THE ACTIVITIES OF THE PROVISIONAL GOVERNMENT: FOOD SUPPLIES,
INDUSTRY, TRANSPORT AND FINANCE.
In the early spring of 1917 the deficiency in supplies for the Army
and for the towns was rapidly growing. In one of its appeals to the
peasants the Soviet said: "The enemies of freedom, the supporters of
the deposed Czar, are taking advantage of the shortage of food in
the towns _for which they are themselves responsible_ in order to
undermine your freedom and ours. They say that the Revolution has
left the country without bread...." This simple explanation, adduced
by the Revolutionary Democracy in every crisis, was, of course,
one-sided. There was the inheritance of the old régime as well as the
inevitable consequences of three years of war, during which imports
of agricultural implements had come to a standstill, labourers were
taken from the land, and, as a result, the area under crops was
diminished. But these were not the only reasons for the food shortage
in a fertile country--a shortage which in the autumn was considered by
the Government as disastrous. The food policy of the Government and
the fluctuation of prices, the depreciation of the currency and a rise
in the price of commodities entirely out of proportion to the fixed
prices for grain also largely contributed to this result. This rise
in prices was due to general economic conditions, and especially to a
very rapid rise in wages; to the agrarian policy of the Government, the
inadequacy of the area under crops, to the turmoil in the villages,
and to the breakdown of transport. Private trade was abolished and
the entire matter of food supplies was handed over to Food Supply
Committees--undoubtedly democratic in character, but, with the
exception of the representatives of the Co-operatives, inexperienced
and devoid of a creative spirit. There are many more reasons, great and
small, which may be included in the formula: The Old Régime, the War
and the Revolution.
On March 29th the Provisional Government introduced the grain monopoly.
The entire surplus of grain, excluding normal supplies, seed corn and
fodder, reverted to the State. At the same time the Government once
again raised the fixed price of grain, and promised to introduce fixed
prices for all necessary commodities, such as iron, textiles, leather,
kerosine oil, etc. This last measure, which was universally recognised
as just, and to which the Minister of Supplies attributed a very great
importance, proved impossible of application owing to the confused
condition of the country. Russia was covered by a huge network of Food
Supply Institutions, which cost 500,000,000 roubles a year, but could
not cope with their work. The villages, on the other hand, had ceased
to pay taxes and rents, were flooded with paper money, for which they
could get no equivalent in manufactured goods, and were by no means
anxious to supply grain. Propaganda and appeals were of no avail, and,
as often as not, force had to be applied.
In its Proclamation of August 29th the Government admitted that the
Country was in a desperate position; the Government stores were
emptying; towns, provinces, and armies at the Front were in dire
need of bread, _although, in fact, there was sufficient bread in
the country_. Some had not delivered last year's harvest; some were
agitating and preventing others from doing their duty. In order to
avert grave danger, the Government once more raised the fixed prices
and threatened to apply stringent measures against the offenders, and
to regulate prices and the distribution of articles required by the
villages. But the vicious circle of conflicting political, social and
class interests was narrowing, like to a tight noose, round the neck of
the Government, paralysing its will-power and energy.
* * * * *
The condition of industry was no less acute, and it was steadily
falling into ruin. Here, as in the matter of supplies, the calamity
cannot be ascribed to one set of causes, as happened when the employers
and the workmen levelled accusations against one another. The former
were charged with taking excessive profits and having recourse to
sabotage in order to upset the Revolution, while the latter were
blamed for slackness and greed and for deriving selfish gains from the
Revolution. The causes may be divided into three categories.
Owing to various political and economic reasons and to the fact
that the old Government did not devote sufficient attention to the
development of the natural resources of the country, our industries
were not placed on a solid basis, and were to a great extent dependent
upon foreign markets even for such material as might easily have been
found in Russia. Thus in 1912 there was a serious shortage of pig-iron,
and in 1913 of fuel. From 1908 to 1913 imports of metals from abroad
rose from 29 to 34 per cent. Before the War we imported 48 per cent.
of cotton. We needed 2,750,000 pouds[18] of wool from abroad out of a
total of the 5,000,000 pouds produced.
The War unquestionably affected industry very deeply. Normal imports
came to a standstill. The mines of Dombrovsk were lost. Owing to
strategical requirements, transport was weakened, supplies of fuel and
of raw materials diminished. Most of the factories had to work for
the Army, and their personnel was curtailed by mobilisations. From an
economic point of view, the militarisation of industry was a heavy
burden for the population, because, according to the estimates made
by one of the Ministers, the Army absorbed 40 to 50 per cent. of the
total of goods produced by the country. Finally, the War widened the
gulf between the employers and the workmen, as the former made immense
profits, whereas the latter were impoverished, and their condition was
further aggravated by the suspension of certain professional guarantees
on account of the War by the fact that certain categories of workmen
were drafted by conscription to definite industrial concerns, and by
the general burden of inflated prices and inadequate food supplies.
Even in these abnormal circumstances Russian industries to some extent
fulfilled the requirements of the moment, but the Revolution dealt
them a death blow, which caused their gradual dislocation and ultimate
collapse. On the one hand, the Provisional Government was legislating
for the establishment of a strict Government control of the industries
of the country and for regulating them by heavily taxing profits and
excess war profits, as well as by Government distribution of fuel, raw
materials and food. The latter measure caused the trading class to be
practically eliminated and to be replaced by democratic organisations.
Whether excess profits disappeared as a result of this policy, or were
merely transferred to another class, it is not easy to decide. On the
other hand, the Government were deeply concerned with the protection
of labour, and were drafting and passing various laws concerning the
freedom of unions, labour exchanges, conciliation boards, social
insurance, etc. Unfortunately, the impatience and the desire for
"law-making" which had seized the villages were also apparent in the
factories. Heads of industrial concerns were dismissed wholesale, as
well as the administrative and technical staffs. These dismissals were
accompanied by insults and sometimes by violence, out of revenge for
past offences, real or imaginary. Some of the members of the staffs
resigned of their own accord, because they were unable to endure the
humiliating position into which they were forced by the workmen. Given
our low level of technical and educational standards, such methods
were fraught with grave danger. As in the Army, so in the factories,
Committees replaced by elections the dismissed personnel with utterly
untrained and ignorant men. Sometimes the workmen completely seized the
industrial concerns. Ignorant and unprovided with capital, they led
these concerns to ruin, and were themselves driven to unemployment and
misery. Labour discipline in the factories completely vanished, and no
means was left of exercising moral, material or judicial pressure or
compulsion. The "consciousness" alone of the workers proved inadequate.
The technical and administrative personnel which remained or was newly
elected could no longer direct the industries and enjoyed no authority,
as it was thoroughly terrorised by the workmen. Naturally, therefore,
the working hours were still further curtailed, work became careless,
and production fell to its lowest ebb. The metallurgical industries
of Moscow fell 32 per cent. and the productivity of the Petrograd
factories 20 to 40 per cent. as early as in the month of April. In
June the production of coal and the general production of the Donetz
basin fell 30 per cent. The production of oil in Baku and Grozni
also suffered. The greatest injury, however, was inflicted upon the
industries by the monstrous demands for higher wages, completely out of
proportion to the cost of living and to the productivity of labour, as
well as to the actual paying capacity of the industries. These demands
greatly exceeded all excess profits. The following figures are quoted
in a Report to the Provisional Government: In eighteen concerns in the
Donetz Basin, with a total profit of 75,000,000 roubles per annum, the
workmen demanded a wage increase of 240,000,000 roubles per annum; the
total amount of increased wages in all the mining and metallurgical
factories of the South was 800,000,000 roubles per annum. In the Urals
the total Budget was 200,000,000, while the wages rose to 300,000,000.
In the Putilov factory alone, in Petrograd, before the end of 1917, the
increase in wages amounted to 90,000,000 roubles. The wages rose from
200 to 300 per cent. The increase in the wages of the textile workers
of Moscow rose 500 per cent., as compared to 1914. The burden of these
increases naturally fell on the Government, as most of the factories
were working for the defence of the country. Owing to the condition
of industry described above, and to the psychology of the workmen,
industrial concerns collapsed, and the country experienced an acute
shortage of necessary commodities, with a corresponding increase in
prices. Hence the rise in the price of bread and the reluctance of the
villages to supply the towns.
At the same time Bolshevism introduced a permanent ferment into
the labouring masses. It flattered the lowest instincts, fanned
hatred against the wealthy classes, encouraged excessive demands,
and paralysed every endeavour of the Government and of the moderate
Democratic organisations to arrest the disruption of industry: "All
for the Proletariat and through the Proletariat...." Bolshevism held
up to the working class vivid and entrancing vistas of political
domination and economic prosperity, through the destruction of the
Capitalist régime and the transfer to the workmen of political power,
of industries, of the means of production, and of the wealth of the
country. And all this was to come at once, immediately, and not as a
result of a lengthy, social, economic process and organised struggle.
The imagination of the masses, unfettered by knowledge or by the
authority of leading professional unions, which were morally undermined
by the Bolsheviks, and were on the verge of collapse, was fired by
visions of avenging the hardships and boredom of heavy toil in the
past, and of enjoying amenities of a _Bourgeois_ existence, which they
despised and yet yearned for with equal ardour. It was "Now or Never:
All or Nothing!" As life was destroying illusions, and the implacable
law of economics was meting out the punishment of high prices, hunger
and unemployment, Bolshevism was the more convincingly insisting upon
the necessity of rebellion and explaining the causes of the calamity
and the means of averting it. The causes were: the policy of the
Provisional Government, which was trying to reintroduce enslavement by
the Bourgeoisie, the sabotage of the employers, and the connivance of
the Revolutionary Democracy, including the Mensheviks, which had sold
itself to the Bourgeoisie. The means was the transfer of power to the
Proletariat.
All these circumstances were gradually killing Russian Industry.
In spite of all these disturbances, the dislocation of industry was
not immediately felt in the Army to an appreciable degree, because
attention was concentrated upon the Army at the expense of the vital
necessities of the country itself, and also because for several months
there had been a lull at the Front. In June, 1917, therefore, we were
provided adequately, if not amply, for an important offensive. Imports
of war material through Archangel, Murmansk, and partly through
Vladivostok had increased, but had not been sufficiently developed by
reason of the natural shortcomings of maritime routes, and of the low
carrying capacity of the Siberian and of the Murmansk Railways. Only 16
per cent. of the actual needs of the Army were satisfied. The military
administration, however, clearly saw that we were living on the old
stores collected by the patriotic impulse and effort of the country in
1916. By August, 1917, the most important factories for the production
of war materials had suffered a check. The production of guns and
of shells had fallen 60 per cent., and of aircraft 80 per cent. The
possibility of continuing the War under worse material conditions
was, however, amply proved later by the Soviet Government, which had
been using the supplies available in 1917 and the remnants of Russian
Industrial production for the conduct of civil war for more than three
years. This, of course, was only possible through such an unexampled
curtailment of the consuming market that we are practically driven back
to primitive conditions of life.
* * * * *
Transport was likewise in a state of dislocation. As early as May,
1917, at the Regular Congress of Railway Representatives at the Stavka,
the opinion was expressed, and confirmed by many specialists, that,
unless the general conditions of the country changed, our railways
would come to a standstill within six months. Practice has disproved
theory. For over three years, under the impossible conditions of Civil
War and of the Bolshevik Régime, the railways have continued to work.
It is true that they did not satisfy the needs of the population
even in a small measure, but they served the strategical purposes.
That this situation cannot last, and that the entire network of the
Russian Railways is approaching its doom, is hardly open to doubt. In
the history of the disintegration of the Russian Railway System the
same conditions are traceable which I have mentioned in regard to the
Army, the villages, and especially the industries: the inheritance of
the unwise policy of the past in regard to railways, the excessive
demands of the War, the wear and tear of rolling stock, and anarchy on
the line, due to the behaviour of a licentious soldiery; the general
economic condition of the country, the shortage of rails, of metal and
of fuel; the "democratisation" of Railway Administration, in which
the power was seized by various Committees; the disorganisation of
the administrative and technical personnel, which was subjected to
persecution; the low producing power of labour and the steady growth
of the economic demands of the railway employees and workmen.
In other branches of the Administration the Government offered a
certain resistance to the systematic seizure of power by private
organisations, but in the Ministry of Railways that pernicious system
was introduced by the Government itself, in the person of the Minister
Nekrassov. He was the friend and the inspirer of Kerensky, alternately
Minister of Railways and of Finance, Assistant and Vice-President of
the Council of Ministers, Governor-General of Finland, Octobrist, Cadet
(Constitutional Democrat), and Radical Democrat, holding the scales
between the Government and the Soviet. Nekrassov was the darkest and
the most fatal figure in the Governing Circles, and left the stamp
of destruction upon everything he touched--the All-Russian Executive
Committee of the Union of Railways, the autonomy of the Ukraine, or the
Kornilov movement.
The Ministry had no economic or technical plan. As a matter of fact,
no such plan could ever be carried out, because Nekrassov decided to
introduce into the Railway Organisation, hitherto strongly disciplined,
"the new principles of Democratic Organisation, instead of the old
watchwords of compulsion and fear"(?). Soviets and Committees were
implanted upon every branch of the Railway Administration. Enormous
sums were spent upon this undertaking, and, by his famous circular of
May 27th, the Minister assigned to these organisations a very wide
scope of control and management, as well as of the "direction" which
they were henceforward entitled to give to the responsible personnel
in the Administration. Executive functions were subsequently promised
to these organisations.... "Meanwhile the Ministry of Railways and its
subordinate branches will work in strict accordance with the ideas
and wishes of the United Railway Workers." Nekrassov thus handed
over to a private organisation the most important interests of the
State--the direction of the Railway policy, the control of the Defence,
of industries, and of all other branches dependent upon the railway
system. As one of our contemporary critics has said, this measure
would have been entirely justified had the whole population of Russia
consisted of railway employees. This reform, carried out by Nekrassov
on a scale unprecedented in history, was something worse than a mere
blunder. The general trend of Ministerial policy was well understood.
In the beginning of August, at the Moscow Congress, which was turned
into a weapon for the Socialist parties of the Left, one of the leaders
declared that "the Railway Union must be fully autonomous and no
authority except that of the workers themselves should be entitled to
interfere with it." In other words, a State within a State.
Disruption ensued. A new phase of the arbitrariness of ever-changing
organisations was introduced into the strict and precise mechanism of
the railway services in the centre as well as throughout the country.
I understand the democratisation that opens to the popular masses
wide access to science, technical knowledge, and art, but I do not
understand the democratisation of these achievements of human intellect.
There followed anarchy and the collapse of Labour discipline. As early
as in July the position of the railways was rendered hopeless through
the action of the Government.
After holding the office of Minister of Railways for four months,
Nekrassov went to the Ministry of Finance, of which he was utterly
ignorant, and his successor, Yurenev, began to struggle against
the usurpation of power by the railwaymen, as he considered "the
interference of private persons and organisations with the executive
functions of the Department as a crime against the State." The struggle
was conducted by the customary methods of the Provisional Government,
and what was lost could no longer be recovered. At the Moscow Congress
the President of the Union of the Railwaymen, fully conscious of its
power, said that the struggle against democratic organisations was a
manifestation of counter-Revolution, that the Union would use every
weapon in order to counteract these endeavours, and "would be strong
enough to slay this counter-Revolutionary hydra." As is well known, the
All-Russian Executive Committee of the Union of Railways subsequently
became a political organisation pure and simple, and betrayed
Kornilov to Kerensky and Kerensky to Lenin. With a zeal worthy of the
secret police of the old régime, it hunted out Kornilov's followers,
and finally met an inglorious end in the clutches of Bolshevik
Centralisation.
* * * * *
We now come to another element in the life of the State--Finance. Every
normal financial system is dependent upon a series of conditions:
general political conditions, offering a guarantee of the external
and internal stability of the State and of the country; strategical
conditions, defining the measure of efficiency of the National Defence;
economic conditions, such as the productivity of the country's
industries and the relation of production to consumption; the
conditions of labour, of transport, etc. The Government, the Front,
the villages, the factories, and the transport offered no necessary
guarantees, and the Ministry of Finance could but have recourse to
palliatives in order to arrest the disruption of the entire system
of the currency and the complete collapse of the Budget, pending the
restoration of comparative order in the country. According to the
accepted view, the main defects of our pre-War Budget were that it was
based upon the revenue of the spirit monopoly (800,000,000 roubles),
and that there was scarcely any direct taxation. Before the War the
Budget of Russia was about 3½ milliards of roubles; the National Debt
was about 8½ milliards, and we paid nearly 400,000,000 roubles interest
per annum; half of that sum went abroad, and was partially covered by
1½ milliards of our exports. The War and Prohibition completely upset
our Budget. Government expenses during the War reached the following
figures:
½ 1914 5 milliards of roubles.
1915 12 " "
1916 18 " "
Seven months, 1917 18 " "
The enormous deficit was partially covered by loans and by paper
currency. The expenses of the War were met, however, out of the
so-called "War Fund." At the Stavka, in accordance with the dictates
of practical wisdom, expenditure was under the full control of the
Chief-of-Staff of the Supreme Commander-in-Chief, who determined the
heads of expenditure in his Orders, schedules, and estimates.
The Revolution dealt the death-blow to our finance. As Shingarev, the
Minister of Finance, said, the Revolution "induced everyone to claim
more rights, and stifled any sense of duty. Everybody demanded higher
wages, but no one dreamt of paying taxes, and the finances of the
country were thus placed in a hopeless position." There was a real
orgy; everyone was desperately trying to grab as much as possible from
the Treasury under the guise of democratisation, taking advantage
of the impotence of the Government and of powerlessness to resist.
Even Nekrassov had the courage to declare at the Moscow Congress that
"Never in history had any Czarist Government been as generous and
prodigal as the Government of Revolutionary Russia," and that "the
new Revolutionary régime is much more expensive than the old one."
Suffice it to quote a few "astronomic" figures in order to gauge the
insuperable obstacles in the way of a reasonable Budget. The decline of
production and the excessive rise in wages resulted in the necessity
of enormous expenditure for subsidies to expiring concerns and for
overpayments for means of production. These over-payments in the
Donetz Basin alone amounted to 1,200,000,000 roubles; the increase in
the soldiers' pay, 500,000,000 roubles; railwaymen's pay, 350,000,000
roubles; Post Office employees, 60,000,000 roubles. After a month
the latter demanded another 105,000,000 roubles, while the entire
revenue of the Posts and Telegraphs was 60,000,000 roubles. The Soviet
demanded 11 milliards (in other words, nearly the total of the Budget
for 1915) for allowances to soldiers' wives, whereas only 2 milliards
had been spent till 1917 under this head. The Food Supply Committees
cost 500,000,000 roubles per annum, and the Land Committee 140,000,000
roubles, etc., etc. Meanwhile the revenue was falling steadily. Thus,
for example, the Land Tax fell 32 per cent. in the first few months of
the Revolution; the revenue from town property, 41 per cent.; the House
Tax, 43 per cent., etc. At the same time, our internal troubles caused
the depreciation of the rouble and a fall in the price of Russian
securities abroad. The Provisional Government based its financial
policy upon "reorganisation of the Financial System on democratic
lines and the direct taxation of the propertied classes" (Death
Duties, Excess Profits Taxes, Income Taxes, etc.). The Government,
however, would not adopt the measure recommended by the Revolutionary
Democracy--a compulsory loan or a high Capital Levy--a measure
distinctly tainted with Bolshevism. All these just taxes, introduced or
planned, did not suffice even partially to satisfy the growing needs of
the State. In the month of August the Finance Ministry was compelled to
increase indirect taxation on certain monopolies, such as tea, sugar,
and matches. These measures were, of course, extremely burdensome, and
therefore highly unpopular.
Expenditure was growing, revenue was not forthcoming. The Liberty Loan
was not progressing favourably, and there could be no hope for foreign
loans on account of the condition of the Russian Front. Internal loans
and Treasury Bonds yielded 9½ milliards in the first half of 1917.
Ordinary revenue was expected to yield 5,800,000,000 roubles. There
remained one weapon established by the historical tradition of every
revolution--the Printing Press.
Paper currency reached colossal proportions:
½ 1914 1,425,000,000 roubles.
1915 2,612,000,000 "
1916 3,488,000,000 "
½ 1917 3,990,000,000 "
According to the estimates of July, 1917, the total of paper currency
was 13,916,000,000 roubles (the gold reserve was 1,293,000,000
roubles), as against 2 milliards before the War. Four successive
Finance Ministers were unable to drag the country out of the financial
morass. This might possibly have been achieved by the awakening of the
national spirit and an understanding of the interests of the State, or
by the growth of a wise and strong power which could have dealt a final
blow to the anti-State, selfish motives of the Bourgeois elements that
based their well-being upon the War and upon the blood of the people,
as well as of the Democracy, which, in the words of Shingarev, "so
severely condemned through its representatives in the Duma the very
same poison (paper currency) which it was now drinking greedily at the
moment when that Democracy had become its own master."