The Eastern Front 1914-1917 (36 page)

Episodes such as this were particularly discreditable, because they came at a time when business was under very great pressure. The Russian economy had always been dominated by great monopolies and very large firms.
¹¹
They faced unstable profit-rates, lack of skilled labour, bottle-necks of various kinds, and combined to make conditions easier. Prices were maintained by
Prodameta
, the metals-cartel,
Produgol
, which united 711 coal-firms in the south,
Prodvagon
, which produced railway-material, and
Med
, producing copper, because they would restrict production in order to create sometimes artificial scarcities; and the method was so successful that by 1914 there were some thirty monopoly-organisations in Russia, which naturally strove to subjugate competitors. The First World War generally favoured large firms at the expense of lesser ones. Skilled labour was rare enough in Russia, and consciption bit into the stock of it; but firms employing a thousand men, and able to pay higher wages, were naturally less affected by this problem than lesser firms. Fuel and transport offered bottle-necks. The country’s performance in both fields was, in fact—and despite legends to the contrary—superior to its performance in 1913, in so far as there was more coal, much more petrol, more rolling-stock and greater railway-mileage during the First World War than before it.
^*
But demand also rose, even further, and it was large firms that could survive the problem better than others. Foreign machinery presented a similar version of the war-time problem. Scarce supplies of foreign exchange could not meet the demands of every firm needing plant from abroad—although such plant was often essential for a firm to take part in production of war-material. Monopolies, fearing competition, also used their position as a weapon to compel independent firms to subject themselves.

These bottle-necks—some traditional, some wartime in origin—brought about concentration of capital, as small firms were forced to amalgamate with larger ones. In 1913, thirty-one factories had opened, and twenty-one had closed. In the First World War, many more factories
closed than opened, but the number of workers in the factories that opened greatly exceeded that in the factories that closed:
¹²

These figures represent only the tip of an ice-berg, for they make no reference either to the great extensions of capital occurring in existing companies, or to the great difficulties that many lesser companies experienced, without quite going bankrupt. In particular, they ignore the hundreds of thousands of cottage-industries that folded up, without ever disturbing the statisticians of the Special Council. It was this movement that underlay much of the agitation of the War-Industries Committees, and their allies in
Zemgor
which were, first and foremost, unions of small or, at best, middle-sized industry. In May 1915, both sets gained the ear of the Moscow magnates, who had their own interest in War-Industries Committees. The resulting agitation against the Petrograd monopoly in the Special Council was successful. Early in June, as Sukhomlinov fell, the body was widened to include representatives, not only of great Moscow industry, but also of the War-Industries Committees and
Zemgor
. In theory, Russian industry was now organised for war. In practice, its performance was frequently more impressive than legend allows. But little of the performance was owing to War-Industries Committees or to
Zemgor
, whatever the legendry of the time. The Special Council began as an engine for utilisation of free enterprise; but it ended by inaugurating the Soviet economy.

War-Industries Committees and
Zemgor
, despite the claims of their propagandists, did not provide the sinews of the war-economy, but were rather its greatest casualty.
¹³
Where they succeeded, they were unnecessary; where they did not, they were a nuisance. In theory, the system looked good enough when it began in spring 1915. A Central War-Industries Committee, in Moscow, undertook to farm out contracts from the war-ministry departments to its own subordinate Committees—33 district ones, 220 local ones—which would in turn report on their capacity and their needs, in terms of raw-materials and labour. The Central Committee had a staff of 2,000, and its labours would be paid for
by one and a half per cent of the value of any contract passed through it, or by subsidies from the great Moscow men who had promoted the system. To begin with, the Central Committee also included representatives of the metals-cartel,
Prodameta
(Darcy, Theakston, Vvedenski, von Dittmar), in the hope that
Prodameta
would support the new system and break with its own restrictive practices. The system also enjoyed political power, by virtue of the Moscow magnates’ links with the Octobrists, and the lesser businessmen’s alliance with the Constitutional Democrats. It was the Progressive Bloc on the factory floor, which no doubt accounts for the inflated reputation that it came to enjoy in the west.

In reality, the large firms did not need War-Industries Committees, and soon began to regard them as tiresome. The many lesser firms imagined that War-Industries Committees would permit them to acquire government money, lathes from abroad, raw-materials (at favourable prices) from
Prodameta
or the coal-owners, whereas the larger firms knew that these things could be much better used if devoted to themselves rather than to thousands of lesser producers scattered over the face of European Russia. They had their own contacts with the monopolies and the Special Council, and found the Central War-Industries Committee almost irrelevant, and sometimes bothersome, whilst the local Committees, with a heavy admixture of lawyers and academics, seemed to be meeting-places of barrack-room lawyers. The system worked well only where it dovetailed with already-existing sub-contracting links. This meant in practice the large towns, particularly Moscow. Here, by virtue of advanced transport-possibilities and the magnates’ links with cartellised suppliers of fuel and raw-materials, a certain de-centralisation could be carried out within the industrial concentration that Russian circumstances promoted. The forty-five local Committees of the Moscow region existed, informally, before the system was formally introduced, and Vankov made use of these links among the Moscow men in February 1915, when he began to set up his shell-producing organisation with Pyot. Even before May, 1915, 500 of the 1,200 Moscow firms eventually included in the War-Industries Committee were already on war-work, and the rest would have been included, committee or no committee, as the flow of government money increased. The same was true, though on a lesser scale, of Kiev or Odessa; and as for Petrograd, it, though forming the country’s source for the most intricate war-goods and machinery, scarcely troubled to have a War-Industries Committee at all.

Elsewhere, the War-Industries Committees were little more than a nuisance. The large firms by-passed them, and the lesser firms, unless they could do sub-contracting work for the larger ones, were left high-and-dry. Of course, the lesser ones could grumble, legitimately enough, that if they
had been given greater State assistance, they would be able to produce more. But this was not an argument that had much appeal, either to large firms or to the State. It was characteristic that, in Ivanovo-Voznesensk, the largest textile-centre of Russia, the whole War-Industries Committee network supplied Vankov’s organisation with less shell than two independent factories
¹⁴
—the
Kuvayevskaya manufaktura
and the
Ivanovo-voznesenskoye tovarishchestvo mekhanicheskikh izdeliy
, which supplied 150,000; in Samara and Saratov, it was the same story. In Yekaterinoslav, the Elworthy railway-works supplied Vankov, virtually without rivals on the War-Industries Committee side. Sometimes, political influences on the Special Council did secure contracts for War-Industries Committees, but their record of delivery was poor. The Reval one, by August 1916, had given only 500,000 roubles’ worth of orders totalling four million; the Vyatka one gave nothing; the Rostov-on-the-Don one, less than five million roubles’ worth out of twenty-four millions. The Baku Committee offered to undertake production of benzene and toluene by pyrolysis of petroleum, but failed;
¹⁵
the work was taken over, successfully, by the local Nobel company. Once inflation bit into the economy, the performance of lesser industry became still less impressive; and the War-Industries Committees appeared to be almost parasitical. The
Prodameta
men abandoned the Central War-Industries Committee; Ryabushinski and von Dittmar even denounced the Constitutional Democrats, and left the Party, for its links with wasteful small enterprise. Altogether, the Central Committee took less than ten per cent of war-ministry orders, and fulfilled less than half of those. The system survived by virtue of the sub-contracting networks of Moscow or Kiev, which were disguised as War-Industries Committees, and even then needed considerable charitable hand-outs from the local millionaire. For better or worse, this kind of business was being slowly throttled in Russia, and by the end of 1916, the War-Industries Committees, their needs neglected by
Prodameta
, their representatives abroad spurned by the government purchasing-committees, their wages derided, relapsed into querulous isolation. Their assemblies were marked by ‘coarse attacks on the working-classes’,
¹⁶
who, by going somewhere else for better wages, made life so difficult for War-Industries-Committee people; equally, there were attacks on the government, the monopolies, and the Special Council, who lacked ‘understanding’. Not surprisingly, this agitation took, in the end, political form. But by then, the Duma Octobrists had lost sympathy for the War-Industries Committees, and the Constitutional Democrats, who remained faithful to them, were powerless.

Zemgor
, also a subject of inflated claims, was victim to much the same situation. Large army suppliers already supplied the army; lesser ones had at best a sub-contracting rôle to play.
Zemgor
put forward the claims of
lesser, and even tiny, industry in matters of army supply, and at the same time ran much of the army’s hospital service. Both cost the government a great deal of money—to the beginning of 1916, 500 million roubles, although operation of hospital services was supposed to be voluntary, based on rate-payers’ money. In industrial matters,
Zemgor
could not make sense. It was a collection of small-producers, spatch-cocked together by groups of
désoeuvré
territorial magnates, who knew little about industry.
Zemgor
’s men worked expensively and inefficiently. Producing great amounts of clothing for the army was beyond them, at least at prices that would make sense. Their price for a blanket was almost seven roubles, where ordinary army suppliers charged 1.50; and
Zemgor
had an engaging habit of taking State money in advance, ordering the goods in question from the United States, but without warning to the foreign-exchange section of the finance ministry. It too found the government’s refusal to give it representation on the purchasing committees abroad incomprehensible. Indeed,
Zemgor’s
own incomprehension of its own limitations was such that would-be producers of war-material, who did not get contracts, suggested that the only reason could be that the government ‘feared to let weapons into the hands of the people’.
¹⁷
Zemgor received only a tiny fraction of orders for war-material.
^*
Just the same, it and the War-Industries Committees launched a legend, of humble and patriotic entrepreneurs, frustrated at every turn by a corrupt and frivolous régime. This claim was frequently accepted in the Entente countries. A German observer had it more accurately when he wrote that, in the public organisations, ‘the talk is overwhelmingly of plans and intentions, appointment of committees, sub-committees, sections, special conferences etc., and relatively little of practical results’.
¹⁸