per cent of its weaponry from overseas
suppliers between 1907 and 1910. By contrast, nearly one-quarter of
orders for naval vessels went to foreign firms.35
The significance of the foreign contribution to the rearmament drive
is made difficult to assess by the absence of figures for orders placed
after 1910. The government preferred to place orders with domestic
suppliers, counting on their contacts with foreign firms. However, this
 Defence procurement 277

strategy seems to have come under pressure on the eve of the First
World War. In 1913, for example, the GAU was authorized to spend ten
million rubles, in order to bring its reserves of shell up to strength, but
three million rubles went to the Rhine Iron and Steel Company in
Dusseldorf. The GAU spent over 19 million rubles on foreign orders in
1914, although the sum was earmarked mostly for purchases of
machine tools and other equipment for the armaments enterprises,
rather than on military goods.36
The government's preoccupation with the balance of payments
coincided neatly with business interests. Both parties sought to create
the conditions for import substitution in defence procurement.
However, this strategy - it can hardly be called a policy - was con-
stantly being subverted, particularly by the Admiralty. One answer lay
in seeking foreign technical assistance to domestic firms. But the
lengthy negotiations that preceded such agreements put Russian
participants at a disadvantage and their aspirations could easily come
unstuck when the pace of defence procurement intensified.

State and private enterprise: the internal arms race

The dichotomy between state and private enterprise in Russia
was charged with more significance than in any other contemporary
industrial power. To weaken the traditional grip of the state over
armament production entailed a corresponding growth in the oppor-
tunities afforded private enterprise. The prospect that the production
of armaments might one day come to depend on the whim of Russian
capitalists and the vagaries of the marketplace alarmed tsarist officials
to distraction. They intended to preserve the tsarist state from the loss
of sovereignty implied in the supremacy of capitalism. At the very
least, the extension of armaments production to the private sector
would call for a partnership between capitalists and government,
unmediated - in the worst case - by the possibility of calling upon the
services of state-owned enterprise.37
It was not simply self-interest that prompted a spokesman for the
Obukhov shipyards to defend state ownership of assets: 'foreign and
private firms are keen to offer their services, but the state ought not to
make its defence completely dependent upon the political mood of
foreign suppliers or on the pecuniary appetites of native industrial-
ists'.38 This was a widespread view. Even S. I. Timashev, the Minister
of Trade and Industry, in no way a committed opponent of private
enterprise, expressed the view that 'in the matter of production of
278 Rearmament and industrial ambition

armaments, the government must not depend upon private factories'.

The Minister of Finances and the State Auditor shared this opinion.39
Government representatives stuck to this conviction, even during
the depths of industrial recession, when the government faced a fierce
onslaught by Russian businessmen. The prolonged depression not
only exposed the frailty of private firms, but also highlighted the
privileges enjoyed by the state sector. The jealous assault by industrial-
ists on state enterprise reached a crescendo during the conference on
the iron and steel and machine-building industries in 1908. Few
industrialists could resist the opportunity to attack the government's
support for state enterprises, at a time when the private sector was
depressed. The most outspoken critic of government policy, the
maverick Moscow industrialist Jules Goujon, demanded that the state
withdraw entirely from industrial production. He urged the sale or
closure of government-owned steel and engineering works, 'which
yielded the government nothing but losses, because of poor manage-
ment practices'. Noting that state enterprises did not have to pay fines
for delays in delivery, Goujon called for such discrimination to be
scrapped. Other business leaders rehearsed the arguments against
state enterprise, pointing out that the inefficient performance of par-
ticular state factories was concealed by government subsidies, which
allowed them to compete unfairly with the private sector. The compe-
titive advantage of the state sector was artificially maintained by the
fact that overheads, as well as tax and insurance payments, did not
figure in their cost schedules. State factories also received advances,
varying from 50 to 75 per cent of the value of the contract, which freed
them of the need to borrow from financial institutions at prevailing
rates of interest. Stories also circulated of corruption in the procure-
ment agencies. Officials reportedly advised state armouries of the price
at which the government intended to purchase a product, enabling
them to undercut their rivals in the private sector.40
This concerted attack on the state sector provoked a vigorous
response from the Ministry of Trade and Industry, whose spokesman
(N. A. Iossa) denied that state-owned ironworks competed with
private factories. He rejected the specific charge, levelled by Goujon,
that the large armoury at Motovilikha was a fundamentally unsound
enterprise. Although he acknowledged that some state works were
demonstrably inefficient, Iossa pointed to the deleterious con-
sequences that would follow their closure: 'this question is connected
with the question of the conditions of numerous workers'. Similar
arguments had been advanced by other government officials, who
 Defence procurement 279

raised the spectre of unemployment and social instability. In 1911, the

State Auditor maintained that 'the government should come to the aid
of the private sector, only after state factories have been fully supplied
with work'. These arguments cut no ice with private entrepreneurs.
Vezhbitskii, one of the spokesmen of heavy industry, was unim-
pressed by the official justification of procurement policy. He insisted
that state enterprises themselves should come to the rescue of strug-
gling private firms: 'in the event of a general decline in demand, state
works should give some of their orders up to private enterprise'.41
The consensus amongst Russian industrialists was that the state
sector occupied an anomalous position in Russia. Only the equali-
zation of conditions for state and private enterprise - by the extension
of commercial principles to the former - would begin to give satisfac-
tion to the industrialists. After 1908, as the depression lifted, so too did
many of the dismissive comments of private entrepreneurs. But they
retained a belief in the fundamental unfairness of a system that
regarded state shipyards and armouries as having a prior claim on
government contracts.
Whatever their shortcomings, the tsarist government never contem-
plated the privatisation of its arsenals and shipyards in their entirety.
As we have seen, even the state ironworks, the weakest link in the
chain, escaped this fate, albeit not without a struggle. The most per-
suasive argument used against privatization proposals was a familiar
one: state ownership of works such as Motovilikha guaranteed that
the government would not be bound by prices set by the private
sector. This was a sensitive issue, for economic as well as ideological
reasons: the government believed that the iron and steel syndicate,
Prodamet, had forced up prices, and had no wish to see the armament
industry fall victim to a private monopoly. It was wholly inappropriate
to transfer ownership in the foreseeable future: 'the removal of the
Perm ordnance works from state administration, and the transfer of
responsibility to a private joint-stock company, must be regarded as
unwelcome and even harmful from the point of view of the proper
supply of armaments to the army and navy, at the cheapest possible
price'.42
The attacks mounted by businessmen challenged the foundations
upon which state enterprise rested, and demanded a response. The
government continued to attach crucial importance to the functions
fulfilled by state shipyards and armouries. A semi-official statement
insisted that 'the armouries and arsenals weaken the dependence of
the state in wartime upon private industry for the supply of defence
280 Rearmament and industrial ambition

goods, and in peacetime regulate the prices for armaments on the

domestic market'.43
At the heart of the procurement decision-making process, therefore,
lay the belief that the prices charged by state factories established a
benchmark against which private bids could be judged. This infor-
mation could be used to drive a hard bargain with private enterprise.
How successful was this strategy? When the occasion demanded - that
is, when they wished to enter the market - private firms deliberately
undercut the state armouries and shipyards. In 1908, for example,
Putilov offered to deliver 3-inch quick-firing artillery pieces at 1,030
rubles, equivalent to the (cost) price charged by Obukhov. The circum-
stances were unusual: Putilov put together what looked like an attrac-
tive bid, in order to get business during a slump, by submitting a very
low bid on gun carriages (22 per cent below the Obukhov price), as a
device to obtain the contract for the guns. Having made provision for a
loss on the carriages, Putilov still made a profit of 35 per cent on the
artillery contract. Subsequently, as the depression lifted, Putilov devel-
oped a reputation for charging high prices, and the government's
attempt to stimulate competition and control prices succeeded only in
the short term.44
Nor did it always follow that new entrants undercut their rivals in
the state sector. The shipbuilding commission tried to play off two
suppliers of submarines, the state-owned Baltic shipyards and the
newly formed company, Noblessner, in order to force the private firm
to lower its bid. But Noblessner insisted that it could not reduce its
price, because of the high start-up costs involved. Sometimes, too, new
entrants found it impossible to reduce their prices, because of the need
to pay a licence fee to a foreign firm. In these circumstances, the rivalry
of state yards did not enter into the calculations of the arms trade.45
The government's basic strategy also came unstuck when firms
colluded, as they frequently did. In 1910, for instance, Putilov, St
Petersburg Metal and Nikolaev agreed on the bids they would submit
for the contract to supply naval gun turrets, in order to defeat the
Admiralty's attempt to force down prices. Garin observed that 'the
existence of actual competition in respect of artillery procurement is a
rare enough occurrence; the industry is not organized into a per-
manent syndicate, but collaborates over virtually every contract'.
When the pace of rearmament quickened, the government found it
difficult to respond to this kind of tactic. The prior existence of the state
sector made little difference, at a time when the government needed to
call upon all available capacity.46
 Defence procurement 281

Underlying the entrepreneurial rhetoric against state works lay the

assumption that they could not compete on equal terms with private
firms. How much truth was there in this belief; did state enterprises
operate with higher unit costs than equivalent firms in the private
sector? In powder production, the cost differential amounted to
around 28 per cent. This gap reflected, in part, the fact that the state
works had to buy inputs of saltpetre and pyrites from Russian sup-
pliers, whereas the privately-owned Schliisselburg powder works
obtained cheaper supplies from abroad. But this did not entirely
account for the higher costs at Okhtensk. The state works maintained a
larger workforce per unit of output, including a white-collar staff that
was nearly three times the size of the contingent at Schliisselburg.
Housing and other facilities also had to be found for the larger work-
force at Okhtensk. Taken together, the overhead costs associated with
a large plant condemned Okhtensk to a high-cost regime.47
It is more difficult to establish the extent of the differential in military
shipbuilding. When government shipyards were required to operate
as commercial enterprises, the prices they charged for armoured cru-
isers and battleships typically exceeded the trade price by between 10
and 18 per cent. This probably gives a fair indication of the cost
differential between the state and private shipyards around 1911. By
1913, as they acquired more experience in manufacturing modern
vessels, private yards opened up a slightly larger productivity gap
with the state sector. But it was unlikely to have exceeded 22 per cent.
Costs were also affected by the price of raw material and other inputs.
Private yards probably obtained relatively cheaper inputs, by import-
ing steel or acquiring it at a discount from steel mills within their orbit.
There was, therefore, some truth in the industrialists' charge that the
state sector was less efficient than the private sector.48
Notwithstanding the decision to place government shipyards on a
commercial footing after 1908, they still retained many of the features
that distinguished them from private enterprise in an earlier period.
Government armouries and ironworks belonged to a different world.
Managers were recruited from the civil service, not from the commer-
cial sector. Workers retained an attachment to a particular factory,
much as their forefathers had been obliged to do since the Petrine era.
A distinct culture pervaded the state shipyards and armouries, one of
fervent commitment to the government's armament programme and
belief in the inviolability of state-owned enterprise. This culture
turned the manufacture of weaponry into a duty, not just a shopfloor
routine. The introduction of self-financing did not undermine a belief
282 Rearmament and industrial ambition

that the quality of output, and an adherence to the broader goals of

government, mattered more than the balance sheet. The First World
War would do nothing to weaken the resolve of government officials
to support the state sector. Nor, however, did it dent the conviction of
private entrepreneurs that they alone were capable of displaying the
'energy and knowledge' demanded in the modern machine age.49

The professionalization of procurement and the decline of

the regimental economy
The ordinary soldier doubtless regarded the supply of decent
clothing, footwear and food as a rather more important matter than
the production and supply of armaments. Recognizing the element of
self-interest involved in the provision of such basic items of consump-
tion, the tsarist state had entrusted generations of ordinary soldiers
With the task of producing finished goods for their own use. The
responsibility of the Quartermaster's Department (GIU) was confined
to the supply of raw materials and semi-finished products to Russian
regiments. However, the dismal experience of the Russo-Japanese War
led the government to reassess its procedures. One of the main lessons
drawn from the war was the need to dismantle the regimental
economy, which had become discredited in the eyes of army officials
and soldiers alike. Critics pointed out that 150,000 soldiers, or 12 per
cent of men in uniform, spent their entire time supposedly on duty but
actually engaged upon the manufacture of uniforms and boots. The
leading Russian expert on military procurement asserted that 'the .
emancipation of troops from the burden of economic responsibilities,
and the transfer of those tasks to a procurement agency has conferred
an advantage on foreign armies', which needed to be redressed, if the
Russian army were to realize its full potential.50
The government responded by taking upon itself the responsibility
to supply troops with finished goods. In 1906, new legislation gave the
Quartermaster's Department authority, not only to procure materials,
but also to supply the army with manufactured goods. It was a popular
and overdue decision, but it burdened officials in the GIU with
additional responsibilities, at a time when their behaviour and perr
formance were coming under intense scrutiny. After 1908, as Garin
emphasized, the GIU budget increased rapidly, but the training and
salaries of its personnel made a much more modest advance.51
Henceforth, the Quartermaster's Department subcontracted work to
state and private workshops, and maintained a network of repair
 Defence procurement 283

shops, close to army units. Attempts were also made to enlist more
small-scale producers (kustari) and cooperative producers in the manu-
facture of boots and uniforms. The War Ministry offered preferential
terms to cooperatives and individual craftsmen, for example by no
longer requiring them to deposit a security against the raw materials
they received. The GIU also undertook not to enforce penalties in the
event of delays in the completion of contracts. By 1909, more than 50
per cent of clothing, as well as all bed-linen was being supplied by
various cooperative enterprises. Footwear was mostly produced in
small workshops or by gangs of workers (arteli). These decisions
demonstrated a deliberate government policy to sustain small-scale
enterprise, as happened in other instances as well. 52.
However, the new arrangements did not escape criticism. As Garin
discovered during his investigations, an unscrupulous contractor
could obtain a contract to supply cloth or finished goods, pocket the
advance and escape to a different town. Perhaps with this problem in
mind, the State Auditor recommended that the GIU deal with large-
scale suppliers, who also offered a cheaper and more reliable product.
In his view, small businesses had sufficient working capital and were
thus liable to be late in handing over the finished product. It is difficult
to ascertain whether this was a widely-held view, and nor is it straight-
forward to establish the extent to which the balance shifted towards
large enterprise. Recent research has tended to draw attention to the
vitality of small-scale enterprise, and it would be unwise to assume
that large firms automatically reigned supreme. According to the
standard source on the subject, small-scale industry contributed
around 90 per cent of all output in the footwear and saddlery trades.
The small producer received the prepared leather from the factory,
and cut, stitched and nailed the boots himself. In this industry, unlike
armaments, where the costs of entry were quite modest, it is likely that
rising levels of defence procurement opened the door to numerous
small businesses across the country.53
Meanwhile, the GIU relied less and less on semi-public auctions as a
means of acquiring semi-finished goods, such as cloth and leather.
Here, the War Ministry did follow the advice of the State Auditor,
dealing with larger and well-established (although not necessarily
more scrupulous) merchants. The GIU drew up lists of recognized
fabrikanty, with whom contracts Were concluded in advance. Never-
theless, these new arrangements did not eliminate the longstanding
problem of poor quality materials..The quality of cloth and leather
continued to give cause for concern, not so much because of the
284 Rearmament and industrial ambition

creeping impact on military morale, but because of the waste of

resources involved.54
This sphere of defence procurement did not escape the reform
initiatives that affected other branches of procurement. The GIU
created new economic committees (khoziaistvennye komitety) at the
uniform and equipment workshops under its administration. The aim
was to introduce the same kind of financial discipline that had been
imposed in other spheres of state enterprise. The committees
monitored costs of production and checked on the uses to which
equipment and materials were put. Workshops were required to
operate within a definite budget and to seek GIU approval for any
overspend. The intention was admirable, but inflation in the price of
raw materials played havoc with the regime of self-financing. The
problems were compounded by the difficulties of finding qualified
personnel for these management tasks.55
With what success, therefore, did the GIU meet its new tasks in the
aftermath of the Russo-Japanese War? Some difficulties persisted,
although these did not always reflect shortcomings in the procure-
ment system itself. For example, Russian producers failed to keep pace
with military demand for leather, and the GIU had to order from
foreign suppliers. This happened on two occasions: after the Russo-
Japanese War, when vigorous attempts were being made to improve
the quality of footwear, and on the eve of the First World War, when
demand reached a new peak. Whether this reflects success or failure,
of course, depended upon one's point of view. Russian manufacturers
bemoaned the reliance on imports, but the Russian army would have
adopted a much more positive attitude, applauding the flexibility
demonstrated by the Quartermaster's staff.56
A contemporary report commented that the GIU was making 'every
effort' to improve the quality of footwear assigned to the rank and file
troops. However, these efforts were hampered by financial constraints,
and the GIU was sometimes forced to sacrifice quality for quantity. In
1913, the War Ministry drew up estimates of expenditure, based upon
past consumption norms, as well as upon the average price that
prevailed in 1912 and 1913. But prices rose rapidly during the first half
of 1914 and the estimates rapidly became outdated: the Quartermas-
ter's Department reckoned to pay 6.35 rubles for a pair of boots, but
suppliers demanded 7.40 rubles.57
In dismantling the regimental economy, therefore, the tsarist regime
required an overstretched and underpaid staff to shoulder additional
responsibilities. In the circumstances - rapid growth in the size of the
 Defence procurement 285

armed forces, inflation in raw material prices - the GIU personnel

acquitted themselves reasonably well. If Russian soldiers went to war
insufficiently clothed and sheltered, the blame attached to military
planners, rather than to procurement officials, who responded to the
norms handed down by the General Staff. The other conclusion to be
drawn is that the mutual distrust that characterized the relationship
between business and government was very much evident in the
procurement of 'soft' items. The Confederation of Trade and Industry
called for the establishment of a committee, which would allow
government and business jointly to consider military procurement.
The proposal sank without trace, as if the decision to dismantle the
regimental economy and to deal directly with private enterprise para-
doxically convinced government officials of the need to keep business-
men at arm's length.58

The procurement and production of armaments:

performance indicators
The performance of the Russian armament industry can be
assessed in conjunction with the performance of the procurement
system. At stake are three key issues. First, arms suppliers must manu-
facture a high-quality product, and it is the task of the procurement
agency to ensure that standards are observed. The second element in
the contract relates to prices; the procurement system should operate
in such a way as to keep prices as close as possible to those specified in
the contract, subject to any unforeseen factors that may alter the
original terms agreed. Finally, the success of the procurement agency
will be judged on its ability to obtain the finished product within the
specified time. How successful was the Russian procurements system
according to these criteria? Finally, to what extent did it contribute to
raising the technological level of the Russian armament industry?
In the early years of the century, the government faced several
complaints from the military about the quality of finished goods.
Initially, the government simply responded by urging its suppliers in
the state sector to improve performance. The Ministry of Trade and
Industry instructed the Urals ironworks that an unacceptably high
proportion of output of shell and guns was defective. That these
criticisms gradually became less vocal suggests that the reform of
factory administration had left its mark. By 1913, for instance, officials
compared the quality of ordnance produced at Motovilikha very
favourably with similar products made abroad.59
286 Rearmament and industrial ambition

Senator Garin had harsh things to say about the quality of output at
some of the leading private firms, such as Putilov and Sormovo. But
not everyone shared his poor opinion. In any case, the quality of
output improved as these firms gained greater experience in manufac-
ture of weapons. In shipbuilding, for instance, Vickers' advisers in
Russia made sarcastic comments about the management and layout of
local plant, but they were impressed by the quality of finished pro-
ducts.60
No less important was the question of delivery dates. The experi-
ence of small arms suggests that the industry improved its delivery
schedules during the late nineteenth century. It took sixteen years to
re-equip the Russian soldier with the Berdan rifle during the 1860s, but
only ten to complete the re-equipment of the army with the Mosin rifle
during the 1890s. Russian dockyards also handled the 1895 shipbuild-
ing programme reasonably well, although its completion owed a good
deal to frenzied activity during the Russo-Japanese War. What of the
period after 1905? Delays were common in state and private enterprise
alike, as Garin discovered. The annual reports of the State Auditor
testified to delays at Motovilikha, especially between 1907 and 1909.
Arrears (nedoimki) in production at the Perm plant were equivalent to
173 per cent of its total output in 1913. Sometimes, delays could be
explained quite simply, for instance by pointing to problems with the
supply of foreign parts for military vessels. But there were other, more
systemic problems at work. One of these was the excessive observation
of formalities at the level of individual enterprises in the state sector.
Another problem had to do with the constant changes in product
specification which were imposed on contractors, a problem that also
had implications for costs. The files of the Shipbuilding Commission
are filled with complaints about the fickleness of the procurement
agencies. Vickers' strongest criticism of tsarist procurement practice
was reserved for the constant changes made to product specifications
after contract terms had been agreed.61
The government tried to alleviate these problems in various ways,
including the imposition of fines on private enterprise for delays in
completion of work. This tactic had broader repercussions. For
example, engineering firms in the capital preferred to make concess-
ions to workers' demands, rather than risk the interruption of pro-
duction schedules by stoppages of one kind or another, and thus the
threat of financial penalties. More important than the financial penalty
was the realization that they might forfeit their chance of orders in the
future. However, it is difficult to establish the extent of this strategy.62
 Defence procurement 287

Government officials sought to keep down procurement prices,

directly, through inviting firms to submit tenders and, indirectly,
through the procurement of raw materials at auction. But private firms
often undermined this objective, by colluding between themselves to
submit an agreed price, and compensating the losers. The State
Auditor reported in 1913 that an informal syndicate of private ship-
builders had forced up the prices: 'taking advantage of the favourable
opportunity to grab government orders, and receiving lavish subsidies
from the commercial banks, Russian firms have formed alliances in
order to apportion orders according to their discretion. This has com-
plicated and certainly held up the shipbuilding programme'.63
The government expressed the hope that the competition between
state and private sectors would act as a restraint on price inflation. The
evidence on this last point is, as we saw earlier, inconclusive. The State
Auditor believed that competition succeeded in restricting the rate of
price increases in defence procurement. On the other hand, Senator
Garin argued that state works sometimes charged higher prices than
the private sector, thereby undermining the principle that they should
'regulate' procurement prices.64
Whatever moderating influence may have been exerted on prices
by such rivalry, the fact remains that the general tendency was for
costs and prices to rise, as a result of the inflation in raw materials
prices before 1914. The tariff on iron and steel raised the cost of inputs
(crude steel and sheet steel sold for between 0.95 and 1.20 rubles per
pud in south Russia, but cost 1.45 rubles in St Petersburg. The equiv-
alent cost in Britain was between 0.75 and 0.90 rubles). These factors,
rather than the activities of Prodamet, helped to inflate the price of
finished armaments. In shipbuilding, too, specific forces operated to
inflate procurement prices, such as the transition to more advanced
and costlier technologies in propulsion and armament.65
Other factors operated to maintain high costs and to delay the
completion of contracts. In particular, neither the GAU nor GUKS
allocated orders in a systematic manner to individual factories. A
special report, prepared for the State Council by three councillors,
including Rodiger, the former Minister of War and Dmitriev, a special-
ist on naval shipbuilding articulated this view. Explaining the relative
time taken to construct vessels in Russia, Germany and the UK, as well
as the high costs of construction in Russia compared to these other
countries, the authors rejected some of the conventional explanations,
such as the lack of a well-developed indigenous commercial shipbuild-
ing industry and the high cost of raw materials, which were offset by
288 Rearmament and industrial ambition

the relative cheapness of labour. Instead, they argued that the

Admiralty had a haphazard attitude towards procurement. Without a
clear indication of the size of orders, without any guarantee that the
orders would not be changed in a capricious fashion and, above all,
without a real commitment from the Ministry to the domestic industry,
the state yards were in a difficult position. Their capacity was under-
utilized and, as a result, they had high overhead costs to bear.66
How did the Russian armament industry perform relative to the
industry elsewhere? Construction costs were usually lower elsewhere,
even though wages were higher: in the British shipbuilding industry,
wages were up to twice as high as the corresponding rates in Russia,
and three or four times higher in the USA. In 1908-9, a British-built
battleship {bronenosets) cost 674 rubles (£71) per ton, compared to 764
rubles (£80) in Germany, 791 rubles (£83) in the USA and 809 rubles
(£85) in Russia. Only the French industry came out higher, at 833
rubles (£87), for reasons that remain obscure. The well-informed
authors of a contemporary study of the world shipbuilding industry
drew attention to the low level of labour productivity in Russian
shipbuilding, a function of insufficient on-the-job training and of
pre-industrial work routines. Russian workers took up to twenty-eight
days' holiday each year, compared to between six and nine days
elsewhere.67
How do these inter-country differentials compare with other
branches of industry? The cost differential between the Russian and
the European construction industry was considerably greater than the
figures for shipbuilding. In manufacturing industry, armaments
appears no worse (and no better) than cotton textiles, where low rates
of labour productivity likewise cancelled out the cost advantage con-
ferred on Russian industry by the prevailing low wages. Russian
manufacturing industry laboured under inherent disadvantages (com-
pounded by tariff protection); these appear to have affected some
branches of industry more seriously than armaments.68
To what extent did the Russian armament industry begin to attain
the European or world level of technology? Direct evidence on this
point is lacking. The large number of technical agreements Russian
firms concluded with their counterparts in France and the UK cer-
tainly held out the possibility of raising the technological level of the
Russian armament industry to comparable levels. The Russian govern-
ment took a deliberate decision to promote technological transfer; for
instance, the Ministry of Trade and Industry insisted that Russud
employ foreign advisers: 'the use initially of foreign expertise in the
 Defence procurement 289

manufacture of gun turrets and steam turbines is absolutely essential

in order to develop military shipbuilding in Russia and to reduce
production costs'. However, as late as 1913, the State Auditor com-
plained that Russian factories had to order turbines and boilers from
abroad, 'a further reminder of the technological backwardness of our
shipbuilding industry'. The gap between Russia and its industrial
rivals narrowed between 1905 and 1914, but it had definitely not been
bridged.69

Conclusion
The prewar history of Russian military procurement demon-
strated that the system began to acquire more modern features. Some
sections of the bureaucracy developed a more professional stance,
notably in shipbuilding, where haphazard devices for awarding con-
tracts gave way to a more systematic arrangement under the Ship-
building Commission. The creation of this body permitted more con-
sidered and informed decisions to be taken. A still more dramatic
change took place with the dismantling of the traditional regimental
economy and the substitution of government supplies of finished
goods.
Taken as a whole, however, the procurement system suffered from
significant defects. Officials were poorly paid and, at least in the Chief
Quartermaster's Department, poorly motivated as well. Until they
received adequate remuneration, and thorough training in the
complex technical, administrative and economic tasks of procurement,
they would remain ill-equipped for the job. Procurement officials
laboured under other constraints, especially financial pressures, and
had to respond to often aggressive and well-organized bids from
private entrepreneurs. These conditions would have taxed even the
best-paid and most highly-qualified personnel to the utmost.
The claims of private enterprise challenged the prerogatives of the
state sector and forced the government to concede that the arms trade
had a role to play. Yet the private sector hardly enjoyed a complete
triumph. The armament industry was especially vulnerable to shifts in
government spending priorities. In addition, the state sector served as
a counterweight to the burgeoning commercial arms trade. The
government owned fixed capital in armaments and shipbuilding, and
might conceivably add to that capacity in future. Such a strategy did
not lack advocates in prewar Russia. The government also sought
to harness non-corporate and small-scale industry to the task of
290 Rearmament and industrial ambition

industrial production. Hence the support given to organized cottage

industry, in the manufacture of basic military goods, such as boots and
uniforms. If the arms race handed the laurels to private enterprise in
Russia, the victory was bought on highly conditional terms.
Imports of armaments represented another challenge to the nascent
arms trade. In practice, however, Russian arms suppliers could dis-
count this threat. In an emergency, as happened during the Russo-
Japanese War, the government hurriedly held out the begging bowl to
foreign suppliers. But peace brought attempts to manage the balance
of payments deficit, and thus a deliberate policy to substitute for
imports. Some sections of the tsarist government, notably the Ministry
of Trade and Industry, also attached significance to the need to estab-
lish an indigenous industry. In armaments production, few military
planners countenanced a strategy that relied heavily upon imports.
Fortunately for Russian armament producers, these policies dovetailed
neatly after 1905.
The complex tasks of rearmament during the early twentieth
century emphasized that no realistic alternative could be found to the
involvement of large-scale private enterprise in the programme. State
shipyards and armouries, despite massive investment and the sizeable
labour force at their disposal, were in no position to cope single-
handedly with the demands of the arms race. Cottage industry might
manufacture boots and belts, but could not build battleships and heavy
artillery. Rearmament yielded orders for a small handful of enter-
prises, which possessed the capital and labour force to cope with the
demands of production. Yet the countervailing force of state enter-
prise, as well as the incipient threat of involving foreign suppliers in
the business of rearmament was sufficient reminder that corporate
power did not bring about the subordination of the tsarist government
to big business. In the twilight years of the old regime, government
ministers and civil servants kept their distance from private enterprise
and barely disguised their suspicion of the arms trade. Only rarely
does the historical record show any awareness of the possibility that
the tsarist government could harness private enterprise, in order to
create a dynamic partnership with the established state sector.70 Thus,
the 'internal arms race' between state and private enterprise differed
fundamentally from the rivalries evident in other continental econo-
mies before 1914. The difference reflected the fierce and deep-seated
aversion in sections of the tsarist regime to private enterprise. Prewar
rearmament brought these tensions to the surface. Nothing in western
Europe paralleled the resulting antagonisms.
7 Military preparedness and defence
capability on the eve of the
First World War

Introduction: Constructing the last argument of tsarism

A mere ten years separated Russia's disastrous engagement
with Japan from the cataclysm of European war. But this decade was
associated with some profound changes in Russia's body politic and
economic conditions. To embark on war in 1914 was to mobilize social
and political forces very different from those that operated in 1904; to
engage in armed conflict was not only to unleash larger and more
sophisticated armaments and personnel upon the enemy, but also to
call upon the resources of a more developed industrial economy. After
1905, and for the first time, Russia possessed an embryonic parlia-
mentary regime. To the extent that the Duma exerted limited control
over defence appropriations, the tsarist government had to take parlia-
mentary opinion into account when formulating defence policy.
Whether, in wartime, the Duma would behave as a pliant instrument
of the regime, or as the focal point of broader social tensions, remained
to be seen. Another major change involved the system of land tenure.
The government of P. A. Stolypin embarked on a thorough reorgani-
zation of land tenure, in an attempt to recast the relationship between
peasantry and the state, by making it possible for peasants to jettison
communal strips of land for individual, enclosed plots, thereby
strengthening a sense of property in land and other agricultural assets.
On the international stage, Russian diplomacy committed the country
more firmly than before to the alliance with France, holding out the
prospect that Russia could share the burden of defence with at least
one partner. Whether Russia would assert its own multifarious diplo-
matic interests, in the face of France's overwhelming preoccupation
with Germany, was a different matter. Finally, the prewar years wit-
nessed an upsurge in the rate of growth of the Russian economy. After
a painful period of financial uncertainty and retrenchment, the

291
292 Rearmament and industrial ambition

economy began to grow rapidly once more, allowing the regime to

improve its credit-worthiness, to build up its gold reserves and to
devote substantial resources to rearmament. The defence industry had
been restructured and expanded, creating opportunities that had not
hitherto existed for private enterprise. What did administrative
reform, rearmament and economic growth imply for Russia's defence
capability?
Defence capability includes military manpower, the organization
and disposition of the armed forces, as well as their provision with
weapons, equipment and other goods. It subsumes, in other words,
the more limited issue of military preparedness: did Russia possess
adequate stocks of robust and easily accessible military hardware? It
extends to the functions entrusted to men in uniform and to the
arrangements for the realization of those functions. It includes the
plans made to transport soldiers, food, munitions and equipment -
and, in the pre-1914 armies, horses and fodder as well - to the theatre
of operations. However, to confine oneself to these questions is to
adopt a narrow definition of defence capability. A broader conception
is required, taking account of the extent to which society as a whole
was prepared for war, and of the capacity of the economy to sustain a
war effort. Military planning before 1914 did not take these issues into
account, on the assumption that the outcome on the battlefield would
be decided in the first few weeks and months of confrontation and
engagement. In the crucial opening phase, what mattered was the
success or failure of the military to adhere to and realize their
carefully-drafted mobilization plans. Within twelve months, economic
exhaustion would force the warring parties to conclude peace, giving
the spoils of war to the countries whose troops had gained the decisive
advantage on the battlefield.1
The First World War confounded these expectations, and the experi-
ence of war revealed in due course that no belligerent power could
count on the supplies of munitions, let alone manpower, that were
available at the outbreak of war - considerations that dominated most
discussions of military preparedness before 1914. Instead, the Euro-
pean powers had to recruit fresh soldiers from the ranks of the civilian
population. What did this mean for Russia, whose regime had for-
feited any residual popular sympathy during the 1905 revolution and
its bitter aftermath? On the face of it, Russia (unlike other European
powers) had a seemingly inexhaustible reserve of manpower, but this
advantage could easily be outweighed by the relative backwardness of
the education system, by deficiencies in training and by a lack of
 The eve of the First World War 293

popular commitment to the war effort and the diplomatic goals of the
regime.
The questions posed by the prospect of a prolonged engagement
became no less acute in respect of the country's economic potential. To
what extent could Russia count on its extractive and processing indus-
tries to supply the raw materials and manufactured goods that would
be required during a protracted war - and by civilians as well as by
men in uniform? What impact would the collapse of trade have on the
delicate Russian balance of payments? How secure were food supplies
in Russia, particularly when rural labour and freight wagons were
absorbed in new military tasks? Could Russia, the 'poorest of all
civilized nations', manage to share the costs of war with its allies, as it
did the costs of preparing for war?2
There was something of a paradox in Russian attitudes towards the
impending conflict. Planners and politicians took comfort from
Russia's relative advantages of size, abundant manpower and food-
producing potential. Backwardness might be a virtue, in helping
Russia to avoid the penalties of economic disruption, to which more
advanced belligerent economies were liable. This had been a stan-
dard refrain for at least a generation. But, having witnessed the
effects of the Russo-Japanese War, Russian observers were less
impressed by the potential for social cohesion in wartime. A lengthy
continental engagement might provide a focus for popular dis-
content, sufficient to unravel Russian society and topple the old
regime. From this point of view, an early resolution of the confront-
ation made greater sense than pinning one's hopes on Russia's
apparent superiority in resources.3
How could Russian military planners increase the likelihood that
they could achieve victory on the battlefield within weeks or months?
The complex tasks confronting Germany offered Russia a window of
opportunity. Germany planned a lightning attack into France, before
turning its forces on Russia; if Germany were bogged down in France,
Russian forces might be able to deal a decisive blow on the enemy's
eastern front, or at least to wear down the German army in a positional
war. The fly in the ointment, however, was Austria-Hungary, whose
forces were capable of inflicting heavy damage in Galicia. To deal with
the combined forces of the central European powers required a
massive expansion of Russian land forces. But, in terms of the financial
commitment, the army took second place to naval rearmament, until
the very eve of the war. Better, perhaps, to pursue a defensive strategy,
in the hope that Germany would be prevented from embarking upon
294 Rearmament and industrial ambition

war, at least until Russia's land and sea preparations had been com-
pleted. Russia would be much better prepared to fight by 1917. Unfor-
tunately, neither France - which needed its ally to commit forces
against Germany at a moment's notice - nor Germany - which finally
launched a preemptive strike against its opponents - were willing to
wait.4
Whatever immediate military preparations were set in motion on
the eve of the First World War, they counted for nothing once war
breached the initial timetable and stalemate set in. Having reached
that point, the belligerent powers were compelled to discard the
mobilization plan and the railway timetable; instead, they needed
reserves of social stability, an adaptable economy and institutional
flexibility, capable of providing their citizens with the means to cope
with the demands of modern warfare.5
Russia had much to gain from victory, if such were vouchsafed to
the armies of the Tsar. Victory would unquestionably yield enhanced
prestige on the international stage. A successful joint prosecution of
the war with its allies would strengthen international confidence in
the ruble and unlock the French and British money markets to an even
greater extent than hitherto. Russia could also count on more immedi-
ate tangible gains, by tasting the fruits of commercial supremacy over a
defeated Germany. Under the terms that could confidently be
expected in a revised trade treaty, Russia would gain access to the
German market for foodstuffs on more advantageous terms, whilst
restricting German competition in manufactured goods in the
domestic market. This is not to say that Russian officials made any
definite proposals for the economic emasculation of Germany.
Although they believed it right and proper to sequestrate the landed
estates of German nationals, and although they expected to suspend
payments to enemy nationals, they did not intend to seize commercial
and industrial assets held by the enemy. Not until 1915 did the Russian
government assume the power to liquidate enemy businesses; and
only in 1916 did it adopt the principle that wartime economic policy
should be directed towards 'the release of the economic system of the
country from German influence'.6
First, however, Russia had to achieve victory over the powers of the
Triple Alliance. What resources did it have at its disposal, and how
were they to be mobilized and combined in pursuit of the overall
strategy?
 The eve of the First World War 295

The armed forces, military doctrine and Russian society

The Russian army numbered 1.423 million men on the eve of
the First World War, far in excess of its allies and adversaries (France
entered the war with 582,000 men in uniform, and Germany 597,000).
The 'great army programme', adopted in 1914 - to the relief and
delight of the French - envisaged the conscription of a further 480,000
men. But the outbreak of war prevented the unhurried realization of
this programme.7
In March 1906, the Tsar had reduced the length of service in the
infantry and field artillery to three years. Other ranks served four
years. Seven out of ten soldiers served in the infantry. Most soldiers,
therefore, served for three years, before entering the reserves. The
composition of the infantry and artillery was overwhelmingly peasant
and, with a relatively short term of service, it is difficult to believe that
many ordinary soldiers lost their close sense of affiliation with the
world of the village (the peasant element was less preponderant in the
cavalry and in engineering units). Many soldiers experienced a huge
gulf between themselves and their commanding officers, even though
some of the latter were themselves of humble origin. There was a
widespread mistrust of authority, particularly when it was exercised
by officers who treated their men no less contemptuously than land-
lords had their serfs in former times. The Russian army had already
shown its mistrust of authority, by mutiny on a widespread scale
during 1905 and 1906. Discipline had only been restored when it
became clear to the disaffected rank and file that there existed no other
alternative source of authority than that of the Tsar. The prevalent use
of harsh punishment for petty infringements of military discipline
continued after the 1905 revolution, undermining any basic trust
between the ordinary soldier and his superior officers.
Much less certain is the extent to which common soldiers possessed
a firm sense of loyalty to the Tsar. Any residual belief by peasants and
workers in the benevolence of despotism had been rudely shaken
during the revolution, and would be difficult to recapture. True, the
Stolypin land reforms were designed to create a property-owning
peasantry, whose interests would be identical with those of the state,
which alone guaranteed property rights and internal security. Govern-
ment officials made strenuous efforts to reorganize land tenure and to
provide rural credit, with some degree of success by 1914. But the
reforms had not proceeded sufficiently far to transform peasant
296 Rearmament and industrial ambition

attitudes, which remained distrustful of outsiders, particularly those

who represented authority. This was an uncertain social bedrock from
which to conscript an additional half million men in peacetime, let
alone the millions who were called to the colours during the war.8
In addition to this deep-seated mistrust of authority, another factor
complicated the picture of military motivation. The army believed that
its role ought to be confined to the security of the Empire from external
aggression. The propensity of the regime to turn the army into an
internal security force to suppress peasant unrest and protest by ethnic
minorities could only alienate soldiers still further from the regime.
That this attitude had also taken root among junior and senior officers
called into question the fundamental reliability of the entire army as a
fighting force.
This alienation of the Russian army mattered, because the army was
regarded as one of the chief props of the old regime. It mattered in yet
another sense. The prevailing military doctrine after the Russo-
Japanese War emphasized, as it had throughout the previous gener-
ation, the importance of the individual soldier's commitment to
advance in the heat of battle. This ethos had been identified as a
significant factor in Japanese success on the battlefield. Japanese infan-
try had mounted well prepared assaults on Russian fortifications. But
more remarkable than the support offered to the Japanese troops by
artillery or the care they took to advance under cover of darkness was
their fighting spirit. The attacks on Russian positions caused great loss
of life among Japanese infantry. The lesson of the campaign was that
troops had to accept heavy casualties, as the price to be paid for tactical
assaults. If the same kind of commitment or morale were absent or
weakly developed, the Russian army had little to fall back upon but
the traditional weapon of military discipline, namely the knout, whose
limited usefulness had already been exposed by the mutinies of 1905
and 1906.
But it was one thing to pinpoint the significance of morale; to realize
the concept proved much more difficult. In practice, something could
be done to educate the soldier, provided that time, care and personnel
could be found for this purpose. The reform of the regimental
economy freed more time for strictly military pursuits. So, too, did the
final admission - 'far too late', in the opinion of one recent study - that
the army should be freed of its commitment to maintain internal
security. Apart from extending the time available to familiarize the
common soldier with the care and use of weapons and other military
equipment, additional hours were released for education. More
 The eve of the First World War 297

resources were found for military training. However, the relatively

short period of service in the Russian army hardly offered much
opportunity to engage in these laudable pursuits. The army, short of
NCO's and short of time, could do little more than train its soldiers in
the elementary use of weapons.9
This provides a clue as to the army's enthusiastic espousal of the
doctrine of morale, despite the evident lack of this quality during the
Russo-Japanese War and its immediate aftermath. The numerical size
of the armed forces and the growth of munitions provision were
insufficient to compensate for the technological superiority of other
powers in Europe. If all else failed, the Russian soldier should be called
upon to stand fast and to use his bayonet. A similar explanation was
doubtless at work in the navy, where the notion of the 'spiritual life
[dukhovnaia zhizn'] of the ship' prevailed. Despite the rearmament
drive, the investment in fortresses and in military vessels, the Russian
army and navy remained technologically backward. As we shall see,
Russia lacked well-developed communications, so vital given the
extended territory in which troops were obliged to operate. Insuffi-
cient investment in railways, despite French cajoling, as well as a
dearth of radio communication, deprived the army of crucial ability to
communicate decisions from the central command to field comman-
ders and from field commanders to troops on the ground.
Finally, notwithstanding the investment that had been made in
education during the late nineteenth and early twentieth centuries,
many conscripts possessed little more than the rudiments of literacy.
Against this background, military doctrine substituted a vision of
personal bravery and reliance on the bayonet for the use of concen-
trated firepower, personal initiative and modern methods of military
communication. Comprehension of one's function and responsibility
in a troop unit played only a small part in the preparation of the
imperial Russian army for war.10

Rearmament and military supply

What was the outcome of the Russian commitment to rearma-
ment? To what extent did the resources devoted to defence yield an
adequately equipped army and navy? According to that eloquent,
energetic and deeply conservative advocate of a rapprochement with
Germany, Peter Durnovo, Russia remained a relatively weak military
power, a state of affairs he ascribed largely to the existence of the
Duma. It was bad enough that the parliament deprived the Tsar of his
298 Rearmament and industrial ambition

autocratic power; that (as Durnovo alleged) the Duma compounded

its misdemeanours by failing to support the programmes brought
. before it by the defence ministries, a sure sign that 'dilettante' opinions
had prevailed over those of the expert. Turning to specific areas of
concern, Durnovo pointed out that the Russian army was especially
deficient in heavy artillery and in machine guns. Russia would there-
fore remain, as at present (in February 1914), ill-equipped to fight
against Germany and Austria-Hungary.11
The record of military reverses during the First World War appeared
to vindicate Durnovo's gloomy assessment of Russian prospects. But it
is not necessary to resort to hindsight in order to corroborate his most
telling criticisms of the state of Russian armaments supply. The pro-
vision of heavier field artillery and machine guns did indeed fall
significantly short of the supply norms that the army had approved.
Russia entered the war with inadequate stocks, particularly of power-
ful field howitzers (mortars), which the German army possessed in
greater numbers and which proved particularly important in trench
warfare. Stocks of machine guns barely exceeded four-fifths of esti-
mated requirements (see table 7.1). Here is evidence of years of neglect
and of problems addressed only belatedly. A mere 10 per cent of total
resources were devoted to artillery under the 1910 programme. True,
this deficiency was to be made good under the 'great programme for
strengthening the army', but the completion of the programme was
destined to take place only in 1917. The Russian army went to war with
three times fewer field howitzers per division than its German
counterpart.12
In other respects, the situation appeared much less alarming, as
even Durnovo had to admit. Stocks of rifles, 3-inch artillery, 3-inch
shell and light artillery on the eve of the war corresponded closely to
the norms that had been laid down by the Russian General Staff
during 1910 and 1912. Whether such norms were sufficient was a
different matter. The Deputy Minister of War, A. A. Polivanov, who
took charge of these preparations, calculated on a war lasting between
two and twelve months. The norms for cartridges and shell fell short of
those adopted by France and Germany. But higher norms would have
required additional allocations, which the army sought in 1907 and in
1912, without being completely successful. On the first occasion, the
army was the victim of Kokovtsov's knife, receiving only 70 per cent of
the sum requested for cartridges. On the second, the demands of the
fortress programme took priority; the proposal to increase shell norms
by 50 per cent (to 1,500 shell per piece) was sacrificed on the altar of
 The eve cf the First World War 299

Table 7.1. Munitions stocks at the outbreak of war, July 1914

Mobilization Stocks held1 Percentage

Plan (1912) (July 1914) surplus/shortfall

Rifles (mill.) 4.559* 4.6522 103

Revolvers 436,000 424,000 97
Machine guns 4,990 4,152 83
Cartridges (mill.) 2,745 2,655 97
3-inch field guns 6,261 6,265 100
3-inch shell (mill.) 6.261 6.433 103
3-inch horse artillery 493. 407 86
3-inch mountain artillery 481 440 91
4.2-inch howitzers 84 . 88 105
4.2-inch shell 91,200 22,344 25
4.8-inch howitzers 586 534 91 3
4.8-inch shell 512,000 449,477 88
6-inch guns 180 173 96
6-inch shell 164,000 99,910 61

Note:J including reserves

2
3-line Mosin rifle and 4.2 line Berdan
3
front-line stocks (512 pieces) corresponded to 1912 plan
Source: A. A. Manikovskii, Boevoe snabzhenie russkoi armii v mirovuiu voinu, 2nd
edn, Moscow 1930, vol. 2, pp. 120,147,152-3,172,286-7,307,377-9,398.

fortress modernization. None the less, by the standards of the Russo-

Japanese War, and in view of the short campaign that everyone
anticipated, the supply norms were adequate and did not cause any
alarm in military circles. In addition, military experts believed that
Russian stocks of rifles, artillery and shell made up in quality what
they may have lacked in quantity.13
Faced with quantitative shortcomings, and notwithstanding the
praise showered on the rifle and the artillery piece, the Russian army
counted on the substitution of manpower for material, or labour for
capital. The French did the same: both armies went to war with around
200 soldiers per gun, a far more generous ratio than Germany and
Austria, whose armies had one gun for every 135 soldiers (see table 7.2).
Military preparedness was not confined to the supply of hardware.
The provisioning of large contingents of troops had caused enormous
problems in the past. To what extent had they been overcome by 1914?
Substantial improvements were made in the provision of basic goods
to the army. Reserve supplies of linen, footwear and greatcoats fell
300 Rearmament and industrial ambition

Table 7.2. Comparative military strength of the European powers, 1914

Total
army Army Infantry Cavalry Artillery Artillery
(millions) corps divisions divisions batteries pieces

Russia 1.42 37 122.5 28 c.792 c.6,720

France 0.85 21 86 10 1,054 4,248
Britain 0.38 - 6 1 84 492
Germany 0.81 25 102 11 1,045 6,004
Austria-Hungary 0.42 16 55.5 11 569 3,090
Romania n.a. 5 20 2 192 768

Source: A. M. Zaionchkovskii, Podgotovka Rossii k imperialisticheskoi voine: ocherki

voennoi podgotovki i pervonachal'nykh planov, Moscow, 1926, p. 101; Russian army
strength from L. G. Beskrovnyi, Armiia iflot v nachale XX veka, Moscow, 1986,
p. 15; other data from Q. Wright, A Study of War, Chicago, 1941, pp. 670-1.

only marginally short of estimated requirements. However, the short-

fall of more than 10 per cent in stocks of uniforms ought to have given
cause for concern (see table 7.3).
Whether Russian manufacturing industry could cope with a sudden
increase in military demand for uniforms, footwear and similar goods
remained to be seen. The recruitment of wave upon wave of reservists
and new conscripts after 1914 meant that factories and workshops
were expected to provide such items by the million. But in this respect,
as in other branches of army supply, military planners gave no
thought to the question of industrial mobilization.

Naval rearmament and naval strategy

The military objectives behind Russian naval rearmament
were difficult to fathom, as Durnovo acknowledged in 1914. He
regarded Russia as a continental, rather than a maritime power. Silent
on the question of the Baltic and Black Sea fleets, Durnovo explicitly
attacked the maintenance of a fleet in the Far East. But his antipathy
placed him at odds with the Tsar, who yielded nothing to the German
Emperor in his enthusiasm for a strong fleet, and who found plenty of
adherents for this doctrine, who wielded greater influence than
Durnovo. The Navy Minister, Admiral Grigorovich spoke grandly, if
vaguely, of a 'partnership' between the three navies of the Triple
Entente. But the lack of substance in his vision could hardly be
 The eve of the First World War 301

Table 7.3. Stocks of military matiriel, 1914

Required reserve Stocks Percentage

(millions) (millions) shortfall

Uniforms 2.403 2.132 88.7

Greatcoats 2.402 2.259 94.1
Linen sheet (pairs) 2.402 2.311 96.3
Footwear (pairs) 2.582 2.467 95.5

Source: derived from Beskrovnyi, Armiia iflot, 1986, p. 158.

concealed. Might an expanded Russian fleet be justified as a 'deter-

rent', along the lines of the Tirpitz plan for a greatly enlarged German
battleship fleet? It is scarcely conceivable that such considerations
seriously entered the minds of Russian naval strategists. German
preparations were a response to British naval supremacy, an attempt
to ensure that Britain could ultimately never threaten Germany's
global interests. Russian plans bore no direct relationship to those of
Germany or Britain.14
On the other hand, the expansion of the Russian navy did not
entirely lack an economic rationale. This view gained greater currency
during the blockade of the Straits in 1912. Newspaper articles drew
attention to the potential damage to Russia's grain trade, threatening
the balance of payments. Certainly, Russia depended very heavily on
a maritime export trade: in 1909-13, 73 per cent of all exports were
despatched by sea, including 43 per cent (by value) through the
Dardanelles. In crude terms, the Russian navy could protect the export
trade. But only 46 per cent of imports arrived by sea (mostly at the
Baltic ports); and the fleet was irrelevant to the growing overland
trade across central Europe. From a different economic viewpoint,
Russia would have done better to invest heavily in a merchant fleet,
reducing its liabilities to foreign shipping and insurance companies.15
Even if one conceded the dubious point that the Russian fleet
possessed an economic rationale, the tasks that it confronted were
enormous. Germany, much more dependent on maritime trade than
Russia, had to contend with one potential adversary, in the shape of
the British navy. Russia would encounter both German and Ottoman
naval forces. To secure the grain trade, Russia would have to match
any increase in the naval strength of its chief rival for supremacy of the
Black Sea.
302 Rearmament and industrial ambition

In struggling to finance the modernization of three fleets - no one in

authority was prepared to abandon the Far Eastern fleet completely -
Russia surely attempted too much. Resources were thinly spread, in an
attempt to compete with Germany, Turkey and Japan. Funds had been
released for the strengthening of the Baltic fleet, but this was not
enough for Grigorovich and Sazonov, responsible respectively for the
navy and foreign affairs, who wanted a strong naval presence in the
Black Sea. Norman Stone has written that Russia ended up with two
'half-navies'. Although his verdict underestimates the capability of the
Baltic fleet, exaggerates the significance of the Black Sea fleet and
overlooks the (admittedly paltry) Pacific fleet, nevertheless there is a
substantial element of truth in the charge that the Russian navy was
confronted with too many strategic responsibilities and could not
shoulder them all simultaneously.16
A German threat to Russian foreign trade could not realistically be
prevented by a large Russian fleet, whose mobility and capacity for
action could be (and was) curtailed at a stroke. The outbreak of war
made nonsense of these confused and ambitious plans, because the
navy was immobilized by the German blockade of the Baltic and the
closure of the Dardanelles. The closure of the Baltic deprived Russia of
an outlet that accounted for around one-third of its foreign trade.
Meanwhile, the remaining Russian fleet, trapped in the Black Sea, had
to confine itself to the intermittent and militarily dubious harassment
of Turkish maritime trade.17
What of the condition in which the Russian navy found itself in the
summer of 1914? Had Durnovo turned his attention to the navy, he
would have been obliged to acknowledge that rapid advances had
been made since Tsushima. Partly, these were a function of the
immense resources devoted to the acquisition of modern military
vessels. In 1908, around one-third of the naval budget was earmarked
for new vessels; five years later the proportion had risen to well over
half. The Russian fleet had been strengthened by the measures taken
in 1907 and 1912. Plans were afoot to create a navy with dreadnoughts,
which would be accompanied by older battleships and an appropriate
complement of cruisers and torpedo boat destroyers. The 'small ship-
building programme' was due to be completed in 1914, although
delays meant that the navy did not reach full strength until after the
outbreak of war.18
Construction of new vessels does not tell the whole story. The
Russian navy also made more effective use of the ships it had, because
of the efforts that had been made to recruit and train personnel. In
 The eve of the First World War 303

Table 7.4. The Russian fleet, 1909-1917

Armoured Light
Battleships cruisers cruisers Destroyers Submarines

1909 12 139 6 66 7 46 82 35 30
1914 8 110 6 66 8 50 120 43 32
1917 15 275 10 195 16 100 150 90 26

a: number of vessels
b: 000 displacement tons
Source: Rossiia v mirovoi voine, Moscow, 1925, p. 95.

1908, only half of all Russian military vessels were prepared for naval
action. The rest were under repair or, more commonly, in use as
training vessels. A substantial number of ships were required to train
ratings, since their low level of literacy and skill required them to
undergo lengthy periods of instruction. The situation improved by
1914, because additional resources were invested in education and
on-shore training, for instance in cadet schools. This meant that the
new vessels could be put to sea without delay.19
Problems remained, of course: Russia obtained relatively less per
ruble of expenditure than did its allies and adversaries, for the reasons
offered earlier. In addition, delays in the completion of ship construc-
tion, the result of a poorly thought-out procurement policy, as well as a
shortage of skilled craftsmen and engineers, allowed competitors to
steal a march on Russia. This was an inevitable consequence of the
decision to rely upon domestic sources of supply.
Whatever the tangible improvements made to the size and capabili-
ties of the Russian navy since the debacle at Tsushima, the tsarist fleet
failed to capture the imagination of 'census society'. As if to confirm
the gulf between themselves and the Tsar's entourage, many educated
Russians did not hold the navy dear. There was nothing of the
widespread academic and mass trumpeting of the virtues of naval
strength, such as characterized late imperial Germany. The Russian
naval union, important though it was in keeping alive the cause of
naval rearmament, paled into insignificance beside the German Flot-
tenverein, with its membership of half a million and more. Russia also
lacked the popular maritime tradition upon which British naval strate-
gists could count in support of the dreadnought programme. Russian
304 Rearmament and industrial ambition

businessmen supported the claims of the navy, and the Tsar's personal
preference for an imperial battleship fleet won the day. But popular
blessing for the navy was conspicuous by its absence. Russian peasants
had other things on their mind than battleships and submarines. The
Russian nobility, many of them fiercely anti-industrial, could hardly be
counted upon to press the claims of a navy whose construction filled
the pockets of the business class. The professional intelligentsia who in
Germany gave Admiral Tirpitz their vocal support opposed tsarism at
almost every turn. Russia's 'half-navies', therefore, occupied a disem-
bodied position in society. This massive public indifference was a poor
return for the millions of rubles that poured into Russian shipyards,
boosting total industrial output and employment.20

Railways and military communications

The conscription of hundreds of thousands of men in wartime,
together with munitions, equipment and horses depended critically
upon the performance of the railway network. All sides believed that
the outcome of the war hinged upon the speed at which men and
material could be mobilized: hence the importance attached to the
military timetables. Discussions between Russian and French military
planners were dominated by these issues. But, despite the efforts made
to build new lines and to add extra track to existing lines, some
contemporary observers remained unimpressed. The influential
German historian Theodor Schiemann discounted additions to the
railway network, pointing out that Russia lacked the capacity to deal
with the task of mobilization: 'the network of strategic railways is
inadequate. The railways possess a rolling stock sufficient, perhaps, for
normal traffic, but not commensurate with the colossal demands
which will be made upon them in the event of a European war'.21 How
much truth was there in these charges, which would surface again
during the First World War?
Between 1908 and 1914, a feverish programme of military construc-
tion got under way. The construction of a link between Bologoe (on
the St Petersburg to Moscow line) and Siedlice (east of Warsaw)
signalled Russian intentions to improve the speed and carrying
capacity of strategically important lines. The German General Staff
conceded that this one line, completed in 1908, would reduce by three
days the time taken to mobilize Russian troops on the German frontier.
Further additions in Russian Poland took place during 1910. This
investment in strategic lines represented a dramatic improvement over
 The eve of the First World War 305

the situation that existed ten years earlier. Now it was the turn of the
Austrian military planners to express alarm, over the extension of lines
that linked the north-west with the south-west, such as the links
between Lgov (west of Kursk) and Mitau (close to Riga), between Orel
and Narva, and the line connecting the Kuban with the north Cauca-
sus. By the spring of 1914, the Austrian General Staff pointed out that
Russia could now mobilize the same number of troops on the Austrian
frontier as its adversary, but take only twenty days, eleven fewer than
the Dual Monarchy. Finally, the German General Staff noted in the
summer of 1914 that the completion of railway construction in pro-
gress would reduce the time for full mobilization to eighteen days,
whereas at present only two-thirds of the troops would be mobilized
within that time.22
Despite these efforts, the railway network in European Russia was
thinly spread. On the eve of the war, Russia had just over one
kilometre of track per square kilometre, whereas France and Germany
had ten and twelve times as much respectively, and even Austria-
Hungary had seven times more track. One contemporary estimate
suggested that Russia needed to build at least 8,000km of track each
year, in order to improve the density and carrying capacity of the
network; the rate of construction actually achieved between 1908 and
1913 barely amounted to one-tenth of the desired rate. Three-quarters
of the entire network consisted of single-track lines, the most notor-
ious example being the trans-Siberian railway: elsewhere in Europe
between two-fifths and three-fifths of the network comprised single-
track. In addition, insufficient investment in locomotives and wagons
during the prewar decade inevitably subjected the existing rolling-
stock to greater wear and tear. The shortfall of locomotives and
wagons was put at 2,000 and 80,000 respectively, corroboration
enough of Schiemann's dismissive comments.23
The technological level of Russian railway transport also left much
to be desired. Most operations, such as switching track and changing
signals, were performed manually and unsystematically. Locomotives
and wagons did not conform to any common standard. The majority
of wagons lacked a roof. Locomotives were fuelled in a haphazard,
laborious and dangerous fashion. Expert opinion commented on the
lack of attention given to the maintenance of rolling-stock. Couplings
frequently broke under the strain imposed on them by more powerful
locomotives.24
Having pinpointed these deficiencies, it needs to be asked whether
additional railway construction and investment in rolling-stock would
306 Rearmament and industrial ambition

have enhanced Russia's security. There are limits to the effectiveness

of any railway system. The enemy can sever communications, by
blowing up track and bridges. Even if railways remain intact, they can
easily become clogged with traffic, no matter how many lines are
available. Extra rolling stock requires additional fuel. Would the new
locomotives have been cared for any better than the existing stock?
Russia might have benefited from more track and more stock, but
equally these increased supplies might have overloaded a poorly
managed system. What counted at the moment of mobilization and
during the heat of a campaign, particularly when it was accompanied
by an incessant flow of refugees and prisoners, was that the system
should be well administered. Unfortunately, the complex demands
imposed by war exposed the deficient administration of the Russian
railway network. Military authorities vied with each other and with
civilian agencies for control over lines at the front. Finally, no amount
of investment in railway construction could disguise the difficulties
that all belligerents encountered in wartime, namely how to move
large numbers of men and equipment from the railhead to the field of
battle.25
In this respect, Russia was woefully unprepared. The General Staff
decided in 1910 to improve the stocks of motorized vehicles, but its
proposals were held up by the War Ministry. In July 1914, the Russian
army had at its disposal no more than 710 motorized vehicles, includ-
ing only 418 lorries. The extent of underinvestment in motorized
transport is implied in wartime levels of consumption: between July
1914 and June 1916, the army took delivery of 30,000 vehicles, not
including motor bikes. Here, more than in most spheres of military
supply, Russia lagged behind the other European belligerents. Of
Russian aviation, there is not much to be said. In 1909, the War
Ministry purchased four airplanes, but on the eve of the war the
aviation budget did not exceed 3 million rubles. In 1912, the General
Staff created a department of military aviation, but procurement policy
was haphazard and caused disagreements between the General Staff
and the purchasing agencies. Russia boasted a mere handful of trained
pilots. The motley stock of planes at their disposal displayed a frustrat-
ing plethora of Russian frames and imported engines.26
Other forms of military communication, no less important in
modern warfare, also attracted little attention at the time. The war
against Japan had taught the Russian army the value of telegraph and
telephone communication in the field. But, on the eve of the First
World War, radio communication in the Russian army was in its
 The eve of the First World War 307

infancy (the German army suffered from a similar defect). The total
length of telegraph lines increased from 320,000km in 1894 to
800,000km in 1913, but this represented a relatively thin coverage of
the imperial land mass. According to plans drawn up in 1912, each
army corps was to be supplied with 20 telegraph apparatus, 193 field
telephones and 350km of cable. These norms were reportedly met,
although doubts remained about the ability of Russian officers to make
proper use of the facilities at their disposal. The position in the rear
gave even more cause for concern, because stocks of equipment fell far
short of what was needed. Army depots disposed of 5,854 telephones,
when there should have been twice as many, and 500 field telegraphs,
when there should have been 700. The war quickly revealed the
inadequacy of these preparations and called forth a desperate bid to
supply far greater quantities. Within eighteen months of the outbreak
of hostilities, the army had ordered nearly 4,000 telegraphs and 120,000
telephones, ten times as many as it had at its disposal in 1914. By the
end of 1916 the army called for 300,000 telephones. Here, as in other
branches of military supply, the war wreaked havoc with peacetime
estimates of demand and posed yet another difficult challenge to
domestic industry.27

Defence industry and industrial capacity

Durnovo buttressed his argument about the dangers inherent
in armed conflict between Russia and Germany, by pinpointing inade-
quacies in Russia's defence industry. He maintained that the arma-
ments industry had failed to supply the armed forces with adequate
stocks of military materiel. There is little point in discussing this
accusation further: it was in the interests of suppliers to process with
all possible speed the orders they received from the procurement
authorities. If supplies were inadequate, this reflected not so much the
backwardness of Russian industry, but rather the government's pur-
chasing policy, which was directly related to the norms fixed by the
military. More telling was Durnovo's complaint that, given the 'low
productivity of our factories', armaments factories could not supply
military materiel in sufficient quantity to compensate for the likely
closure of Russia's borders by her enemies. This charge would be
echoed after 1917, by historians who sought an explanation for military
shortcomings during the war.28
However, such blanket condemnation of the Russian defence indus-
try is undermined by the evidence presented earlier, indicating that
308 Rearmament and industrial ambition

rearmament had begun to create a more modern defence industry.

The reactionary Durnovo could hardly be expected to applaud the
growing involvement of the private sector in the defence industry,
still less to welcome the participation of French and British capital in
Russian industry. But, in so far as his analysis overlooked evidence of
new investment in manufacturing industry and the restructuring of
defence enterprise, Dumovo failed to see how much had changed
since the turn of the century.
Military planners acknowledged that defence industry had made
rapid strides, but some of them were convinced that the government
needed to exercise closer control over enterprises in this sector.
Lukomskii, the author of an article in the Admiralty's staff journal,
took this argument a great deal further, proposing that the govern-
ment should intervene in all branches of industry that related to
national defence. The government, he argued, had a duty to secure
supplies of basic materials, such as metals, coal and grain, by taking
control over production and distribution. Private owners would be
compensated by the state for the loss of their assets. The inevitable
addition to the national debt was a small price to pay for enhanced
security: 'the loan would be granted for a definite purpose, not
merely for cosmetic reasons'. The expropriation of up to three-
quarters (sic) of a given sector would allow the government to deter-
mine prices, ensuring both price stability and a welcome increase in
government revenue. Other consumers would surely applaud this
initiative. More extensive state control of the armaments industry
would facilitate the 'rational' organization of work at all levels, from
the central administration down to the factory shop. At each stage of
the planning process, technical questions and financial management
would be kept separate. Work routines on the shopfloor could be
closely monitored, in order to improve labour productivity. The
government could begin by tackling the management of the arsenals
currently in state hands, whose competitive position left much to be
desired.29
Lukomskii thus offered a technocratic solution to the problem of
industrial unpreparedness, although he did not venture to discuss
how the new arrangements, if implemented, would be greeted by
businessmen and workers. He offered a taste of things to come during
the war, which provided officials in the War Ministry with the oppor-
tunity to extend state control over defence industry. His vision of
public control over the production and distribution of raw materials
enjoyed a still wider appeal in wartime, especially by the beginning of
 The eve of the First World War 309

1917, when the commercial press was filled with articles concerning
'compulsory syndicalization.'30
It was all very well to argue in favour of increased state control of
industry, but this did not provide a solution to the immediate prob-
lems that would likely confront Russian manufacturing industry in the
event of war. To the extent that some branches of industry depended
heavily upon imports, Durnovo was correct to identify Russian
vulnerability to any disruption to normal trade flows. Many sectors
relied on imports of raw materials, machine parts and finished goods.
Notwithstanding the production of wool and cotton in central Asia,
Russia imported around two-fifths of cotton fibre and one-third of
wool fibre. Dependence upon imports figured to a still greater extent
where leather, tanning materials and dyestuffs were concerned, all of
them products crucial to the war effort. Some basic industrial chemi-
cals were supplied by domestic industry, but soda came from Germany
and pyrites from Portugal and Norway. All but 2 per cent of Russian
demand for lead was met by imports; zinc output, largely confined to
Poland, accounted for only one-third of domestic consumption. Russia
completely lacked domestic sources of supply of aluminium, nickel
and tin. In the electrical engineering industry, Russia imported around
35 per cent of its needs, a proportion that was much higher in the case
of high voltage plant, transformers, valves and incandescent lamps.
Russia imported most of its textile machinery and steam engines.
Finally, and most significant of all, all but 30 per cent of machine tools
were imported by 1913.31
This catalogue of import dependence hardly betokened a capacity to
survive a long war without profound disruption to industrial pro-
duction. However, military planners neither analyzed the issue of
potential resource shortages nor offered a strategy for promoting
import substitution in wartime. Their assumptions about the nature
and duration of continental warfare rendered them blissfully unaware
of the problems that would befall industry.
Tsarist Russia's narrow industrial base was likely to cause a different
kind of problem in the event of a prolonged war.32 The relatively small
number of domestic engineering firms could cope with a sudden
increase in demand for high-explosive shell, but a simultaneous
increase in demand for other munitions, or for the machine tools with
which to manufacture munitions would tax those firms to the limit.
When the 'shell shortage' burst forth during the winter of 1914, orders
for munitions were hurriedly placed with leading engineering firms.
This hardly made rational use of available capacity; lesser-ranking
310 Rearmament and industrial ambition

firms should have been encouraged to manufacture straightforward

items, such as shell, leaving more experienced factories to handle con-
tracts for rifles, machine-guns and machine tools. Instead, the govern-
ment tolerated the diversion of highly-skilled workers and sophisti-
cated equipment to shell production. The failure to implement a more
rational strategy in wartime bedevilled armament supply. It typified
more widespread failures of decision-making in tsarist Russia; but it also
reflected the limited options available within the industrial economy.33
Nevertheless, one should judge industrial capacity according to other
criteria as well, not just against the yardstick of a war whose dreadful
dimensions and demands could scarcely be glimpsed in 1914. Measured
against its size and technological level in 1900 or 1908, Russian industry
had made enormous strides. The estimated value of the industrial
capital stock increased from 2,200 million rubles in 1900 to just under
2,900 million rubles in 1908. By 1913, it stood at over 4,100 million rubles.
The bare figures do no more than hint at the quantity and quality of new
equipment placed at the disposal of Russian workers.34
Many of these workers, however, were vulnerable to the demands
of the recruiting office in 1914. Some firms lost up to one-fifth of their
labour force at the outbreak of war, and had to take energetic and
time-consuming steps in order to replace them or persuade the army
that their skills were better put to use in the factory than at the front.
No less serious a problem arose from the location of Russian industry.
A rough calculation suggests that Russia forfeited around one-fifth of
available industrial capital when German and Austrian troops occu-
pied its territory. Textile factories and ironworks in Russian Poland
were abandoned to the enemy with alarming suddenness. An
unknown proportion of industrial capital did eventually find its way
into the Russian heartland: for example, important engineering works
along the Baltic littoral were evacuated. The beleaguered industrial
economy could ill afford the time-lag involved in this complex effort of
administration and transportation. But these difficulties were caused
by the accidents of Russian geography and resource endowment,
rather than by industrial backwardness. The more developed Soviet
industrial economy faced similar problems in 1941,35

Financial preparedness and the Russian balance of payments

'The development of our armed forces will not create
genuinely strong military potential if the state is financially and
economically weak'. With this assertion, Kokovtsov expressed the
 The eve of the First World War 311

prevailing orthodoxy within the Russian Ministry of Finances.

Writing, as he did, in the immediate aftermath of the war against
Japan, the argument in favour of restraint carried conviction. Nor did
the rapid recovery of the Russian economy after 1908 predispose
Kokovtsov to approve ambitious rearmament programmes: it made
little sense to rearm, if the outcome was simply to bankrupt the state,
or to accumulate debts that placed an intolerable burden on future
generations. But the tsarist state did take on new commitments,
including participation in the European arms race. What did these
commitments imply for Russian finances on the eve of war in 1914?36
The first point to register is that the government budget grew
rapidly between 1905 and 1914: recurrent revenue and expenditure
increased by around 60 per cent in those years (table 3.1 and 3.5). By
means of judicious adjustments to the published figures, Kokovtsov
regularly presented the public at home and abroad with a balanced
budget, thereby confirming the health of tsarist finances. He suc-
ceeded in maintaining public confidence, without making any funda-
mental changes to the structure of government taxation. Additional
revenue derived from the increased level of economic activity. No
controversy over death duties or income tax disturbed the surface of
Russian budgetary politics, as it did elsewhere in Europe. Only a brief
ripple of dissent emerged from time to time, as when Kokovtsov told
his colleagues in cabinet that higher levels of defence spending
required a sharp increase in the price of vodka.37
What of Russia's ability to meet its international financial obli-
gations? Russia accumulated multiple commitments to foreign credi-
tors. They included payments on state debt held abroad, as well as
interest payments to holders of municipal debt and dividends payable
to foreign investors. Russia maintained a large foreign debt, which in
January 1914 stood at 3,971 million rubles. In addition, securities issued
on behalf of the railway companies and held abroad totalled 975
million rubles. Municipal authorities had issued stock abroad to the
tune of 380 million rubles. Finally, the foreign obligations of private
corporations amounted to 2,602 million rubles. Russia traditionally
secured a healthy surplus on the merchandise account, but it covered
only part of these commitments and it depended heavily upon the size
of the grain harvest, whose vulnerability was all too apparent to
contemporary observers. To cover the remaining deficit on the balance
of payments current account, Russia resorted to additional borrowing,
whether from foreign governments or private investors. The govern-
ment floated guaranteed railway loans on the foreign stock markets,
312 Rearmament and industrial ambition

with the encouragement of the French government and military

advisers.38
Russia thus depended upon a continuous inflow of fresh infusions
of foreign capital, and thus new additions to the state debt. Any
expressions of disquiet about the financial prospects of imperial Russia
were habitually silenced by pointing to the substantial reserves of
foreign currency held by the Russian Treasury, amounting to 464
million rubles in January 1914. The Treasury used this reserve, in order
to support the ruble exchange rate. Most of the reserve was held on
deposit in France and Germany, with smaller amounts in Britain,
Holland, Austria-Hungary and the USA. On the eve of the war, the
government moved its holdings out of Germany, one instance in
which defence considerations directly governed financial policy.39
The size and location of the gold and foreign currency reserves did
not dispose all members of the ruling elite to adopt a sanguine attitude
towards government finances. The most notorious dissident, unsur-
prisingly, was Count Witte. Attending a meeting of the Finance Com-
mittee in March 1914, he expressed the opinion that 'from a financial
point of view, we are considerably less well prepared for war than we
were ten years earlier'.40 Underlying Witte's gloomy assessment was a
belief that his successor had failed to adhere sufficiently closely to the
conventions of the gold standard; financial preparedness, in Witte's
view, meant sufficient gold reserves to support the convertibility of the
ruble to the last note. Prewar developments did not inspire him with
confidence. Noting that total Russian gold reserves had increased from
903 to 1,688 million rubles between 1906 and 1913, he pointed to a
threefold increase in the volume of paper rubles in circulation, from
578 to 1,665 million rubles. Since part of Russia's gold reserve was held
abroad, the ruble was not entirely covered by gold. Nor, in Witte's
opinion, did this exhaust Russian vulnerability. In the likely event of a
financial panic, the State Bank would have great difficulty in meeting
the claims of depositors, because a large proportion of its assets took
the form of long-term commitments. The state, he believed, would
only be able to finance a war by resorting to the printing press,
undoing the achievements of the past decade and a half.41
Expectations of a short conflict conditioned views of the likely
impact of war on Russia's ability to meet outstanding commitments to
its creditors, as well as its capacity to bear the direct costs associated
with war. No one expected that any country could afford more than a
brief rupture to international commerce. In these circumstances,
Russia would continue, as before, to export grain and other primary
 The eve of the First World War 313

products to help settle its obligations. Russia's reserves of gold and

foreign currency would act as collateral for fresh loans.42
The government can be accused of possessing a narrow vision of
financial preparedness. Evidently, official discussions were dominated
by the size of the gold reserve. Other issues failed to get an airing in
the corridors of power. No one asked how Russia would pay for large
quantities of military supplies and raw materials, in the event of a
protracted conflict, and whether existing creditors would be prepared
to extend fresh credit on a significant scale. The stability of the ruble
continued to be of paramount concern, being a hallmark of Russia's
international economic status and attractiveness to potential investors.
The traditional preoccupation with 'sound money' dictated the
government's adherence to balanced budgets, which advertised
Russian solvency to its numerous creditors. Few observers believed
that war would inflict significant damage on the currency, let alone
that it would bankrupt Russia. It was confidently expected that Russia
would be able to pay for imports of raw materials or finished goods by
exporting primary products. Bewitched by the concept of a short war,
few contemporaries expected significant changes to the state budget: a
few marginal changes to taxation represented the boundaries of
official thinking. No one contemplated the necessity of calling upon
the civilian population to subscribe to state debt on an unprecedented
scale, as a means of mobilizing savings for the war effort.
The war confounded expectations that Russia would be relatively
immune from financial disturbances. Russia abandoned the gold stan-
dard as soon as the war broke out, much faster than anyone expected.
Taxes were forced higher; the government, in desperation, even con-
templated an income tax. For the most part, Russia paid for the war by
printing money at an unprecedented rate and by obtaining loans at
home and abroad. Russia borrowed from Britain and especially France
to finance its purchases overseas, as well as to try and maintain the
purchasing power of the ruble. By borrowing in this manner, the
tsarist government spent much less on the war, relative to its normal
peacetime expenditure, than most other belligerents, with the excep-
tion of Austria-Hungary.43

Burden sharing and the Franco-Russian alliance

The Franco-Russian alliance brought together two of Europe's
largest economies: Russia, whose national income in 1913 amounted to
20 billion rubles, and France, with a national income of just under 12
314 Rearmament and industrial ambition

billion rubles. Confronting these countries were Germany and Austria-

Hungary, with a combined national income equivalent to 34 billion
rubles, making the two continental blocs evenly matched. The partners
to the Franco-Russian alliance differed, not only in the size of their
respective economies, but also in their level of economic development.
Here, the roles were reversed. In terms of national income per head of
population, France was more than twice as rich as Russia (and
Germany more than three times as rich). France produced 1.95 tons of
coal per head of population, Russia a mere 0.21 tons (compare
Germany, with 4.3 tons). France produced 120 kg of crude steel per
head, whereas Russia could manage only 29 kg (Germany manufac-
tured 270 kg per head). The alliance not only joined together two
unevenly matched economies; it also represented a mix of two quite
different political and social systems, autocratic Russia and republican
France, united by the common concern for the ambitions of imperial
Germany.44
The Franco-Russian alliance was first and foremost a military alli-
ance. Did the relative poverty of tsarist Russia and its reliance on
French finance turn Russia into the junior, or dependent partner?
Certainly, the alliance appeared to offer more to France than to Russia.
It afforded France the opportunity to share with Russia the costs of
challenging German supremacy in Europe and of one day making
Germany pay for the humiliation inflicted on France in 1871. In the
decade prior to the outbreak of war in 1914, the military agreement
was refined. Before 1912, the military agreement between France and
Russia provided for regular meetings of general staff officers. These
occasions seem to have been largely confined to mutual attendance at
military manoeuvres. During 1912, ceremonial encounters gave way to
more substantive meetings. French politicians and military leaders - in
the persons of Prime Minister Raymond Poincare and the Chief of
General Staff Joseph Joffre - mounted a concerted effort to convert
their Russian counterparts to a French view of defence preparations.
In particular, the manifest deficiencies (as it seemed) of the Russian
railway network obsessed French military planners, and eventually
impelled the French government to approve the release of funds
dedicated to the construction of new lines on the Polish border.45
The crux of the matter concerned the Russian timetable for mobili-
zation. The original Russian mobilization plan provided for troops to
be deployed well inside Russian territory: this plan appalled the
French general staff, who were concerned that this disposition would
hamper a speedy and direct assault on Germany. At the annual
 The eve of the First World War 315

conference of the joint general staffs in 1913, Joffre and his colleagues
successfully insisted that Russia deploy its troops in a large concentra-
tion around Warsaw, much further west than the 1912 plan had called
for, in order to permit a more concerted Russian attack on Berlin. In the
event, Russia sent 29-and-a-half divisions against Germany and 46-
and-a-half against Austria-Hungary.46
One reading of the discussions between Joffre and Zhilinskii, his
Russian counterpart, is that they revealed the wholesale subordination
of Russia to France: in his memoirs, Sukhomlinov describes the mili-
tary agreement as 'a gamble with Russian cannon fodder7. This conclu-
sion is unjustified, in as much as prewar preparations corresponded to
important strands in Russian military thinking, no less than to French
preferences. In 1908, General Alekseev had identified shortcomings in
the railway network, which hampered attempts to concentrate
Russian troops quickly and effectively along the border with Germany,
Austria and Romania, whose forces threatened to overwhelm their
opponents. Its potential enemies had nearly three times as many lines
as Russia and could handle 530 trains daily, compared to a mere 211
trains on the Russian side. The prewar negotiations between Russia
and France simply reflected a traditional preoccupation amongst
many Russian military planners with the defence of the western
borders. The Russian military, for example, not the French, planned a
new line connecting Riazan and Warsaw. In improving the potential
access of Russian troops through Polish territory, as well as regener-
ating the old fortresses along the imperial frontiers, French financial
assistance satisfied Russian strategists no less than Joffre.47
The final version of the military convention, which took effect in
September 1913, provided for both countries to mobilize immediately
and without consultation, should Germany itself mobilize; in the event
that either Italy or Austria mobilized, France and Russia agreed that
prior consultations would have to take place before any response was
made. The agreement satisfied the French preoccupation with the
need to threaten Germany with a war on two fronts. Russia agreed to
maintain fortifications and a large army close to the Polish border.48
From a French viewpoint, the alternative strategy would have been
to strengthen the French army, but the slow rate of growth of popu-
lation rendered this virtually impossible, at least until the eve of the
First World War. Far better to draw instead on the apparently 'inex-
haustible' reserves of Russian manpower to threaten Germany on its
eastern frontier. Nor did the advantages to France of the alliance stop
there. French rentiers not only received a regular, fixed return on their
316 Rearmament and industrial ambition

investments in Russian government bonds; they also avoided the

increases in taxation that would otherwise have been necessary to
support a larger French army. No doubt this helped to reconcile
French investors to the tsarist regime, whose record on human rights
would otherwise hardly have predisposed them to lend it their sup-
port.49
In August 1913, the French approved loans for the construction of
more than 5,000km of new track and 3,050km of complementary lines,
as well as for improving the capacity of existing lines. Particular
attention was given to doubling the lines connecting Kiev with Poland
and with the south-east, a programme that was scheduled to begin in
1914 and to be completed by 1918. The loan for strategic lines alone
amounted to between 750 and 900 million rubles, and was granted on
the understanding, not only that Russia would build these strategic
lines, but also that the size of the Russian army would be increased.50
Some members of the Duma castigated as 'shameful' the ill-
disguised pressure exerted by the French, but this view is difficult to
sustain, particularly in the light of French failure to extract an under-
taking that Russia would purchase military equipment exclusively
from France. Plans were already afoot to increase the size of the
Russian army by around 365,000 men. Where criticism can be directed
is at the military planners of both countries for dwelling so heavily on
the movement of troops to the frontier, whilst overlooking the need
for investment to improve the carrying capacity of lines to Archangel
and Vladivostok, the two ports which would replace the Black Sea and
Baltic ports in the event of war. There is no better illustration of the
military fixation with 'war by timetable'.51
The extent and significance of what would nowadays be termed
burden-sharing was not always appreciated by contemporaries.
Durnovo overlooked the extent to which Russia collaborated with
France, in order to maximize the combined effectiveness of their
troops. As someone whose sympathies lay with Berlin, rather than
Paris, this was hardly surprising. Collaboration between the partners
in the Triple Entente, particularly between France and Russia,
undoubtedly featured in the pre-1914 defence effort. Nor should it be
assumed that 'economic backwardness' condemned Russia to play the
role of the subordinate. As the negotiations in 1913-14 over the railway
loan demonstrated, both parties depended on one another in order to
enhance their respective visions of national security.52
That these visions were restricted does not alter the point that the
burden was shared. The Franco-Russian alliance distributed the
 The eve of the First World War 317

burden of defence equally between the two partners, provided one

looks at more than one measure of the burden. In terms of the share of
national income committed to defence, Russia contributed more
heavily than France (see table 3.5); with its higher level of develop-
ment, France might have made a bigger contribution. On the other
hand, France maintained a larger proportion of its population in
uniform. In 1914, the French army represented 0.95 per cent of total
population, whereas no more than 0.76 per cent of the Russian popu-
lation served in the army. Whatever the tensions that surfaced from
time to time, neither France nor Russia can be accused of having a free
ride in the alliance.53

Food production and food supply

In his analysis of the dangers that faced Russia on the eve of
war Durnovo said nothing about food supply, presumably because he
shared the common perception that, whatever other difficulties it
faced, Russia would not be thwarted by a shortage of food. The risk of
wartime starvation was much higher in island Britain (few contempo-
raries publicly voiced any concern about the German food balance).
Russia, with its vast steppe, seemed immune from the threat to mari-
time trade. Indeed, it was thought that Russia alone stood to benefit
from the disruption to trade, in so far as the collapse of grain exports in
wartime would yield between 10 to 15 per cent of the gross cereal
harvest for domestic consumption. The prewar behaviour of Russian
food production did not cause strategists any anxiety, and recent
recalculations of the volume and value of grain production suggest
that they were right not to be alarmed at trends in this component of
total agricultural output. Net grain output, for example, more than
kept pace with the rate of growth of population; the per capita value of
grain production increased by 23 per cent between 1904/8 and 1909/
13.54
This benign picture, however, concealed some serious weaknesses.
Livestock remained a weak element of the aggregate agricultural
sector. The growth in grain output fails to reveal significant shifts in
regional production patterns that took place during the early twenti-
eth century. In the central industrial region and the north-west, food
producers had converted their fields from cereal to technical crops,
such as flax. This was not in itself a negative development: on the
contrary, it suggested the kind of regional specialization associated
with economic progress. Yet these changes in regional production
318 Rearmament and industrial ambition

patterns entailed the uninterrupted transport of grain from the central

black-earth region and the southern steppe to the main consuming
regions of the country. So long as this supply could be guaranteed, the
balance of agricultural production was fairly stable. But a major shock,
such as war, particularly when accompanied by pronounced shifts in
population and disruption to transport, could easily upset this delicate
balance. Here was the chief danger in the prewar food economy.55
Those who concerned themselves with military preparedness before
1914 paid no attention to such overarching considerations, being more
preoccupied with the details of food procurement. Under Witte, the
Ministry of Finances had taken the lead in procuring grain on behalf of
the armed forces, largely as a means of intervening in the domestic
grain market, in order to stabilize prices. After 1905, with the blessing
of Kokovtsov, the army increasingly assumed responsibility for its own
grain procurements, acquiring grain directly from producers or from
district and provincial zemstvo boards, thereby cutting out the Minis-
try of Finances. Unfortunately, the new arrangements proved
extremely costly for the Ministry of War. During the Witte era, the
government had paid an additional 1.5 million rubles each year for
grain, representing the difference between the prevailing market price
and the fixed price on which the estimates were based. Between 1903
and 1906, when it assumed responsibility for grain procurement, the
Ministry of War spent an extra 8.5 million rubles, the difference
between the (falling) market price and the procurement price. Sub-
sequently, as grain prices rose, this differential narrowed. By 1912, the
army's own personnel had become less closely involved in procure-
ments, ceding this task to the staff of the zemstvos and the stock
exchange committees. The evidence points once more to the growing
professionalization of the Russian army, in this instance allowing
civilian agencies to assume responsibility for grain procurement,
leaving military personnel to concentrate on matters pertaining more
strictly to military provision.56
When war came, it demonstrated Russia's ability to feed its soldiers
well, many of them enjoying a better diet than they had done during
peacetime. This reflected the priority given to the maintenance of
military consumption. Meanwhile, the supply of foodstuffs to the
civilian population broke down completely by the winter of 1916. This
was not primarily a consequence of declining grain output. Aggregate
grain production held up well during the first two years of war,
notwithstanding the loss of able-bodied men to the army and the
decline in the supply of capital equipment to the agricultural sector.
 The eve of the First World War 319

Peasants maintained production by utilizing the remaining family

labour more intensively. Only in 1916 and 1917 did grain production
fall significantly, and even then the overall grain balance was favour-
able. But the regional patterns of production and consumption were
thrown into chaos, not least by the wartime mobilization and evacu-
ation of people and equipment, which disrupted traffic flows. In
addition, peasants demonstrated a marked reluctance to market
additional quantities of grain, because they could maintain and even
increase the prewar level of their purchasing power, by marketing
normal quantities of grain at higher prices, by forfeiting their purchase
of vodka (now the subject of prohibition) and by drawing upon
transfer payments. With abundant cash in hand, peasants tended to
increase household consumption of grain (this included feed for live-
stock), rather than to market the surplus quantities. Finally, by 1916-17
the lack of consumer goods and the decline in the value of the ruble
constituted powerful disincentives to sell grain. This outcome revealed
the extent of military hubris. The war effort demanded not just the
acquisition of modern military hardware, but investment in food
production, and appropriate policies to extract grain from the agri-
cultural sector.57

Conclusion
What kind of security did Russian military expenditure pur-
chase in 1914, compared to 1906? For several years after the Russo-
Japanese War, Russian security remained at a desperately low ebb. A
joint meeting of the army and navy chiefs of staff, held in April 1908,
concluded that the defence of St Petersburg could not be guaranteed,
given the lack of officers, military specialists and, above all, mines and
mine-layers. The war against Japan had all but eliminated the reserves
of military goods. Retrenchment severely curtailed the scope for
replenishment and rearmament. In these circumstances, according to
Deputy Minister of War Polivanov, 'in 1908 our army was incapable of
fighting [byla neboesposobna]''. This depressing view was echoed by
Rodiger, the outgoing Minister of War, by Alekseev, attached to the
General Staff, and by Palitsyn, the Chief of Staff, who reported that
'the most important branch of state affairs - the defence of the realm -
is far from corresponding to the international situation of Russia and
its inherent power'.58
Nor did its allies and potential adversaries think any more highly of
Russia's military strength in the years immediately following the war
320 Rearmament and industrial ambition

against Japan. In part, this jaundiced view reflected the losses incurred
by the army and navy during 1904 and 1905. But it also reflected a poor
assessment of military morale, transport and supply. In addition,
informed military observers drew attention to the problems posed by
rural and urban unrest, which continued throughout 1906 and into
1907. The German General Staff reckoned in 1906 that Russia could
deploy no more than four-fifths of its available troops in any
engagement on the frontiers of the country, the others being required
for internal security duties.59
All observers agreed that Russian military potential improved out of
all recognition between 1905 and 1914. This did not stop Durnovo from
trying to impress upon the Tsar that a war in Europe would be a
foolish gamble. Some of Durnovo's observations, as we have seen,
rang true. Yet, it is difficult to avoid the conclusion that Durnovo
exaggerated Russian military weakness, in order to strengthen the case
for a rapprochement between Russia and Germany. A far more posi-
tive assessment was made by German military planners and foreign
office officials, who entertained no doubts about the military capacity
of their potential enemy. Moltke, the chief of the German General
Staff, noted in February 1914 that Russian military preparedness 'is
now much greater than ever before'; 'even level-headed politicians
(wrote the German Chancellor, Bethmann Hollweg, on the eve of the
war) are worried at the increases in Russian strength and the
imminence of Russian attack'. Russia possessed powerful armaments,
in addition to the large army.60
The perception of Russian military strength held by foreign
observers was all the more remarkable in view of the way in which the
resources were managed by the military establishment. Despite the
resource constraints they faced, Russia's military planners failed to
create a proper balance between the claims of different elements in the
armed forces. Instead, they tried indiscriminately to meet a welter of
competing strategic imperatives. In practice, this meant a desperate
attempt to maintain adequate troops in readiness for an offensive
against both Germany and Austria-Hungary, without ignoring the
defence of Russia's borders in the Far East and in central Asia. As if this
were not enough, the Tsar insisted that Russia be provided with a fleet
that had an offensive as well as a defensive capability. To manage
these competing and divergent claims for resources would have taxed
the most ingenious and astute political brain. Political guidance,
however, was a commodity in short supply in imperial Russia. A
balance between defence claimants had been sought by the Council for
 The eve of the First World War 321

State Defence, but this voice was silenced in 1909, and there emerged
no effective personal or institutional counterweight to the Tsar,
capable of pressing the claims of the army against those of the navy.
The initiatives taken during 1913 and 1914, under the 'great army
programme', did not compensate for a decade of relative neglect of
heavy field artillery, communications equipment and training, par-
ticularly of reserve troops.61
Military planning during the last years of peace was conducted in
close association with the French General Staff. Unfortunately, this
collaboration yielded a joint adherence to an entirely inflexible plan
for troop mobilization, epitomized by the adoption of the 1912 mobili-
zation document. Military plans imposed a kind of tunnel vision on
the Russian military, in which everything was subordinated to the task
of concentrating troops in large numbers, not just on the border with
Germany (as Joffre and Sukhomlinov intended), but also on the
frontier with Austria-Hungary. This compromise plan was bad enough
in itself. At the same time, all the broader questions - of contingency
arrangements for evacuation, of railway capacity in the rear of the
country, of supplies to the civilian population, of industrial mobili-
zation - never entered the military field of vision. To be fair, Moltke
and Bethmann Hollweg were no less blinkered than Zhilinskii and
Goremykin. Generals and civilian officials alike concentrated on the
size and equipment of the Russian army, to the exclusion of other
aspects of the tsarist defence capability. They failed to spot that Russia
was prepared to fight on paper, but was unable to conduct a pro-
longed and complex conflict.
Russia entered the war with its uniformed and civilian population
unprepared for a long war. No one realistically expected the campaign
to last beyond a few months, and those who did contemplate the
unthinkable expressed sanguine views about Russia's capacity to
survive. But, in the absence of a speedy military solution, Russian
military and civilian society eventually unravelled. The constant
emphasis in prewar military doctrine on the soldier's morale did not
compensate for the thin veneer of patriotism, which concealed a much
stronger seam of discontent. The army did not mask, but instead
manifested all too clearly the tensions in Russian society, between the
privileged and the dispossessed, between the 'patrician' and the
'plebeian', between Russian and non-Russian. The bulk of educated
opinion supported a war in defence of slav liberties, but this support
was not granted unconditionally. Russian liberals, for the most part
professional people, soon demanded greater participation in the
322 Rearmament and industrial ambition

affairs of state, as the price for supporting a protracted campaign

against the Triple Alliance. This was one source of potential domestic
instability. Ordinary people had little interest in a war that under-
mined their living standards and deprived them of able-bodied
youths, in the cause of a war whose purpose may have been disclosed
but whose broader meaning could not easily be fathomed. Herein lay
another source of discontent. Unlike France, whose peasantry 'became
Frenchmen' between 1870 and 1914, and in the process acquired an
acute sense of the heed for a military solution to their national griev-
ances, militarism in that form never struck deep roots in Russian
society. Of all the belligerent powers in Europe, Russia was least
prepared psychologically for war.62
 Conclusion

Historians of late imperial Russia must confront the degree to which

the tsarist regime adapted to the consequences of rapid change at
home and in the wider world. Economic historians of Russia need to
focus on the extent of innovation in the economic system, as well as on
the economic consequences of decisions about the allocation of
resources. These issues have generated a substantial literature, and this
book belongs firmly within a well-established historiographical tradi-
tion. The present study demonstrates that the tsarist government
embarked on a major programme of reform and rearmament in the
aftermath of war and revolution, in order to improve its defence
capability, but that the regime proved less adept at addressing the
consequences of these policy shifts. Rearmament saddled the old
regime with economic and political problems which it was ill-
equipped to handle. Imperial Russia had to deal simultaneously with
the tasks of economic recovery, structural change and rearmament; the
attempt to reconcile these tasks, in the midst of an international
scramble for influence, exposed the fragile foundations upon which
the entire edifice rested.

None the less, this book has shown that military and industrial
objectives, far from being incompatible, could be reconciled. Rearma-
ment brought recovery for Russia's beleaguered industrialists. Broadly
speaking, it encouraged capital investment, generated increased levels
of industrial employment and stimulated more modern forms of
industrial organization. Profitability provided one criterion of recov-
ery: profits improved dramatically between 1907 and 1914. But this is to
adopt too narrow a focus. More important, bigger profits provided
funds for reinvestment in new plant. Rearmament provided the back-
323
324 Conclusion

drop to a significant increase in the size and quality of the industrial

capital stock. The associated investment in shipyards, industrial equip-
ment and new manufacturing facilities gave a pronounced impetus to
industrial recovery and to potential expansion in new markets.1
This implies that there were no alternatives to rearmament as the
mainspring of industrial growth. In principle, Russian industry might
have secured recovery without the need for a heavy commitment of
government funds to rearmament. In 1907-8, Russian industry stood at
the bottom of the trade cycle. Recovery would have come sooner or
later, as industry moved out of the trough of the cycle. Rearmament
offered industry a breathing-space. But what kind of recovery might
otherwise have taken place? Likely as not, the government would
have been involved, either through the supply of credit by the State
Bank to the commercial banking system or, more directly, through
state ownership of transport infrastructure.
Leading industrialists certainly hoped and expected as much. In
May 1915, representatives of the Russian engineering industry urged
the government to guarantee orders with firms for several years
ahead. Heavy industry required a continued commitment by govern-
ment to purchase capital goods. In these uncertain times, industrialists
remained wedded to non-market transactions, as the best hope of
continued prosperity. However, their pleas to government officials in
the traditional manner showed also how little had changed in indus-
trial politics.2
The question of alternative market opportunities was closely bound
up with the creation of new products. What were the signs that
Russian industry developed new products, other than armaments?
Factories continued to turn out a broad range of manufactured goods;
production runs in all product lines were short. The Russian market
had not yet developed to the extent that entrepreneurs could risk
specialization. Armaments joined the long list of products which
Russian industry manufactured. Nor does investment in new capital
equipment appear to have provided a base from which to launch an
offensive to capture markets from foreign competitors; on the eve of
the First World War, Russia continued to import large quantities of
industrial equipment. The success of import substitution in armaments
production was not matched in electrical engineering or in machine
tools.
Russian entrepreneurs did not have a monopoly in armaments.
Granted, the tsarist government all but renounced the purchase of
armaments from foreign suppliers, both for balance of payments and
 Conclusion 325

for security considerations. But the government could turn to its own
shipyards and armouries. To minimize this risk, Russian arms pro-
ducers mounted an attack on the integrity of the state sector, com-
plaining that it enjoyed an unfair competitive advantage, and that its
administration and work practices were outmoded. Whatever the
truth of these charges - which conveniently ignored the reforms in
progress at state enterprises - the case for their closure could never
succeed on purely economic grounds. The old regime had political,
ideological and security reasons for promoting the survival of the state
sector. Politically, government dockyards and armouries formed a
counterweight to the emergent industrial elite. Ideologically, they
demonstrated that the tsarist state could not be compromised by the
power of capital. Strategically, their purpose was to provide the
government with its first line of defence in any future production
campaign in wartime.3
Russian industrialists, therefore, were forced to accept limitations on
their economic strength, as well as strict subordination within the
existing political system. The 1905 revolution was not a triumph for the
industrial bourgeoisie, and the new parliament reflected a widespread
public antipathy to private enterprise. The industrial pressure-groups
that substituted for genuine political power did their best to mobilize
Russian entrepreneurs in defence of their market share. Eventually,
the private sector obtained a handsome slice of the rearmament cake,
as a kind of compensation for political leverage. Mounting corporate
strength provided comfort in straitened times, although it served to
confirm, rather than to modify public hostility to industrial endeavour.
It may be objected that too much emphasis has been placed on the
hostility of the tsarist government to private enterprise. After all, the
imperial regime did not obstruct private investment in the iron and
steel industry during the late nineteenth century. Even in armaments
production, the state sanctioned orders to firms producing cartridges
and military vessels. In addition, the Russian government put together
a rescue package for private firms at the turn of the century. These
measures hardly indicate outright opposition to private enterprise,
and the perennial lack of government unity suggests that some
departments of state did champion the cause of capitalism. Neverthe-
less, much of its practice was devoted to the regulation, if not the close
supervision of management and workforce alike. Many government
officials, even in the Ministry of Trade and Industry, hoped to control
industrialists' behaviour, or to keep it within acceptable bounds. The
Ministry of Finances regarded the development of private enterprise
326 Conclusion

as a convenient source of revenue, not a policy to pursue as an end in

itself. If Russia's industrialists continued to generate profits and to
build new businesses, they did so in an atmosphere of official antagon-
ism and public distaste.
The highly conditional toleration of the principle of private enter-
prise certainly betokened no weakening of the bonds of state enter-
prise. The government could not abandon its own arsenals and ship-
yards, because the stakes were too high. Wherever entrepreneurs
turned, they confronted evidence of 'patrimonial' authority and patri-
archal attitudes: in the favours showered on state enterprises, in the
protection afforded workers in government employment, and in the
fiscal system, which treated industry as a productive milch-cow. Nor
did these attitudes and institutions change fundamentally after 1905.
Having nearly succumbed to the forces of revolution and having been
obliged to accept parliamentary constraints on its authority in such
sensitive spheres as defence and budgetary matters, the imperial
regime was unwilling to sacrifice still more of its traditional preroga-
tives. The support extended to state enterprise must be seen in this
light.
Hostility to private enterprise went hand in hand with ignorance.
The old regime never came to terms with the needs of a modern
industrial economy. Its tariff policy offered little effective protection to
the infant machine tool industry. The government had no coherent
policy for improving industrialists' access to credit. Its tax policy did
not encourage industrial investment. The government was unwilling
to consult or consort with industrialists, showing no inclination to
establish a regular forum in which business leaders could articulate
their views. This communication gap was not peculiar to Russia: it is
hard to find evidence across Europe of adequate institutional arrange-
ments before 1914 for the exchange of views between government and
business. But few European governments demonstrated the peculiar
tsarist combination of ideological antipathy and administrative
obstacles towards private enterprise.4
One is justified, therefore, in attaching significance to the notion of
an 'internal arms race'. The state sector was the guardian of an older
tradition of paternalism, in which the state protected 'the people' who
toiled on its behalf. To the extent that government employees laboured
for the security of the tsar's state, this can even be thought of as a
'patrimonial' tradition, although the argument should not be pressed
too far. None the less, it is not too fanciful to suggest that, by uphol-
ding the state sector, the government sought to defend the fiscal
 Conclusion 327

interests of the population; hence the rhetoric of 'the people's kopek'

(narodnaia kopeika).5

II
Enormous efforts were expended in the defence of the
Russian empire, but to what end? Asked to justify elaborate defence
preparations, tsarist officials would have argued that their measures
provided security against external aggression. However, this argu-
ment celebrated a vision of imperial grandeur that went down better
in St Petersburg than in the borderlands of empire. Far from being
regarded as a threatening intrusion, external aggression may have
been welcomed by some of the restless ethnic groups which found
themselves subject to tsarist domination. As the events of 1918 were to
show, national 'independence movements' could forge fruitful links
with Germany.6
Russian defence preparations assumed a no more benign character
in the eyes of the majority of Russians. Educated society - in the words
of Huckleberry Finn, 'the quality' - accepted rearmament as part of a
package of responsibilities, whereby the greatest slav nation offered
protection to other slav populations. By contrast, Russian workers and
peasants (Huck's 'ornery' folk) saw things in a different light. Russian
troops stood guard on the borders of the empire, but they were also
accommodated in garrisons the length and breadth of the country,
where they could be deployed to deal with internal unrest. That many
soldiers and officers disliked the policing role they were asked to
assume hardly made their function and behaviour any more palatable
to the oppressed peasant and the striking worker.
Nicholas II set great store by naval rearmament. This was
undoubtedly a gamble, because of the huge resources required. Russia
was not alone in investing heavily in naval rearmament: the German
naval programme staggered contemporaries, and justifiably so. But the
decision to acquire a modern battleship fleet had different implications
in Russia and in Germany. In Germany, naval expansion generated
fears of additional taxation, including death duties. In Russia, the main
implication was not fiscal - the government could borrow, and
economic growth generated additional revenue - but administrative.
Who would control the programme: would it be entrusted to the
established men of influence, or to a new generation of professionally
trained men, technocratic in outlook, men who wanted to 'get things
done', rather than to observe the niceties of courtly ritual? Could it be
328 Conclusion

left to the large state shipyards in St Petersburg; could the state afford
to construct entirely new shipyards to handle the Black Sea pro-
gramme? Naval rearmament became the sphere in which all the
interlocking problems of imperial Russia came to the fore: finance,
parliamentary politics, personnel recruitment and training, inter-
national relations, technological change and entrepreneurial
endeavour.
These were the overriding dilemmas of reform in late imperial
Russia: whether the political system could cope with the consequences
of rapid change in the economy, in society and in international rela-
tions. This, it seems to me, is the relevance of the argument advanced a
generation ago by less orthodox Soviet historians, namely that instabi-
lity was a function of the struggle between different structures of
production relations (non-capitalist and capitalist), rather than of the
contradictions generated by capitalism. The rivalry between the state
and private sectors brought into the open antagonisms within govern-
ment, which lacked the mechanisms to handle them.7
Could tsarist Russia have done any better? From the perspective of
1905, the answer must surely be no, for so much had been achieved.
With hindsight, however, one is bound to advocate not policies to
generate faster economic growth, but a different allocation of
resources. Less, certainly, on a fancy naval programme (shades of the
'Potemkin village'?) and on fortresses that would be abandoned at an
early opportunity. More on transportation, including motorized trans-
port; more on heavier artillery, to put the entrenched positions of the
enemy under greater pressure. More on training, on the creation of
more professional procurement officials, capable of responding to
demands for munitions, food and other items. Unhappily for Russia,
international events dictated that the armies of the Tsar would embark
on war at least three years before the rearmament programmes were to
reach fruition.
Ultimately, however, one must step sufficiently far back from the
detailed pattern of rearmament to ask what purpose it served. Russia
and Germany were economic partners, as well as economic rivals, a
point that the arch-conservative Durnovo was perceptive enough to
recognize. Should not Russian diplomacy have sought to reconcile the
objectives of these two European giants? This is easy enough to
advocate with hindsight. But, if Fritz Fischer is right, then Russia had
everything to fear from German expansionism, and Russia's war plans
were justified, as a means of protecting its interests in the Black Sea.
Besides, Russia and Austria were rivals for the mastery of slav popu-
 Conclusion 329

lations in south-eastern Europe: popular concern for fellow slavs in the

Balkans had a powerful resonance in St Petersburg. Germany would
not - and did not - abandon its Austrian partner. Seen in this light, the
Franco-Russian alliance made sense.8
Needless to say, pan-slavism had little resonance in the factories and
villages of the Russian empire. But the tsarist government showed
little understanding of the aims and aspirations of workers and
peasants. In other spheres, the regime acted as if it knew what workers
and peasants wanted ('police trade unions' in 1903; 'freedom' from the
land commune in 1906). Should one be surprised that the government
chose with equal presumption to act on their behalf in the sphere of
foreign and defence policy?
When war broke out, all social groups fell victim to the aspirations of
the regime. Workers and peasants were conscripted to serve at the
'frontier of hell and death'. The ensuing revolution spared neither
government ministers, the court nor Russian industrialists. The war,
with its sickening consequences for human beings, its appalling con-
sumption of resources, its reliance on mass mobilization and new
industrial technology, its extension of government intervention and
the breakdown of international cooperation truly marked the begin-
ning of the 'real, not the calendar century', and eventually exposed the
recklessness of the gamble undertaken by the imperial regime.9
 Notes

Introduction
1 A. Gerschenkron, 'Problems and patterns of Russian economic develop-
ment', in C. E. Black, ed., The Transformation of Russian Society, Cambridge,
Mass., 1960, p. 71.
2 Ibid., pp. 52-8; A. Gerschenkron, 'The early phases of industrialization in
Russia: afterthoughts and counterthoughts', in W. W. Rostow, ed., The
Economics of Take-Off into Self-Sustained Growth, London, 1963, pp. 151-69.
3 Gerschenkron, 'Problems and patterns', pp. 51-2. For the latest assessment
of Gerschenkron's hypotheses, see R. Sylla and G. Toniolo, eds., Patterns of
European Industrialization: The Nineteenth Century, London, 1991.
4 T. Shanin, Russia as a 'Developing Society': Volume One, The Roots of Otherness,
London, 1985, pp. 126-9,184, 202.
5 D. C. B. Lieven, Russia's Rulers Under the Old Regime, London, 1989, for the
upper reaches of the tsarist bureaucracy. The 'peasant impoverishment'
thesis was challenged by J. Y. Simms, 'The crisis in Russian agriculture at
the end of the nineteenth century: a different view', Slavic Review, 36,1977,
pp. 377-98; the subject receives sophisticated treatment in S. G. Wheatcroft,
'Crises and the condition of the peasantry in late imperial Russia', in
E. Kingston-Mann and T. Mixter, eds., Peasant Economy, Culture and Politics
of European Russia, 1800-1921, Princeton, 1991, pp. 128-72. On the subject of
foreign investment and its political significance, see V. I. Bovykin, 'O neko-
torykh voprosakh izucheniia inostrannogo kapitala v Rossii', in A. L.
Sidorov, ed., Ob osobennostiakh imperializma v Rossii, Moscow, 1963,
pp. 250-313; for a non-Soviet perspective, consult Olga Crisp, Studies in the
Russian Economy before 1914, London, 1976, and J. P. McKay, Pioneers for
Profit: Foreign Entrepreneurship and Russian Industrialization, 1885-1913,
Chicago, 1970.
6 D. Geyer, Russian Imperialism: The Interaction of Foreign and Domestic Polio/,
1860-1914, Leamington Spa, 1987, p. 309.
7 G. Kennedy, The Economics of Defence, London, 1975, pp. 111-12.
8 By defence market is meant the sum total of goods and services to which
military customers lay claim by means of outlays on capital items (such as
weapons and buildings) and current requirements (such as food and
uniforms).
330
 Notes to pages 6-9 331

9 These words belong to Kenneth Boulding, cited in G. Hardach, The First

World War, 1914-1918, London, 1977, pp. 5 3 ^ .
10 E. Kehr, 'Munitions industry', Encyclopedia of the Social Sciences, 15 vols.,
New York, 1930-5, vol. 11, pp. 128-34; 'Class struggle and the armament
industry', in E. Kehr, Economic Interests, Militarism and Foreign Policy, ed.
G. A. Craig, Berkeley, 1977, pp. 50-75. See also W. H. McNeill, The Pursuit of
Power: Technology, Armed Force and Society since A.D. 1000, Chicago, 1982,
p. 277. Some support for Kehr's position may be found in V. Berghahn,
Germany and the Approach of War, London, 1973, pp. 92,109-15.
11 K. E. Boulding and A. Gleason, 'War as an investment: the case of Japan',
Peace Research Society Papers, 3,1965, pp. 11-12. A. S. Milward, War, Economy
and Society, 1939-1945, London, 1987, p. 12. However, Milward goes on to
draw attention to other sources of support for German expansionism. On
Britain, see R. C. Trebilcock, 'Legends of the armaments industry', Journal of
Contemporary History, 5, 1970, pp. 3-19; but compare S. Pollard and P. L.
Robertson, The British Shipbuilding Industry, 1870-1914, Cambridge, Mass.,
1979, p. 220.
12 S. C. Sarkesian, ed., The Military Industrial Complex: A Reassessment, Beverly
Hills, 1972; A. Giddens, The Nation-State and Violence, Cambridge, 1985,
pp. 244-54.
13 Kennedy, Economics of Defence, pp. 122-5 provides a fuller discussion.
14 M. J. Peck and F. M. Scherer, The Weapons Acquisition Process: An Economic
Analysis, Boston, 1962, pp. 48,61, 208-10; F. M. Scherer, The Weapons Acqui-
sition Process: Economic Incentives, Cambridge, Mass., 1962, p. x:
15 Joseph Bradley, Guns for the Tsar: The State, Labor and Technology Transfer in
the Russian Small Arms Industry, DeKalb, 1990. See also E. R. Goldstein,
'Military aspects of Russian industrialization: the defense industries, 1890-
1917', PhD thesis, Case Western Reserve University, 1971; and V. V. Polikar-
pov, 'Gosudarstvennoe proizvodstvo vooruzheniia v Rossii nachalo XXv.
(istoriografiia voprosa)', Istoriia i istoriki, 1987, pp. 16-37.
16 A. S. Milward, The German Economy at War, London, 1967, and R. Overy,
'Hitler's war and the German economy: a reinterpretation', Economic
History Review, 35,1982, pp. 272-91, for contrasting views of the significance
of Blitzkrieg. British peacetime preparations are discussed by A. Offer, The
First World War: An Agrarian Interpretation, Oxford, 1989.
17 An exception is the latest book by W. C. Fuller, Jr., Strategy and Power in
Russia, 1600-1914, New York, 1992.
18 K. F. Shatsillo 'O disproportsii v razvitii vooruzhennykh sil Rossii naka-
nune pervoi mirovoi voiny, 1906-1914gg.', Istoricheskie zapiski, 83, 1969,
pp. 123-36; and Rossiia pered pervoi mirovoi voinoi: vooruzhennye sily tsarizma v
1905-1914gg., Moscow, 1974. The quotation is from A. L. Sidorov, Istori-
cheskie predposylki Velikoi Oktiabr'skoi sotsialisticheskoi revoliutsii, Moscow,
1970, p. 56 (my italics).
19 W. M. Pintner, 'The burden of defense in imperial Russia, 1725-1914',
Russian Review, 43,1984, pp. 231-59.
20 W. C. Fuller, Jr., Civil-Military Conflict in Imperial Russia, 1881-1914, Prince-
ton, 1985.
332 Notes to pages 13-22

I The eve of the Russo-Japanese War

1 B. Eklof, J. Bushnell and L. Zakharova, eds., The Great Reforms in Russia,
1860-1874: A New Perspective, Bloomington, Indiana, 1993.
2 The most helpful guide is Geyer, Russian Imperialism.
3 P. R. Gregory, Russian National Income, 1885-1913, Cambridge, 1982,
pp. 153-63; P.W. Gatrell, The Tsarist Economy, 1850-1917, London, 1986,
pp. 29-17.
4 Gregory, Russian National Income, appendices I, J, L; A. Kahan, 'Capital
formation during the period of early industrialization in Russia, 1890-1913',
in P. Mathias and M. M. Postan, eds., Cambridge Economic History of Europe,
vol. 7, part 2, Cambridge, 1978, pp. 265-307.
5 For an excellent study of the relationship between government and one
leading propertied social group, see A. J. Rieber, Merchants and Entre-
preneurs in Imperial Russia, Chapel Hill, 1982.
6 Documents diplomatiques frangais, 1871-1914, Paris, 1929-1936, serie 1, vol. 9,
pp. 615-16; A. Z. Manfred, Obrazovanie russko-frantsuzskogo soiuza, Moscow,
1975.
7 L. E. Shepelev, Tsarizm i burzhuaziia vo vtoroi polovine XIX veka, Leningrad,
1981, is the best guide to policy shifts in the Ministry of Finances.
8 John Bushnell "draws some of the threads together in 'Miliutin and the
Balkan war: military reform versus military performance', in Eklof et al.,
eds., The Great Reforms.
9 Geyer, Russian Imperialism, p. 125; D. C. B. Lieven, Russia and the Origins of
the First World War, London, 1983, p. 21; R. Girault, Emprunts russes et
investissements frangais en Russie, 1887-1914, Paris, 1973, p. 242.
10 A. Malozemoff, Russian Far Eastern Policy, 1881-1904, Berkeley, 1958; I. Nish,
The Origins of the Russo-Japanese War, London, 1985. By contrast, Franco-
Russian relations were closely bound up with developments in central Asia.
In 1899, the French government loaned fresh funds to Russia, but attached
tight strings to the loan. See Geyer, Russian Imperialism, pp. 154-5,182-3;
Girault, Emprunts russes, pp. 335-8; B. V. Anan'ich, Rossiia i mezhdunarodnyi
kapital, 1897-1914, Leningrad, 1970, pp. 39-49.
II L. G. Beskrovnyi, Armiia iflot v XIX veke, Moscow, 1973, pp. 312-13; Geyer,
Russian Imperialism, pp. 346-8, 362.
12 Quoted in Fuller, Civil-Military Conflict, p. 57. For other details, see Besk-
rovnyi, Armiia iflot, p. 521; Geyer, Russian Imperialism, pp. 202-19.
13 Beskrovnyi, Armiia i flot, p. 519. The disparity between the Russian and
German fleets in 1898 is revealed in K. A. Kuznetsov et al., Baltiiskii sudos-
troitel'nyi 1856-1917, Leningrad, 1970, p. 153. For government contracts, see
P. P. Migulin, Russkii gosudarstvennyi kredit, 3 vols., St Petersburg, 1907, vol.
3, p. 1,072.
14 Tsentrarnyi Gosudarstvennyi Arkhiv Voenno-Morskogo Flota (hereafter
TsGAVMF) f.420, op.l, d.23,11.2-5; Beskrovnyi, Armiia iflot, p. 522.
15 F. T. Jane, The Imperial Russian Navy, 2nd edn, London, 1904, reprinted 1983,
pp. 307, 356-64, 421-2; P. I. Belavenets, Nuzhen-li nam flot i znachenie ego v
istorii Rossii, St Petersburg, 1910, pp. 255,261.
16 A full discussion of the battle between the defence departments and the
 Notes to pages 23-29 333

Ministry of Finances is provided in Fuller, Civil-Military Conflict, pp. 59-62,

65-7. Budget figures derive from P. A. Khromov, Ekonomicheskoe razvitie
Rossii v XIX i XX vekakh, Moscow, 1950, pp. 518-23. For the 1899 decision, see
Vsepoddaneishii otchet gosudarstvennogo kontrolera za 1900 (hereafter VOGK),
St Petersburg, 1901, p. 15, and Fuller, Civil-Military Conflict,
pp. 68-9.
17 Beskrovnyi, Armiia iflot, p. 62; Pintner, 'The burden of defense', p. 245.
18 The extent of military training continued to cause problems until 1914. See
chapter 7.
19 VOGKza 1902, St Petersburg, 1903, p. 21; VOGKza 1903, p. 22; VOGKza 1904,
p. 19.
20 VOGKza 1900, p. 26; VOGKza 1903, p. 11; Beskrovnyi, Armiia iflot, pp. 451-2.
21 Quoted in S. N. Prokopovich, Voina i narodnoe khoziaistvo, Moscow, 1918,
p. 4, and by Fuller, Civil-Military Conflict, p. 64. Fuller interprets this, not
entirely convincingly, as an indication that Vyshnegradskii subscribed to
the conventional view of the soldier's battlefield morale. Kuropatkin
believed that the fiscal policies pursued by the government had weakened
the morale of the peasant conscript.
22 These workers were for the most part soldier-conscripts {nizhnie chiny),
whereas their counterparts in the GAU factories and the government
dockyards were normally civilians. See N. M. Lisovskii, Rabochie v voennom
vedomstve, St Petersburg, 1906, pp. 6-7, noting the wry comment by the War
Minister that 'we are simply plantation owners and our workers are our
negro slaves'.
23 See A. Kahan, The Plow, the Hammer and the Knout, Chicago, 1985, pp. 95-101.
24 Voennaia entsiklopediia, 18 vols. (no more published), St Petersburg, 1911-15,
vol. 10, entry under 'zavody artilleriiskie'.
25 The standard factory history of Putilov is by M. Mitel'man et al., Istoriia
Putilovskogo zavoda, 1801-1917gg., 4th edn, Moscow, 1961, but it does not
meet the needs of the modem historian. The history of the Nikolaev yards
after 1900 figures heavily in the work of the Soviet historian Shatsillo (see
below). There is no up-to-date history of Nevskii.
26 See the entries on individual government arsenals and dockyards in Voen-
naia entsiklopediia; also E. K. Germonius, 'Izhevskii oruzheinyi zavod i rol'
kazennykh zavodov v dele oborony', Russian Economist, 2, 1922, p. 2,901;
V. N. Ashurkov, 'Predpriiatiia voennogo vedomstva kak element
mnogoukladnoi ekonomiki Rossii', in Voprosy istorii kapitalisticheskoi Rossii,
Sverdlovsk, 1972, pp. 109-17.
27 Ashurkov, 'Predpriiatiia', pp. 110-11,113-15, and Iu. F. Subbotin, 'Voennaia
promyshlennost' Rossii vo vtoroi polovine XlX-nachale XXv., 1868-
1914gg.', kandidatskaia dissertatsiia, Moscow State University, 1975.
28 Germonius, 'Izhevskii zavod', pp. 2,909-10.
29 M. P. Viatkin, Gornozavodskii Ural v 1900-1917gg., Moscow-Leningrad, 1965,
pp. 11-16.
30 Tsentral'nyi Gosudarstvennyi Istoricheskii Arkhiv (hereafter TsGIA) f.37,
op.77, d.136,11.1-2; VOGKza 1908, St Petersburg, 1909, pp. 139-40,145. The
State Auditor commented that the state ironworks also supplied high
quality steel to British customers, though at a loss.
334 Notes to pages 29-38

31 VOGK za 1900, St Petersburg, 1901, p.28; VOGK za 1903, p. 25; Beskrovnyi,

Armiia iflot, p. 359.
32 A. A. Korolev, 'Iz istorii russkoi voennoi promyshlennosti: vozniknovenie
chastnogo patronnogo zavoda', Uchenye zapiski Tul'skogo gosudarstvennogo
pedagogicheskogo instituta, kafedra istorii, vyp. 2, Tula, 1969, pp. 78-98. In
1890, Tula charged 20 per cent more than the state sector for its cartridges.
33 Otchet gornogo departamenta za 1900-1901, St Petersburg, 1902.
34 J. Kipp, 'The Russian navy and the problem of technological transfer:
technological backwardness and military-industrial development, 1853-
1876', in Eklof et al, eds., The Great Reforms, forthcoming.
35 N. I. Dmitriev and V. V. Kolpychev, Sudostroitel'nye zavody i sudostroenie v
Rossii i za granitsei, St Petersburg, 1909, pp. 889-902.
36 Tsentral'nyi Gosudarstvennyi Voenno-istoricheskii Arkhiv (hereafter
TsGVIA) f.369, op.l, d.133, ll.l-13ob.; TsGAVMF f.420, op.l, d.23,11.2-15,
citing State Auditor's reports; Dmitriev and Kolpychev, Sudostroitel'nye
zavody, pp. 902-4; Kuznetsov et al., Baltiiskii sudostroitel'nyi, p. 71.
37 Dmitriev and Kolpychev, Sudostroitel'nye zavody, p. 916; I. A. Baklanova,
Rabochie sudostroiteli Rossii v XIX veke, Moscow-Leningrad, 1959, pp. 7-8.
38 Dmitriev and Kolpychev, Sudostroitel'nye zavody, pp. 817,832-3.
39 Ibid., pp. 801-5.
40 VOGK za 1900, St Petersburg, 1901, p. 25; Germonius, 'Izhevskii zavod',
pp. 2,903-5; N. N. Golovin, Voennye usiliia Rossii v mirovoi voine, 2 vols.,
Paris, 1939, vol. 2, p. 427.
41 Svod voennykh postanovlenii, vol. 13,3rd edn, St Petersburg, 1910, paras. 8,16,
65-6,75.
42 A commission of enquiry took evidence during 1903 and made several
suggestions for improvements in accounting procedures, but nothing was
done in the short term. See I. Kh. Ozerov, Gornye zaovdy Urala, Moscow,
1910, p. 120.
43 Dmitriev and Kolpychev, Sudostroitel'nye zavody, p. 916.
44 The 1901 edition of the regulations for state shipyards stipulated that the
principle of commercial administration be maintained at the Obukhov and
Baltic yards. But Izhora and the Admiralty yards continued to receive an
annual appropriation from the Treasury, to which they were required
strictly to adhere. TsGAVMF f.420, op.l, d.23,11.2-15, 37ob.; Svod morskikh
postanovlenii, 1901 edn.
45 For background, see Baklanova, Rabochie, pp. 47,97; 'Iz istorii Shostenskogo
zavoda', Krasnyi arkhiv, 75,1936, no. 2, pp. 192-6.
46 The cotton industry was the largest, employing nearly 400,000 workers.
The coal industry employed 109,000 workers. Industries of comparable size
include chemicals (60,000), paper and printing (78,000) and woodworking
(80,000). Figures from A. G. Rashin, Formirovanie rabochego klassa Rossii,
Moscow, 1958, pp. 48,61.
47 See table 5.8. In 1902, the workforce permanently employed at GAU
factories and workshops stood at just over 29,000. A further 45,700 workers
were engaged in military engineering projects, and 15,200 in the construc-
tion and upkeep of barracks. See Lisovskii, Rabochie, pp. 8-9. Other data are
 Notes to pages 38-41 335

taken from Dinamika rossiiskoi i sovetskoi promyshlennosti v sviazi s razvitiem

narodnogo khoziaistva za sorok let (1887-1925gg.), 3 vols., Moscow-Leningrad,
1929-30, vol. 1, pp. 96-7. The proportion of the male labour force employed
in the British armaments industry was no more than two per cent in 1900,
according to W. Ashworth, 'Economic aspects of late Victorian naval
administration', Economic History Review, 22, 1969, p. 492. The Swedish
industry accounted for half of one per cent of the total industrial labour
force. In Russia, armaments accounted for close on four per cent of the total
labour force.
48 V. I. Grinevetskii, Poslevoennye perspektivy russkoi promyshlennosti, Kharkov,
1919, p. 159. For further discussion, see Crisp, Studies, pp. 36-44; Gatrell,
Tsarist Economy, pp. 157-67.
49 TsGIA f.37, op.77, d.136,11.15-27; Baklanova, Rabochie, pp. 125-6. On Tula,
see V. N. Ashurkov, 'Rabochie zavodov artilleriiskogo vedomstva v epokhu
kapitalisma: osobennosti ikh polozheniia i klassovoi bor'b/, in Rabochie
Rossii v epokhu kapitalizma, Tula, 1972, p. 168. The author quotes the despair-
ing remarks of the Bolshevik activist V. D. Bonch-Breuvich: 'the worker in
the factory is at the same time master of the house. He sends back home
work on samovars and guns, and rigorously exploits other workers, who
cannot find work in the factory'. The whole question is explored for the
earlier period by Bradley, Guns for the Tsar.
50 Svod morskikh postanovlenii, vol. 5,1910, para. 119. These regulations were
abolished in 1910.
51 On hours of work in military shipbuilding, see Baklanova, Rabochie, p. 72.
For non-defence industry, see Iu. I. Kir'ianov, Zhiznennyi uroven' rabochikh
Rossii, konets XlX-nachalo XXv., Moscow, 1979, p. 84. The 1897 law applied
only to enterprises that employed more than twenty workers.
52 S. N. Semanov, Peterburgskie rabochie nakanune pervoi russkoi revoliutsii,
Moscow, 1966, p. 39; A.R., 'Rabochie Sormovskikh zavodov', Narodnoe kho-
ziaistvo, 4,1902, pp. 84-94.
53 Lisovskii, Rabochie, pp. 187-90; Baklanova, Rabochie, pp. 112-14. Tula had 90
places, Sestroretsk 60 and Izhevsk 120. For workers' complaints in 1905
about the kind of provision that was made, see Revoliutsiia 1905-1907gg. v
Rossii: nachalo pervoi russkoi revoliutsii, ianvar'-mart 1905g., Moscow, 1955,
pp. 135-7.
54 A. A. Manikovskii, Boevoe snabzhenie russkoi armii v mirovuiu voinu, 1914-
1918gg., 2 vols., Moscow, 1930, vol. 1, p. 78; Svod voennykh postanovlenii, vol.
13,1910, appendix; Svod morskikh postanovlenii, vol. 5,1910, para. 120; Ger-
monius, 'Izhevskii zavod', pp. 2,902-3. Fewer than half of one per cent of
Russian factories in 1895 made direct provision for schooling, according to
V. Luknitskii, 'O vol'nonaemnykh rabochikh artilleriiskikh tekhnicheskikh
zavedenii', Artilleriiskii zhurnal, 1,1899, p. 99.
55 Germonius, 'Izhevskii zavod', p. 2,902; S. I. Zav'ialov, Izhorskii zavod, 2 vols.,
Leningrad, 1976, vol. 1, p. 175.
56 Rashin, Formirovanie, pp. 503-4; O. Crisp, 'Labour and industrialization', in
Cambridge Economic History, vol. 7, part 2, pp. 381-2, citing a work by Otto
Goebel.
336 Notes to pages 41-48

57 A.R., 'Rabochie Sormovskikh zavodov'.

58 Svod morskikh postanovlenii, vol. 5,1910, para. 126; Workmen's Insurance and
Compensations Systems in Europe, 2 vols., Washington, 1911, vol. 2,
pp. 2,259-67. In 1891, workers at government dockyards were offered sick
pay and the right to claim a disability pension: Baklanova, Rabochie, pp. 101,
176. See also 1.1. Shelymagin, Zakonodatel'stvo o fabrichno-zawdskom trude v
Rossii v 1900-1917'gg., Moscow-Leningrad, 1952, p. 72.
59 On provisions for pensions at the state shipyards, see Workmen's Insurance,
pp. 2,255,2,297-8, and S. V. Murzintseva, 'Iz istorii ekonomicheskogo pol-
ozheniia rabochikh na predpriiatiakh voennogo i morskogo vedomstv v
1907-1914gg. v Peterburge', Uchenye zapiski LGU, 270,1959, p. 234. On the
vexed question of workers' links with the land, see Gatrell, Tsarist Economy,
pp. 88-94.
60 The background history of the Popov commission is described in Lisovskii,
Rabochie, introduction and p. 236. See also Baklanova, Rabochie, pp. 110-19.
61 There were some signs that things were beginning to change. In 1900, the
GAU insisted that workers pay a commercial rent for the plots of land they
occupied after emancipation: 'Iz istorii Shostenskogo zavoda', pp. 192-6.
62 The Mosin rifle was a more reliable, accurate and lighter version of the
3-line breech-loading rifle. VOGK za 1901; Beskrovnyi, Armiia i flot,
pp. 315-20.
63 Subbotin, 'Voennaia promyshlennost", p. 106; Beskrovnyi, Armiia i flot,
p. 323.
64 Ibid., p. 359; R. Ropponen, Die Kraft Russlands, Helsinki, 1968, pp. 184-5,
citing a report prepared for the Austro-Hungarian General Staff. Plans
already in place provided for a stock of 6,831 artillery pieces within four
years.
65 TsGAVMF f.420, op.l, d.23,11.2-15; Baklanova, Rabochie, pp. 125-6.
66 Dmitriev and Kolpychev, Sudostroitel'nye zavody, p. 777.
67 Modern treatments of the subject are J. Bushnell, 'Peasants in uniform: the
tsarist army as a peasant society', ]ournal of Social History, 13, 1980,
pp. 565-76 and D. Beyrau, Militar und Gesellschaft im vorrevolutionaren Rus-
sland, Cologne-Vienna, 1984, pp. 313, 360.
68 A. P. Voznesenskii, 'O voennom khoziaistve', Obshchestvo revnitelei voen-
nykh znanii, 1906, kniga 1, p. 101; F. Maksheev, Voenno-administrativnoe
-ustroistvo tyla armii, 3 vols., St Petersburg, 1893-95, vol. 3,1895, p. 161; VOGK
za 1900, St Petersburg, 1902, pp. 20-1.
69 Voennaia entsiklopediia, vol. 10,1912, entry under 'zavedeniia intendantskie'.
70 Khromov, Ekonomicheskoe razvitie, pp. 452, 454, 457. The average annual
growth rate of industrial production derives from Kondratiev, as reported
in A. Gerschenkron, 'The rate of industrial growth in Russia since 1885',
]ournal of Economic History, supplement 7,1947, pp. 144-74.
71 Percentage shares calculated from Khromov, Ekonomicheskoe razvitie,
p. 457.
72 McKay, Pioneers for Profit, pp. 113-36.
73 M. la. Gefter, 'Tsarizm i monopolisticheskii kapital v metallurgii iuga Rossii
do pervoi mirovoi voiny', lstoricheskie zapiski, 43,1953, p. 77. See also A. L.
 Notes to pages 48-57 337

Tsukernik, Sindikat 'Prodamet' 1902-1914gg.: istoriko-ekonomicheskii ocherk,

Moscow, 1959, p. 13; McKay, Pioneers, pp. 117,339,391-4.
74 L. A. Mendel'son, Teoriia i istoriia ekonomicheskikh krizisov i tsiklov, 3 vols.,
Moscow, 1959-64, vol. 2, pp. 456, 458, 460; P. I. Liashchenko, Istoriia narod-
nogo khoziaistva SSSR, 2 vols., Moscow, 1952, vol. 2, p. 324. The output of
iron and steel in physical terms declined much less sharply between 1900
and 1902.
75 Stenogramma soveshchaniia o polozhenii metallurgicheskoi i mashinostroitel'noi
promyshlennosti, St Petersburg, 1908, p. 46; McKay, Pioneers, p. 140.
76 Ibid., p. 134.
77 Otchet gornogo departamenta za 1900-O1, St Petersburg, 1902, pp. 268-71;
Viatkin, Gornozavodskii Ural, pp. 11-16, and the older but still valuable work
by Ozerov, Gornye zavody Urala.
78 Smeta dokhodov i raskhodov gornogo departamenta na 1914, St Petersburg, 1913,
pp. 39,49; Ozerov, Gornye zavody, pp. 120,128; Viatkin, pp. 46-7,116.
79 The first soviet census distinguished 160 classes of product (nomenklatura
izdelii) in the machine-building industry. See B. N. Sarab'ianov, Metallopro-
myshlennost' Rossii, Moscow, 1921, p. 25.
80 The main source on the Russian engineering industry is la. S. Rozenfel'd
and K. I. Klimenko, Istoriia mashinostroeniia SSSR, Moscow, 1961; see also
Ocherki istorii tekhniki v Rossii, 1861-1917gg., Moscow, 1973, p. 328.
81 Rozenfel'd and Klimenko, Istoriia, pp. 50,53,136; P. G. Ivanov, Ocherk istorii
i statistiki russkogo zavodskogo parovozostroeniia, Petrograd, 1920; D. P.
Il'inskii and V. P. Ivanitskii, Ocherk istorii russkoi parovozostroitel'noi i vago-
nostroitel'noi promyshlennosti, Moscow, 1929, pp. 75-8.
82 Ibid., p. 67; Ocherki istorii tekhniki, pp. 328-32,345.
83 Dmitriev and Kolpychev, Sudostroitel'nye zavody, pp. 812-14; Ocherki istorii
tekhniki, pp. 245-6.
84 Dmitriev and Kolpychev, Sudostroitel'nye zavody, pp. 793-5.
85 Details in Rozenfel'd and Klimenko, Istoriia, p. 87.
86 Horsepower per worker increased by between 29 and 43 per cent; output
per worker increased by between 8 per cent (rolling-stock) and 38 per cent
(agricultural machinery). Ibid., p. 86.
87 Tsukernik, Sindikat 'Prodamet', pp. 13,37. The South Russian Iron and Steel
Association petitioned the government to buy up steel-making factories
and close them down. Other details from Mendel'son, Istoriia, vol. 2,
pp. 459-60; Liashchenko, Istoriia, vol. 2, p. 324; McKay, Pioneers, pp. 281-2;
Crisp, Studies, pp. 177-8.
88 Tsukernik, Sindikat 'Prodamet', pp. 12-18. For French misgivings, see Crisp,
Studies, pp. 177-8, and Girault, Emprunts russes, pp. 354-8. On the various
forms of government assistance, see I. F. Gindin, 'Politika tsarskogo pra-
vitel'stva v otnoshenii promyshlennykh monopolii', in Ob osobennostiakh
imperializma, pp. 86-123. Shares in Prodamet were not traded on the stock
exchange, and any firm that left the syndicate had to turn its shares over to
the other members. Firms' export orders were not subject to Prodamet
control until 1912. See Monopolii v metallurgicheskoi promyshlennosti, 1900-
1917gg., Moscow, 1963, pp. 301,579-80.
338 Notes to pages 57-66

89 Liashchenko, Istoriia, vol. 2, pp. 308-10; McKay, Pioneers, p. 283.

90 Liashchenko, Istoriia, pp. 310-12.
91 McKay, Pioneers, pp. 229-32.
92 During the 1890s, Druzhkovka produced only rails; 88 per cent of Hughes'
output was also rails. By 1903, these proportions had fallen to around 72 per
cent. See Crisp, Studies, pp. 34, 227; Tsukernik, Sindikat 'Prodamet',
pp. 78-88.
93 Monopolii, pp. 25-7; N. Shteinfel'd, 'Politika kazennykh zakazov', Narodnoe
khoziaistvo, 1902, 8, pp. 149-54; Liashchenko, Istoriia, vol. 2, p. 320; A. L.
Tsukernik, 'Iz istorii monopolizatsii zheleznogo rynka v Rossii', Istorkheskie
zapiski, 42,1953, pp. 173-4.
94 Il'inskii and Ivanitskii, Ocherk, pp. 91-2,95. The original members of Prod-
parovoz were Kolomna Engineering, the Russian Locomotive and Engi-
neering Company, Hartmann, Briansk, Putilov and Sormovo. The Nevskii
engineering works joined in 1907. Details in V. I. Bovykin, Formirovanie
finansovogo kapitala v Rossii, Moscow, 1984, p. 218; T. D, Krupina, 'K voprosu
o vzaimootnosheniiakh tsarskogo pravitel'stva s monopoliiami', Istori-
cheskie zapiski, 57, 1956, p. 147. According to Il'inskii and Ivanitskii, p. 95,
government subsidies were worth 300 rubles per goods wagon, 800 rubles
per passenger wagon and 3,000 rubles per locomotive. Applying these
figures to the output data, subsidies were equivalent to 21 per cent of
wagon production and three per cent of locomotive production in 1907.
96 Cited in V. la. Laverychev, Gosudarstvo i monopolii v dorevoliutsionnoi Rossii,
Moscow, 1982, pp. 124-5.
97 For the British case, see Clive Trebilcock, 'War and the failure of industrial
mobilization: 1899 and 1914', in J. Winter, ed., War and Economic Develop-
ment, Cambridge, 1975, pp. 139-64.

2 War and revolution, retrenchment and recession

1 Quoted in A. L. Sidorov, Finansovoe polozhenie Rossii v gody pervoi mirovoi
voiny, Moscow, 1960, p. 20. See also S. Harcave, ed., The Memoirs of Count
Witte, New York, 1990, pp. 424-5.
2 G. Surh, 1905 in St Petersburg: Labor and Government, Stanford, 1989;
L. Engelstein, Moscow, 1905: Working-Class Organization and Political Conflict,
Princeton, 1982; T. Emmons, The Formation of Political Parties in Russia and the
First National Elections in Russia, Stanford, 1983.
3 W. J. Kelly, 'Crisis management in the Russian oil industry: the 1905 revo-
lution', Journal of European Economic History, 10,1981, pp. 291-342.
4 Details of the negotiations are provided by Anan"ich, Rossiia, pp. 114-15,
123-8. A leading German Foreign Office spokesman, Rudolf Martin, argued
that Russia remained creditworthy, so long as grain exports were main-
tained. See B. Lohr, Die 'Zukunft Russlands': Perspektiven russischer Wirts-
chaftsentwicklung und deutsch-russische Wirtschaftsbeziehungen vor dem ersten
Weltkrieg, Wiesbaden, 1985, pp. 21-7.
5 The chief published source of information on government economic policy
remains the memoirs of V. N. Kokovtsov, 7z moego proshlogo: vospominaniia, 2
 Notes to pages 67-72 339

vols., Paris, 1933; an abbreviated English edition, annotated by H. H. Fisher,

appeared under the title Out of My Past: The Memoirs of Count Kokovtsov,
Stanford, 1935.
6 The outstanding monograph on business-government relations in this
period is L. E. Shepelev, Tsarizm i burzhuaziia v 1904-1914gg., Leningrad,
1987.
7 Kokovtsov noted that improvements were also made to the capacity of the
Chinese Eastern Railway. Iz moego proshlogo, vol. 1, p. 39. See also Newton
A. McCully, The McCully Report: The Russo-Japanese War, 1904-1905,
Annapolis, 1977, pp. 17-18, 23. The carrying capacity of the trans-Siberian
railway in 1900 had been limited to three trains daily. Troop strengths are
taken from Ropponen, Die Kraft Russlands, p. 39.
8 TsGIA, f.1393, op.2, d.456, 11.365-6. For further discussion of the Garin
report, see chapter 6.
9 B. A. Romanov, Ocherki diplomatichesoi istorii russko-iaponskoi voiny, Moscow-
Leningrad, 1955, p. 303, notes that there were 1,03712-inch shells at Vladi-
vostok, but no 12-inch guns, and only 153 such shells at Port Arthur, where
they were badly needed. The army received heavier howitzers only in the
summer of 1905, far too late to affect the outcome of the war. On the crucial
shortage of communication equipment, see McCully, Report, pp. 32,47.
10 The quality of footwear supplied to Russian troops is described in I. Kh.
Ozerov, Kak raskhoduiutsia v Rossii narodnye dengi, Moscow, 1907, p. 151. On
peacetime arrangements, see chapter 1.
11 Quoted in Shatsillo, Rossiia, p. 14. See also Ocherki istorii SSSR, 1905-1907,
Moscow-Leningrad, 1955, p. 52.
12 Romanov, Ocherki, p. 303; P. A. Zaionchkovskii, Samoderzhavie i russkaia
armiia na rubezhe X1X-XX stoletii, 1881-1903, Moscow, 1973, pp. 339^0.
13 Raymond Spear, Report on the Russian Medical and Sanitary Features of the
Russo-Japanese War to the Surgeon General U.S. Navy, Washington, 1906, pp. 9,
12-13; T.I. Pol'ner, Obshchezemskaia organizatsiia na Dal'nem Vostoke,
Moscow, 1908. Food shortages are discussed in Fuller, Strategy and Power,
1992, p. 401.
14 McCully, Report, pp. 243-56; Ocherki istorii SSSR, pp. 64-66.
15 V. A. Marinov, Rossiia i Iaponiia pered pervoi mirovoi voinoi, 1905-1914gg:
ocherki istorii otnoshenii, Moscow, 1974, pp. 11-13; Shatsillo, Rossiia, p. 13;
figures on naval casualties derive from Ia.I. Kefeli, Poteri v lichnom sostave
russkogo flota v voinu s Iaponiei: statisticheskoe issledovanie, St. Petersburg, 1914,
p. 118.
16 B. A. Romanov, ed., 'Konets russko-iaponskoi voiny', Krasnyi arkhiv, 28,
1928, pp. 182-204.
17 Figures from Stenogramma soveshchaniia, pp. 104-5. French and German
manufacturers competed for Russian custom during the war. The renewal
of the Russo-German trade agreement at the end of 1904 alarmed French
industrialists, who urged the government to ensure that any loan to Russia
be made conditional on orders to French iron and steel producers. Kokovt-
sov tartly remarked in private that 'Russia is not Turkey'. However, he did
inform Bompard, the French ambassador, that Russia regarded France as a
340 Notes to pages 73-78

major source of military supplies. See Anan'ich, Rossiia, pp. 119-22; Girault,
Emprunts russes, pp. 405-11; M. Epkenhans, Die wilhelminische Flottenriis-
tung, 1908-1914, Munich, 1991, p. 470.
18 Stenogramma soveshchaniia, pp. 105, 116-17; Istoriia Tul'skogo oruzheinogo
zavoda, 1711-1972, Moscow, 1973, pp. 91,101-4.
19 TsGAVMF, f.420, op.l, d.13,11.1-5.
20 L. G. Beskrovnyi, 'Proizvodstvo vooruzheniia i boepripasov dlia armii v
Rossii v period imperializma, 1898-1917', lstoricheskie zapiski, 99, 1977,
pp. 105-7; A. A. Korolev, 'Finansovo-ekonomicheskaia deiatelnost'
Tul'skogo patronnogo zavoda, 1899-1907', /z istorii Tul'skogo kraia, Tula,
1972, pp. 26-41.
21 Beskrovnyi, 'Proizvodstvo', pp. 105-7; Otchet gornogo departamenta za 1900-
Olgg.; ibid., za 1905; G. A. Miftiev, 'Artilleriiskaia promyshlennost' Rossii v
period pervoi mirovoi voiny', kandidatskaia dissertatsiia, Leningrad State
University, 1953, appendix 2.
22 Dmitriev and Kolpychev, Sudostroitel'nye zavody, p. 777. According to
McCully, Report, p. 3, 'the Emperor visited all the ships under construction
and by personal addresses and offers of rewards urged the workmen to
increased efforts'.
23 TsGAVMF f.427, op.l, d.1998,11.151-62; Dmitriev and Kolpychev, Sudostroi-
tel'nye zavody, pp. 905,912; Zav'ialov, hhorskii zavod, p. 171.
24 TsGIA, f.1393, op.2, d.456, 11.365-365ob.; TsGAVMF f.512, op.l, d.1781,
11.9ob., 21ob.; d.1782, 1.39. Ozerov, Kak raskhoduiutsia, p. 116 notes that
Putilov also received orders for coastal vessels. See also S. B. Okun', ed.,
Putilovets v trekh revoliutsiiakh: sbornik materialov po istorii Putilovskogo zavoda,
Leningrad, 1933, p. xvi; Liashchenko, Istoriia, p. 585; R. Girault, 'Finances
internationales et relations internationales: a propos des usines Poutiloff',
Revue d'histoire moderne et contemporaine, 13,1966, p. 220.
25 Subbotin, 'Voennaia promyshlennost", pp. 117,121.
26 TsGIA f.37, op.77, d.136, 1.10; Gosudarstvannaia Duma: Stenograficheskie
otchety (hereafter SOGD), III, 4th session, sitting 77, col. 1,251; Viatkin,
Gornozavodskii Ural, p. 113.
27 VOGK za 1905, St Petersburg, 1906, p. 32.
28 Kokovtsov, speaking to the State Council in 1908, is quoted in Mendel'son,
Teoriia, vol. 3, p. 130.
29 Ibid., p. 137; Bovykin, Formirovanie, pp. 52-3.
30 Stenogramma soveshchaniia, pp. 6-7; Il'inskii and Ivanitskii, Ocherk, p. 91;
Mendel'son, Teoriia, pp. 131,135.
31 Mendel'son, Teoriia, pp. 133-6. The 1904 harvest was 24 per cent higher
than the average for the previous quinquennium. The quotation is from
G. Meerson, 'Promyshlennaia depressiia v Rossii, 1906-1909gg.', Vestnik
Kommunisticheskoi Akademii, 9,1924, p. 148.
32 A. L. Blek, 'Usloviia truda rabochikh na peterburgskikh zavodakh po
dannym 1901g.', Arkhiv istorii truda v Rossii, 2,1921, pp. 65-85.
33 Ozerov pointed out acerbically that it would be cheaper to reform labour
law and prevent massive labour disputes than to pay the police bill incur-
red by the Ministry of the Interior: Ozerov, Kak raskhoduiutsia, p. 121. See
 Notes to pages 79-85 341

also Rieber, Merchants and Entrepreneurs, pp. 261-6; T. McDaniel, Autocracy,

Capitalism and Revolution in Russia, Berkeley, 1988, pp. 107-6.
34 U. A. Shuster, Peterburgskie rabochie v 1905-1907gg., Leningrad, 1976, p. 93;
Emmons, Formation of Political Parties, p. 128. Kokovtsov's memoirs are
silent on his meeting with the employers.
35 For a general survey of industrialists' attitudes and behaviour in 1905, see
A. Ermanskii, 'Krupnaia burzhuaziia v 1905-1907gg.', in Iu. Martov et al.,
eds., Obshchestvennoe dvizhenie v Rossii v nachale XXv., 4 vols., St Petersburg,
1909-14, vol. 2, part 2,1910, pp. 30-100.
36 Shepelev, Tsarizm i burzhuaziia, pp. 74-77. For documentation, see B. A.
Romanov, ed., Rabochii vopros v komissii V. N. Kokovtsova v 1905g., Moscow,
1926. See also Ermanskii, 'Krupnaia burzhuaziia', pp. 50-1, for the
industrialists' claim to participate in the deliberations of the Bulygin com-
mission. The quotation in the text is from McDaniel, Autocracy, p. 115.
37 See the remarks of Goujon, cited in McDaniel, Autocracy, p. 108; V.Ia.
Laverychev, Po tu storonu barrikad: iz istorii bor'by Moskovskoi burzhuazii s
revoliutsii, Moscow, 1967, pp. 34-5.
38 Ermanskii,, 'Krupnaia burzhuaziia', pp. 33,44-5; Laverychev, Po tu storonu,
pp. 34-5; Emmons, Formation, p. 129; Rieber, Merchants, pp. 346-7.
39 Laverychev, Po tu storonu, pp. 44,58.
40 Shepelev, Tsarizm, 1987, pp. 77-8; Ermanskii, 'Krupnaia burzhuaziia', p. 52.
Lieven, Russia's Rulers, p. 320 discusses the law relating to membership of
the State Council.
41 Ermanskii, 'Krupnaia burzhuaziia', p. 58; Emmons, Formation, pp. 127-42;
Rieber, Merchants, pp. 273-81.
42 V. V. Reikhardt, 'Partiinye gruppirovki i predstavitel'stvo interesov krup-
nogo kapitala v 1905-1906gg.', Krasnaia letopis', 1930, 6, pp. 5-39; S. E. Sef,
ed., Burzhuaziia v 1905g. po neizdannym arkhivnym materialam, Moscow-
Leningrad, 1926, pp. 88-100.
43 Shepelev, Tsarizm i burzhuaziia, p. 80; Laverychev, Po tu storonu, p. 40;
Rieber, Merchants, pp. 270-1,298-99.
44 For a full account, see J. H. Hartl, Die Interessenvertretungen der Industrkllen
in Russland, 1905-1914, Vienna, 1978.
45 Shepelev, Tsarizm i burzhuaziia, pp. 83-5; Rieber, Merchants, p. 337.
46 In February 1906, the Confederation of Trade and Industry stated publicly
that 'the landed elements in our society are ill-informed about the real
significance of trade and industry ... and regard industrialists and mer-
chants as a parasitic money-making class which can bear the burden of
heavy taxation without much difficulty'. Quoted by Ermanskii, 'Krupnaia
burzhuaziia', pp. 59-60; Sef, ed., Burzhuaziia, pp. 18-21; Rieber, Merchants,
p. 321.
47 H. Reichman, Railwaymen and Revolution, Berkeley, 1989, pp. 149-57.
48 According to the German General staff, twelve of the sixty infantry divi-
sions were tied up in the task of maintaining order in Russia. See Rop-
ponen, Die Kraft Russlands, p. 219; J. Bushnell, Mutiny amid Repression:
Russian Soldiers in the Revolution of 1905-1906, Bloomington, 1985.
49 An exception to the general strike movement in St Petersburg was the
342 Notes to pages 85-92

gun-cotton works administered by the Admiralty, whose workforce failed

to respond to the call from workers at the Baltic and Tube factories in
January 1905. See Nachalo pervoi russkoi revoliutsii, pp. 21-3,135-7,190-1.
50 Ibid., pp. 135-7,190-1. See also V. A. Tsybul'skii, 'Sestroretskie rabochie v
revoliutsii 1905-1907gg.', in Iu. D. Margolis, ed., Novoe o revoliutsii1905-
1907gg. v Rossii, Moscow, 1989, pp. 132-9.
51 Nachalo, pp. 124-5,149-50,198-200. For further evidence of anti-war senti-
ment, see Surh, pp. 270-1.
52 Nachalo, pp. 141-2,166-9.
53 Ibid., pp. 198-200; Shuster, Peterburgskie rabochie, p. 101.
54 Nachalo, pp. 202-3; Revoliutsionnoe dvizhenie v Rossii vesnoi i letom 1905g.,
aprel'-sentiabr', part, 1, Moscow, 1957, p. 270.
55 Ibid., part 2,1961, pp. 28-9,
56 Ibid., pp. 41-4,47-8; Vserossiiskaia politicheskaia stachka v oktiabre 1905g., part
1, Moscow, 1955, pp. 131-9; Vysshiipod"em revoliutsii 1905-1907gg: vooruzhen-
nye vosstaniia noiabr'-dekabr' 1905g., part 2, Moscow, 1955, pp. 841-2,846-9.
57 Details in Zav'ialov, hhorskii zavod, pp. 208-9,235-6,249, and Surh, 2905 in
St Petersburg, pp. 194-6. For Obukhov, see P. A. Berlin, Russkaia burzhuaziia v
staroe i novoe vremia, Moscow, 1922, pp. 235-6.
58 Revoliutsionnoe dvizhenie v Tul'skoi gubernii 1905-1907gg., Tula, 1956,
pp. 77-8, 99-104. For Sestroretsk, see Tsybul'skii, 'Sestroretskie rabochie';
SR influence in Perm is discussed in C. Rice, Russian Workers and the
Socialist-Revolutionary Party through the Revolution of 1905-1907, London,
1988, pp. 51-2,165-76.
59 See E. Maevskii, 'Massovoe dvizhenie s 1904 po 1907gg.', in Martov, ed.,
Obshchestvennoe dvizhenie, vol. 2, part 1, p. 157.
60 Nachalo, pp. 469-70. On Lange, see Revoliutsiia 1905-1907gg. v Latvii:
dokumenty i materialy, Riga, 1956, pp. 29,92-3.
61 Revoliutsionnoe dvizhenie v Tul'skoi gubernii, pp. 59-62.
62 During the December massacre, twenty-three people were killed: details in
Krasnyi Arkhiv, vol. 65-6, no. 4-5, 1934, pp. 193-247. On the exaction of
financial penalties, see TsGIA f.1393, op.2, d.456, 1.147. For Nevskii and
Putilov, see Revoliutsionnoe dvizhenie v Rossii vesnoi i letom 1905g., part 1,
Moscow, 1957, pp. 281-2; Revoliutsionnoe dvizhenie v Tul'skoi gubernii,
pp. 112-3.
63 TsGIA f.1393, op.2, d.456,11.151-ob.; D. Kol'tsov, 'Rabochie v 1905-1907gg.',
Obshchestvennoe dvizhenie, vol. 2, part 1 p. 189. Putilov paid the wages of
delegates to the St Petersburg Soviet: Berlin, Russkaia burzhuaziia, p. 236.
64 Completion rates are derived from Manikovskii, Boevoe snabzhenie, vol. 1,
p. 129; Beskrovnyi, 'Proizvodstvo', pp. 90-2.
65 TsGIA f.37, op.77, d.136,1.7. The average daily wage at Zlatoust was 1.10
rubles in 1904; by 1906 it had risen to 1.46 rubles. See also Shuster, Peter-
burgskie rabochie, p. 100.
66 On the gains made by other workers, see Kir'ianov, Zhiznennyi uroven',
pp. 101-32; on spatial concentration, see Shuster, Peterburgskie rabochie,
p. 117; Surh, 1905 in St Petersburg, p. 358.
67 In March 1903, Kuropatkin indicated that a war lasting eighteen months
 Notes to pages 92-99 343

would cost around 600 million rubles; a year later, Kokovtsov put the likely
cost at around 750 million rubles. See B. A. Romanov, ed., Russkiefinansyi
evropeiskaia birzha vl904-1906gg., Moscow-Leningrad, 1926, pp. 31-62,82-4,
307-3. On the financial outcome, see Sidorov, Finansovoe polozhenie,
pp. 15-21; Anan"ich, Rossiia, pp. 153-77; and Girault, Emprunts russes,
pp. 430-49.
68 Russkiefinansy,pp. 239-41; Girault, Emprunts russes, pp. 398,416,445-6.
69 Russkiefinansy,336-40.
70 See A. L. Sidorov, ed., 'Finansovoe polozhenie tsarskogo samoderzhaviia v
period russko-iaponskoi voiny i pervoi russkoi revoliutsii', lstoricheskii
arkhiv, 1955,2, pp. 141-2; Russkiefinansy,p. 358.
71 From 1906 until his death in 1915, Witte chaired the Finance Committee, a
non-executive body. Kokovtsov held the post of Minister of Finances
between February 1904 and October 1905; after an interval of six months,
during which I. P. Shipov served as Minister of Finances, he took back the
portfolio. On the Finance Committee, see N. P. Eroshkin, lstoriia gosudarst-
vennykh uchrezhdenii dorevoliutsionnoi Rossii, 3rd edn, Moscow, 1983,
pp. 162-3. Biographical details are culled from Shepelev, Tsarizm i burzhua-
ziia, and Anan"ich, Rossiia, p. 259.
72 Sidorov, Finansovoe polozhenie, pp. 26-7.
73 Anan"ich, Rossiia, pp. 257-261; Harcave, ed., Memoirs, pp. 561-72; Kokovt-
sov, Out of My Past, pp. 98,459-60.
74 Sidorov, Finansovoe polozhenie, pp. 27-8.
75 See Russkiefinansy,pp. 349-66, and Anan'ich, Rossiia, pp. 254-60.
76 K. F. Shatsillo, 'O disproportsii v razvitii vooruzhennykh sil Rossii naka-
nune pervoi mirovoi voiny, 1906-1914', Istoricheskie zapiski, 83,1969, p. 124,
fn.5. The total naval budget in 1900-4 averaged 102 million rubles. Accord-
ing to A. L. Vainshtein, Narodnoe bogatstvo i narodnokhoziaistvennoe nakoplenie
predprevoliutsionnoi Rossii, Moscow, 1960, p. 292, the value of all vessels,
merchant and naval, including those under construction, amounted to 783
million rubles on 1 January 1914. Bearing in mind the huge shipbuilding
programme that was under way after 1907, and discounting the merchant
fleet, the value of the stock of military shipping in 1904 must have been well
under 400 million rubles.
77 Shatsillo, 'O disproportsii', p. 128, fn.28; Ozerov, Kak raskhoduiutsia, p. 139.
78 TsGIA f.,1276, op.2, d.444,11.2-3. See also K. F. Shatsillo, Russkii imperializm i
razvitie flota nakanune pervoi mirovoi voiny, 1906-1914gg., Moscow, 1968,
pp. 53-6.
79 TsGIA, f.1276, op.4, d.530,1.24ob.; ibid., op.2, d.444,1.50ob; Shatsillo, Russkii
imperializm, pp. 53-7. Birilev is described in Witte's memoirs as an 'honour-
able, knowledgeable naval man ... he is not stupid, has a sharp tongue and
a sharp pen, and can be amusing'. He despised the Grand Duke, whom
Witte himself called 'hare-brained': Harcave, ed., Memoirs, pp. 719,721.
80 Shatsillo, Russkii imperializm, pp. 24, 61; Shatsillo, Rossiia, p. 36.
81 TsGIA f.1276, op.4, d.530,11.25-7. The strategy in the Black Sea was designed
to forestall any hostile attempt to penetrate the Straits (Russia's own navy
was forbidden to leave the Black Sea). For reference to new naval
344 Notes to pages 99-109

technology, see ibid., op.2, d.444,11.1-8, and Shatsillo, Russkii imperializm,

pp. 57-9,105.
82 TsGIA f.1276, op.2, d.444, 11.41-2; ibid., op.4, d.530, 11.32-9; ShatsUlo, 'O
disproportsii', p. 128. For Dikov - 'very decent', chosen 'not for his abili-
ties, but for lack of a suitable and willing candidate' - see Harcave, ed.,
Memoirs, p. 721.
83 Shatsillo, Russkii imperializm, pp. 49-50.
84 Iu. V. Rummel', Otechestvennyiflotkak sredstvo oborony i mezhdunarodnoi
politiki, St Petersburg, 1907, pp. 58-9,81-6; A. P. Semenov-Tian-Shanskii, O
napravlenii v razvitii russkogoflota, St Petersburg, 1907; Belavenets, Nuzhen-
li nam flot; Shatsillo, Russkii imperializm, p. 49. Rummel"s work was also
couched in terms of a plea for the creation of a merchant fleet. His son was
a leading figure in the south Russian iron and steel industry and played a
major role in Prodamet.
85 A. G. Kavtaradze, 'Iz istorii russkogo general'nogo shtaba', Voenno-istori-
cheskii zhurnal, 1972, 7, pp. 87-92; 1974,12, pp. 80-6; Shatsillo, 'O dispro-
portsii', p. 126.
86 Sidorov, Finansovoe polozhenie, p. 55; A. Zhilin, 'Bol'shaia programma po
usileniiu russkoi armii', Voenno-istoricheskii zhurnal, 1974, 7, pp. 90-7;
N. Stone, The Eastern Front, 1914-1917, London, 1975, pp. 23, 30-1.
87 Shatsillo, Rossiia, pp. 39,106.
88 TsGIA f.1276, op.4, d.530,1.17; Stone, Eastern Front, pp. 19-20.
89 Shatsillo, Rossiia, pp. 39-40.
90 TsGIA f.1276, op.4, d.530, 11.24-29ob. Eroshkin, Istoriia, p. 227, and
M. Perrins, 'The Council for State Defence, 1905-1909: a study in Russian
bureaucratic polities', Slavonic and East European Review, 58, 1980,
pp. 370-98.
91 Artilleriiskii zhurnal, 1908, p. 975 (Rodzevich).
92 TsGIA f.37, op.77, d.136,1.10; Viatkin, Gornozavodskii Ural, p. 113.
93 TsGIA f.37, op.77, d.136,1.7; VOGK za 1908, p. 143.
94 TsGIA f.37, op.77, d.136,11.15-27, report by Professor V. N. Lipin on his
visit to the Perm Cannon Works, 27 December 1906 to 19 January 1907. At
Zlatoust, one-quarter of output in the gun shop was rejected. See VOGK
za 1908, p. 143.
95 Ozerov, Kak raskhoduiutsia, pp. 111-37,158-9.
96 Stenogramma, pp. 12-13. Tokarskii's comments were endorsed by Ozerov.
97 SOGD, III, 4th session, 72 sitting, cols. 1,404-5; Shatsillo, Russkii imperial-
izm, pp. 169-73.
98 A. F. Iakovlev, Ekonomicheskie krizisy v Rossii, Moscow, 1955, pp. 314,
339-43. Mendel'son, Teoriia, vol. 3, pp. 137-51, takes a different view, but is
not convincing.
99 Meerson, 'Promyshlennaia depressiia', pp. 147-74, who emphasizes the
'crisis of overproduction'; Bovykin, Formirovanie, p. 56. See also TsGIA
f.268, op.3, d.1049,1.124.
100 Mendel'son, Teoriia, vol. 3, pp. 148-9.
101 L. E. Shepelev, Akstionernye kompanii v Rossii, Leningrad, 1973, pp. 135,225;
 Notes to pages 109-121 345

I. F. Gindin, Russkie kommercheskie banki, Moscow, 1948, pp. 118,124; Men-

del'son, Teoriia, vol. 3, pp. 142-4.
102 Liashchenko, Istoriia, p. 310.
103 Laverychev, Gosudarstvo, pp. 120-1.
104 Ibid., for the conventional Soviet view, as well as A. P. Pogrebinskii,
'Komitet po zheleznodorozhnym zakazam i ego likvidatsiia v 1914g.',
Istoricheskie zapiski, 83,1969, pp. 233-43.
105 Quotations in Liashchenko, Istoriia, p. 325. See M.Ia. Gefter, 'Bor'ba
vokrug sozdaniia metallurgicheskogo tresta v Rossii v nachale XXv.',
Istoricheskie zapiski, 47,1954, pp. 124-48.
106 Gefter, 'Bor'ba', p. 131. Gefter emphasized inter-firm division; Rieber,
Merchants and Entrepreneurs, pp. 340-4, places much greater stress upon
ministerial opposition, which whipped up consumer frenzy.
107 G. M. Gorfein, 'Iz istorii obrazovaniia Ministerstva torgovli i promyshlen-
nosti', S. N. Valk, ed., Ocherki po istorii ekonomiki i klassovykh otnoshenii v
Rossii kontsa XlX-nachala XX veka, Moscow-Leningrad, 1964, pp. 161-79.
Shepelev, Tsarizm i burzhuaziia, pp. 37,42-6. Timashev went on to pursue a
career in finance, thereby confirming his colleagues' worst fears.
108 Ibid., pp. 54-8, drawing a contrast with A. V. Krivoshein, in the Chief
Administration of Land Reorganization and Agriculture.
109 The classic statement about the dilemmas of political reform and social
change in the first Russian revolution remains M. Weber, 'Zur Lage der
burgerlichen Demokratie in Russland', reprinted in W. J. Mommsen and
D. Dahlmann, eds., Max Weber: Zur Russischen Revolution von 1905, Tub-
ingen, 1989, pp. 71-280.
110 Rieber, Merchants and Entrepreneurs, p. 333.

3 The defence burden, 1907-1914

1 General Brinken, chief of staff of the Petersburg military district, reported in
1907 that the Tsar was 'hypnotized' by the idea of a large modern navy:
Shatsillo, Russkii imperializm, p. 61. See also V. A. Sukhomlinov, Vospomi-
naniia, Berlin, 1924, pp. 225-6. Nicholas complained when ministerial reports
'failed to provide detailed insights into the real conditions of the fleet or the
qualifications of new recruits', according to A. Verner, The Crisis of Russian
Autocracy: Nicholas II and the 1905 Revolution, Princeton, 1990, pp. 23-5,60,65.
2 C. Schmidt, ed., The Economics of Military Expenditure, London, 1987,
pp. 141-2,193-4; David M. MacDonald, United Government and Foreign Policy
in Russia, 1900-1914, Cambridge, Mass., 1992.
3 Offer, First World War, for a full treatment.
4 Marinov, Rossiia i Iaponiia, is the main source for Russo-Japanese relations
before 1914.
5 A. M. Zaionchkovskii, Podgotovka Rossii k mirovoi voine v mezhdunarodnom
otnoshenii, Moscow-Leningrad, 1926, pp. 118-20; Documents diplomaliaues
franqais, s<§rie 2, vol. 9, pp. 273-4; vol. 10, pp. 185, 491-3; vol. 11, p. 789;
Ropponen, Die Kraft Russlands, p. 228.
346 Notes to pages 121-129

6 V. I. Bovykin, Ocherki istorii vneshnei politiki Rossii, Moscow, 1960, p. 88;

Ropponen, Die Kraft Russlands, pp. 215-7; Zaionchkovskii, Podgotovka,
p. 202.
7 Cited in Shatsillo, Rossiia, p. 31. See also Lieven, Russia, pp. 31-2,74-5.
8 Undated memorandum, cited in Marinov, Rossiia i laponiia, p. 104. See also
Kokovtsov, Out of My Past, pp. 231-5.
9 Marinov, Rossiia i laponiia, pp. 105-7.
10 Ibid., pp. 46-9,85,101-4.
11 Lieven, Russia, pp. 38,69; Fuller, Strategy and Power, pp. 433-8.
12 F. A. Golder, Documents of Russian History, 1914-1917, New York, 1927,
pp. 3-23; Lieven, Russia, pp. 80-3.
13 Geyer, Russian Imperialism, p. 300.
14 A. M. Zaionchkovskii, Podgotovka Rossii k imperialisticheskoi voine: ocherki
voennoi podgotovki i pervonachal'nykh planov, Moscow, 1926; G. Frantz, Russ-
lands Eintritt in den Weltkrieg: der Ausbau der russischen Wehrmacht und ihr
Einsatz bei Kriegsausbruch, Berlin, 1924; Fuller, Strategy and Power. David
Stevenson is completing a major study of the European arms race.
15 TsGIA f.1276, op.4, d.530, 11.424-65, 'Kratkii svod otzyvov grazhdanskikh
vedomstv po voprosu o plane gosudarstvennoi oborony'.
16 Zaionchkovskii, Podgotovka, pp. 74-80,348-54 (Memorandum from General
Alekseev, 17 December 1908).
17 SOGD, III, 4 session, 71 sitting, cols. 1,302-3. See also Harcave, ed., Memoirs,
p. 729. In his Political Memoirs, 1905-1917, Ann Arbor, 1967, p. 168, Paul
Miliukov described Koliubakin as an ex-officer 'with a hot temper'.
18 TsGIA f. 1276, op. 4, d. 530,1.150ob.
19 Details in Sukhomlinov, Vospominaniia, pp. 154-5. Witte used a different
metaphor: 'what we had from 1905 to 1909 was something like a trunk with
two heads'. Harcave, ed., Memoirs, p. 730. The General Staff also failed to
keep the GAU properly informed of its plans, according to E. Z. Barsukov,
Podgotovka Rossii k mirovoi voine v artilleriiskom otnoshenii, Moscow-
Leningrad, 1926, p. 60.
20 The Tsar initially declared his intention to chair the SGO but, typically,
changed his mind. See Kavtaradze, 'Iz istorii', pp. 87-92; L. G. Beskrovnyi,
Armiia iflot Rossii v nachale XXv., Moscow, 1986, pp. 49-51.
21 A. F. Rodiger, 'Istoriia moei zhizni', Voenno-istoricheskii zhurnal, 6, 1990,
pp. 82-7. Rodiger had already incurred the Tsar's displeasure by opposing
the decision to hive off the General Staff from the War Ministry, according
to Kokovtsov, Memoirs, p. 229. For Rodiger's resignation, see W. T. Wilfong,
'Rebuilding the Russian army, 1905-1914', PhD thesis, University of
Indiana, 1977, pp. 86-95,115.
22 A. A. Polivanov, /z dnevnikov i vospominanii po dolzhnosti voennogo ministra i
ego pomoshchnika, 1907-1916gg., Moscow, 1924, pp. 27-8. Sukhomlinov
worked his way through four staff chiefs between 1909 and 1914. Stone,
Eastern Front, p. 26 interprets this turnover as a deliberate attempt by the
new War Minister to impose his authority over the General Staff. Sukhom-
linov was the subject of numerous uncomplimentary portraits, as in S. I.
Shidlovskii, Vospominaniia, 2 vols., Berlin, 1923, vol. 1, pp. 214-17, and N. N.
 Notes to pages 130-141 347

Golovine, The Russian Army in the World War, New Haven, 1931, pp. 11-14.
His rehabilitation began with Sidorov, Finansovoe polozhenie, pp. 52-4, 74,
and was continued by Norman Stone and W. T. Wilfong.
23 'Iz zapisok A. F. Rodigera', Krasnyi arkhiv, 60,1930,5, pp. 104,123; Sukhom-
linov, Vospominaniia, p. 270; Beskrovnyi, Armiia i flot, p. 12; Wilfong,
'Rebuilding', pp. 69-75.
24 TsGIA f. 1276, op. 4, d. 530,1.15ob.; Barsukov, Podgotovka, p. 58.
25 Polivanov, Iz dnevnikov, p. 28; Wilfong, 'Rebuilding', pp. 97-137; Fuller,
Strategy and Power, p. 427. For a critique of Sukhomlinov's policy towards
fortresses, see Zaionchkovskii, Podgotovka, pp. 141-54. Each fortress cost
between 50 and 100 million rubles to build and equip, according to Rodiger,
in SOGD III, 1st session, 74 sitting, 27 May 1908, col. 1,616.
26 TsGIA f. 1726, op. 4, d. 530,11.192-i, 219-20, 231^0ob., Council for State
Defence, 9 May 1908; Shatsillo, Rossiia, pp. 41-2,106.
27 TsGIA f. 1276, op. 4, d. 530,11.343-76, Kokovtsov to Stolypin, 1 April 1908;
Polivanov, Iz dnevnikov, p. 39; Kokovtsov, Memoirs, pp. 218-19,229-30. Suk-
homlinov captured the frostiness of his relationship with Kokovtsov in his
own memoirs: when Kokovtsov became Prime Minister (in 1911), Sukhom-
linov relates that he 'was obliged to tell him that it won't be possible to fire
money at the enemy and that all his gold reserves and other funds would
simply find their way into the pockets of our conquerors, in the event of a
national disgrace'. Sukhomlinov, Vospominaniia, pp. 218-19.
28 Barsukov, Podgotovka, pp. 58-69, 269-70; Zaionchkovskii, Podgotovka,
pp. 85-90; Ropponen, Die Kraft Russlands, pp. 198-200.
29 Ibid., pp. 202-3; Barsukov, Podgotovka, pp. 63-8; Stone, Eastern Front,
pp. 31-2.
30 A. Zhilin, 'Bol'shaia programma po usileniiu russkoi armii', Voenno-istori-
cheskii zhurnal, 7, 1974, p. 91; Beskrovnyi, 'Proizvodstvo vooruzheniia',
pp. 106-7.
31 Sukhomlinov, Vospominaniia, pp. 194, 269; B. Bukin, 'Zheleznye dorogi v
mirovuiu voinu ikh blizhaishie zadachi v podgotovke strany k oborone',
Voina i revoliutsiia, 1926,3, pp. 100-18; 4, pp. 87-100.
32 Shatsillo, Rossiia, pp. 43-9; A. L. Sidorov, ed., 'Iz istorii podgotovki Rossii k
pervoi mirovoi voine', Istoricheskii arkhiv, 1962,2, p. 143.
33 K. F. Shatsillo, 'Poslednie voennye programmy Rossiiskoi imperii', Voprosy
istorii, 7-8,1991, p. 230; Zhilin, 'Bol'shaia programma', p. 91; G. Krumeich,
Armaments and Politics in France on the Eve of the First World War: The
Introduction of Three-Year Conscription, 1913-1914, Leamington Spa, 1984.
34 The 'large programme' absorbed and replaced the 'small' military pro-
gramme.
35 Barsukov, Podgotovka, pp. 81-94; Zhilin, 'Bol'shaia programma', pp. 91-5;
Shatsillo, 'Poslednie voennye programmy', pp. 230-1.
36 Zhilin, 'Bol'shaia programma', p. 96; Beskrovnyi, Armiia iflot, p. 15; D. W.
Spring, 'Russia and the Franco-Russian alliance, 1905-1914: dependence or
interdependence', Slavonic and East European Review, 66, 1988, pp. 564-92
remarks that 'it was not the dependence of Russian strategy on France
which called for the speeding up of Russia's mobilization and an early
348 Notes to pages 135-141

attack on east Prussia. It was the deterioration of relations with the central
powers and the correctly foreseen strategy of Germany in a two-front war'.
37 Cited in Shatsillo, Russkii imperializm, pp. 346,323.
38 Ibid., pp. 163-201; A. Zvegintsev, 'The Duma and imperial defence', Russian
Review, 1912,3, pp. 49-63.
39 I. V. Bestuzhev, 'Bor'ba v Rossii po voprosam vneshnei politiki nakanune
pervoi mirovoi voiny, 1910-1914', Istoricheskie zapiski, 75, 1965, pp. 45-85;
Shatsillo, Russkii imperializm, pp. 90-162; idem, 'Poslednie voennye prog-
rammy', p. 229. Grigorovich replaced Voevodskii, who served from 1909
until 1911 and was, in Witte's view, 'not to be taken seriously'.
40 TsGIA f. 1276, op. 5, d. 494, 11.25-7, 'Zhurnal Osobogo soveshchaniia po
rassmotreniiu programmy razvitiia morskikh vooruzhennykh sil Rossii', 3
August 1909; Shatsillo, Russkii imperializm, pp. 65-7.
41 TsGIA f. 1276, op. 5, d. 494,11.28-34.
42 Ibid., 11.84-9, 'Zhurnal Osobogo soveshchaniia', 21 August 1909; ibid., op. 4,
d. 530,11.405-11, Navy Minister to Council of Ministers, 15 January 1910;
ibid., d. 444, 11.405-11, Council of Ministers, 15 January 1910; 'Iz istorii
podgotovki', pp. 120-5.
43 Shatsillo, Russkii imperializm, pp. 193-5.
44 TsGIA f. 1276, op. 2, d. 444,11.232-240ob., Council of Ministers, 4 August
1911; TsGAVMF f. 401, op. 6, d. 1,11.196-205ob., Commission on Shipbuild-
ing, 2 December 1911.
45 TsGAVMF f. 401, op. 6, d. 272,1.177, Secret report on progress of 1912-16
shipbuilding programme (1913); Shatsillo, Russkii imperializm, pp. 72-77,
158-61. For an unconvincing attempt to argue that the Duma was respon-
sible for Russia's failure to achieve naval parity with Germany by 1914, see
N. S. Chirikov, 'Plan voiny, podgotovka i mobilizatsiia imperatorskogo
flota v 1914 godu', Voennaia byl', 75,1965, pp. 12-18.
46 N. V. Savich, 'Morskie raskhody i sudostroitel'naia programma', Novyi
ekonomist, 5,1914, pp. 4-7.
47 Vestnik finansov, 1914,13, p. 623; Proposed Budget for the Russian Empire, St
Petersburg, 1908, p. 103; Proekt gosudarstvennoi rospisi dokhodov i raskhodov na
1908, St Petersburg, 1908, pp. 120-1. The 1907 total includes 186 million
rubles 'extraordinary7 expenditure, connected with the Russo-Japanese
War; the 1913 figure includes 135 million rubles for 'economic-operational'
expenditures. These figures exclude sums assigned for railway construc-
tion, some of which were earmarked for military lines.
48 For Kokovtsov's assessment, see TsGIA f. 1276, op. 4, d. 530, 1.353, and
Sidorov, Finansovoe polozhenie, pp. 48,55-8.
49 SOGD, III, 1st session, 74 sitting, 27 May 1908, col. 1,658; 4th session, 62
sitting, 21 February 1911, col. 2,341 (Alekseenko). See also Fuller, Civil-
Military Conflict, p. 48 and Pintner, 'Burden' p. 248, who puts defence
spending at 25.2 per cent of the budget in 1910-14.
50 Proekt.. na 1915, Petrograd, 1915, pp. 138-9, noting that 73 million rubles
were assigned to the construction budget; Proekt gosudarstvennoi rospisi...
na 1917, Petrograd, 1916, p. 119; Fuller, Civil-Military Conflict, p. 220; Pintner,
'Burden', p. 243.
 Notes to pages 141-148 349

51 Nikanor Savich (1869-?) subsequently appeared on the Progressive Bloc's

slate as the preferred candidate for the post of Navy Minister in 1915. He
held office briefly under the Provisional Government. For the budget
figures, see Proekt ... na 1913, pp. 126-7; Pintner, 'Burden', p.244. The
figures relate to ordinary spending.
52 Gregory, Russian National Income, appendix F, pp. 252-3.
53 Fuller, Civil-Military Conflict, p. 68.
54 Savich remained concerned by the power vested in the Admiralty by virtue
of the 'colossal' sums assigned it: see Savich, 'Morskie raskhody'. Zvegint-
sev (1869-1915) entered politics via the Voronezh zemstvo; during the First
World War, his airplane was shot down by 'friendly fire'. Alekseenko
(1847-1917) outlived him by just two years. Guchkov (1862-1936) served
briefly as chairman of the Third Duma (1910), but reached the pinnacle of
his fame as chairman of the central war industries committee. He died in
Paris. Shingarev (1869-1918) served in the Provisional Government, but
was murdered in his hospital bed by Bolshevik sailors.
55 Grigorovich (1853-1930), unusually, remained in his post until February
1917. He receives a good press in Zvegintsev, 'The Duma and state defence',
in Kokovtsov, Memoirs, pp. 218-19, and (grudgingly), in Witte's memoirs,
where he is compared favourably with his predecessors. For Stolypin's
• view on the role of the Duma, see SOGD, III, 1st session, 72 sitting, 24 May
1908, cols. 1,400-4; Sukhomlinov, Vospominaniia, pp. 221, 223; J. D. Walz,
'State defense and Russian politics under the last Tsar', PhD thesis, Syra-
cuse University, 1967; and Fuller, Civil-Military Conflict, pp. 225-30.
56 V. N. Mukoseev, 'Gosudarstvennoe khoziaistvo', in Martov et al. Obshchest-
vennoe dvizhenie, vol. 1, pp. 182-95. The Duma could not challenge
payments earmarked for the state debt. See P. E. Shchegolev, ed., Padenie
tsarskogo rezhima, 7 vols., Leningrad, 1924-7, vol. 7, p. 11 (Shingarev); Shat-
sillo, Russkii imperializm, p. 166.
57 SOGD, III, 4th session, 62 sitting, col. 2,342; ibid., 126 sitting, col. 737-8;
Kokovtsov, Memoirs, p. 371. See also Ozerov, Kak raskhoduiutsia, p. 159, and
Sidorov, Finansovoe polozhenie, pp. 71-2.
58 In 1911, 16 per cent of the appropriations to the War Ministry remained
unspent; by 1913, this figure had fallen to one per cent. See Sidorov,
Finansovoe polozhenie, p. 75; also SOGD HI, 5th session, 126 sitting,
cols. 737-8 (Rozanov), for the GAU budget.
59 SOGD, III, 4th session, 62 sittings, cols. 2,342-444. Kokovtsov's memoirs
reveal his undisguised contempt for Shingarev.
60 TsGIA f. 1393, op. 2, d. 455,1. 98; Fuller, Civil-Military Conflict, p. 285.
61 The extent of corruption is discussed in chapter 6.
62 Savich, 'Morskie raskhody'.
63 TsGIA f.1276, op.4, d.530,11.343-74, Kokovtsov to Stolypin, 2 January 1910;
Kokovtsov, Memoirs, p. 345.
64 Shepelev, Tsarizm i burzhuaziia, p. 49. Rukhlov (1853-1918) held office until
October 1915. Born into a peasant family in Vologda province, he made a
rapid rise through the government, helped by his association with the
extreme rightwing Union of Russian People.
350 Notes to pages 148-155

65 V. S. Diakin, 'Iz istorii ekonomicheskoi politiki tsarizma v 1907-1914gg.',

Istoricheskie zapiski, 109, 1983, pp. 25-63. Krivoshein (1858-1921) held the
post of Minister of Agriculture from 1908 until 1915.
66 TsGIA f. 1276, op. 4, d. 530, 11.32-9, 367-70, Kokovtsov to Stolypin, 2
January 1910.
67 R. H. Gorlin, 'Problems of tax reform in imperial Russia', journal of Modern
History, 49,1977, pp. 246-65; Sidorov, Finansovoe polozhenie, pp. 33-48; Iu. N.
Shebaldin, 'Gosudarstvennyi biudzhet tsarskoi Rossii v nachale XXv. do
pervoi mirovoi voiny', Istoricheskie zapiski, 65,1959, pp. 163-90.
68 Shepelev, Tsarizm i burzhuaziia, pp. 162-4.
69 Promyshlennost' i torgovlia, 1911, 8, pp. 343-5. The net profits of state rail-
ways increased from 161 million rubles in 1908 to 473 million in 1913; other
details from Shepelev, Tsarizm i burzhuaziia, pp. 222-8.
70 Mukoseev, 'Gosudarstvennoe khoziaistvo', p. 181; Explanatory Memorandum
to the Russian Budget, St Petersburg, 1913, vol. 1, p. 97.
71 M. Miller, The Economic Development of Russia, 1905-1914, London, 1926,
pp. 132-6.
72 G. D. Dement'ev, 'Svobodnaia nalichnost' gosudarstvennogo kazna-
cheistva', Vestnik finansov, 1912, 9, appendix, pp. 34-5; A. I. Bukovetskii,
'Svobodnaia nalichnost' i zolotoi zapas tsarskogo pravitel'stva v kontse
XlX-nachale XXv.', in Monopolii i inostrannyi kapital v Rossii, Moscow-
Leningrad, 1962, p. 363. See also Kokovtsov, Memoirs, p. 460; Explanatory
Memorandum, p. 97; Anan"ich, Rossiia, pp. 233-54, 266-7. The 1908-9 nego-
tiations are also described in Sidorov, Finansovoe polozhenie, p. 31; Shebaldin,
'Gosudarstvennyi biudzhet', pp. 178-9 and Girault, Emprunts russes,
pp. 487-91.
73 Bukovetskii, 'Svobodnaia nalichnost", pp. 364-5; Sidorov, Finansovoe poloz-
henie, p. 104.
74 TsGIA f. 1276, op. 4, d. 5340, 11.363-4; Sidorov, Finansovoe polozhenie,
pp. 27-34; Anan'ich, Rossiia, pp. 254-60.
75 SOGD, III, 1st session, 74 sitting, col. 1,602,27 May 1908 (Bab'ianskii); Vestnik
finansov, 1914,13, p. 623; Alvin Johnson, 'The expansion of military expendi-
tures', Documents of the American Association for International Conciliation,
New York, 1911, pp. 3-9. Different figures, from a German source, are given
in Hardach, First World War, p. 150: Germany $7.4, France $8.0, Britain $7.8,
Austria $3.3 and Russia $2.8.
76 SOGD, III, 1st session, 74 sitting, col. 1,602, for other estimates of defence
spending as a proportion of national income: in Russia, between 8.3 and 10
per cent, in Austria, 5 per cent, in Germany 4 per cent and in France
between 5 and 6.2 per cent.
77 P. K. O'Brien, 'The costs and benefits of British imperialism, 1846-1914', Past
and Present, 120,1988, pp. 163-200.
78 Quoted in Quincy Wright, The Study of War, Chicago, 1940, p. 260. See also
M. Pearton, The Knowledgeable State: Diplomacy, War and Technology since
1870, London, 1982, pp. 132-9 and Harcave, ed., Memoirs, pp. 55-7.
79 Witte's 1903 statement appears in G. Drage, Russian Affairs, London, 1904,
p. 279. For the very different view he held in 1913 - 'the vast sums spent on
 Notes to pages 155-162 351

armaments come from the sweat of the poor; they sap our productive
strength, while poverty, sickness and mortality increase' - see Harcave, ed.,
Memoirs, pp. 57-8; and Explanatory Memorandum to the Russian Budget, 1913,
vol. 1, p. 94.
80 G. Kennedy, Defense Economics, London, 1983, provides a clear guide to the
issues.
81 SOGD, HI, 1st session, 74 sitting, col. 1,627 (Belousov). Kokovtsov's views
appear in Kokovtsov, Memoirs, pp. 260-1. Durnovo is quoted in Lieven,
Russia's Rulers, p. 224.
82 A. Kahan, 'Government policies and the industrialization of Russia', journal
of Economic History, 27,1967, pp. 460-77.
83 J. Brooks, 'The zemstvo and the education of the people', in T. Emmons and
W. Vucinich, eds., The Zemstvo in Russia: An Experiment in Local Self-Govern-
ment, Stanford, 1982, pp. 270-1.
84 The quote is from B. Eklof, 'Peasants and schools', in B. Eklof and S. P.
Frank, eds., The World of the Russian Peasant, London, 1990, p. 118. It might be
argued that the government should have done more to advance the
educational opportunities of the urban population. On the other hand,
factories - including state-owned enterprises - did provide some schooling
for young workers. The argument about 'social capabilities' derives from
Moses Abramovitz, 'Catching up, forging ahead and falling behind', Journal
of Economic History, 46,1986, pp. 385^106.
85 Figures from S. C. Ramer, 'The zemstvo and public health', in Emmons and
Vucinich, eds., Zemstvo, pp. 302,307.
86 M. Bulgakov, A Country Doctor's Notebook, London, 1990.
87 Kennedy, Defense Economics, pp. 193-203.
88 Geyer, Russian Imperialism, p. 287, perhaps exaggerates the relative weak-
ness of the Black Sea fleet, vis-a-vis that of the enhanced Turkish navy. On
the need for both defensive and offensive capabilities, see the comments of
Stolypin and Sukhomlinov, in Shatsillo, Russkii imperializm, p. 323.

4 The economics and politics of industrial recovery

1 Gerschenkron, 'The rate of industrial growth', p. 152.
2 I. Kh. Ozerov, Na temy dnia: k ekonomicheskomu polozheniiu Rossii, St Peters-
burg, 1912, p. 296; A. Finn-Enotaevskii, Sovremennoe khoziaistvo v Rossii, St
Petersburg, 1911, pp. 248-50; M. I. Tugan-Baranovskii, K luchshemu budush-
chemu, St Petersburg, 1912, pp. 177-83; Lyashchenko, History, p. 685; I. F.
Gindin, Russkie kommercheskie banki, Moscow, 1948, pp. 160-1,165; Mender-
son, Teoriia, vol. 3, p. 205.
3 Gerschenkron, Economic Backwardness, p. 22; M. E. Falkus, The Industrial-
ization of Russia, 1700-1914, London, 1972, pp. 79-80; Crisp, Studies, pp. 34,
52,149.
4 Promyshlennost' i Torgovlia, 1911, 7. Avdakov (1851-1915) came from an
Armenian professional background. After training at the Institute of Mines
in St Petersburg, he established himself as a leading figure in the south
Russian iron and steel industry. He held directorships in Nikolaev Ship-
352 Notes to pages 163-174

building, Lena Goldfields, Makeevka Coal and Briansk Iron and Steel; he
was briefly head of the coal syndicate Produgol'. He also served on the
State Council. Details in Materialy po istorii SSSR, vol. 6, Moscow, 1959,
p. 745; Shepelev, Tsarizm i burzhuaziia, pp. 98-9; and Rieber, Merchants and
Entrepreneurs, pp. 229-30.
5 The government did, however, offer indirect support to industry; in par-
ticular, the State Bank underwrote the operations of the commercial
banking system.
6 TsGIA f.1276, op. 4, d.217,11.1-lob. The delay was caused by the sudden
death of Filosofov and his replacement by I. P. Shipov. For their careers and
ideas, see Shepelev, Tsarizm i burzhuaziia, pp. 39-43. The conference pro-
ceedings are contained in Stenogramma soveshchaniia and in TsGIA f.268,
op.3, d.1049; f.1276, op.4, d.296.
7 TsGIA f.268, op.3, d.1049,11.135-40.
8 Ibid., 11.136-136ob.; Zapiska soveta s'ezdov o merakh k pod"emu otechestvennoi
zheleznoi promyshlennosti i mashinostroeniia, St Petersburg, 1908.
9 Stenogramma, pp. 47-8 (V. A. Karaulov). Vol'skii estimated that only six
million puds were required for the new Donets railway, only one-fifth of
the iron and steel supplied to the railways in 1907: Zapiska soveta s'ezdov,
pp. 7, 28; Stenogramma, pp. 75 (Farmakovskii), 83-5 (Tokarskii).
10 See the report on the Conference (by Shipov) to the Council of Ministers,
TsGIA f.268, op.3, d.1049,11.124ob.-125.
11 Rieber, Merchants and Entrepreneurs, pp. 195-8; Crisp, Studies, pp. 28-31.
12 Shepelev, Tsarizm i burzhuaziia, pp. 231-2; Gindin, 'Politika', p. 103. Miller
died prematurely in 1911. He was succeeded by P. L. Bark (1858-1937), later
Minister of Finances between 1914 and February 1917.
13 Promyshlennost' i torgovlia, 1914,2, p. 69, cited in Shepelev, Tsarizm i burzhua-
ziia, p. 240; Gindin, 'Politika', pp. 104-5.
14 Shepelev, Tsarizm i burzhuaziia, pp. 232-3.
15 Laverychev, Gosudarstvo i monopolii, pp. 70-5. Further details in Gindin,
'Politika'. A brief summary in English is provided in Rieber, Merchants and
Entrepreneurs, pp. 369-70.
16 TsGIA f.268, op. 3, d.1049,1.124; Svod zakonov Rossiiskoi imperii, izd. 1887, vol.
10, part 1, 'Polozhenie o kazennykh podriadakh i postavkakh', new edn,
1900, revised 1915; Stenogramma, pp. 125,128. See also Subbotin, 'Voennaia
promyshlennost'', p. 127.
17 Shepelev, Tsarizm i burzhuaziia, pp. 251-3.
18 TsGIA f.1276, op.4, d.166,11.4-4ob.
19 Rieber, Merchants and Entrepreneurs, p. 370.
20 See Bovykin, Formirovanie, and H. Haumann, Kapitalismus im zaristischen
Stoat, 1905-1917, Konigstein, 1980.
21 Urban population increased from 16.55 million in 1908 to 18.60 million in
1913. Urban consumption patterns are discussed in G. A. Dikhtiar, Vnutren-
niaia torgovlia v dorevoliutsionnoi Rossii, Moscow, 1960, pp. 47-58.
22 Strumilin derived an estimate of the capital stock of industry from two
sources: published balance sheets, which yielded information about the
'acquisition cost' of assets, and (for investment in non-corporate industry)
 Notes to pages 175-184 353

tax statistics. Tax statistics recorded gross turnover for various categories of
enterprise; by applying a coefficient for the rate of turnover of basic capital,
Strumilin estimated the value of capital employed. S. G. Strumilin, Sta-
tistiko-ekonomicheskie ocherki, Moscow, 1958, pp. 519,530-1.
23 Gindin, Russkie kommercheskie banki, pp. 177-86,192, 331-40; Crisp, Studies,
pp. 144-53.
24 Details from Khromov, Ekonomicheskoe razvitie, p. 457; Zapiska, pp. 7-9;
Gefter, 'Tsarizm', p. 104; Tsukernik, Sindikat 'Prodamet', p. 189; V. S. Ziv,
Inostrannye kapitaly v russkoi gornozavodskoi promyshlennosti, Petrograd, 1917,
p. 9.
25 Svod statisticheskikh dannykh po zheleznodelatel'noi promyshlennosti, St Peters-
burg, 1911-13; Gornozavodskoe delo, 51,1915, p. 12,512; Statistischeskii sbornik
za 1913-1917gg., Petrograd, 1915, p. 25; I. Kh. Ozerov, Ekonomicheskaia Rossiia
i eefinansovaiapolitika, St Petersburg, 1905, p. 118; N. N. Savvin, K voprosu o
potreblenii metalla i metallicheskikh izdelii v Rossii, St Petersburg, 1913, p. 6;
Gefter, 'Tsarizm', pp. 82-5; Liashchenko, lstoriia, vol. 2, p. 127.
26 Torgovo-promyshlennaia gazeta, 7 January 1914; Finansovoe obozrenie, 1914,10,
p. 29.
27 Savvin, K voprosu, p. 4.
28 Otchet otdela promyshlennosti za 1910, St Petersburg, 1911, p. 171. Pig iron sold
at 45 kopeks per pud in 1908 and 46 kopeks in 1910; structural shapes
(sortovoe zhelezo) sold for 90 kopeks per pud in 1908 and 120 kopeks in 1910.
29 TsGIA f.23, op.27, d.120.
30 Litvinov-Falinskii (1868-1928) began his career as a factory inspector in St
Petersburg. He wrote several books on factory inspection, labour law and
economic policy. At this time he headed the department of industry in the
new Ministry of Trade and Industry. He left Russia after the revolution.
31 TsGIA f.23, op.27, d.120,11.3-12.
32 Liashchenko, lstoriia, vol. 2, pp. 314-15. Compare G. D. Feldman, Iron and
Steel in the German Inflation, 1918-1923, Princeton, 1977, p. 32.
33 Details of output and marketing of rolled iron and steel may be found in
Obshchii obzor glavneishikh ostraslei gornoi i gornozavodskoi promyshlennosti, 2
vols., St Petersburg/Petrograd, 1913-15, vol. 1, p. 37; vol. 2, p. 219, and Svod
statisticheskikh dannykh, p. 73.
34 Liashchenko, lstoriia, vol. 1, pp. 314-15; Monopolii, pp. 68,102.
35 TsGIA, f.23, op.27, d.120,1.16.
36 Otchet otdela promyshlennosti za 1913, Petrograd, 1914, pp. 111-12.
37 TsGAVMF f.401, op.4, d.36,11.101-6,110-14, d.37,11.72-83,131-7ob., 176-80,
sessions of the Commission on Shipbuilding, 13 and 27 April, 28 September,
16 November and 21 December 1912. Liashchenko, lstoriia, vol. 2, pp. 316-17
argues, without offering any evidence, that Prodamet hindered pre-war
defence preparations.
38 TsGAVMF f.420, op.l, d.76,11.66-66ob., Minister of Trade and Industry to
Admiralty, 6 October 1908.
39 TsGIA f.23, op.27, d.120,1.20ob.
40 Otchet otdela promyshlennosti za 1914, Petrograd, 1915, pp. 59-60. No decision
was taken about the rate of duty that would apply.
354 Notes to pages 184-191

41 Viatkin, Gornozavodskii Ural, pp. 126,226; Ocherki istorii tekhniki, p. 142.

42 Tsukernik, Sindikat 'Prodamet', pp. 239-41.
43 TsGIA f.23, op.27, d.120,1.4ob.; Tsukernik, Sindikat 'Prodamet', pp. 239^1;
McKay, Pioneers, pp. 112-40, 197-200. For a German comparison, see S. L.
Webb, 'Tariffs, cartels, technology and growth in the German steel indus-
try7, Journal of Economic History, 40,1980, pp. 309-29.
44 Tsukernik, Sindikat 'Prodamet', pp. 244-51; McKay, Pioneers, pp.197-200.
45 The best guide to this subject remains D. I. Shpolianskii, Monopolii ugol'no-
metallurgicheskoi promyshlennosti iuga Rossii v nachale XX veka, Moscow, 1953,
pp. 120-1. Other details from Obshchii obzor, vol. 2, p. 173; V. L. Tukholka,
'Zheleznye rudy', Bogatstva SSSR, 1925, 3, p. 39; Ziv, Inostrannye kapitaly,
pp. 60,68; P. I. Fomin, Gornaia igornozavodskaia promyshlennost' iuga Rossii, 2
vols., Kharkov, 1915-22, vol. 2, pp. 113-14; Tsukernik, Sindikat 'Prodamet',
pp. 41-51; McKay, Pioneers, pp. 391-4.
46 Rieber, Merchants and Entrepreneurs, p. 227, notes that the distinctive voice
of the 'southern entrepreneurial group', founded on a mix of engineering
skill and managerial acumen, began to weaken after 1908, as the investment
banks took charge.
47 Dinamika, vol. 3, pp. 52-79,116. Figures in Gregory, Russian National Income,
appendix I, imply a 32 per cent increase between 1912 and 1913.
48 Private company purchases are detailed in Il'inskii and Ivanitskii, Ocherk,
p. 97. Two per cent of wagons and five per cent of locomotives were
imported: see V. I. Zhdanov, Dovoennaia moshchnost' metallopromyshlennosti i
ee znachenie v ekonomike strany, Moscow-Leningrad, 1925, p. 41. For loco-
motives, see Ivanov, Ocherk; Istoriia Khar'kovskogo parovozostroitel'nogo
zavoda, 1895-1932gg., Kharkov, 1956, pp.233, 235, 240-1, 251, 295;
Rozenfel'd and Klimenko, Istoriia, p. 102.
49 Il'inskii and Ivanitskii, Ocherki, pp. 99-101; I. F. Gindin, 'Antikrizisnoe fin-
ansirovanie predpriiatii tiazheloi promyshlennosti, konets XlX-nachalo
XXv.', Istoricheskie zapiski, 105,1980, pp. 105-49, for Nevskii; N. Savin, 'The
machine industry', in A. Raffalovich, ed., Russia: Its Trade and Commerce,
London, 1818, p. 206, for the car industry in Riga. Motor car production is
mentioned briefly in Doklad Soveta s'ezdov o merakh k razvitiiu proizvoditel-
nykh sil Rossii, Petrograd, 1915, p. 239.
50 E. M. Izmailovskaia, Russkoe sel'skokhoziaistvennoe mashinostroenie, Moscow,
1920, pp. 16-17, 26-7, 34, 95-9; Otchet otdela promyshlennosti za 1914, Petro-
grad, 1915, pp. 37-48.
51 G. Holzer, 'The German electrical industry in Russia, 1890-1910', PhD
thesis, Lincoln, Nebraska, 1970, p. 68; L. la. Eventov, Inostrannye kapitaly v
russkoi promyshlennosti, Moscow, 1931, pp. 72-3; Sarab'ianov, Metallopro-
myshlennost', p. 25; L. G. Davydova, lpsol'zovanie elektricheskoi energii v prom-
yshlennosti Rossi, Moscow, 1966, p. 158; Rozenfel'd and Klimenko, Istoriia,
pp. 109-11; J. Coopersmith, The Electrification of Russia, Ithaca, 1992.
52 Zhdanov, Dovoennaia moshchnost', p. 41; Rozenfel'd and Klimenko, Istoriia,
pp. 107-8; G. B. Borisov and S. Vasil'ev, Stankostroitel'nyi im. Sverdlova: ocherk
istorii Leningradskogo stankostroitel'nyi im. Sverdlova: ocherk istorii Leningrads-
kogo stankostroiteinogo zavoda, 1867-1961gg., Leningrad, 1962, pp. 34,56,57.
 Notes to pages 191-203 355

53 TsGVIA f.369, op.l, d.31,1.247; Rozenfel'd and Klimenko, Istoriia, p. 105;

M Ol'shevskii, 'Russkoe mashinostroenie i deistvuiushchii tamozhennyi
tarif, Promyshlennost' i torgovlia, 1914,11, pp. 567-71; Trudy pervogo s'ezda
predstavitelei metalloobrabatyvaiushcheipromyshlennosti, Petrograd, 1916, p. 22.
54 Doklad Soveta s'ezdov, 1915, p. 172; S. N. Vankov, 'O normalizatsii metalloo-
brabatyvaiushchei promyshlennosti', Nauchno-tekhnicheskii vestnik, 1921,
4-5, pp. 1-18; Rozenfel'd and Klimenko, Istoriia, pp. 105-8.
55 TsGIA f.1393, op.2, d.456, U.161ob.-162.
56 Ol'shevskii, 'Russkoe mashinostroenie'; N. N. Sawin, 'O poshlinakh na
stanki po obrabotke metallov', Vestnik inzhenerov, 1915, 7, pp. 269-72; Kan-
negiser, Zadachi, pp. 9-10.
57 Il'inskii and Ivanitskii, Ocherk, pp. 74,87; Rozenfel'd and Klimenko, Istoriia,
p. 137.
58 Grinevetskii, Poslevoennye perspektivy, p. 139; N. Charnovskii, 'Mashinos-
troitel'naia promyshlennost' v Rossii', Narodnoe khoziaistvo v 1916 godu,
Petrograd, 1921, 4, p. 52; Trudy pervogo s'ezda, 1916; S. N. Vankov, 'O sos-
toianii nashei metalloobrabatyvaiushchei promyshlennosti k nachalu
1914 g. i vo vremia voiny7, Nauchno-tekhnicheskii vestnik, 1921,6, pp. 1-18.
59 Finansovoe obozrenie, 1914, 7, p. 9. Total share capital increased from 121.5
million rubles (December 1911) to 223.4 million rubles (December 1913).
60 la. I. Livshin,'"Predstavitel'nye" organizatsii krupnoi burzhuazii v Rossii v
kontse XlX-nachale XXw.', Istoriia SSSR, 1959, 2, pp. 95-117; R. A. Roosa,
'Russian industrialists and "state socialism", 1906-1917', Soviet Studies, 23,
1972, pp. 395-417.

5 The armaments industry

1 Derived from table 5.8 below.
2 TsGAVMF f.420, op.l, d.23,11.16-41ob.; VOGKza 1911, St Petersburg, 1912,
p. 75; Shatsillo, Russkii imperializm, p. 211.
3 Svod morskikh postanovlenii, vol. 5, 1910, paras. 5, 18. The new regulations
said nothing about the possibility of borrowing from commercial banks, nor
is there any evidence that the state yards ever tried to do so.
4 The Baltic yards made a profit of 500,000 rubles in 1908, but only 292,000
rubles in 1910; the Admiralty yards' profits dropped from 434,000 to 126,000
rubles. The Baltic yards maintained an amortization fund of around two
million rubles, but half of this would vanish, if the yards bought new
machine tools and installed modern foundry facilities. See TsGAVMF f.401,
op. 6, d.178,11.2-17.
5 TsGAVMF f.427, op. 1, d.2114, U.27-52ob., f.427, op.l, d.1998,11.1-3,151-62,
286; Vsepoddaneishii otchet morskogo ministra za 1911, St Petersburg, 1912,
p. 278.
6 TsGAVMF f.427, op. 1, d.1998,11.38-49ob.; f.420, op. 1, d.188,1.115; f.401, op.
6, d.178,11.15-17, 33; f.410, op. 3, d.1246,. 11.2-6,14-20.
7 TsGAVMF f.410, op. 3, d.822,11.75ob.-76; d.1246,11.8-9.
8 The comments of General Gross, director of Izhora, are reported in Zav'ia-
lov, Izhorskii zavod, p. 265; see also TsGAVMF f.410, op. 3, d.1066,1.10; ibid.,
356 Notes to pages 203-212

d.37, 1.188; Vsepoddaneishii otchet morskogo ministra za 1913, St Petersburg,

1914, p. 302; Shatsillo, Russkii imperializm, pp. 222-23.
9 TsGAVMF f.410, op. 3, d.1246,11.8-9.
10 TsGAVMF f.410, op. 3, d.822,1.193; f.441, op. 1, d.1998,11.1-3,286,293. For the
State Auditor's remarks, see ibid., 314-20ob.; for the Ministry of Finances'
opposition (Weber to Stolypin, 31 October 1909), ibid., f.410, op.l, d.1998,
11.322-4. The cabinet resolution appears in ibid., 11.349-57ob.
11 The sums involved in writing off debts were substantial, amounting to 15
million rubles. For details see TsGAVMF f.401, op. 6, d.178,11.2-17; Vsepod-
danneishii otchet morskogo ministerstva za 1912, St Petersburg, 1913, p. 122.
12 TsGAVMF f.427, op. 1, d.1998,11.2,274,286; Vsepoddaneishii doklad morskogo
ministra (hereafter VDMM) za 1912, St Petersburg, 1913, p. 122; VDMM za
1913, p. 323.
13 TsGAVMF f.427, op. 1, d.1998,11.151-62,286; f. 427, op.l, d.1999,11.2-80; f.401,
op.6, d.178,11.183, 186; Vsepoddaneishii otchet morskogo ministra za 1913, St
Petersburg, 1912, p. 283.
14 TsGAVMF f.401, op. 6, d.37,1.186; Vsepoddaneishii otchet morskogo ministra za
1913, St Petersburg, 1914, pp. 308-11.
15 TsGAVMF f.401, op. 6, d.36, U.146ob.-147, Shipbuilding Commission, 20 July
1912; ibid., 11.149-54, 5 July 1912.
16 TsGAVMF f.401, op. 6, d.37,11.5ob., 176, 188-90; ibid., d.274,11.106-112ob.,
Council of Ministers, 4 January 1913.
17 TsGAVMF f.401, op. 3, d.822,11.120-122ob., Council of Ministers, 9 February
1912, on the breakdown of the 1908 regulations. In September 1914, in
response to continued pressure from the Duma, the government appointed
a 'Chief Inspector of State Shipyards', with responsibility for promoting
collaboration between state yards.
18 Assets estimated from Vainshtein, Narodnoe bogatstvo, p. 403.
19 The figures in the final column of table 5.3 have been divided by my
estimate of the GAU labour force in 1908 and 1913, given in table 5.8.
20 VOGK za 1913, St Petersburg, 1914, pp. 37-8.
21 VOGKza 1909,pp.58-9; VOGKza 1910,p.64; VOGKzal911,1911,pp.56-7;
SOGD, III, 4th session, 71 sitting, cols. 1,251-60, 20 March 1910. Guchkov
welcomed the decision to build 'in the secure heartland of Russia' (ibid., 5th
session, 126 sitting, col. 724).
22 Germonius, 'Izhevskii oruzheinyi zavod', pp. 2,909-10.
23 VOGK za 1913, St Petersburg, 1914, pp. 38-9; VOGK za 1914, p. 38; Mani-
kovskii, Boevoe snabzhenie, vol. 1, pp. 127-9.
24 Smeta dokhodov i raskhodov gornogo departamenta na 1913, St Petersburg, 1912,
p. 37; Ozerov, Gornye zavody, p. 120; Viatkin, Gornozavodskii Ural, p. 116.
25 Viatkin, Gornozavodskii Ural, pp. 109,113-15,118.
26 Ibid., p. 116.
27 Smeta dokhodov ...na 1914, p p . 39,49.
28 Ozerov, Gornye zavody, p. 128; Smeta dokhodov ...na 1911, pp. 73-3.
29 Otchet gornogo departamenta na 1911, St Petersburg, 1912, p. 225; Smeta
gornogo departamenta na 1914, Petrograd, 1915, p. 37; VOGK za 1911, St Peters-
burg, 1912, p. 130.
 Notes to pages 212-221 357

30 TsGIA f.37, op.77, d.136,11.103-6ob., dated September 1912; VOGK za 1914,

Petrograd, 1915, p. 44; Ozerov, Gornye zavody, p. 137.
31 TsGIA f.37, op.77, d.136,11.101-2ob.
32 Viatkin, Gornozavodskii Ural, pp. 260-4.
33 TsGIA f.37, op.77, d.131,11.107-12ob.; Viatkin, Gornozavodskii Ural, p. 263.
34 R. C. Trebilcock, The Vickers Brothers: Armaments and Enterprise, 1854-1914,
London, 1977; Epkenhans, Die Wilhelminische Flottenrustung; R.P.T.
Davenport-Hines, 'The British marketing of armaments, 1885-1935', in
Davenport-Hines, ed., Markets and Bagmen: Studies in the History of Marketing
and British Industrial Performance, 1830-1939, London, 1986, pp. 146-91; and
work in progress by C. Beaud on Schneider-Creusot. Note, however, that
even at the peak of rearmament, military output rarely exceeded 40 per
cent of Krupp's total output.
35 TsGIA f.268, op.3, d.1049,1.125.
36 Biographical details are culled from various sources, chiefly Materialy po
islorii SSSR, Moscow, 1956, vol. 6, pp. 745-75; Kokovtsov, Out of My Past,
pp. 539-94; and V. I. Bovykin and K. F. Shatsillo, 'Lichnye unii v tiazheloi
promyshlennosti Rossii nakanune pervoi mirovoi voiny', Vestnik MGU,
istoriia, 1962,1, pp. 55-74. Additional details in Harcave, ed., Memoirs, p. 553
and Rieber, Merchants and Entrepreneurs, 1982, p. 374.
37 The quotation appears in Shatsillo, Russkii imperializm, p. 300. Plotnikov,
like Meshcherskii, gave evidence to the Bolshevik commission of investi-
gation into the Russian admiralty during 1918, but his fate is not known.
38 For Meshcherskii, see P. V. Volobuev and V. Z. Drobizhev, 'iz istorii
goskapitalizma v nachal'nyi period sotsialisticheskogo stroitel'stva v SSSR',
Voprosy istorii, 9,1957, pp. 107-22. Khrulev's works include Finansy Rossii v
sviazi s ekonomicheskom polozheniem ee naseleniia, 2nd edn, St Petersburg,
1908; and Finansy Rossii i ee promyshlennost', 2nd edn, Petrograd, 1916;
they sing the praises of private enterprise.
39 The three groups were identified in 1914 by Racouza-Soutschevsky, in a
report prepared for the BUP, cited in Girault, Emprunts russes, pp. 356-7.
40 Details in Finansovoe obozrenie, 1914, 4, p. 21; 1914, 8, p. 23; and Fabrkhno-
zavodskie predpriiatiia Rossiiskoi imperii, St Petersburg, 1908; 2nd edn, Petro-
grad, 1914. The chief secondary sources are V. I. Bovykin, 'Banki i voennaia
promyshlennost' Rossii nakanune pervoi mirovoi voiny', Istoricheskie
zapiski, 64,1959, pp. 82-135; V. I. Bovykin and K.N. Tarnovskii, 'Kontsen-
tratsiia proizvodstva i razvitie monopolii v metalloobrabatyvaiushchei
promyshlennosti Rossii', Voprosy istorii, 1957,2, pp. 19-31; Iu. N. Subbotin,
'Iz istorii voennoi promyshlennosti Rossii kontsa XlX-nachala XXv.', Vesnik
LGU, 20, 1973, 3, pp.45-52; and N.I. Torpan, 'Finansovo-monopolisti-
cheskie gruppirovki v voennoi promyshlennosti na territorii Estonii v
1911-1917gg.', Izvestiia AN Estonskoi SSR, obshchestvennye nauki, 1984, 2,
pp. 112-23; 3, pp. 228-39.
41 Finansovoe obozrenie, 1914, 2, p. 19; I. F. Gindin, Banki i promyshlennost' v
Rossii, Moscow-Leningrad, 1927, p. 67.
42 Finansovoe obozrenie, 1914,3, p. 19; 1914,7, p. 8; Gindin, Banki, p. 67.
43 TsGIA f.1393, op. 2, d.456, 1.147; Finansovoe obozrenie, 1914, 2, p. 29; G.P.
358 Notes to pages 221-231

Efremtsev, htorii Kolomenskogo zavoda, 2nd edn, Moscow, 1984; A.G.

Golikov, 'Obrazovanie monopolisticheskogo ob'edineniia "Kolomna-
Sormova'", Vestnik MGU, istoriia, 1971,5, pp. 74-87.
44 Details from Fabrichno-zavodskie predpriiatiia, and Bovykin and Shatsillo,
'Lichnye unii'.
45 In addition to the sources cited in note 44, see Materialy, pp. 328-41 for the
firm's participation in the shell syndicate.
46 TsGIA f.1276, op.ll, d.248, 1.6 (inquiry into the affairs of Putilov, March-"
April 1915); Finansovoe obozrenie, 1914,5, p. 21; 1914,8, p. 23; Bovykin, 'Banki',
pp.85,96-8; Okun', ed., Putilovets, p.xxvi.
47 Finansovoe obozrenie, 1914,4, p. 4.
48 TsGIA f.23, op.15, d.354,1.13ob.; A. V. Pankin, 'Memoirs', manuscript, Lenin
Library no. 304, 1.6; Fabrichno-zavodskie predpriiatiia; Goldstein, 'Military
Aspects' p. 29.1 have no information about the financial support offered to
Schlusselburg.
49 Gindin, Banki, p. 67; Beskrovnyi, Armiia iflot, pp. 83-5.
50 Finansovoe obozrenie, 1914,10, p. 27; ibid., 12, p. 9. Parviainen received orders
worth three million rubles in 1913 and seven million in 1914. On Putilov, see
Girault, 'Finances internationales', pp. 217-36; Bovykin, 'Banki', p. 83;
Miftiev, 'Artilleriiskaia promyshlennost", p. 115.
51 Girault, 'Finances internationales', p. 225; Bovykin' 'Banki', pp. 85-90.
52 TsGIA f.1393, op. 2, d.456,1.147; Golikov, 'Obrazovanie', pp. 80-1.
53 Ibid., pp. 83-7.
54 Based upon information provided in Materialy, pp. 745-75.
55 TsGAVMF f.420, op.l, d.41,11.149-50ob., Kokovtsov to Dikov, 19 September
1908.
56 Details from Gindin, 'Antikrizisnoe finansirovanie', pp. 105-49.
57 TsGIA f.1276, op.ll, d.248, 1.6; Materialy, pp. 535, 545-50, 554-5; K. Dem-
bovskii, 'Mekhanicheskaia i mashinostroitel'naia promyshlennost' v Rossii
pri nastoiashchei kon'iunkture', Promyshlennost' i torgovlia, 1914, 14,
pp. 67-71; Bovykin, 'Banki', pp. 90-1.
58 TsGIA f.23, op.12, d.1371,1.50.
59 TsGIA f.23, op.12, d.1371, U.66-70ob., 72-3; ibid., op.ll, d.248,11.1-19; Mater-
ialy, pp. 543-5.
60 Details from VDMM za 1914, Petrograd, 1915, summary tables; Bovykin and
Shatsillo, 'Lichnye unii', p. 72; E. E. Kruze, Peterburgskie rabochie v 1912-
1914gg., Moscow-Leningrad, 1961, pp. 26,43; and K. F. Shatsillo, 'Monopolii
i stroitel'stvo podvodnogo flota v Rossii nakanune i v period pervoi
mirovoi voiny', Vestnik MGU, istoriia, 1960, 3, pp. 27-42.
61 J. H. Grout, U.S. Consul, Odessa, to State Department, 18 July 1911, US State
Department Papers, US National Archives, RG 92, series M316, frame 367-9.
See also Dmitriev and Kolpychev, Sudostroitel'nye zavody, p. 812.
62 TsGAVMF f.512, op. 1, d.1782, 11.19, 28-9; K. F. Shatsillo, 'Formirovanie
finansovogo kapitala v sudostroitel'noi promyshlennosti iuga Rossii', in /z
istorii imperializma v Rossii, Moscow-Leningrad, 1959, p. 28.
63 TsGIA f.1333, op.2, d.21, ll.l-7ob.; Shatsillo, 'Formirovanie', pp. 28-9.
64 TsGIA f.1333, op.2, d.21,11.46-51 (Vickers agreement); TsGAVMF f.512, op.l,
 Notes to pages 232-242 359

d.285,11.1-5, 39-46ob. (AGM, Paris, 29 July 1912); Shatsillo, 'Formirovanie',

pp. 30-5. The rapid influx of Russian workers into the port of Nikolaev
entailed less pleasant consequences. The US Consul in Odessa reported
that the company had forced Jewish inhabitants out of the town, in order to
make room for immigrant workers.
65 Shatsillo, 'Formirovanie', pp. 35-9.
66 Ibid., pp. 40-50; TsGAVMF f.512, op.l, d.522,11.2-7; d.1782,11.9-9ob.; f.401,
op.6, d.777,11.13, Filippovich to Bloch, 12 December 1914.
67 See McKay, Pioneers, p. 378, who comments that 'a Russian entrepreneur
could increasingly shrug off the admonishments of the stern old French
uncle, while still paying him an occasional visit - with palm outstretched'.
Some foreign firms did develop an interest in the defence market during
the 1860s, but their activity proved short-lived.
68 R. C. Trebilcock, 'British armaments and European industrialization',
Economic History Review, Tib, 1973, pp.254-72; McKay, Pioneers, pp.233,
236-41; Gindin, Russkie kommercheskie banki, pp. 395-403.
69 McKay, Pioneers, pp. 105-6, citing Credit Lyonnais archives.
70 W. Kirchner, Die deutsche Industrie und die lndustrialisierung Russlands, 1815-
1914, St. Katharinen, 1986, p. 163.
71 TsGIA f.1393, op.2, d.316, ll.l-5ob.
72 Girault, 'Finances internationales', pp.228, 234; Bovykin, 'Banki', pp.91-2;
Claude Beaud, 'De l'expansion internationale a la multinationale: Sch-
neider en Russie, 1896-1914', Histoire, Economic et Societe SEDES, 1985, 4,
pp. 575-602.
73 Vickers Archives (hereafter VA), microfilm no. 735, technical agreement
between Socie'te' Ge'nerale and Naval shipyards, January 1911.
74 VA microfilm no. R.214, Charles Evans to Vickers' London office, 25
November 1912.
75 Viatkin, Gornozavodskii Ural, p. 265.
76 V. I. Bovykin, 'Iz istorii proniknoveniia inostrannogo kapitala v Rossii (Per-
mskoe delo)', Nauchnye doklady vysshei shkoly, 1958,1, pp. 66-73; Documents
diplomatiques franqais, serie 3, vol. 9, pp. 56-7; Anan'ich, Rossiia, pp. 271-9;
Girault, Emprunts russes, pp. 563-8. The French finally agreed a loan of 249
million rubles.
77 Bovykin, 'Iz istorii', pp. 68-9.
78 TsGIA f.37, op.77, d.136,11.163-82ob.
79 Bovykin, 'Iz istorii', pp. 70-2; Documents diplomatiques franqais, vol. 9,
pp.570-1, Dolcet to Doumergue, 12 March 1914 (n.s.).
80 VA,files51 and 1219; Bovykin, 'Banki', pp. 122-4.
81 VA,files51 and R215; TsGIA f.1333, op.2, d.21,11.46-51 (Vickers agreement);
TsGAVMF f.512, op. 1, d.285, 11.1-5, 39-16ob. (AGM, Paris, 29 July 1912);
TsGAVMF f.401, op.6, d.272,1.276ob., for the Admiralty's contract, for 12
16-inch and 50 smaller naval guns per annum, worth 10 million rubles over
a ten-year period, 1916-25. See also E.R. Goldstein, 'Vickers Ltd. and the
tsarist regime', Slavonic and East European Review, 58, 1980, pp. 561-71;
G. Jones and C. Trebilcock, 'Russian industry and British business, 1910-
1930: oil and armaments', Journal of European Economic History, 11, 1982,
360 Notes to pages 242-250

pp. 61-103; and V. V. Polikarpov, 'Iz istorii voennoi promyshlennosti v

Rossii, 1906-1917gg.', Istoricheskie zapiski, 104,1979, pp. 126-36.
82 A. C. Marshall and N. Newbould, The History of Firth's, Sheffield, 1924,
pp. 89-90, 95.1 owe this reference to Dr A. J. Marrison. Other details from
Fabrichno-zavodskie predpriiatiia, Petrograd, 1914.
83 L. E. Mints, Trudovye resursy SSSR, Moscow, 1975, p. 40.
84 The number of auxiliary workers at Motovilikha appears to have fallen by
12 per cent between 1908 and 1912. But this may have been a result of
changes in the classification of workers. For details, see Otchet gornogo
departamenta za 1908, p p . 5 3 4 - 5 ; Smeta dokhodov ...na 1914, p p . 2 3 - 3 6 ; a n d
Miftiev, 'Artilleriiskaia promyshlennost", p. 100.
85 See Germonius, 'Izhevskii oruzheinyi zavod', p. 2,902, and S. V. Murzint-
seva, 'Izuchenie formirovaniia i sostava rabochikh trubochnogo zavoda po
dannym pasportnykh knig, 1907-1944gg.', in Rabochie Rossii v epokhu kapita-
lizma: sravnitel'nyi poraionnyi analiz, Rostov, 1972, pp. 59-68.
86 TsGAVMF f.512, op.l, d.285,11.13,15.
87 Evidence on the background of workers is hard to come by. Kruze, Peter-
burgskie rabochie, pp. 75-7 provides one of the few attempts to explore the
question. For other details, see A. A. Artem'ev, 'Usloviia rabot v tekhni-
cheskikh zavedeniiakh Artilleriiskogo vedomstva i postanovka zdes'
meditsinskoi pomoshchi rabochim', Trudy vtorogo Vserossiiskogo s'ezda fabri-
chnykh vrachei i predstavitelei fabrichno-zavodskoi promyshlennosti, Moscow,
1911, vol. 1, pp. 15-17.
88 Murzintseva, 'Izuchenie', pp. 59-68.
89 Manikovskii, Boevoe snabzhenie, vol. 1, p. 78; Svod voennykh postanovlenii, vol.
13, 1910, appendix; Svod morskikh postanovlenii, vol. 5, 1910, para. 120;
Germonius, 'Izhevskii oruzheinyi zavod', pp. 2,902-3.
90 Murzintseva, 'Izuchenie', pp. 61, 66.
91 Polozhenie o vol'nonaemnykh i pravila o naime masterovykh i rabochikh v tekhni-
cheskikh artilleriiskikh zavedeniiakh, Petrograd, 1915, para. 15; Svod morskikh
postanovlenii, vol. 5, 1910, appendix, pp. 73-4; Artem'ev, 'Usloviia rabot',
p. 16; Kir'ianov, Zhiznennyi woven', p. 77; S. V. Murzintseva, 'Iz istorii eko-
nomicheskoi polozhenii rabochikh na predpriiatiiakh voennogo i
morskogo vedomstv v 1907-1914gg. v Peterburge', Uchenye zapiski LGU, 270,
1959, p. 231.
92 Svod voennykh postanovlenii, vol. 13,1910, appendix, para. 26.
93 Artem'ev, 'Usloviia rabot', p. 10; Ashurkov, 'Predpriiatiia'.
94 Workmen's Insurance, vol. 2, pp. 2,259-67.
95 Murzintseva, 'Iz istorii', pp. 235-8; Artem'ev, 'Usloviia', p. 30; Svod morskikh
postanovlenii, vol. 5,1910, paras, 128-9,136.
96 Artem'ev, 'Usloviia', pp. 27-8, 30-2, noting that the daily wage in 1910
ranged from 0.90 rubles to 1.40 rubles. See also Polozhenie, 1915, para 30.
97 Shepelev, Tsarizm i burzhuaziia, pp. 174-87; Shelymagin, Zakonodatel'stvo,
pp. 232, 246; V. la. Laverychev, Tsarizm i rabochii vopros v Rossii, Moscow,
1972, p. 241.
98 Artem'ev, 'Usloviia', pp. 13-14. Artem'ev took up his post in 1906, but what
became of him after 1911 is unclear. He was certainly no longer attached to
 Notes to pages 250-264 361

Okhtensk by 1915. See Obshchii sostav uchebnykh i tekhnicheskikh artiller-

iiskikh zavedenii, podvedomstvennykh GAU na 1915, Petrograd, 1915.
99 E. E. Kruze, Usloviia truda i byta rabochego klassa Rossii v 1900-1914gg.,
Leningrad, 1981, pp. 44-51.
100 Shelymagin, Zakonodatel'stvo, pp. 237-8. See also P. E. Liubarov, 'Tret'ia
gosudarstvennaia Duma i vopros o strakhovanii rabochikh kazennykh
predpriiatii', Vestnik MGU, istoriia, 1967,2, pp. 36-48.
101 R. B. McKean, St Petersburg between the Revolutions: Workers and Revolution-
aries, June 1907-February 1917, London, 1990, p. 282.
102 Allan Monkhouse, Moscow, 1911-1933, London, 1933, pp. 37,47, However,
Monkhouse went on to comment that state employees 'found themselves
considerably better off than the majority of those employed in private
enterprises'.
103 H. Hogan, 'The reorganization of work processes in the St Petersburg
metalworking industry, 1901-1914", Russian Review, 42, 1983, pp. 163-90.
See also V. E. Bonnell, Roots of Rebellion: Workers'Politics and Organization in
St. Petersburg and Moscow, 1900-1914, Berkeley, 1983, pp. 195-202; S. V.
Murzintseva, 'Iz istorii razrabotki antirabochego zakonodatel'stva na
zavodakh voennogo i morskogo vedomstv v 1907-1914gg.', in V. V. Mav-
rodin, ed., Rabochie oruzheinoi promyshlennosti v Rossii i russkie oruzheiniki v
XlX-nachale XXv., Leningrad, 1976, pp. 101-12. The debate has been joined
more recently by McKean, St Petersburg, pp. 12,261.
104 VA, microfilm MF214, T. Jones to T. Owens, 29 August 1913.
105 TsGAVMF f.401, op.6, d.546,1.226, Shipbuilding Commission 16 May 1914;
ibid., 1.239ob., 23 May 1914.
106 Beskrovnyi, 'Proizvodstvo vooruzheniia'.
107 'Promyshlennaia i professional'naia perepis' 1918g: fabrichno-zavodskaia
promyshlennost' v period 1913-1918gg.', Trudy TsSU, vol. 26, parts 1 and 2,
Moscow, 1926. See also N. la. Vorob'ev, Ocherki po istorii promyshlennoi
statistiki v dorevoliutsionnoi Rossii i SSSR, Moscow, 1961, and M. N. Cher-
nomorskii, 'Pervaia promyshlennaia perepis' 1918g. kak istoricheskii
istochnik', Trudy Moskovskogo gosudarstvennogo istorichesko-arkhivnogo insti-
tuta, 12,1959, pp. 245-66.
108 Ashworth, 'Economic aspects', p. 492; F. Crouzet, 'Recherches sur la pro-
duction d'armements en France, 1815-1913', Revue historique, 251,1974, p. 72.
109 In 1915, however, Motovilikha was still being described as 'poorly equip-
ped'. TsGIA f.1276, op.ll, d.248,1.5.
110 Merritt Roe Smith, Harpers Ferry Armory and the New Technology, Ithaca, 1977.
111 See below, p. 281.

6 The economics and politics of defence procurement

1 Scherer, The Weapons Acquisition Process, p. x.
2 Kehr, 'Munitions Industry', pp. 128-34.
3 Rieber, Merchants and Entrepreneurs, pp.297, 320; Bestuzhev, 'Bor'ba',
pp. 44-85.
4 Berlin, Russkaia burzuaziia, pp. 177-8.
362 Notes to pages 264-268

5 See chapter 5, note 36, and A. N. Krylov, Moi vospominaniia, 8th edn,
Leningrad, 1984. Bostrem figures briefly in Harcave, ed., Memoirs, pp. 721-2.'
Other details from Shatsillo, Russkii imperializm, pp. 296-9.
6 On the origins of the inquiry, see TsGIA f. 1393, op. 2, d. 456,11.1-393. The
corresponding file on the GIU is in ibid., d. 455, ll.l-101ob. Garin (I860-?)
was employed in the Ministry of the Interior, where he served for a short
time as Trepov's deputy, in 1904. In 1916, he became deputy Minister of
War, where he assumed particular responsibility for foreign supply on the
Special Council for State Defence. Witte dismissed Garin as someone who
wrote reports in florid prose and who was 'servile to those in high places'.
Harcave, ed., Memoirs, p. 689.
7 TsGIA f. 1393, op. 2, d. 456,1.367.
8 Ibid., d. 455, 1.98; la. I. Livshin, 'K voprosu o voenno-promyshlennykh
monopoliiakh v Rossii v nachale XX veka', Voprosy istorii, 1957,7, pp. 55-70;
V. I. Bovykin, 'Monopolisticheskie soglasheniia v russkoi voennoi prom-
yshlennosti, po materialam senatorskikh revizii', Istoriia SSSR, 1958, 1,
pp. 125-9; T. D. Krupina, 'K voprosu o vzaimootnosheniiakh tsarskogo
pravitel'stva s monopoliiami', Istoricheskie zapiski, 57,1956, pp. 158-9; Laver-
ychev, Gosudarstvo, pp. 66-83.
9 TsGIA f.1393, op.2, d.455,11.99-100; d. 456,11. 369ob.-70ob., 391.
10 Fuller, Civil-Military Conflict, pp. 239-40,255; A. A. Korolev, 'Reviziia sena-
torom N. P. Garinym Tul'skogo patronnogo zavoda', in /z istorii Tul'skogo
kraia, Tula, 1972, pp. 54-62. Garin, like D. B. Neidhardt, another senator
responsible for investigations into business-government links, was closely
associated with Stolypin (Neidhardt had married Stolypin's sister). A
recent account of Stolypin's career suggests that Neidhardt, a former
governor of Odessa, helped secure the appointment of his brother-in-law
to the Ministry of the Interior. See P. N. Zyr'ianov, 'Petr' Arkad'evich
Stolypin', Voprosy istorii, 1990,6, p. 59.
11 His views are set out in Sukhomlinov, Vospominaniia, pp. 253-4. Amongst
several attacks in parliament on the competence of the GAU, see the speech
of Guchkov in SOGD, III, 5th session, 126 sitting, 7 May 1912, cols. 720-36:
'In five years of close study of the budget of the War Ministry, I have not
come across a department as fundamentally disorganized as the GAU', and
the remarks of Academician A. V. Vasil'ev, reported in Gosudarstvennyi
Sovet, Stenograficheskii otchet (hereafter SOGS), 4th session, 35th sitting, 11
May 1909, cols. 1,966-7. See also Ozerov, Kak raskhoduiutsia, pp. 158-60.
12 TsGIA f.1333, op.l, d.2,1.6; f.1393, op.2, d.455, and Korolev, 'Reviziia'.
13 Shatsillo, Rossiia, p. 71, citing an unnamed director of Russud.
14 TsGAVMF f.410, op.3, d.761, l.l-10ob. In two instances, the government did
begin to make a longer-term commitment to private enterprises; contracts
were promised to the Vickers' plant at Tsaritsyn and a new powder works
in Vladimir, for a ten-year period. Ibid., f.401, op.2, d.272,1.276ob.
15 TsGIA f.1393, op.2, d.455,11.95-7,100.
16 For background, see TsGAVMF, f.410, op.3, d.761, U.l-5 (undated report by
Rerberg, 1907); f.420, op.l, d.92,11.3-4, Voevodskii to Dikov, 15 September
1908.
 Notes to pages 269-275 363

17 Ibid., 11.12-12ob., Dikov to Stolypin, 14 November 1908.

18 The reference was to the artillery commission, formed on 29 February 1900,
which considered economic and technical aspects of the artillery pro-
gramme. This commission had powers to dictate to the GAU which sup-
pliers, procurement method and prices it should adopt. TsGIA f.1276, op.14,
d.623,11.34-5,40-1.
19 Ibid., U.18ob., 20-25 ob.
20 The managers of the four state yards were entitled to attend, but without
voting rights. TsGAVMF f.410, op.3, d.1357,11.5-7; TsGIA f.1276, op.14, d.623,
11.1-lob.
21 TsGAVMF f.420, op.l, d.92,11.84ob.-86; f.401, op.6, d.l, 1.35; d.178,1.175.
22 Ibid., f.420, op.l, d.149,11.1-3. K. P. Boklevskii, appointed to the Commission
by Stolypin, complained bitterly that the Admiralty concluded contracts
behind its back. Ibid., f.401, op.6, d.41,11.34,64 (sessions of 29 April and 17
June 1911).
23 The Shipbuilding Commission makes a brief appearance in Krylov, Vospo-
minaniia, pp. 185-7, where he launches a scathing attack on the competence
of its civilian members. Krylov also recounts how copies of its secret
proceedings were sold by an enterprising printer employed by the Navy
Ministry, but there is no other corroboration of this anecdote. The standard
Soviet view of Boklevskii features in Shatsillo, Russkii imperializm,
pp. 289-92.
24 Otchet otdela promyshlennosti za 1910, St Petersburg, 1911, pp. 134-9; Otchet
otdela promyshlennosti za 1911,1912, pp. 146-7; debates in Stenogramma, p. 14.
It is worth recalling that the petition presented to the Tsar in January 1905
by the Assembly of Russian Workers included the condition that 'contracts
for orders of the war and naval departments are to be placed in Russia and
not abroad'. See the text of the petition, in H. D. Mehlinger and J. M.
Thompson, Count Witte and the Tsarist Government in the 1905 Revolution,
Bloomington, Indiana, 1972, p. 347.
25 Khrulev, Finansy Rossii, p. 215. Khrulev was chairman of the International
Bank and the Nikopol-Mariupol Ironworks, and a member of the board of
the Tula Cartridge Company.
26 Stenogramma, pp. 14,118.
27 TsGIA f.268, op.3, d.1049,11.123-4; Stenogramma, pp. 107-11, 277-89.
28 TsGAVMF f.420, op.l, d.42,11.3ob.-i, Memorandum dated 30 June 1907.
29 Ibid., 11.52-57ob., 60-65ob.; Shatsillo, 'Inostrannyi kapital', p. 76.
30 TsGAVMF f.420, op.l, d.42,11.139-ob., 3 September 1908.
31 Ibid., 11.156-158ob., 19 October 1908; d.76,11.159-159ob., 11.165-66ob.
32 Ibid., 11.66-66ob., Shipov to Dikov, 6 October 1908; see also TsGAVMF f.401,
op.6, d.272,1.178ob.
33 TsGIA f.1276, op.4, d.166,11.4-6, Confederation of Trade and Industry to
Stolypin, 16 June 1908; Stolypin to Dikov, 18 June 1908; Dikov to Stolypin,
21 June 1908.
34 See, for example, the session on 4 January 1912, TsGAVMF, f.401, op.6, d.36,
11.6-12; Stenogramma, 1908, p. 286; Shipov made the same point in 1909.
TsGAVMF f.420, op.l, d.76,11.128-9, Council of Ministers, 18 February 1909.
364 Notes to pages 276-282

35 I have assumed that the figures given in table 6.1 were exclusively for
weaponry and for vessels.
36 A. Bart, 'Na fronte artilleriiskogo snabzheniia', Byloe, 34,1925, pp. 147-91;
A. L. Sidorov, 'Otnosheniia Rossii s soiuznikami i inostrannye postavki vo
vremia pervoi mirovoi voiny, 1914-1917gg.', Istoricheskie zapiski, 15, 1945,
p. 130.
37 See Lisovskii, Rabochie, pp. 24-6, where he emphasizes the guarantees that
can be extracted from the state sector.
38 Quoted in TsGAVMF f.427, op.l, d.2114,1.37ob., Report of fire and safety
commission, 1910.
39 Timashev is quoted in Viatkin, Gornozavodskii Ural, p. 126. See also
TsGAVMF f.420, op.l, d.42,11.149-50, Kokovtsov to Dikov, 19 September
1908; ibid., f.401, op.6, d.35,1.23ob.
40 Stenogramma, pp. 53-55. The Ministry of Trade and Industry also admitted
to the Shipbuilding Commission, in July 1911, that 'penalties and damages
are nothing but a fiction, so far as state factories are concerned'. TsGAVMF
f.401, op.6, d.l, 1.104. As long ago as 1870, industrialists complained that 'in
peacetime, the state works are a drain on the public purse, whilst in
wartime their capacity is insufficient'. Cited in Ashurkov, 'Predpriiatiia',
pp. 113-14.
41 TsGAVMF f.401, op.6, d.35,1.23ob., State Auditor's report for 1911, marked
'secret'; Stenogramma, pp. 122-9.
42 TsGIA f.37, op.77, d.136,1.103; Viatkin, Gornozavodskii Ural, pp. 262-4.
43 Voennaia entsiklopediia, vol. 10,1912, entry under 'zavody artilleriiskie'.
44 TsGIA f.1393, op.2, d.456,1.93.
45 TsGAVMF f.401, op.6, d.36,11.185-7; ibid., d.37,11.25-35.
46 TsGIA f.1333, op.2, d.21,11.7-7ob. ibid., f.1393, op.2, d.456,1.367.
47 Ibid., 11.182ob., 190,203ob.
48 TsGAVMF f.420, op.l, d.42,1.64ob., op.6, d.35,1.24; VOGK za 1911, St Peters-
burg, 1912, p. 75. See TsGIA f.1393, op.2, d.456,1.193, for an illustration of
relative input prices. This advantage may have been illusory, however:
state rolling mills also transferred steel from one factory to another.
49 For the views of Manikovskii, later head of the GAU, see Boevoe snabzhenie,
passim. He was opposed by technical specialists, such as the engineer P. I.
Balinskii, quoted in TsGVIA f.369, op.l, d.133, ll.l-13ob. Balinksii called for a
'Russian Krupp, free from bureaucratic interference' and capable of dis-
playing 'energy and knowledge'.
50 Some regiments 'employed' as many as 200 tailors and shoemakers,
working slowly and without supervision. See Voznesenskii, 'O voennom
khoziaistve', p. 118; Bushnell, 'Peasants in uniform', p. 567, notes that up to
40 per cent of troops were engaged in activities other than military training.
The quotation from Maksheev appears in SOGS, 4th session, 35th sitting, 11
May 1909, col. 1,966 (Vasil'ev).
51 TsGIA f.1393, op.2, d.455, 1.98. The GIU budget in 1913 amounted to 356
million rubles, including 125 million rubles representing food and fodder
purchases, and 48 million" rubles for equipment. Military demand for
leather and fur products was put at 15-20 million rubles: Doklad soveta
 Notes to pages 283-292 365

s'ezdov, pp. 53-9. The supply of food to the army is dealt with briefly in
T. M. Kitanina, Khlebnaia torgovlia Rossii v 1875-1914gg., Leningrad, 1978,
pp. 201-21.
52 Described in VOGK za 1909, St Petersburg, 1910, pp. 31-8; VOGK za 1910, St
Petersburg, 1911, p. 48. On other initiatives to encourage small-scale indus-
try, see K. N. Tarnovskii, 'Kustarnaia promyshlennost' i tsarizm, 1907-
1914gg.', Voprosy istorii, 1986,7, pp. 33-46.
53 VOGK za 1911, St Petersburg, 1912, pp. 3 3 ^ ; VOGK za 1913, Petrograd, 1914,
p. 28. Also Ozerov, Kak raskhoduiutsia, pp. 158-9. Other details from A. A.
Rybnikov, Mel'kaia promyshlennost' Rossii, Moscow, 1922, pp. 7-8; V. Varzar,
'Factories and workshops', in Raffalovich, ed., Russia, p. 142.
54 TsGIA f.1393, op.l, d.455, 11.81-2. VOGK za 1913, p. 29; VOGK za 1914,
Petrograd, 1915, p. 32.
55 Voennaia entsiklopediia, vol. 10,1912, entry under 'zavedeniia intendantskie'.
Beskrovnyi, Armiia iflot, p. 151, mistakenly gives the date as 1910.
56 VOGK za 1907, St Petersburg, 1908, p. 23; Beskrovnyi, Armiia iflot, p. 157.
57 VOGK za 1914, p. 30; Obshchaia oWiasnitel'nak zapiska ...na 1914, appendix 4.
58 TsGIA f.1393, op.2, d.455,1.97.
59 TsGIA f.23, op.12, d.1371, U.66-70ob.; f.1393, op.2, d.316, U.l-5ob.; VOGK za
1908, St Petersburg, 1909, pp. 142-3.
60 VA, microfilm R214.
61 TsGAVMF f.410, op.3, d.822,11.75ob.-76; VOGK za 1912, St Petersburg, 1913,
p. vi; Svod voennykh postanovlenii, vol. 18, 1907, para. 11; Jones and Trebil-
cock, 'Russian industry*, pp. 61-103. Ozerov, Kak raskhoduiutsia, pp. 159-60
is one of many critics of the procurement agencies' tendency to make
abrupt changes to specifications.
62 McKean, St Petersburg, pp. 273-5. In 1912, only one in ten of the leading
engineering firms in the capital voted to fine workers who went on strike.
63 TsGAVMF f.401, op.6, d.272,1.184.
64 TsGIA f.1393, op.2, d.456,11.367-8.
65 Dmitriev and Kolpychev, Sudostroitel'nye zavody, p. 1,017.
66 TsGAVMF f.410, op.3, d.761, ll.l-100ob. The report corroborates many of
Garin's findings.
67 Dmitriev and Kolpychev, Sudostroitel'nye zavody, pp. 1,014-9.
68 Grinevetskii, Poslevoennye perspektivy, p. 159; Gatrell, Tsarist Economy,
pp. 158-9,163.
69 TsGIA f.23, op.12, d.1167,1.28, 8th July 1911; TsGAVMF f.401, op.6, d.272,
1.181, State Auditor's comments on the Admiralty's annual statement, 1913.
70 For an unusual statement of the potential for cooperation between the two
sectors (in the context of armour-plate production), see the remarks of an
Admiralty official, quoted in Ozerov, Kak raskhoduiutsia, p. 154.

7 Military preparedness on the eve of the First World War

1 Sidorov, Ekonomicheskoe polozhenie, pp. 5-8; L. Burchardt, Friedenswirtschaft
und Kriegsvorsorge: Deutschlands wirtschaftliche Rustungsbestrebungen vor
1914, Boppard-am-Rhein, 1968.
366 Notes to pages 293-296

2 The phrase belongs to the Russian economist S. N. Prokopovich.

3 See A. Gulevich, Voina i narodnoe khoziaistvo, St Petersburg, 1898, and the
discussion in Prokopovich, Voina, chapter 1. Gulevich concluded that
Britain would be the first to suffer a food shortage, within six months of the
outbreak of war; the same fate would befall Germany within ten months.
For a sanguine view of Russia's advantages of natural resources and
manpower, see A. L. Rafalovich, "Voina i ee vliianie na nashe narodnoe
khoziaistvo', Promyshlennost' i torgovlia, 1914, 21, pp. 406-8. For German
General Staff and British Admiralty fears about the intolerable economic
burden implicit in a long conflict, see Offer, First World War, pp. 348,350.
4 Moltke's views oh Russia's gathering military strength are recorded in
Ropponen, Die Kraft Russlands, p. 249.
5 The article by S. Lukomskii, 'Razvitie i prganizatsiia zavodskoi deiatel'nosti
v riadu ostal'nykh uslovii mogushchestva gosudarstva', Morskoi sbornik,'
1914,2, pp. 113-31, provides an exception to the narrow approach adopted
by most military planners. Lukomskii identified five components of mili-
' taiy preparedness: the size of the armed forces (including their Weaponry);
prevailing technical conditions (this included the quality of weaponry and.
vessels, and the potential speed with which mobilization could be effec-
ted); education and training of troops; the morale of the troops; and,
finally, the ability of the country to supply its military and civilian popu-
lation with necessary materials and products. He assumed that Russia faced
difficulties in supplying the military, but (in common with his contempo-
raries) he was confident in the capacity of the economy to satisfy civilian
needs.
6 B. E. Nolde, Russia in the Economic War, New Haven, 1928, pp. 17,55. Nor is
it the case that the Russian government immediately closed the Russian
market to German goods; on the contrary, the government pinned its
hopes on continued access to German oils and fats, non-ferrous metal and
machinery. The tsarist regime did not prohibit trade with the enemy until
the end of 1916.
7 Wright, A Study of War, pp. 670-1, gives the size of the Russian army in 1914
as 1.3 million. For the figure cited in the text, as well as for the intended
impact of the 'great army programme', see Beskrovnyi, Armiia i flot,
pp. 14-15.
8 A full account of peasant society during the Stolypin years remains to be
written. E. Vinogradoff, 'The Russian peasantry and the elections to the
fourth state Duma', in L. H. Haimson, ed., The Politics of Rural Russia,
1907-1914, New York, 1978, pp. 219-60, is persuasive in identifying the
peasants' fundamental preoccupation with their claim to private estates, to
the exclusion of other issues. But see D. A. J. Macey, 'The peasant commune
and the Stolypin reforms: peasant attitudes, 1906-1914', in R. Bartlett, ed.,
Land Commune and Peasant Community in Russia, London, 1990, pp. 219-36,
for a discussion of the complex issues involved in arriving at an under-
standing of peasant attitudes. On the Russian army before 1914, the first
chapter of Allan Wildman, The End of the Russian Imperial Army: The Old
Army and the Soldiers' Revolt, Princeton, 1980 offers a good discussion.
 Notes to pages 297-306 367

9 Fuller, Civil-Military Conflict, pp. 220,255,257.

10 Walter Pintner, 'Russian military thought: the western model and the
shadow of Suvorov', in P. Paret, ed., Makers of Modern Strategy, New York,
1986, pp. 354-75. The treatment of military education and training in Besk-
rovnyi, Armiia i flot, pp. 26-8, does not go very far. Makarov, the chief
advocate of morale in the navy, is discussed briefly in a study by P. A.
Zhilin, Russkaia voennaia mysl', Moscow, 1986, pp. 137-8. Stone, Eastern
Front, chapter 2, offers an interesting analysis. For a thoughtful discussion
of the complex question of military motivation, see the final chapter of John
Keegan, The Face of Battle, London, 1976.
11 Golder, ed.. Documents, p. 11.
12 N.N. Golovine, The Russian Army in the World War, New Haven, 1931,
pp. 32-4, and Stone, Eastern Front, p. 32.
13 TsGVIA f.369, op.l, d.124, 11.10-11, undated memo Qanuary 1916?): 'our
ordnance, shell and rifles are of a high quality and the war has not revealed
any defects'. See also Manikovskii, Boevoe snabzhenie, vol. 1, pp. 285-7,
. 305-6. Stone, Eastern Front, pp. 38-9 notes that the German concentration
on trench mortars reflected the peculiarities of the military budget;
deprived by the Reichstag of the power of conscript additional men, the
German army substituted heavy artillery for troops. The planned bombard-
ment of Russian and French fortresses also influenced this use of resources.
14 Golder, ed., Documents, pp. 7,13. Durnovo points out that Russian control
of the Straits would still leave it vulnerable to British naval supremacy in
the Mediterranean. For the Tsar's attitude, see Sukhomlinov, Vospominaniia,
pp. 225-6.
15 M. Soboleff, 'Foreign trade of Russia', in Raffalovich, ed., Russia, pp. 303-5.
In 1913, fewer than one vessel in five that arrived at Russian ports was
registered in Russia. See also Lohr, Die 'Zukunft Russlands', p. 29.
17 Nolde, Russia, pp. 44-6.
18 See Explanatory Memorandum, 1913; VDMM za 1912, St Petersburg, 1913,
pp. 72-7; VDMM za 1914, Petrograd, 1915, pp. 66-74.
19 SOGD, HI, 4th session, 71 sitting, col.1,265 (L'vov); SOGS, VI, session 33 (27
March 1911), cols.1,576-7 (P.F. Rerberg); Savich, 'Morskie raskhody',
pp. 4-7.
20 Kennedy, Rise of the Anglo-German Antagonism, pp. 361-85.
21 Golder, ed., Documents, p. 11; Ropponen, Die Kraft Russlands, p. 265.
22 Ibid., pp. 220,242,256,269. For the situation in 1900, consult Fuller, Strategy
• and Power, p. 381.
23 Bukin, 'Zheleznye dorogi', p. 103; Sidorov, Ekonomicheskoe polozhenie,
pp. 567-9.
24 But see John Wesrwood, 'The railways', in R. W. Davies, ed., From Tsarism to
the New Economic Policy, London, 1990, pp. 173-5, who notes that older
locomotives were withdrawn.
25 Ibid., p. 177. Westwood notes that the military tended to hoard goods
wagons. Stone, Eastern Front, p. 41, makes the point that the rapid addition
to railway track between 1910 and 1914, improving the system's carrying
capacity, was sufficient to cause the German General Staff to believe that
368 Notes to pages 306-311

the Schlieffen Plan was rapidly becoming obsolete. Hence, the imperative
need to launch an offensive in 1914.
26 TsGVIA f.369, op.2, d.10, 1.190; op.8, d.l, 11.1-5; d.74, 11.3-4; Beskrovnyi,
Armiia iflot, p. 131.
27 Figures from ibid., p. 147.
28 Golder, Documents, p. 11.
29 Lukomskii, 'Razvitie zavodskoi deiatel'nosti', pp. 119-29.
30 The most famous statement of government attempts to take control of the
armaments industry is found in Manikovskii's programme for new con-
struction in 1916. See Sidorov, Ekonotnicheskoe polozhenie, pp. 424-49. There
is a large contemporary literature on 'compulsory syndicalization', of
which a representative sample is the series of articles by V. Ziv in Birzhevye
vedomosti, 3-6 May 1917.
31 Varzar, 'Machine industry', pp. 200-26; Narodnoe khoziaistvo v 1915g., Petro-
grad, 1918; Ocherki istorii tekhniki, p. 332.
32 Textiles and food-processing together accounted for one-half of gross
industrial production in 1914. Extractive industries, including oil, met-
allurgy and engineering combined to produce less than one-third of total
industrial output. See Crisp, Studies, pp. 34-6.
33 TsGVIA f.369, op.3, d.78,11.170-2 (memorandum dated 18 January 1916);
Krylov, Moi vospominaniia, p. 251; V. P. Litvinov-Falinskii, cited in Mani-
kovskii, Boevoe snabzhenie, vol. 2, pp. 293-7. For similar complaints, which
were widespread in wartime, see ibid., pp. 342-7; N. Savin, 'God voiny i
tekhnicheskaia mobilizatsiia promyshlennosti', Promyshlennost' i torgovlia,
1915, 13-14, pp. 5-8; Trudy soveshchanii po izgotovleniiu korpusov 3-dium.
granat, Moscow, 1916, p. 130 ('those factories that have begun to manufac-
ture shell should refuse to accept further orders and should produce
machine tools instead'), and Charnovskii, 'Mashinostroitel'naia promysh-
lennost", p. 52.
34 Strumilin, Statistiko-ekonomicheskie ocherki, p. 519. These figures, which
include non-incorporated industry, should be treated with caution. But all
authors who have examined this subject (such as V. A. Gukhman and M. A.
Barun in the 1920s) agree on the rapid growth in industrial capital between
1908 and 1913.
35 Khoziaistvennaia zhizn' i ekonomicheskoe polozhenie naseleniia Rossii za pervye
deviat' mesiatsev voiny, Petrograd, 1916, p. 32; L. S. Gaponenko, Rabochii klass
Rossii v 1917 godu,, Moscow, 1970, pp. 75-6; Efremtsev, Istoriia, p. 105. Esti-
mates of industrial capital stock on territory subsequently occupied by the
enemy are derived from Vainshtein, Narodnoe bogatstvo, pp. 368-9. Evacu-
ation procedures are discussed in Sidorov, Ekonomisheskoe polozhenie,
pp. 216-23.
36 Quoted in Romanov, ed., Russkiefinansy, p. 358, Kokovtsov to Stoplypin, 14
November 1906.
37 Anan'ich, Rossiia, p. 267. In January 1914, the Tsar dismissed Kokovtsov. His
successor as Minister of Finances, Peter Bark, was expressly encouraged to
shift the emphasis in the budget from taxes on consumption (particularly
the consumption of vodka) towards taxes on productive economic activity.
 Notes to pages 312-317 369

In the short term, however, a balanced budget required that Russia adhere
to the traditional fiscal regime. See Shepelev, Tsarizm i burzhuaziia,
pp. 162-3.
38 Vainshtein, Narodnoe bogatstvo, pp. 444-5; Anan"ich, Rossiia, pp. 261,267-8,
271; Gregory, Russian National Income, pp. 313-37.
39 Bukovetskii, 'Svobodnaia nalichnost", pp. 359-76; Sidorov, Finansovoe pol-
ozhenie, pp. 98,104-5. A more pessimistic mood amongst German financiers
in 1914 is captured in Lohr, Die 'Zukunft Russlands', pp. 171-80.
40 Sidorov, Finansovoe polozhenie, 102.
41 In response to Witte's criticisms, the Finance Committee decided to reduce
the amount of gold held abroad, in order to ensure that a larger proportion
of the currency in circulation was covered by domestic resources.
42 Unlike Britain or France, Russia did not own extensive property overseas.
There were a few enterprises and other assets in China, Manchuria,
Mongolia and Persia, chief amongst them the Chinese Eastern Railway.
The chief remaining assets included gold reserves held overseas. These
combined assets amounted to 917 million rubles in January 1914, which, in
theory, could be sold to help finance the war effort. Vainshtein, Narodnoe
bogatstvo, pp. 444-5.
43 See Hardach, Firs* World War, p. 153.
44 Britain contributed a further 21 billion rubles to the Triple Entente. Data
from Gregory, Russian National Income, pp. 155-7.
45 For background discussion, see Zaionchkovskii, Podgotovka Rossii.
46 Stone, Eastern Front, pp. 51-3.
47 Sukhomlinov, Vospominaniia, pp. 191-2; Sidorov, Ekonomicheskoe polozhenie,
pp. 576-7; Anan"ich, Rossiia, pp. 275, 279; Spring, 'Russia and the Franco-
Russian alliance'. There is another consideration to take into account: the
alliance allowed Russia to draw upon French support for tsarist ambitions
in the Far East. See Fuller, Strategy and Power, pp. 392-3.
48 Documents diplomatiques franqais, serie 3, vol. 8, pp. 85-93.
49 This point is made by Pearton, The Knowledgeable State, pp. 103-4. The
three-year law, passed in 1913, is discussed in G. Krumeich, Armaments and
Politics in France on the Eve of the First World War: The Introduction of
Three-Year Conscription, 1913-1914, Leamington Spa, 1984.
50 Anan"ich, Rossiia, p. 283.
51 See the reports in ibid., pp. 287-8, quoting the Cadet Shingarev and the
rightist Markov, who complained that Russia had been offered very poor
terms. Consult the map in Girault, Emprunts russes, p. 518.
52 See Girault, Emprunts russes, pp. 563-8.
53 For the data, see table 3.6. and Wright, Study of War, pp. 670-1. On the
subject of military alliances, see Kennedy, Defense Economics, pp. 32-44.
54 Gulevich, Voina, discussed the German food situation. The only references
to food in Durnovo's memorandum are to the imminent disruption to
British food imports likely to be caused by a German blockade and to the
desirability of promoting Russian exports to Germany, provided the trade
treaty could be renegotiated in Russia's favour. On British preparations for
a naval blockade of Germany, see Offer, First World War, part three. My
370 Notes to pages 318-325

estimates of grain output per capita derive from Gregory, Russian National
Income, appendix D, p. 235. The mean value of net grain output was 15.1
rubles per person in 1904/08 and 18.6 rubles in 1909/13 (both figures
expressed in 1913 prices). . '.
55 This section draws upon S. G. Wheatcroft, 'The balance of grain production
and utilization in Russia in war and revolution', Birmingham, n.d.
56 Kitanina, Khlebnaia torgovlia, pp. 255-65, provides a full discussion.
57 R. Claus, Die Kriegswirtschaft Russlands bis zur bolschewistischen Revolution,
Berlin, 1922, pp. 138-40; N. D. Kondrat'ey, Rynok khlebov i ego regulirovanie v
voine i revoliutsii, Moscow, 1922, pp. 48, 330; Wheatcroft, 'Balance of grain
production'.
58 Polivano'v is quoted in Sidorov, Finansovoe polozhenie, p. 54, Palitsyn by
Kavtaradze, 'Iz istorii', p. 87. See also Rodiger's memoirs, excerpted in
Voenno-istoricheskiizhurnal, 1990,6, ppi 82-7; 1991,1, pp. 57-63; for Alekseev,
see Zaionchkovskii, Podgotovka, pp. 348-54.
59 Ropponen, Die Kraft Russlands, pp. 213-35.
60 Quoted by Stone, Eastern Front, pp.37, 42. See also Lohr, Die 'Zukunft
Russlands'; and Niall Ferguson, 'Germany and theorigins of the First World
War: new perspectives', Historical Journal, 35,1992> pp. 725-52.
61 For a modern view, see Fuller, Strategy and Power. Art interesting observa-
tion on the drift in prewar priorities was provided by Fisher, the First Sea
Lord, in.1908. Finding himself seated between Stolypin and Izvorskii at an
official dinner, Stolypin asked Fisher '"What do you think we want most?"
He fancied I should answer "so many battleships, so many cruisers etc.
etc.", but instead I said "Your western frontier is denuded of troops and
your magazines are depleted. Fill them up and then talk of fleets!...".
Stolypin looked hard at me and said not another word'. Quoted in J. A.
Fisher, Fear God and Dread Nought: The Correspondence of Admiral of the Fleet
Lord Fisher of Kilverstone; ed. A. J. Marder, 3 vols., London, 1952-59, vol. 2,
p. 194 (Fisher's italics). .
62 The terms 'patrician' and 'plebeian' are used by Norman Stone. For France^
see E. Weber, Peasants into Frenchmen, London, 1977; on Britain, see Offer,
The First World War, pp. 313-61. "

Conclusion • : . . . . .
1 The magnitude of the improvement is difficult to gauge, and the entire
subject requires more investigation. A start might be made with the article
by I. F. Gindin, 'Balansy aktsionernykh predpriiatii kak istoricheskii istoch-
nik', in Maloissledovannye istochniki po istorii SSSR, XIX-XXvv.'-, Moscow,
1964, pp. 74-147. See also Gerschenkron, Economic.Backwardness, p. 22; and
'Rate of industrial growth'.
2 Doklad soveta s"ezdov, p. 155.
3 Manikovskii, Boevoe snabzhenie, vol. 2, pp. 61-78; V. S. M[ikhailov], 'Ob
organizatsii voehnoi promyshlennosti', Voennaia hauka i revoliutsiia, 1922,1,
pp. 138-54. Both author's advocated that the most technologically complex
armaments be produced exclusively at state works. Other goods, par-
 Notes to pages 326-329 371

ticularly those with a dual civilian-military purpose (optical instruments)

medical supplies, electrical equipment), could be supplied by the private
sector. : .
4 For further thoughts on this topic, consult T. C. Owen, The Corporation
under Russian Law, 1800-1917: A Study in Tsarist Economic Policy, Cambridge,
1991. ..••'••..
5 SOGD, III, 1st session, 74 sitting, 27 May 1908, col. 1,662 (Kurakin, deputy
from Yaroslavl).
6 J. Reshetar, The Ukrainian Revolution, Princeton, 1952.
7 See the contributions to Voprosy istorii kapitalisticheskoi Rossii, Sverdlovsk,
1972, as well as Polikarpov, 'Gosudarstvennoe proizvodstvo vooruzhe-
niia', pp. 16-37 and the bad-tempered debate between Bovykin and Poli-
karpov in the pages of Voprosy istorii during 1989.
8 F. Fischer, War of Illusions: German Policies from 1911 to 1914, London, 1975.
9 Anna Akhmatova, 'Poema bez geroia', Sochineniia, 2yols., Munich, 1968,
• vol. 2, p. 118. The other phrase belongs to Joyce Ca'ry. •
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dokhodov i raskhodov na 1913,1912.
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4 vols., 1910-13.
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1913-15.
Obshchii sostav uchebnykh i tekhnicheskikh artilleriiskikh zavedenii, podvedomstven-
nykh GAU na (1911-1915) god, 1911-15.
Otchet Gornogo departamenta za (1891-1911) god, 1892-1913.
Otchet Gosudarstvennogo kontrolera po ispol'neniiu gosudarstvennoi rospisi i
finansovykh smet za (1866-1914) god, 1868-1915.
Otchet otdela promyshlennosti za (1910-1914), 1910-14.
Polozhenie o vol'nonaemnykh i pravila o naime masterovykh i rabochikh v tekhni-
cheskikh artilleriiskikh zavedeniiakh, 1915.
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2nd edn, 1906.
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Svod voennykh postanovlenii: vol. 12, zavedeniia intendantskie, 2nd edn, 1891; 3rd
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3. Unpublished works
E. R. Goldstein, 'Military aspects of Russian industrialization: the defense
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H. Hogan, 'Labor and management in conflict: the St Petersburg metalworking
industry, 1900-1914', PhD thesis, University of Michigan, 1981.
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G. A. Miftiev, 'Artilleriiskaia promyshlennost' Rossii v period pervoi mirovoi
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Iu. F. Subbotin, 'Voennaia promyshlennost' Rossii vo vtoroi polovine XIX-
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J. D. Walz, 'State defense and Russian politics under the last Tsar', PhD thesis,
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S. G. Wheatcroft, 'The balance of grain production and utilization in Russia in
war and revolution', Centre for Russian and East European Studies,
University of Birmingham, n.d.
W. T. Wilfong, 'Rebuilding the Russian army, 1905-1914: the question of a
comprehensive plan for national defense', PhD thesis, University of
Indiana, 1977.

4. Periodicals and Newspapers

Artilleriiskii zhurnal
Birzhevye vedomosti
Finansovoe obozrenie
Morskoi sbornik
Novyi ekonomist
Promyshlennost' i torgovlia
Torgovo-promyshlennaia gazeta
Vestnik finansov
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5. Published books and articles

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Artem'ev, A. A., 'Usloviia rabot v tekhnicheskikh zavedeniiakh Artilleriiskogo
vedomstva i postanovka zdes' meditsinskoi pomoshchi rabochim', Trudy
vtorogo Vserossiiskogo s"ezda fabrichnykh vrachei i predstavitelei fabrichno-
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Ashurkov, V. N., 'Rabochie zavodov artilleriiskogo vedomstva v epokhu kapi-
talizma: osobennosti ikh polozheniia i klassovoi bor'by', Rabochie Rossii v
epokhu kapitalizma, Tula, 1972, pp. 93-101.
'Predpriiatiia voennogo vedomstva kak element mnogoukladnoi ekonomiki
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1959.
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Moscow, 1926.
Bart, A., 'Na fronte artilleriiskogo snabzheniia', Byloe, 34,1925, pp. 147-91.
Beaud, Claude, 'De l'expansion internationale a la multinationale: Schneider
en Russie, 1896-1914', Histoire, Economie et Sociite, SEDES, 1985, 4,
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Berlin, P. A., Russkaia burzhuaziia v staroe i novoe vremia, Moscow, 1922.
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 Index

Admiralty Administration see Ministry of labour productivity, 33, 38-9,44,223,

the Navy 231,238,288,307, 308
Admiralty shipyards see New Admiralty labour protest, 85-91,286
shipyards labour recruitment, 40-1,243,245-*, 257
Afghanistan, 18,124 labour turnovers, 246-7
Agricultural equipment, 50,54,56,61,162, lobby, 6,263-8
167,176,177,178,188-9,193 location, 27,28,91,158-9
Agricultural sector, 14,162,188 management of state enterprise, 30,
food supply, 317-19 102-3,257-8
grain production, 311,317-18, 319, organization, 7-8, 26, 34, 225, 324-5
340n31, 370n54 product prices, 210, 279-81
livestock, 317 profitability, 104,201
reorganization of land tenure, 84,148, relations between state and private
162,295-6 sectors, 43,62-3,118, 209,236,
Alekseev, General M. V. (1857-1918), 127, 277-82,289-90, 328, 365n70
132,315,319 size, 25-6,37-8, 256
Alekseenko, M. M., 142, 349n54 wages, 41,43,85, 86,91,247,252,288
Alexander II, 265 welfare benefits, 247,248-50
All-Russian Union of Trade and Industry, see also defence industry, state
82,83,112 enterprise
Allgemeine Elektrizitatsgesellschaft Armaments production, 73-6,90, 254-5
(AEG), 190,229,274 costs, 36,104-5, 200, 201,203, 258,281,
Archangel, 316 286-7,288
Armaments industry, 5-8,25-43,74-7, delivery schedules, 39,44, 74,87,90,
197-259, 285-9, 307-8, 324-6 105, 262, 273,286
barriers to entry, 7-8,62,63,215-16 economic significance, 253-7
capital investment, 29, 31,32,44, 76, quality, 28,105, 212, 273,285-6
194,197,200,204,205,206, 221, technology, 8,63,96,145,212, 242,
231 246
civilian customers, 28,29, 30,32, 41, see also defence production, imports,
209-10,230 see also Urals ironworks Russo-Japanese War
collusion, 7,62,91,145, 216,267, 280, Armour-plate, 75,96,204,214,221, 226,
287 241
conditions of work, 39,41-3, 85,86,89, Armstrong, Whitworth & Co. Ltd., 239,240
231,247-50 Army, Russian, 128-9,131-2,140, 295-7,
employment, 37-40,226, 243-5, 256-7 321
European, 63,257,335n47 billets, 23,140
foreign investment, 234-43,275 communications, 68,132,297, 206-7
government and private sector, 7-8, composition, 295
234,260-1,267, 268-71,275, 308 conscription, 139
labour force, 27,28,37-43,96, 207,245, food and fodder supply, 23,69,140,
334n47 155,318
388
 Index 389

footwear and uniforms, 25,45-6,48, rivalry with Noblessner, 267,280

68-9,155,283, 299-301 and small shipbuilding programme,
officers, 36, 69,122,265 274
reform of (1874), 18,45 Banks, commercial, 95,175,218,225,233,
regimental economy, 23,45-6,155,265, 234, 238,264
282, 296, 364n50 Azov-Don, 164,175
role of, 9,23-4,119,296, 321, 327, International, 164,175,213,217,218,
341n48 220-21,222, 223,224, 231-3, 241
size, 22-3,67,122,130,133-4,152,292, Loan and Discount, 217,220,224, 229,
295, 316,317 241,267
training received by soldiers, 23, 63, 69, Northern, 164,175
140,296 Private Commercial, 221,228
transport, 306 Russian Bank for Foreign Trade, 164,
see also General Staff, mobilization 175
Artem'ev, A. A., 249,250,360n98 Russian Trade and Industry, 175,212,
Artilleriiskii zhurnal, 103 217,228
Artillery, 8,18,26,68,101,131,132,241 Russo-Asiatic, 175,212,218-19,223,228,
ammunition, 68,242, 298-9 236
naval, 98,241,253,258 Russo-Chinese, 175,217
organization, 20,100-2,131-2 Siberian Trade, 212
supply: before 1905,19, 24, 29,44, 74, see also State Bank
269,298-9; after 1905,140-1, 214,236, Banque de l'Union Parisienne, 56,110,
239,240,280, 298,299, 328 218-19,224,228, 237
Artkinsk ironworks, 50 Baranchinsk, ironworks in Urals, 49
Association of Southern Coal and Steel Baranovskii (incorporated 1912), 219,222,
Producers, 195 223,236
Atlas Engineering Company, St Bark, P. L., 150,240, 352nl2, 368n37
Petersburg (incorporated 1913), 230 Becker (incorporated 1909), 221,226,227
Augustin Normand, French shipbuilders, Belgium, 47,56,169
235-6 Bestuzhev-Riumin, Lt.Gen., 75-6
Austria-Hungary, 9,17,120,165, 312, 314, Bethmann Hollweg, T. von, 147,320, 321
329 Birilev, A. A., Navy Minister (1905-6), 97,
armed forces, 293, 298,299 343n79
diplomacy, 121,122 Bischliager, L. A., 225
and First World War, 313 Bismarck, Otto von, 16
mobilization plans, 305, 315 Black Sea fleet, 20-1, 98-9,126,135-7,159,
railways, 305 230,237,300, 302
and Russian diplomacy, 4, 320 Blitzkrieg, 8
Avdakov, N. S., 162,164, 351n4 Bloch, G. A., 218,241
Aviation, military, 134, 306 Bloch, Jan (Ivan), 154-5
Blohm und Voss, Hamburg, 72,228,237,
Bakhmach, 165 274
Balance of payments, 235,272,275,277, Boklevskii, K. P., 270-1, 363n22
301,311 Boklevskii, P. P., 87
Balinskii, P. I. 364n49 Bologoe, 304
Balkans, 15,17-18,122,123,126,131,133, Bompard, Maurice, 339nl7
142,263, 329 Bonch-Bruevich, V. D., 335n49
Baltic fleet, 98-9,126,135-7,138,241, 300, Bonnardel Group, 48
302 Bosnia, 121,152
Baltic provinces, 58,159 Bostrem, Admiral I. F., 264
Baltic shipyards, 26,30-1,91,202, 258 Boulding, Kenneth, 331 n9
acquisition by government, 31 Briansk Ironworks, steel mill and
financial position, 201,202, 355n4 engineering plant at Aleksandrovsk
labour force, 41,42, 74-5,202 (established 1887), 48,58, 59,60,107,
management, 37 164,166,182,184,185,191,193,219,
output, 75 223,224
and revolution, 85, 342n49 Brinken, General, 345nl
390 Index

Britain gosudarstvennoi oborony), 97,98,99,

Admiralty, 9,261 102,126-7,128,129,131,135,320-1
armaments industry, 287,288 Council of Ministers, 96,101,129,131,137,
defence policy, 9,20,119 138,141,168,171,204,213,240, 269,
defence spending, 153-4 270,272,273,274
diplomacy, 17,120,125 Credit Lyonnais, 48,236
exports, 44,272 Crichton (incorporated 1897), 227,235
food supply, 317 Crimean War, 1,16,18,30
investment in Russia, 63,242, 308 see Crisp, Olga, 162
also Vickers
iron and steel industry, 287 Davydov, A. A., 217,264
merchant shipbuilding, 53 Defence expenditure, 9,22-25,118,
navy, 301,303, 312, 313 139-47,152-6
Bromley, machine toolmakers, 52 allocation, 20, 22,63,138,140-1,302
Brunstrom, Otto, 219 debates concerning, 24,142,143,155,
Budget, 92-3,139-40,148-51,311,313, 156
368n37 see also defence management of defence budget, 23,
expenditure 143-7,262,349n58
Bulgakov, Mikhail, 158 and national income, 153-4,350n76
Bulygin, A. G., 81 pegged, 22,139,142
Bunge, N. Kh., 16 per capita, 153,350n75
as public good, 155
Cartridges, 27,29-30,34,76,199,253,267, regional impact, 158-9
298-9 size of budget, 22-3,139,154, 343n76,
Caucasus, 65,127,165, 305 348n47
Chaudoir, Ekaterinoslav, 184 see also Duma
Chetverikov, S. 1,80,81 Defence market, 5-8,26, 30,236,242,267,
Chief Administration of Land 330n8 see also procurement
Reorganization and Agriculture see Defence policy, 8-9,19-22,98-9,100,
Ministry of Agriculture 125-8,159-60, 320-1 see also
Chief Quartermaster's Department Franco-Russian alliance, rearmament
(Glavnoe intendantskoe upravlenie), Defence production, 5,38,43-6,62-3,
23,45, 69,177,183,264-66 253-4
budget, 282-85,289,364n51 Department of Mines, 26,28, 34,36, 76,
criticized, 68,265 86,88, 239,240,258 see also Urals
Chief Shipbuilding Engineer, 36 ironworks
China, 17,18 Dikov, I. M., Navy Minister (1907-.9), 98,
Chinese Eastern Railway, 122, 339n7 99,269,274, 344n82
Cholera, 179 Disarmament (Hague Conference), 18
Citroen, 242 Dmitriev, N. I., 287
Coal industry, 107,108,169,171,172,185, Dmitriev-Baitsurov, N. G., 86
235,250,314 Donets-Iurevsk Metallurgical Company
Company law, 58,167 (est. 1895) 48,184
Confederation of Agricultural Donets Steel Company, Druzhkovka, 48,
Machine-Building Industry, 164,167, 59,164,182
195 Dreadnought, 8,96, 98,99,123,135, 302
Confederation of Northern and Baltic Dreier, A. K. von, 225,264
Engineering Industry, 164,195, 271 Duma, State, 66,67,82,84,110,118,160,
Confederation of Trade and Industry, 111, 291
113,164,168,170,273-4, 275,285, and defence appropriations, 103,104,
341n46 137,138,139,142-3,147,153,262, 291
Constitutional Democratic Party (Cadets), defence commission, 135,141,142
81,82,121,127,142 and defence departments, 105,118-19,
Construction industry, 77,165,288 127,137,141,142,143,268
Consumer goods, 61,107,108-9,174 and French loan, 316
Cottage industry, 45,283, 290 and industry, 113,164,165,184
Council for State Defence (Soviet and labour policy, 249,250
 Index 391

and rearmament, 137,160,200,202,206, diplomacy see Franco-Russian alliance

211,212,297-8,348n45 private investment in Russia, 57,169,
Durnovo, P. N. (1845-1915), 156,309, 317, 231, 236-7,238,240,242,308
320,328 public loans to Russia, 58,66,72,92, 94,
analysis of Russian foreign and defence 95,147,152,239,240, 274,315, 316,
policy, 123-5,156,297-8,300,307-8, 332nlO, 339nl7
316 railways, 305
Dvigatel', Reval, 60 Franco-Russian alliance, 4,9,16,117,
120-1,134,159-60, 291, 313-17,329
Education, 38,40-1,156-7,292,351n84 military convention, 16,18-19,120,314,
Ekaterinoslav, 166,220,221 321
Eklof, Ben, 157 Franco-Russian Wharves Company (est.
Enhanced shipbuilding programme 1881, incorporated 1911), 31, 205,221,
(1912), 138,275 226, 227,273,274, 275
Exports, 135, 301,312, 317 Free balance {svobodnaia nalichnost'), 95,
147,151-2
Factory inspectors, 43,251 Fundamental Laws (April 1906), 119
Falkus, Malcolm, 162 Fuses, 76,199,209, 222,253
Famine relief, 93,151,152
Fedorov, K. P., 241 Galernyi shipyard see New Admiralty
Felzer Engineering, Riga, 236 shipyards
Filosofov, D. A., 352n6 Garin, N. P., 170,264-7,265, 267,280, 282,
Finance Committee see Ministry of 283,286,287, 362n6
Finances General Staff, Russian, 100,101,102,120,
Finansovoe obozrenie, 177 122,127,128,129,132,134,241,269,
Finland, 127 285,298,306, 314-15
Finn-Enotaevskii, A., 161 Gerliakh & Pulst, Warsaw, machine tool
First World War suppliers, 52
communications, 307 Germany, 9,312, 314
evacuation of industry, 310 armaments industry, 236, 237, 238,287,
food supply, 318-19 288
German strategy, 302 armed forces, 295, 298,299, 307,367nl3
industrial organization, 308-9 defence policy, 119
industrial production, 309-10 defence spending, 153-4
Russian economic policy, 294, 366n6 diplomacy, 4,13,16,121,122,123,124,
transport, 28,306 297, 327,328
war finance, 312-13 General Staff, 128, 304-5, 320,367n25
Fischer, Fritz, 328 loans to Russia, 58,66
Fisher, Admiral J. A., 370n61 military preparations, 293—4
Flottenverein, 303 navy, 21, 53, 301-4, 327
Food supply see Agriculture private investment in Russia, 124,
Foreign investment, 14,16,234-5, 311-12, 237
313 railways, 305
in arms trade, 235-8, 241-3 and Russian threat, 320
in electrical engineering, 190 steel industry, 47,181
in state sector, 238-41 trade with Russia, 124,190,272, 294,
Foreign policy, 4,17-20,120-5,263 see also 309,328, 339,366n6, 369n54
Franco-Russian alliance Germonius, E. K., 28
Foreign trade see exports, imports Gerschenkron, Alexander, 1-2,3,162
Fortresses, 19,23^, 25, 38,100,122,130, Geyer, Dietrich, 3-4,125
132-3,134,141, 298-9,315 Gindin, 1. F., 162,174
construction costs, 145,146, 347n25 Girault, Ren6, 223
France, 53,117-18,228,291, 312, 339nl7 Glavnoe artilleriiskoe upravlenie see Main
armaments industry, 63, 239,288 Artillery Administration
armed forces, 124,133,293,298,299, Glavnoe intendantskoe upravlenie
315-16, 317, 322 see Chief Quartermaster's
defence spending, 153-4 Department
392 Index

Glavnoe upravlenie korablestroeniia i growth, 14-15,77,161-2,172-4

snabzheniia see Main Shipbuilding industrial accidents, 42,250
Administration labour productivity, 38,174,288,
Gold standard, 14,92,312,313 337n86
Goremykin, I. L., Chairman of Council of organization, 167-8
Ministers (1914-16), 321 recession, 16-17,48,49,54,56,107-9,
Goujon, Jules, 59,80,165,278 112
Great army programme (1913), 133-4,295, recovery, 172-5,324
298, 321 state control in wartime, 308-9
Grigorovich, I. K. Navy Minister taxation, 169
(1911-17), 135-8,142,143,144,202, Infant mortality, 158
230,240,300,302,349n55 International Harvester, 188
Grinevetskii, V. I., 193 Iossa, N. A., 278
Gross, General, 203 Irkutsk, 156
Grubbe, E. K., 212 Iron and steel industry, 15,46-50,56-9,
Guchkov, A. I., 129,142,349n54, 362nll 109-10,176-86
conference on (May 1908), 164-6
Hartmann Ironworks (incorporated 1896), government consumption of products,
48,51,59,164,187,217,220 58, 111, 176-9,194
Health care, 157-8 growth, 47,176
Helferrich-Sade, Kharkov, 188 integration, vertical, 185-6
Hogan, Heather, 251-2 market demand for products, 176,179
Holland, 312 prices, 57-8,176,186,287
Holy Synod, 126; 143 profits, 48-9,165
Horses, 24,70,140 recession, 48,49,77,107,108,165-6
Housebuilding, 174 recovery, 194
Huta Bankova, 48 proposed trust, 110-11
shortages, 179-34
Ianzhul', 1.1., 164 technical change, 47,49,184-5
Imports, 301, 309 see also Prodamet, Urals state ironworks
agricultural machinery, 167 Italy, 120,315
armaments, 155,271-7,290 Izhevsk arsenal, 26,27-S, 29,34, 44,88,
electrical equipment, 190,309 104,204,207,209, 223,241, 258
food, 119 labour force, 40,41,43,243,246
footwear, 284 Izhora shipyard, 26,91,200,203
import substitution, 45,189,309,324 labour force, 40
iron and steel, 167,180,183 management, 37
machine tools, 44,52,274-5, 309 modernization, 204
merchant vessels, 52 revolution, 85,86
military vessels, 21,45,273-4,276,289 supplier of armour-plate, 75,204,258
non-ferrous metal, 309 Izvol'skii A. P. (1856-1919), Minister of
rolling-stock, 354n48 Foreign Affairs (1906-10), 135
Industrial census (1908), 254, (1918) 253
Industrialists, 78-S4,113,163-6,168-72, Japan, 18,19,53,122,136
197,308 diplomacy, 120,123
and labour policy, 80, 249,250-1 losses in 1904-5,70
and Russian government, 15,42, 58-9, rearmament, 123, 302
60-1,79, 111, 149,163-72,179,193-5, see also Russo-Japanese War
263, 267,278,324, 325 Joffre, General Joseph, 314,315, 321
views on foreign and defence policy, 2, John Brown, shipbuilders, 232, 272
15-16,100,263 Johnson, Alvin, 153,154
see also Confederation of Trade and
Industry Kahan, Arcadius, 156
Industry Kannegiser, I. S., 164,217,231, 237
capital investment, 56, 77,107,108,109, Karpov, Captain N., 264
166,174,192,194,310,324 Kazan, 28,264
employment, 174-5,334n46 Kehr, Eckhart, 6,263
 Index 393

Kharitonov, P. A. (1852-1916), State Kuropatkin, A. N. (1848-1925), Minister of

Auditor (1907-16), 170-1,286 War (1889-1904), 20,44,71, 333n21,
Kharkov Locomotive Company 342n67
(incorporated 1897), 51,187,232
Khrulev, S. S., 218,241,272, 363n25 Labour force see armaments industry
Kiev, 316 Labour policy, 39-40, 42-3, 248,249-50
military district, 127, 264 Lange & Son (incorporated 1898), merged
Kokovtsov, V. N. (1853-1943), Minister of with Becker (1912), 74,89,227
Finances (1904-5,1906-14), Chairman League for the renewal of the Russian
of Council of Ministers (September fleet, 100
1911-January 1914), 66,122,129,130, Lesenko, N. D., 241
135,150,152,160,167,169,204,226, Lessing, A. I., 224
343n71 Lessner Engineering Company
and consequences of Russo-Japanese (incorporated 1898), 30, 52, 217,219,
War, 77 220, 223,230
defence budget, 141-2,143-4,147,156 Lgov, 305
and defence procurement, 274,318 Liaotung peninsula, 19
fiscal and monetary policy, 93,94,99, Liashchenko, P. 1., 161
137,148-9,152, 310-11 Lilpop, Rau and Levenstein, engineering
and foreign policy, 93 factory, Warsaw, 60,266
and negotiations over French loans, 92, Lipin, Professor V. I., 105
94-5,239, 274, 339nl7 Litvinov-Falinskii, V. P., 180,182,353n30
and rearmament, 97,101,126,128,129, Lugansk cartridge works, 29-30,34,75,
131,136, 298, 311 76,207,208
relations with industrialists, 79,168 Lukomskii, S., 308, 366n5
and revolution, 85, 87 L'vov, N. N., 156
and small shipbuilding programme,
274 MAN (Maschinenfabrik
views on defence policy, 122,126,128, Augsburg-Niirnberg AG), 236
129,136 Machine-building industry, 50-6, 59-61,
Koliubakin, A. M. (d.1915), 127,346nl7 186-94,324
Kolokol'tsov report, 43 agricultural machinery see agricultural
Kolomna Engineering Company (est. equipment
1863, incorporated 1871), 30,51,164, capital investment, 56,192,194
191,192,218,219,220,222,223,224-5, composition of output, 54-5,186-7
232-3,236 depression, 54, 59
agreement with Citroen, 242 electrical equipment, 186-7,189-90
agreement with Sormovo, 224-5, 234, industrial equipment, 54,187,190-1 see
268 also machine tools
capital investment, 222 labour productivity, 54,56
labour conditions, 251 transport equipment, 187,188 see also
participation in Prodparovoz, 60 rolling-stock
rolling mill at Kulebaksk, 183, 222,225 trends in output, 51-3,186-7
Konovalov, A. I. (1875-1948), 240 Machine-guns, 8,44, 73,131,246,298-9,
Kramatorsk Iron and Steel Company, 164, 310
184 Machine tools, 52,54,74,191-2,240, 309,
Krenholm Cotton Mill, 215 310
Krivoshein, A. V., 148, 350n65 acquisition by GAU, 208
Kronstadt, naval base, 26,84,127,133, imports, 44, 52, 274-5, 277
136 tariff, 192,326
Krovlia, 109,180 McKay, John, 185,359n67
Krupp, Friedrich, GmbH, Essen, 28, 72, Main Artillery Administration, 26,28,29,
204, 214,215,235, 236,237, 239, 74,86,87,90,100,103,130,140-1,183,
357n34 246-7,269, 287
Krylov, Admiral A. N., 264, 270,363n23 administration of enterprises, 34-6,103,
Kuban, 305 206
Kulebaksk rolling mill see Kolomna criticized, 68,103,265, 362nll
394 Index

imports of armaments, 276, 277 Committee to allocate railway

investment decisions, 76,208-9 contracts, 58,61, 77,110,168
proposed construction of new factories, see also Rukhlov, S. V.
76,209 Ministry of War, 18,19,46,86,93,128,139,
Main Shipbuilding Administration 140,142-6,164,180,210,211,225,262,
(Glavnoe upravlenie korablestroeniia 266, 269,271,276,283,284,306, 308,
i snabzheniia), 21,106,201,204,264, 318 see also army, Chief
274,287 Quartermaster's Department, Main
Makeevka Steel Company, 48,109,110, Artillery Administration, rearmament
185 Mitau, 305
Maltsov works, 60 Mobilization
Manchuria, 4,15,19,121 in 1914,292,293,315
Martin, Rudolf, 338n4 plans, 120-1,134, 304,305,314-16, 321,
Mendel'son, L. A., 77,162 366n5
Merchant fleet, 52,83,224, 301, 344n84 and stocks of munitions, 266
Meshcherskii, A. P., 183,218,224 Moltke, Helmuth von, 320, 321
Mikhin, S. I., 164,271 Monkhouse, Allan, 251,361nlO2
Military-industrial complex, 6,234 Moscow, 66,78,88
Miller, P. I. deputy Minister of Trade and Bourse Committee, 80,81,83
Industry (1910-11), 167,169 merchantry, 82,263
Miliukov, P. N. (1859-1943), 121 military district, 264
Miliutin, D. A., 17,18,45 Moscow Metal Company, 80
Ministry of Agriculture and State Moscow Wagon Company, 60
Domains (renamed Chief Motovilikha see Perm Cannon Works
Administration of Land Municipal government, 166,196, 272
Reorganization and Agriculture, May Myshlaevskii, A. Z., 136
1905), 148,164,180,209
Ministry of Education, 126,156-7 Naidenov, V. A., 81,82
Ministry of Finances, 18,22,52,139,143, Narva, 305
149,151,152,164,180,205,217,264, Naval General Staff, 96,98,100,107,136,
269, 272,325-6 137,138
and armaments industry, 205,240,268, Naval rearmament see rearmament, naval
278 Naval Technical Committee, 45,106
Finance Committee, 93,312 Navy
food purchases, 318 function, 20, 301-2, 343n81
management of reserves, 312 and Russian society, 302-3
political influence, 22,95, 111, 117,194-5 and Russo-Japanese War, 70-1,96
and rearmament, 130, 311 size, 21,302-3, 343n76
see also Kokovtsov, V. N. training of officers and men, 22,302-3
Ministry of Foreign Affairs, 135 see also Baltic fleet, Black Sea fleet,
Ministry of the Interior, 78,164,209, 340 Pacific fleet
Ministry of Justice, 164,169, 266 Neidhardt, D. B., 170, 362nlO
Ministry of the Navy, 24,26, 87,103,106, Nevskii Shipbuilding Comapny
142,144,145,153,164,180,183,205; (incorporated 1891), 26, 30, 31-2,51,
232,262,267,268,271, 273-4, 275,277 52,91,164,187,225, 226,228
and naval procurement, 268-71,288 financial position, 226
see also rearmament labour productivity, 252
Ministry of Trade and Industry, 26,103, strikes, 90
143,163,164,171,177,180,183,269, New Admiralty shipyards, 26,31,36,37,
272-5,290 85, 200,201-2, 202-3
and industrialists, 111, 113,167,168,171, capital investment, 201, 204,205
195,325 financial position, 355n4
responsibility for state ironworks, lease proposed, 205-6
103-5,213,278, 285 New Russia Ironworks (est. 1870), 47,48,
support for foreign advisers, 288-9 58,164,184,185
Ministry of Transport, 22,56,58,126,140, Nicholas II (1868-1918), 20, 65,94,118,
143,148,168,171,180,183,187,210,270 123,128,129,194,240,297,320,346n20
 Index 395

and naval rearmament, 9, 21,117,135, Pacific fleet, 10,20-1,98,136,137,300,302

138,160, 300, 320, 327,345nl Paleologue, Maurice, 240
dismisses Kokovtsov, 150 Palitsyn, F. F., Chief of General Staff,
and Russo-Japanese War, 340n22 120-1,128-9,132, 319
suspends Garin investigation, 266 Parviainen (incorporated 1910, as Russian
Nicholas, Grand Duke (1850-1929), Shell and Munitions Company), 213,
Chairman of Council for State 219-20,223,225,228, 236, 358n50
Defence, 97,102, 343n79 Peasantry, 119,166,189,366n8
Nikolaev, 26, 32,136,159,230, 359n64 attitude towards education and health,
Nikolaev Shipbuilding Company 157-8
(established 1895, reorganized 1911), consumption of manufactured goods,
26,32-3,52,164, 205,226,227,230-3 78,189
collaboration with MAN, 236 during First World War, 319
collaboration with Russud, 233,268 living standards, 3,83
collusion, 280 military service, 295
financial position, 231-2 Peasants' Land Bank, 148
foreign financial assistance, 237-8 Perm Cannon Works, Motovilikha, 26,
labour force, 75,243, 245,252 28-9,34,104-5, 204, 208,210-14, 258
output, 33, 75, 232 agreement with Krupp, 104,239
and procurement agencies, 264 capital investment, 76,212,213-14
productivity, 44,231, 252 criticized, 212,278,286
reorganization (1911), 231,238 financial condition, 104
revolution, 89 foreign investment, 239-41
Nikolaev-on-Amur, 136 labour force, 39,105
Nikopol-Mariupol Mine and Steelworks, management, 36
48,164,185,219,220-1, 232 privatization proposals, 212-13, 279
Nizhnii Novgorod, 40, 88 revolution, 87-8
Nobel, E. L., 164 quality of product, 212, 285
Nobel Brothers, 52, 229-30 'Perm National Society', 213
Noblessner (incorporated 1913), 205, 226, Peroni, I. M., 225
227,229-30,264,266-7,280 Persia, 18,122,124,125
Norpe, M. F., 83 Peter I, the Great, 7, 26,30,117,135
North-West Railway Company, 182 Phoenix Engineering Company
Norway, 309 (incorporated 1868), St Petersburg,
Novgorod province, 40,243 30,52,191,192,219, 220,221,223
Phoenix Wagon-making Company (Riga),
Obukhov steelworks, 26,28,29,44,85,91, 60
169,183,200,240, 258,277 Plotnikov, M. S., 217,221,229, 357n37
capital investment, 204-5 Poincar6, Raymond, 314
criticized, 201 Poland, 16, 58, 77,124,127, 309,310, 316
labour force, 42,251 Police socialism, 78
management, 37 Polivanov, A. A. (1855-1920), 298,319
output, 74 Ponafidin, N. E., 267
prices charged by, 280 Popov commission, 42-3
revolution, 85-6,88 Population growth, 14,151,153, 352n21
October Manifesto, 65,82,94 Port Arthur, 19,65,68,84, 339n8
Octobrists, 82,110,112,141,142 Ports, construction, 25,145,152,166,177,
Odessa, 165,264 178
Oil industry, 65,107, 235 Portugal, 309
Okhtensk explosives factory, 26,207, 243, Prices
245,246,247-8,249,250,281 of armaments, 210, 279-81, 287
Olonets province, 243 of inputs, 145,146-7,286,287, 353n28
Optical Company, St Petersburg, 225, 242 Procurement, 269-90
Orbanovskii, manager of Putilov of civilian goods, 59,169-71
Wharves, 228 corruption, 144,145,265, 266-7
Orel, 305 of defence goods, 6,23, 35,63,106,144,
Ozerov, I. Kh., 161,340, 365n61 210, 260-90, 280
396 Index

lack of planning {planomernost'), 35, strategic lines, 100,121,132,134,139,

106,182,267,365n61 239,304-6, 314,315,316,367n25
officials, 23,143-5,262-3,265-6,278, supply of rails, 48, 57,58-9,168
284,289 see also Ministry of Transport,
see also Chief Quartermaster's rolling-stock, trans-Siberian railway
Department, Main Artillery Ramseier, Iu. I., 218, 220,221,224,241
Administration, Shipbuilding Rearmament, 9,94,95-102,117-19,
Commission 125-38,297-304,323-4
Prodamet, 164,167,169,176-7,180-6,195, and ground forces, before 1905,19-20,
337n88 43-4; after 1905,100-2,128-35
activities, 57-9,109-10 naval, before 1905, 20-2,31,32,44-5;
criticized, 145,279,287,353n37 after 1905,96-100,135-8,200,229,
formation, 56-7 230,275,327-8
membership, 58-9 see also great army programme, small
Prodparovoz, 60-1,180,338n94 shipbuilding programme
Produgol', 168-9,171 Regimental economy see army
Prodvagon, 60-1,180 Reutern, M. Kh, 16
Profits, 323 Reval, 127,136,159,220,230
in armaments, 224,231 Revolution, 1905-1906,3,40,43,65-7, 71,
in iron and steel, 48-9,165 78-80,94,107,112-13,151, 292,325
in machine-building, 236 and armament industry, 85-91,363n24
Progressists, 156 and armed forces, 84,295,296,320
Progressive Economic Party, 82, 83-4, Rhine Iron and Steel Company, 277
112 Riabushinskii, P. P., 263
Prokopovich, S. N., 293 Riazan, 315
Pskov province, 243 Rieber, A.)., 113,171, 345nlO6
Pushchin, I., 264 Rifle, Mosin, 19, 23,27,29,43,90,246,286,
Putilov, A. I., 212,217,218,225, 239, 264 336n62
Putilov Company (incorporated 1873), 20, Riga, 159,179
26,29,30,52,90,164,192,215,217-20, Polytechnic, 217
221-4,225,271, 340n24 Rodiger, A. F. (1853-1917), Minister of
capital investment, 76,221-2 War (June 1905-March 1909), 100-2,
collusion, 280 129,287, 319,346n21
criticized, 286 Rolling-stock, 29,51-2,54,56,59,61, 77,
financial position, 223-4 165,186-S, 210,305-6
labour force, 29,108, 219 Romania, 127,136, 300, 315
leading position in arms trade, 44,75, Roosevelt, Theodore, 71
90,217,223 Rozhdestvenskii, Admiral E. P., 71
links with Schneider, 236-7 Rudzkii, K. Engineering Co., Warsaw and
output, 29, 51,75,223 Ekaterinoslav, 266
prices charged by, 210,280 Rukhlov, S. V., Minister of Transport
Putilov Wharves (incorporated 1912), 226, (1909-15), 148,168-9,171,349n64
227,228,229,237 Rummel', Iu. V., 164, 344n84
'Russian Artillery Works Company Ltd.'
Racouza-Soutschevsky, K. K, 217,220, see Vickers
225 Russian Locomotive Company, 164
Railways, 14,67,84,158, 304-6 Russian naval union, 100, 303
construction, 14-15,17,22,28,58,83, Russian Providence Company, 109,110,
139-40,161-2 164
consumption of iron and steel, 59, Russian Renault, 242
176-8,182 Russian Shell and Munitions Company
cutbacks, 148,166 see Parviainen
freight rates, 57,163 Russian Shipbuilding Company (Russkoe
industrial accidents, 250 sudostroitel'noe obshchestvo)
and military mobilization, 304-5, 315 (incorporated 1911), 205,230,231-3,
private companies, 59,165-6 288
source of revenue, 93,150,350n69 and arms lobby, 264
 Index 397

collaboration with Nikolaev Schichau Werft, Elbing, 264

Shipbuilding Company, 205,230, Schiemann, Theodor, 304, 305
233, 268 Schliisselburg powder works
labour force, 245,252 (incorporated 1884), 30,91,219,222,
'Russian Whitehead', 230 281
Russkoe obshchestvo parokhodstva i Schneider-Creusot, 215,217, 218,219,222,
torgovli, 52 228, 229,235, 236-7, 239-41,242,258
Russo-Baltic Shipbuilding and Schwanebach, P. K., 94
Engineering Company, Reval Scientific management, 251-2
(incorporated 1912), 188,225, 226, Semenov, I. A., engineers, St Petersburg,
227,228-9, 264 191
Russo-Baltic Wagon Company, Riga, 60 Serbia, 121,125
Russo-Belgian Metallurgical Company Serebriansk, ironworks in Urals, 50
(est. 1895), 48,110,164,182,185 Sestroretsk armoury, 27, 44, 74,85, 91,223
Russo-Japanese War, 4,17,19,20,67-72, labour force, 40,41, 207
79,84,269,284,286,290, 293,319 revolution, 85,86,87,88
armaments production during, 50, Sevastopol, 26,230
72-7,221,250 Shanin, Teodor, 2-3,4,117
conduct of, 68, 70,296,297 Shatsillo, K. F., 9
financial consequences, 66, 92,93, 94, Shidlovskii commission, 86
151,348n47 Shingarev, A. I., 142,144, 349n54
foreign supplies, 72-3, 272 Shipbuilding, merchant, 52-3,83,287 see
lessons drawn from, 306 also merchant fleet
preparations, 21 Shipbuilding, military, 141,199-206,
supplies during, 46,67-9,282,299, 226-34,237-78,286,288, 303
339nl7 capital investment, 228
Russud see Russian Shipbuilding labour force, 226,227
Company management of enterprises, 36,
356nl7
St Petersburg, 27,40,41,127,159,179,230, output, 32,227
249,251 productivity, 36,44,281,288
defence of, 319 technology, 30
industrialists, 83,179 see also naval rearmament, armaments
military district, 264 industry
Polytechnic, 217,270 Shipbuilding Commission, 205
revolution, 79,84-7 composition, 269-70
Stock exchange, 77,218 formation, 268-9
St Petersburg Cartridge Works, 29, 34, 74, and naval procurement, 270-1,275,
75,86,207,208 280,286,289, 363n23
St Petersburg Metal Company Shipov, I. P. (1865-1919), Minister of
(incorporated 1857), 206,219,220, Trade and Industry (1908-9), 111, 164,
221,222, 223,233,241,275, 280 273, 274,343n71
St Petersburg Ordnance factory, 29,44, Shostensk, explosives factory, 207,209
258 Siberia, 61
St Petersburg Tube Works, 207,243,245, Sidorov, A. L., 9
246,247,248, 342n49 Siedlice, 304
Sakharov, General V. V., Minister of War Siemens-Schuckert, 190,217
(1904-5), 71 Small shipbuilding programme, 98-9,139,
'Salamander', Riga, subsidiary of Thomas 143,262,268,271,273-4, 302 see also
Firth, 242 rearmament, naval
Samara fuse factory, 76, 209 Social Democrats, 87,88,89,250
Sarapul, 28 Socialist-Revolutionary Party, 88
Satkinsk ironworks, 49 Soctete Generate, 48,110,238
Savich, N. V., 141,142,349n51 Societe Generate de Belgique, 237
Sawin, N. N., 179 Society of Factory Owners and
Sazonov, S. D. (1861-1927), Minister of Manufacturers, St Petersburg, 164
Foreign Affairs (1910-16), 135,240,302 Sokolovskii, K. M., 225
398 Index

Sol'skii commission on railway contracts, Taganrog Steel Company, 48,59,164,185

58 Tallinn, 159
commission on Urals ironworks, 212 Tariff, 82,163,236, 288
Sormovo Engineering Company (est. engineering products, 51,52,166-7,
1849, incorporated 1894), 30,52, 192,193,326
164,192-3,210,218,219,220,221, iron and steel, 47,52,166-7, 287
271 Taxation, 147,149-52
agreement with Kolomna, 224-5,268 of industry, 151,169
criticized, 286 Textiles, 77-8,81,288, 309
labour force, 40,41 Thomas Firth, Sheffield, 242
as leading armaments producer, 223, Thorneycroft, 231,238
224 Timashev, S. I. (1858-1920), Minister of
output, 51 Trade and Industry (1909-15), 111,
and procurement, 264 148,167,239,240, 277-8, 345nlO7
and revolution, 88-9,90 Timiriazev, V. I. (1849-1921), Minister of
Soskinovskii, Colonel, 264 Trade and Industry (1905-6,1909),
South Russian Dnieper Ironworks (est. 111, 195
1891), 48,59,110,164,182,185 Tirpitz, Alfred von, Admiral, 21,301, 304
Spahn, K. K., 225 Tokarskii, M. A., 106,271
Spring, D. W., 347n36 Trade unions, 78,80, 250-1
State Auditor, Office of, 23,29,44,49,103, Trans-Siberian railway, 19,22,41,67,126,
170,180,212,262,268,269,275, 278, 305
279,283,286,287,289 Triple Entente, 300,316
State Bank, 32, 56, 77,175,187, 272-3, 312, Tsaritsyn, 220, 240, 241
324, 352n5 Tsukernik, A. L., 184-5
State Council, 81,93,194,258,287 Tsushima, naval battle, 20,70-1,96,262,
State Duma see Duma 302
State enterprise, 3, 37,39,326 Tugan-Baranovskii, M. I., 161
attacked, 169,171, 278-9, 325 Tula armoury, 26,27,44, 73,207,223
in armaments, 7,26-9,31-2, 36-7, 39, capital investment, 209
62,103-6,198-9,205, 207,238-40, labour force, 39,40,41,74,246,335n49
257-8,277,279-80,325,326 revolution, 88
privatization proposals, 205-6,212-13, Tula Cartridge Company (incorporated
279 1898), 29-30, 74, 76,89, 90,215,218,
see also armaments industry, Urals 220,222,223,267
ironworks Turbines, 190,238, 273,274,275
Stolypin, P. A. (1862-1911), Chairman of Turkey, 9,13,20,123,127,136
Council of Ministers (1906-11), 93,98, fleet, 301-2, 351n88
106-7,110-11,121-2,136,148,149, war against Russia (1877-8), 15,16,18,
266, 268,269,271, 275,291, 295, 29,62
362nlO, 370n61 Tver province, 243
Stone, Norman, 132, 302
Straits of Constantinople, 17,20,123,138, Ukraine, 46,179,185
301,302, 343n81 United States, 312
Strikes, 78,80,251 defence industry, 158,258,288
in armament industry, 84-91,251 rearmament, 123
Strumilin, S. G., 174,352n22 steel industry, 47,184-5
Struve, P. B., 84 workforce, 193
Submarines, 73,96,98,137,138,229-30, Ural-Volga, 110
303 Urals ironworks, 26,28-9,49-50,179,
Sukhomlinov, V. A. (1848-1926), Minister 210-14
of War (1909-15), 128,129-30,131-5, criticized, 49,212
136,144,160, 240,266,315,321, 346, financial performance, 104, 210,212
347n22,348n27 labour force, 28,42
Sweden, 44,127,136 management, 36,210
Syndicates, legislation concerning, 167 see quality of product, 285
also Prodamet reform of administration, 211-12
 Index 399

revolution, 87-8 Votkinsk ironworks, 28,30, 51, 206,210

work for private clients, 30,49, 210 Voznesenskii, A. P., 282
see also Perm Cannon Works, Zlatoust Vulkan, Stettin, 229
ironworks Vyshnegradskii, I. A., 16,24,217
Ust-Izhora, 221 Vyshnegradkii, A. I., 217, 224,233,241
Utin, la. I., 218,241
Warsaw, 315
Vannovskii, P. S., 19-20 Warsaw-Vienna railway, 152
Verkhne-Volga wagon-makers, Tver, 60 Wesdnghouse, 190
Verstraete, M. E., 212 Witte, S. lu. (1849-1915), 16-17,20,65,94,
Vestnik finansov, 164 167,194-5, 343n71, 346nl9
Vickers Ltd., 215,218,220 criticizes Kokovtsov, 312
operations in Russia, 220,235, 258 and food procurement, 318
proposed artillery works, Tsaritsyn, and railway construction, 58
213,220, 240,241-2, 362nl4 and Russo-Japanese War, 65,66,93-4
and small shipbuilding programme, supports Prodamet, 57
273-4 views on defence spending, 155,
technical assistance provided by, 44, 350-ln79
231, 238, 273-4
views on Russian workers, 252 Yaroslavl, 40
views on Russian industry, 286
Vitebsk province, 243 Zaibatsu, 6
Vladimir, 222, 362nl4 Zemstvos, 56,70,110,151,156-8,185,189,
Vladimir Aleksandrovich, Grand Duke, 71 196, 318
Vladivostok, 133,316, 339n9 Zhilinskii, General la. G., 315, 321
Verkhovskii, Vice-Admiral, 21 Zlatoust ironworks, 28-9,34, 36,49, 50,
Vezhbitskii, A. A., 275, 279 104,206,210, 214, 342n65,344n94
Voevodskii, Admiral S. A., 269, 348n39 Zurov,V. P.,212
Voigt, A. K., 271 Zvegintsev, A. I., 135,142, 349n54
Cambridge Russian, Soviet and Post-Soviet Studies

77 JOZEF M. VAN BRABANT

The planned economies and international economic organizations
76 WILLIAM MOSKOFF
The bread of affliction: the food supply in the USSR during World War II
75 YAACOV Ro'l
The struggle for Soviet Jewish emigration 1948-1967
74 GRAEME GILL
The origins of the Stalinist political system
73 SANTOSH K. MEHROTRA
India and the Soviet Union: trade and technology transfer
72 ILYA PRIZBL
Latin America through Soviet eyes
The evolution of Soviet perceptions during the Brezhnev era 1964-1982
71 ROBERT G. PATMAN
The Soviet Union in the Horn of Africa
The diplomacy of intervention and disengagement
70 IVAN T. BEREND
The Hungarian economic reforms 1953-1988
69 CHRIS WARD
Russia's cotton workers and the New Economic Policy
Shop-floor culture and state policy 1921-1923
68 LASZLO CSABA
Eastern Europe in the world economy
67 MICHAEL E. URBAN
An algebra of Soviet power
Elite circulatwn in the Belorussian Republic 1966-1986
66 JANE L. CURRY
Poland's journalists: professionalism and politics
65 MARTIN MYANT
The Czechoslovak economy 1948-1988
The battle for economic reform
64 XAVIER R1CHET
The Hungarian model: markets and planning in a socialist economy
63 PAUL G. LEWIS
Political authority and party secretaries in Poland 1975-1986
62 BENJAMIN P1NKUS
The Jews of the Soviet Union
The history of a national minority
61 FRANCESCO BENVENUTI
The Bolsheviks and the Red Army, 1918-1922
60 HIROAKI KUROM1YA
Stalin's industrial revolution
Politics and workers, 1928-1932
59 LEWIS S1EGBLBAUM
Stakhanovism and the politics of productivity in the USSR, 1935-1941
58 JOZEF M. VAN BRABANT
Adjustment, structural change and economic efficiency
Aspects of monetary cooperation in Eastern Europe
57 1L1ANA ZLOCH-CHR1STY
Debt problems of Eastern Europe
56 SUSAN BRIDGER
Women in the Soviet countryside
Women's roles in rural development in the Soviet Union
55 ALLEN LYNCH
The Soviet study of international relations
54 DAVID GRANICK
Job rights in the Soviet Union: their consequences
53 ANITA PRAZMOWSKA
Britain, Poland and the Eastern Front, 1939
52 ELLEN JONES AND FRED GRUPP
Modernization, value change and fertility in the Soviet Union
51 CATHERINE ANDREYEV
Vlasov and the Russian liberation movement
Soviet reality and imigre theories
50 STEPHEN WHITE
The origins of delente
The Genoa Conference and Soviet-Western relations 1921-1922
49 JAMES MCADAMS
East Germany and detente
Building authority after the Wall
48 S. G. WHEATCROFT AND R. W. DAVIES (EDS.)
Materials for a balance of the Soviet national economy 1928-1930
47 SYLVANA MALLE
The economic organization of war communism, 1918-1921
46 DAVID S. MASON
Public opinion and political change in Poland, 1980-1982
45 MARK HARRISON
Soviet planning in peace and war 1938-1945
44 NIGEL SWAIN
Collective farms which work?
4 3 J. ARCH GETTY
Origins of the great purges
The Soviet Communist Party reconsidered, 1933-1938
42 TADEUSZ SWIBTOCHOWSKI
Russian Azerbaijan 1905-1920
The shaping of national identity in a muslim community
41 RAY TARAS
Ideology in a socialist state
Poland 1956-1983
38 DAVID A. DYKER
The process of investment in the Soviet Union
35 WILLIAM J. CONYNGMAM
The modernization of Soviet industrial management
34 ANGELA STENT
From embargo to Ostpolitik
The political economy of West German-Soviet relations 1955-1980
32 BLAIR A. RUBLE
Soviet trade unions
Their development in the 1970s
30 JOZEF M. VAN BRABANT
Socialist economic integration
Aspects of contemporary economic problems in Eastern Europe
22 JAMES RIORDAN
Sport in Soviet society
Development of sport and physical education in Russia and the USSR

The following series titles are now out of print:

1 ANDREA BOLTHO
Foreign trade criteria in socialist economies
2 SHEILA F1TZPATRICK
The commissariat of enlightenment
Soviet organization of education and the arts under Lunacharsky, October 1917-1921
3 DONALD J. MALE
Russian peasant organisation before collectivisation
A study of commune and gathering 1925-1930
4 p. WILES (ED.)
The prediction of communist economic performance
5 VLADIMIR V. KUS1N
The intellectual origins of the Prague Spring
The development of reformist ideas in Czechoslovakia 1956-1967
6 GALIA GOLAN
The Czechoslovak reform movement
7 NAUN JASNY
Soviet economists of the twenties
Names to be remembered
 8 ASHA L. DATAR
India's economic relations with the USSR and Eastern Europe, 1953-1969
9 T. M. PODOLSKl
Socialist banking and monetary control
The experience of Poland
10 SHMUEL GALAI
The liberation movement in Russia 1900-1905
11 GALIA GOLAN
Reform rule in Czechoslovakia
The Dubcek era 1968-1969
12 GEOFFREY A. HOSK1NG
The Russian constitutional experiment
Government and Duma 1907-1914
13 RICHARD B. DAY
Leon Trotsky and the politics of economic isolation
14 RUDOLF B1CAN1C
Economic policy in socialist Yugoslavia
15 JAN M. CIECHANOWSKl
The Warsaw rising of 1944
16 EDWARD A. HEWITT
Foreign trade prices in the Council for Mutual Economic Assistance
17 ALICE TEICHOVA
An economic background to Munich
International business and Czechoslovakia 1918-1938
18 DANIEL F. CALHOUN
The united front: the TUC and the Russians 1923-1928
19 GALIA GOLAN
Yom Kippur and after
The Soviet Union and the Middle East crisis
2 0 MAUREEN PERRIE
The agrarian policy of the Russian Socialist-Revolutionary Party
From its origins through the revolution of 1905-1907
21 GABRIEL GORODETSKY
The precarious truce: Anglo-Soviet relations 1924-1927
23 PAUL VYSNY
Neo-Slavism and the Czechs 1898-1914
24 GREGORY WALKER
Soviet book publishing policy
25 FELICITY ANN o'DELL
Socialisation through children's literature
The Soviet example
26 T. ii. RIGBY
Lenin's government: Sovnarkom 1917-1922
27 SHEILA FITZPATRICK
Education and social mobility in the Soviet Union 1921-1934
28 STELLA ALEXANDER
Church and state in Yugoslavia since 1945
29 MARTIN CAVE
Computers and economic planning
The Soviet experience
31 R. F. LESLIE (ED.)
The history of Poland since 1863
33 MARTIN MYANT
Socialism and democracy in Czechoslovakia 1944-1948
36 JEAN WOODALL
The socialist corporation and technocratic power
The Polish United Workers Party, industrial organisation and workforce control 1958-1980
37 ISRAEL GETZLER
Kronstadt 1917-1921
The fate of a Soviet democracy
39 s. A. SMITH
Red Petrograd
Revolution in the factories 1917-1918
40 SAUL ESTRIN
Self-management: economic theory and Yugoslav practice