Russian Industrialists in an Era of Revolution: The Association of Industry and Trade, 1906-17

The Association of Industry and Trade, 1906-17

Ruth AmEnde Roosa, Thomas C. Owen

• Publisher: Routledge
• Year: 2019
• Topic: Business
• eBook ISBN:
  9781315503073
• Subtopic: Business General
• Index: Business

Ruth Roosa's long-awaited study focuses on the most important business organization in imperial Russia. the Association of Industry and Trade, the nerve center of Russian capitalism in the years between the revolutions of 1905 and 1917. The author's comprehensive, nuanced analysis of the Association's policy positions on Russian economic development has no peer. Of particular interest are the insights the study affords into the peculiarities of Russian business -- including the operation of semi-monopolistic syndicates and the role of imported capital, banks, and the autocratic state. It supplies historical perspective on some of the more perplexing features of the new Russian capitalism. Roosa was a pioneer in the study of early twentieth-century Russian capitalism. This volume, prepared for posthumous publication by her friends and colleagues, makes her work available at a time when it has new resonance and relevance.

1

The Russian Business Community

The Crisis of 1905

Although the relationship between industry’s representatives and monopolistic organizations remains a subject for historical investigation, its relations, economic and political, with the world of officialdom, both before and after 1905, have prompted intense, protracted, and inconclusive debate among historians. Much prerevolutionary Marxist, especially Menshevik, writing stressed the success of organized trade and industry in influencing official economic (and occasionally political) policies. In contrast, western historical scholarship has generally emphasized the dependence, economic as well as political, of Russian business circles on the government and the predominant importance of governmental initiative and direction in the economic development of the Empire. Between these extremes, Soviet historians have steered an uncertain course.¹ The same conditions that permitted a wide range of governmental intervention in the affairs of business also gave to the business leadership of prerevolutionary Russia broad opportunities for influencing governmental action.²

Inconclusive though the evidence may be concerning the success of the business community in influencing the economic policies of the Empire, there can be no question of the closeness of the organizational relationship between the government and organized industry before 1905. None of the representative organizations operated free of some degree of official supervision and control. Chartered by the government, they all were required to satisfy official requests for information concerning their particular branches of industry. Their elections of officers were subject to governmental confirmation. Advance approval was required for the agendas of their congresses, and they were obliged to include in them any subject that the government wished to have considered. The congresses (and often the meetings of their executive councils and their numerous specialized committees) customarily included prominent government officials among their participants, at least one of whom usually bore an official responsibility for influencing the proceedings.³

Counterbalancing, to some extent, these restrictions and obligations was the government’s recognition of the various organizations as the legitimate representatives of their particular branches of industry within the geographic areas encompassed by them. These organizations enjoyed the right to address petitions to government officials, and the government consulted with them on all issues involving their economic interests, inviting both written statements of opinion on specific questions and their participation through their chosen delegates in official conferences and committees. Prior to 1905, such contacts were most commonly channeled through the Ministry of Finance, although consultation with other official agencies was not unusual. These relationships had their origins in the 1870s and 1880s, but it was during Sergei Iu. Witte’s tenure as minister of finance (1892–1903) that the government most actively encouraged the organization of business interests for representational purposes and developed its own use of them as consultants.⁴ As early as 1896, a member of the council of the ministry of finance declared to the Commercial-Industrial Congress at Nizhnii Novgorod that “the ministry has always listened attentively to the voice of the industrialists and the merchants.”⁵ Yet, seven years later, despite the noteworthy progress that had been made in the organization of industry and trade, Witte, addressing a conference of representatives of exchange committees, found it advisable to exhort the country’s businessmen to unite in permanent organizations for the advancement of their own interests. Offering assurances of a sympathetic governmental reception for their efforts, he admonished them:

Try to see each other as often as possible, to meet, to confer about your needs. If you explain your needs to the government in a thorough and convincing way, you will more quickly obtain their satisfaction. Have your own press organs for the elucidation of your interests and rights. … Try to influence public opinion. … Most important of all, for you, is the possibility of publicly explaining your views; and you will acquire this only by having your own organization. Organize, therefore, in order that you may meet periodically at general and regional congresses, in order that you may possess your own permanent bureaus or other unifying institutions.⁶

Thus, well before 1905, at a time when the organizing efforts of most elements in Russian society encountered suspicion and even repression by a distrustful government, clear channels of communication had been firmly established between that government’s principal agency in economic affairs, the Ministry of Finance, and the representatives of organized industry and trade. Through a steady flow of petitions and a continuing round of consultations, Russia’s businessmen had won acceptance by a generally sympathetic government of their right to be informed and to have their opinions considered in the determination of official economic policies.

Yet, beneath an apparently harmonious exterior there was growing turmoil within the business community. The Revolution of 1905 found it unprepared to participate in the momentous events of that year. Intellectually and politically, the businessmen remained immature. Immersed in the details of their own immediate economic concerns and unburdened, for the most part, by political interests or convictions, they appeared to lack any broad understanding of their long-run economic interests, particularly as they related to the fundamental political issues that confronted the Empire.⁷ Nevertheless, the signs of a rising sense of an identity of interests among the more alert leaders in the business world were unmistakable. Underlying this emerging self-consciousness was a growing dissatisfaction both with the substance of official economic policies and with the quality of their own relationship with the government.

The departure of Count Witte from the Ministry of Finance in 1903, had, despite the general acceptability of his successor, Vladimir N. Kokovtsov, deprived the business community of the strongest and most enthusiastic protector it had ever known within the government. Even before Witte’s departure, moreover, the protection of the ministry had, in the absence of a unified governmental policy, offered no security against unfriendly intervention in industrial and commercial affairs by the agrarian-oriented Ministry of Internal Affairs and other unsympathetic agencies. Both before and after 1903, a number of provocative incidents served as recurrent reminders to businessmen of their essential helplessness in the face of an arbitrary and often capricious bureaucracy.⁸ Within this context, the constant tutelage to which private enterprise was subject, even by relatively friendly governmental organs--a condition deeply rooted in the archaic legislation that deprived Russian businessmen of the legal rights and freedoms commonly enjoyed by their confreres in the West--now gave rise to a new and deeper restiveness. Against this background, both the effectiveness of the existing forms of industrial and commercial organization and the usefulness of the traditional system of consultation between organized industry and the government on questions of economic policy began to be seriously questioned by business leaders. It is true that in 1905 the conservative Nikolai S. Avdakov asserted that in his experience “no one has ever constrained us in anything; on the contrary we have always enjoyed broad scope.”⁹ One of his colleagues echoed his assurances before the thirtieth congress of the Association of Southern Coal and Steel Producers in 1906.

Having participated for almost thirty years in the congresses, I am accustomed to observing how our representatives in the highest governmental spheres, being always well informed about matters, were always able in good time to forestall various occurrences and unexpected decrees with respect to our industry.¹⁰

Avdakov’s assertion, which has been widely quoted, loses much of its force, however, when considered in context. In fact, it was issued as a rebuttal to a proposal of a liberally inclined bureaucrat and industrialist, Vladimir I. Kovalevskii, that the largely government-dominated associations be replaced by new organizations free of official controls. Furthermore, Avdakov stressed the benefits to industry of the “semi-governmental” character of its existing institutions. “The entire difficulty,” he observed, “consists in the fact that you proceed from the future, which is still unknown to us, and I from experience.”¹¹ Only a few months later, moreover, representatives of some twenty-two business organizations complained that “thus far all questions concerning industry and trade have been discussed and decided in the ministries, without the participation of persons and enterprises interested in them, and on only a few questions has the government convened congresses.”¹² Shortly afterward, Adolf A. Volskii, a business leader long associated with the powerful Consultative Board of Iron Producers, told one of industry’s organizing congresses that “the most vital questions for industry and trade have been decided, and continue to be decided, in our governmental institutions almost without any influence on the part of Russian industry and trade.”¹³

Signs of disillusionment with the governments’ conduct of economic affairs had begun to appear within the business community even before Witte’s departure. He had failed to solve the fundamental problems of the financing of industrial expansion and of marketing industry’s products.¹⁴ As the Association’s journal, Industry and Trade, subsequently noted, in both his political ideas and in his promotion of the cause of “state socialism” (that is, in his advancement of the entrepreneurial role of the state in industry and, especially, in the railroads), Witte had remained “separated from the commercial-industrial milieu.”¹⁵

General economic conditions also contributed heavily to the businessmen’s growing awareness of the extent to which conditions embedded in Russia’s way of life and in the traditions and policies of its government hampered industrial growth and prosperity. The economic crisis that began in 1899 proved severe, and the signs of recovery that first appeared in 1904 were soon dissipated by the difficult and costly war with Japan. During the five-year depression that preceded the revolution, the potentially disastrous consequences of the government’s lack of a systematic economic policy became manifest. The government’s proclaimed devotion to national economic development and its satisfaction of various demands of business circles for subsidies, contracts, and tariff protection could not substitute for a positive program designed to foster industrial expansion and commercial stability. Despite the government’s faithfulness in consulting businessmen with respect to economic policy, consultation all too often found little reflection in the official practices that ensued.

Still more disquieting, perhaps, were the government’s efforts to bolster its own financial position and that of the weakened landed gentry by implementing tax and credit policies that drained capital away from industry. Industrial and commercial enterprise was already taxed more heavily than land, but a direct tax on business was instituted and soon afterward increased. In general, the government’s tax policies, which placed a disproportionately heavy burden on the unpropertied classes, served further to constrict the purchasing power of an already pitifully impoverished home market, the value of which as a base for industrial development was now, under the impact of depression, becoming belatedly evident to Russia’s businessmen. Although industry had admittedly benefited from a generally high protective tariff, the industrialists became restive under the trade agreements that Russia had concluded with Germany, Russia’s principal trading partner, in 1894 and in 1904. With considerable justification, the industrialists considered the tariff treaties a patent sacrificing of the interests of industry to those of agriculture.

Above all, the dependence of the entire economy on a capricious harvest and on the will of a powerful and arbitrary government made for instability in economic life. Intensifying the cumulative effect of these unfavorable conditions was industry’s heavy dependence on foreign capital, which, when confronted with the unhopeful prospects of pre-1905 Russia, showed an alarming inclination to withdraw in search of more auspicious fields of investment. Clearly, without a more congenial environment, Russian industry would fail to attract and hold the lifeblood of its own existence and further growth.¹⁶

Early in the twentieth century, a new source of irritation arose out of the growing restiveness of industrial labor. Already accustomed to looking with jealous eyes on the favored position enjoyed in official circles by their agrarian rivals, the industrialists now viewed with consternation the government’s efforts to pacify disaffected workers by enacting labor and factory legislation¹⁷ and by grouping them into state-supported unions that championed their economic grievances against their employers. Ironically, it was the bitterness engendered by the government’s sponsorship for the Zubatov system (albeit in the face of the employers’ own resistance to nearly all concessions)¹⁸ that served, more than any other single factor, to crystallize the industrialists’ realization that nothing less than broadly conceived political reforms could remove the underlying causes of this growing economic discontent.

In the upheaval of 1905, all these causes of discontent came into focus for the first time. If Russia’s industrialists entered the revolutionary era still only vaguely cognizant of their own political and economic “credo,”¹⁹ they nevertheless keenly felt their grievances. Increasingly restive under the restraints of their environment and imbued with a growing awareness of their dignity and worth as a class, they had been rapidly approaching a turning point in their relations with the government. The events of “Bloody Sunday” on January 9, 1905 precipitated a crisis in these relations and forced Russia’s business leadership, for the first time, to examine seriously its own intrinsic interests and aspirations. At a time when all other groups in Russian society were resorting to direct action in defense of their own interests, the businessmen would have been extraordinarily apathetic had they not begun to think of doing likewise.

In March 1905, the liberal textile manufacturers of Moscow, led by Savva T. Morozov, convened a congress of some thirty-two industrialists from the industrial regions except that of Lodz, to discuss the labor question.²⁰ From an organizational point of view, the March Congress produced no concrete results, but it set in motion the sequence of events that ended with the establishment of the Association of Industry and Trade some seventeen months later. The congress’s decision to create a permanent organization of united industry was unanimously adopted, and a “statute on general congresses of representatives of industry,” drawn up by a commission led by the liberal Ural metal producer Vladimir I. Kovalevskii and forwarded to the Ministry of Finance for approval, served as tangible evidence of industry’s first halting step to...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Editor’s Foreword
• 1. The Russian Business Community
• 2. The Industrialists Look to Russia’s Future
• 3. Promoting Economic Development: The Dilemmas of Backwardness
• 4. Politics, War, and Revolution
• 5. Conclusion
• Appendix I: The Charter of the Association
• Appendix II: The Structure of the Association
• Appendix III: Congresses of the Association
• Appendix IV: Sources for the Study of the Association
• Notes
• Bibliography
• Index