INDUSTRY 91
about the very rapid expansion of our industry before the Revolution and the little that was known has since been largely forgotten.
I shall give an account of Russian industry before 1917 in a necessarily short description of its various branches, its development and sources of supply in raw materials, supported by statistics showing how it expanded within the last decades of Czarism and depicting the bright future toward which it was advancing.
Industry in Russia owed more to government enterprise than in any other country of the world.
It was only toward the middle of the last century that the Russian people were able to turn to the systematic development of the great resources of their country for reasons which I mention in other chapters. As it was, the Caucasus and Central Asia, later so vital to industry, were brought into the fold about a century ago and, from a technical point of view, we were a young country. It may be said that some of our great industries were started by Peter the Great, that others had existed before him, but they were isolated enterprises that did not come within the scope of a general system of industrialization.
One of the main preoccupations of Peter, like the Czars before him, was to raise our national economy to a higher level but the measures taken by his predecessors were quite ineffective, as is shown by the parlous state of the nation's finances at the time of his accession. Other methods were required and the young Czar applied himself to a thorough overhaul of agriculture, industry and trade. Though following the general principles of French protective commercialism, Peter had the wisdom to base his reforms on sound Russian economic tradition. Tugan-Baranovsky, one of our best known authorities on Russian industry, says:
"Though industrial captitalism did not exist before Peter the Great, commercial capitalism was fully developed. The
92 CZARISM AND REVOLUTION
existence of this commercial capital was not the result of governmental interference but was due to a normal evolution of trade and the recognition of the benefits of large scale as against petty commerce. The assets of industry in Peter's day consisted of this trading capital, a fact proved by a glance through the list of leading manufacturers. Contrary to an opinion widely held the majority were Russian and members of the merchants' guild.
"The number of factories owned by foreigners was very limited during the reign of Peter I. ... The greater number was owned by Moscow capitalists, merchants of the old stock. The character and moral qualities of these men laid their stamp upon our industry, to which they brought the traditions of Muscovite large-scale trade and which they helped to develop under favorable conditions. The high standards and way of life of these solid merchants were not the work of Peter's hands, but without him the growth of industry in Russia would have been impossible." (a)
Peter initiated his economic reforms by a series of ordinances in which he insisted upon the advantages of a technical education and industrial expansion. According to one of our historians "Peter frequently turned the throne into a professorial chair," so as to explain to his people the conditions governing social progress. In his desire to promote an inclination for commerce and industry among the varied classes, he propounded that a nobleman should be able to engage in these pursuits without loss of dignity though, as we shall see in the chapter devoted to Trade, admonitions of this kind were quite unnecessary. Peter did not confine his efforts to lecturing and advice; he granted concrete benefits to the pioneers of industry and guaranteed their investments by governmental orders. He had an inventory of the country's mineral resources drawn up, while energetic prospecting led to the discovery of new deposits and
(a) Tugan-Baranovsky. "The Russian Factory in the past and the present," St. Petersburg, 1898. Vol. I, p. 8.
INDUSTRY 93
new ores, which in turn was followed by the founding of new industrial undertakings. Often, a fresh enterprise launched by the Czar, was handed over by him to private ownership after it had been squarely set on its feet. The founding of a shipbuilding industry and the inception of our navy and merchant fleet bear witness to his relentless and insatiable energy.
This intense activity was well rewarded: before Peter's time there were hardly a dozen factories in Russia, at the time of his death they numbered 233 not counting the mines, while some of the factories founded by him were still operating in 1917. During his reign, the urban population rose from 292,000 to 802,000. The process initiated by Peter continued unchecked so that by the end of the 19th century there were 3161 industrial undertakings in operation and Russia was beginning to lose the salient characteristics of a country solely dependent on agriculture.
Industrial expansion on a large scale in a country the size of Russia was of necessity deferred until the day when thousands of miles of railway brought within practicable reach the immensely rich deposits of the South, the Urals, the Caucasus and the far distant regions of Siberia. In this respect the United States and Russia are very much alike: In both countries industrial development was made possible by the railway. Other factors, of course, also contributed in bringing about this new orientation of Russian economy, not least among them the final pacification of the country, the measures taken by the government directly to promote industry, the trade tariff of 1891, called "an intelligent tariff" by Mendeleev, and the substantial influx of foreign capital, especially during the last years of the 19th century. An increase in the urban population, from 8,175,000 to 25,819,000 between 1867 and 1913, is in itself an indication of the social and economic changes that were taking place. On the eve of the First World War industrial revenue virtually equalled the revenue from agriculture though of course the latter still engaged the labor of a majority of the population.
94
CZARISM AND REVOLUTION
Sources of National Revenue 1913
Agriculture Industry
Other branches of activity Total
6,300 Million Roubles 6,200 Million Roubles 3,000 Million Roubles
15,500 Million Roubles
Four fifths of the requirements of the internal market were by then supplied by our national industries, while most of the goods imported from abroad were unfinished articles, or material intended for re-manufacture.
Young industrial countries enjoy an undisputed advantage over older nations; technical progress, gained by long experience, is available to them ready made. Russia was no exception and the new plants which rose in the steppes of the South, in the mountains of the Caucasus and the virgin forests of Siberia were modeled on the best the West could offer, equipped with the newest type of machinery and tools and employed the most modern methods of production and manufacture.
A remarkable change was taking place in Russian industry: It is best illustrated by the findings of two enquiries held at an interval of 20 years. In 1887 there was an average of 43 persons employed and a turnover of 43,200 roubles per factory. In 1908 there were 157 operatives, a turnover of 485,000 roubles, and 8,606 new undertakings launched.
Even more striking are the statistics for the period between 1900 and 1908: for factories powered by steam, there was an increase of 4.9% in the number of factories, 16% in the number of workers, 41.2% in motive power and 49.8% in turnover.
These figures show the general tendency of Russian Industrial expansion: the concentration of production in large industrial units, comparable to the German "Riesenunterneh-mungen," or the huge plants in America.
One is struck by the speed and intensity of the drive by which this expansion was being attained. In 1890 industrial production was valued at 1,500 million roubles and the number of workers totalled 1,450,000. In 1914 production was worth
INDUSTRY 95
about 6,000 million roubles and there were 3 million workers, a respective increase of 300% and 100% in a quarter of a century. The annual yield in taxes of Russian industry amounted to 500 million roubles, (1) the mining industry alone contributing to Russia's national economy a net annual revenue of between 600 and 800 million, after allowing for deductions in respect of sinking funds, capital reserves, social, fire and other forms of insurance. It would be correct to say that Russia in those prewar years (1914) was an investor's paradise, where both native and foreign capital earned handsome dividends, while large sums were at the same time reserved for further capital investment.
A noticeable feature was the considerable accumulation of substantial capital reserves available to industry from native sources inside the country, in marked contrast to the closing years of the 19th century, when investments from abroad were predominant. The Russian financial market which came into being between the years 1908 and 1912, was now in a position to absorb over two thirds of the total stocks and shares issued at home, i.e., 3,657,100,000 roubles, allowing only 1,509,300,000 roubles to go abroad, (a) At the time the total of foreign capital, invested in Russian industrial, commercial, municipal and credit concerns totalled 2,242,874,000 roubles, (b)
I do not for a moment suggest that Russia was on the point of closing her markets to foreign capital. On the contrary, it would appear that in the rapidly expanding development of her natural resources there was ample room for both Russian and foreign capital. In friendly competition they were bound to
(a) A. Raffalovitch. "Russia. Its Trade and Commerce." London 1918.
pp. 394-95.
(b) "Russian Debts and Russian Reconstruction." Publication of the "In
stitute of Economics," New York, 1924. p. 182-184. For particulars of French
capital investments, over one third of the sum mentioned, see my articles in
the "Economist," London, 27 December, 1924, and "La Vie Financiere."
Paris, January 3, 1925.
(a)
96 CZARISM AND REVOLUTION
exercise a beneficial influence on the whole economic life of the country.
Before examining the most important branches of Russian industrial activity, when I shall mention some of the outstanding social works, founded and financed by our large employers, I particularly want to stress the interest taken by them and especially the Imperial Government in the welfare of the workers. Our first labor legislation was drafted under Alexander III. Among its main provisions was the establishment of a special body of factory inspectors whose duty lay in the control of individual factories, the safeguarding of the interests of the employed and the prevention of any exploitation of the worker by the employer. A new set of labor laws, advanced and liberal, was promulgated by Nicholas II. Concerning them United States President Taft expressed himself, when speaking before many notable Russians two years before the 1914-18 war, in the following terms: "Your Emperor has introduced legislation for the working classes more perfect than that which any of the democratic countries boast."
THE MINING INDUSTRY
The riches concealed underground in Russia are far more varied than the different kinds of soil on her surface.
The exploitation of this wealth was barely under way and, even today, it is still far from fully developed. Yet, even in those days we were the largest producers of platinum and manganese; second, of tin and asbestos; fourth, of gold and fifth, of copper and asphalt.
COAL. Coal, until recently the mainstay of modern industry, is located in many regions of Russia. We were fourth among the coal-producing countries of the world, coming after the United States, Canada and China, and our coal reserves were estimated at 544 million tons.
The biggest coal fields, considered among the richest and
INDUSTRY 97
most easily workable in the world, lie in the Don Basin and spread over an area of 32,000 square miles.
Elisee Reclus, the French geographer, tells us that "In 1865 over 650 shallow seams were discovered, varying between one foot and twenty feet in depth and containing coal of every possible quality, from anthracite to the cheapest grades. The trench-like gullies and ravines traversing this area, allowed for an easy assessment of the seams and facilitated the work of the miners."
Soon after this date, the mining industry which had existed in rudimentary form since 1799, began to expand. Production, however, remained relatively unchanged until an extensive network of railways had been laid by the State and an expanding internal market supplied by industry provided an outlet. In 1864 the annual output of the Don Basin amounted to 114,754 tons; in 1885 it reached 1,885,246 tons and continued to increase up to the Revolution. Other coal fields, though less extensive, lay in the Dombrova district of Poland (then Russia), near Moscow, in the Urals, the Caucasus and, in this century, in Central Asia.
Output of coal in Russia
(in millions of tons)
Other districts of
Year
Don
Dombrova
Eur. Russia
Asiatic
Total
(Poland)
Russia
1885
1.88
1.80
0.53
0.05
4.26
1895
4.90
3.70
0.46
0.05
9.11
1905
12.80
4.70
0.74
1.03
19.27
1908
18.27
5.64
1.17
1.48
26.56
1911
19.96
6.00
0.94
1.70
28.60
1912
21.42
6.46
1.23
2.13
31.24
1913
24.70
7.00
1.56
2.16
35.42
This table also shows the importance of the Don coal fields in relation to the other mines.
The newly discovered coal seams in Siberia which produced over 3 million tons in 1916 appeared very promising at that
98 CZARISM AND REVOLUTION
time and the region of Kouznetsk has since been developed into the biggest coal centre of Russia, surpassing the Don Basin both in size and yield.
In spite of the difficulties created by the war and the loss to the Germans of the whole Dombrova fields, the annual output of the mines continued to rise and reached a record figure in 1916.
CRUDE OIL. The abundance of oil in Russia is well known. Geologists have estimated reserves at approximately 3,000 million tons, or 35% of the world total of which 15% is located in the United States.
The pioneers of the Russian oil industry were Kokarev and a peasant named Dubinin, who first extracted oil in Baku on the Western shore of the Caspian in the first half of the 19th century. But the immense resources of this region were tapped and placed on an industrial footing after the pacification of the Caucasus in 1864.
This pacification, or rather the subduing of the fierce hills-men of the huge mountain range which stretches from the Black Sea to the Caspian, had taken over fifty years. (2)
Under peaceful and orderly conditions, the government was able to build harbors, construct good highways, joining the principal towns and strategic points, blast long tunnels, introduce ordered legislation and administration. Special attention was paid to developing the agricultural and industrial resources of the region: vineyards, afforestation, cotton and silk, mining of copper and manganese, boring for oil.
Vast sums were spent by the government on this elaborate program of expansion. The treasury lost on balance, but Caucasian production as a whole helped to strengthen our national economy and to increase the balance of trade.
Wise administration, Russian technical and financial resources, as well as the influx of foreign capital, combined to assure a prosperous future to a region which, until recently, had been the home of wild, unruly hillmen and nomad tribes constantly at war and divided by a century of old feuds, eking
INDUSTRY 99
out a precarious existence by raising a few sheep or by pillaging travellers and Armenian settlers.
Certain conditions which only a large country and government protection could provide were necessary to turn the budding Caucasian oil industry into a world exporter, with security for foreign capital investment, an expanding internal market, protection against competition, an organized system of trade, abundant credit and efficient transport.
The development of the industry falls into three periods.
1) Up to 1905. Production rose at a rate unequalled any
where. Though late in the field, Russian oil production over
took the United States by 1897 and at the beginning of the
20th century Russia was the largest producer of oil in the world.
During this period new and better marketing and distributing
methods, like the adoption of the oil-tanker, were introduced
by the captains of our oil industry.
2) A period of crisis during the abortive revolution of 1905.
The wave of disorders, strikes and sabotage which swept across
the country culminated in Baku where the revolutionaries set
fire to the oil wells, wrecked plant and installations and eventu
ally drenched the whole region in the blood of a provoked war
between the Tartars and the Armenians. A special committee
sent by the Government to assess the damages reported that
"three fifths of the total installation are in ruins and all work at
a standstill. In the remaining plants the suspension of work is
likely to be of a temporary nature."
During this period overall production dropped by one third. America was quick to take advantage of reduced Russian production, and a number of foreign markets, both actual and potential, was lost, (a) Russia forfeited her supremacy in the world oil trade, a position she has not yet recaptured.
3) After 1906. A new period of production from fresh fields
in Baku and Grozny, which compensated for the diminishing
yields of some of the older wells.
(a) See P. Danielbek. "Exports of Russian Petrol and World Markets." St. Petersburg. 1916.
100
CZARISM AND REVOLUTION
Russian Oil Production (In thousands of tons)
Year
Bakou
Grozny
Maikop
Emba
Ferghana
Total
Old
New
1906
7.345
0.001
0.630
—
—
0.070
8.046
1907
7.800
0.080
0.640
—
—
0.060
8.580
1908
7.656
0.100
0.860
0.001
—
0.050
8.667
1909
8.490
0.220
0.940
0.006
—
0.015
9.671
1910
8.000
0.500
1.210
0.020
—
0.029
9.759
1911
7.066
0.700
1.230
0.130
—
0.030
9.156
1912
7.107
0.900
1.070
0.150
0.017
0.030
9.274
1913
6.700
1.080
1.200
0.080
0.100
0.040
9.200
1914
5.656
1.400
1.610
0.070
0.280
0.030
9.046
1915
5.738
1.700
1.460
0.120
0.270
0.030
9.218
1916
5.600
2.300
1.680
0.030
0.260
0.030
9.900
In the years just before the Revolution a great deal of prospecting for oil was done and some potentially very rich oil fields were tapped. In 1917 boring was started in a particularly promising region near Novo-Grozny and the initial output of 600,000 tons was then considered most encouraging. Thanks to the heavy yields of these new fields, the Soviet government was always relatively well supplied with oil and could even claim, in the early years of its existence, a certain measure of success in the development of their oil industry. Nevertheless, production fell and was only one twelfth of the world output, compared with one sixth in pre-war years, (b)
(a) This table is based on data borrowed from the Report submitted to the
Congress of Representatives of Russia Trade and Industry, held in Paris in 1921.
(b) For information on capital investment in the oil industry, the changes
which have taken place since 1917, the bitter struggle to safeguard private
interests and the policies of international trusts and foreign governments, the
reader is referred to my articles in the following publications: "Revue
Economique Internationale," Brussels, December 1924 and November, 1927;
"Journal of Commerce," New York, January 9, 1926 and November 5, 1927;
"The Statist," London, October 1927; "Paris-Telegrammes," Paris, October
1927, November 2 and 9, 1927; "Vie Financiered Paris, January 20, 1925.
October 26, November 7, 1927 and June 21, 1929.
(a)
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IRON ORE. Reserves of iron ore were estimated at 2,400 million tons. Much of this ore is located in widely separated parts of the country, but the biggest and richest deposits, where the ore contains up to 50% and 70% of pure iron, lie in the south of Russia in the region of Krivoi Rog. These mines are reported to have been worked by the Scythians, and Aeschylus, five hundred years B.C., commenting on their lances and weapons, attributes their quality to the fine metal from which they were forged. The industrial exploitation of these mines began in the second half of the 18th century and they were described in some notes on a voyage from St. Petersburg to Kherson by the academician Zuev: "At Krivoi Rog and along the banks of the Saxagan River, I noticed ferruginous strata. The steppes there look less dreary and the presence of rich mineral deposits in the soil appears likely."
An earlier iron industry, which was later relegated to second place, existed in the timber-clad mountains of the Urals from the beginning of the 18th century, where it was founded by Peter the Great. Here smelting was performed in wood-charcoal burning furnaces and, in later years, the steel produced in the Urals was renowned for its special qualities. The development of Krivoi Rog, lying in a woodless region, was delayed until it was linked by rail to the Don coal basin. Once this had been achieved output began rapidly to increase. The first mine was opened in 1881 and still bears the name of Alexander Pohl, its founder and one of our ablest mining engineers of the time. Soon, with the aid of French and Belgian capital, Krivoi Rog became the largest mining center of Russia.
Output of Iron Ore (In thousands of tons)
Year Total Krivoi Rog
1870 0.765
1880 0.984
1890 1.727 0.406
1900 5.748 2.745
1913 9.226 6.200
102
CZARISM AND REVOLUTION
New mines in Siberia, at Nikolaevski Zavod and Petrovski Zavod, came into production shortly before the First World War and we were by then exporting appreciable amounts of ore abroad.
MANGANESE. Russia is extremely rich in manganese, so vital to the manufacture of steel. Of the total world production 56% was mined in Russia, 35% in India, 5% in Brazil and 4% in other countries.
The largest single deposits, covering an area of over 60 square miles, lay in the Caucasus at Chiatury. The best manganese, containing up to 55% of pure ore, was mined in this region, while smaller deposits were worked at Nikopol in the South and in the Ural mountains. Between 1891 and 1895, annual production averaged 200,000 tons. By 1913 it had risen to over a million tons.
Output
of Manganese (In tons)
Year 1910 1911 1912 1913
Urals 0,918 2,460 3,213 19,510
South 178,200 202,280 238,700 265,250
Caucasus 537,700 434,840 577,520 970,000
Total 716,818 639,580 819,433 1,254,760
Increase 1910-1913, in tons
18,592
87,050
434,300
537,942
Exports:
1910
557,540 1,147,540
tons tons
1913
PRECIOUS METALS. In most of the rivers of Siberia, from the Urals to the Pacific Ocean, alluvial deposits of gold are to be found. The gold mining industry, with a labor force of 90,000, ranked third and came after coal and oil. Though still largely undeveloped, it had already helped to open up hitherto uninhabited regions and to transform mining settlements into small townships. Assisted by the Government, the mining companies built schools, hospitals and churches, while the post and telegraph reached* out to and linked outlying parts of the
INDUSTRY 103
country. Gold mining was practised in Siberia as far back as the 17th century, but the proper development of the industry began in the second half of the 19th century.
Output
of gold in the main
centers
(In tons)
Year
Urals
W. Siberia
E. Siberia
Total
1864
5.49
1.02
16.40
22.91
1874
5.44
2.56'
25.33
33.33
1884
8.00
2.15
25.64
35.79
1894
10.66
2.80
29.60
43.06
1904
10.00
3.16
30.56
43.72
1914
8.82
6.33
51.20
66.35
Attention is drawn to the 50% increase in the last decade against 100% in the preceding forty years and the growing importance of the East Siberian mines. This expansion was due to improved methods of extraction and the use of modern machinery, while the building of roads and railways in the Urals and Siberia brought within accessible reach far flung and outlying mining centers. As an example, the following railway lines were laid down in 1913: Orsk-Troitzk, across Orenburg, 235 miles; the Altai Railway from Novo-Nikolaevsk to Semi-palatinsk, via Barnaul and a branch line to Bisk, 515 miles; Archinsk-Minousinsk, 275 miles; the Kolchinsk line, 125 miles. The Altai Railway was completed by 1917 and yet another line along the Amur River, begun before the War, was also completed that year. A concession had been granted for the construction of the main South-Siberian railway of 1070 miles. The discovery of new veins during construction work was a frequent occurence. When the Amur railway was being built, in particular, it was difficult to prevent the workmen from quitting their jobs and wandering off into the neighboring forests in search of gold.
The Department of Emigration undertook the construction of lateral railroads and a further 10,000 miles were taken in hand by the Ministry of Communications.
Before the Revolution Russia was the fourth largest gold
104 CZARISM AND REVOLUTION
producing country in the world, following South Africa, the United States and Australia.
PLATINUM. The mining of platinum was virtually a Russian monopoly. Before 1917, Russia produced 95% of the total amount of platinum mined in the world. About 4% came from Columbia and 1% from the United States and Australia. Only a small amount of platinum was retained at home and all but a fraction of the total output went abroad. Between 1904 and
1908 the yearly average mined amounted to 4.3 tons; between
1909 and 1913, to 7.3 tons, an increase of 70.4% in five years.
During this period the market price per Russian pood (1/61
of a ton), containing 83% of refined metal, rose from 19,000 to
36,000 roubles. Legislation introduced by the government just
before the fall of the Czarist regime to encourage the platinum
industry and the adoption of a modern dredging technique
would have reduced the cost of production by about 50% and
still further increased the existing substantial margin of profit.
SILVER. A very old Russian mining industry. Modern methods of extraction by electrolysis enabled the industry to expand at the beginning of this century and to increase the output by 150%: 13.12 tons between 1900 and 1905; 32.80 tons, 1910-1915. Unlike Mexico and Norway, where the metal is obtained from silver mines proper, silver in Russia was extracted from copper, tin and lead mines, the ore in the latter being particularly rich in silver content.
Other metals and minerals
COPPER. Copper is one of Russia's most important mining assets. It was obtained on an industrial scale in the Ural Mountains as far back as the reign of Peter the Great and later in the Altai range, yet output supplied only about half the demands of industry. In 1902 8,820 tons were produced, against a demand of well over 16,400 tons; after 1906 the mines in the Caucasus, where production was doubled in the course of four years, helped to reduce this shortage.
INDUSTRY
105
Production, consumption and
imports of Copper
(in tons)
Year
Production
Consumption
Imports
1907
14,541
18,180
3,672
1908
17,000
19,262
2,328
1909
18,590
21,246
2,655
1910
22,690
28,000
5,426
1911
25,607
31,180
5,541
1912
33,574
37,426
3,852
Increase 1907-1912,
in tons
19,033
19,246
0,180
Per Cent
132.4%
107.7%
4.9%
By 1912 production was gradually overtaking consumption and it was even possible to export limited amounts abroad after satisfying the requirements of the home market. In 1907 a beginning was made in the Caucasus of refining copper by a method of electrolysis and by 1911 the annual output had reached 5,000 tons. Similar factories were founded in the Urals and yielded another 6,600 tons. In 1912 copper mined by this process all but met the internal demand.
ZINC. Rich deposits of zinc are found in the Altai region, Nerchinsk (in Siberia), the Khirgiz steppes north of the Caspian, as well as near Murmansk on the White Sea. Unfortunately, the working of these deposits was neglected and mining was mainly confined to Poland where conditions of work and transport were easier. Home production was supplemented by an average of 16,400 tons imported annually. In 1915-1916 a large plant was constructed in Siberia with an estimated output of 49,000 tons. In the first months of 1917 this plant produced 16,400 tons and doubled this figure in the first full year of operation. The cost of production of Siberian ore was particularly cheap, due to the fact that it contained a considerable content of gold and silver, thus bringing the cost of production below that of Germany and the United States.
Many regions rich in zinc also abounded in lead. In 1917 a plant was erected in the Altai Mountains with an estimated
106 CZARISM AND REVOLUTION
output of 20,000 tons, ten times the amount hitherto produced.
The whole range of the Altai is exceptionally rich in mineral deposits, yet the development of this region could not be profitably undertaken until modern methods of concentration, smelting and refining were introduced in view of the complex composition of some of the ores. At the time these methods were just beginning to be applied in countries where metallurgy was more advanced than in Russia and explains why the exploitation of this potentially rich region appears to have been neglected.
SALT. Russian reserves are sufficient to provide the world with salt, literally, for centuries. 1,311,500 tons were produced in 1896; 1,800,000 tons in 1906, and 2,215,000 tons in 1912.
Before closing this part of the Chapter, I must mention a few metals and minerals which were as yet practically untouched industrially, such as quick silver, cobalt, tin, nickel, antimony, mica, graphite, tungsten, chromium, sulphur, asphalt, cement limestone, phosphates (reserves estimated at 5,500,000 tons) and radium, (a)
METALLURGY
In the 17th century Tula and Kaluga, in the center of European Russia, were the only two towns where there existed a metallurgical industry. Peter the Great availed himself of the energy and enterprise of a blacksmith from Tula named Demidov to found a metal industry in the Urals, and, in token of gratitude, handed over to him the first foundry built there
(a) In the years following the Revolution foreign interests were for some time tempted to persevere with mining in Russia on the strength of concessions granted by the Soviet Government. The fate of these attempts is now past history, but I refer those interested to my analysis published in the "Revue Economique Internationale" Brussels. (Vol. IV, No. 2, pp. 240-277). The views I then expressed, were subsequently justified, as witnessed by the failure of huge concerns like Harriman and the Lena Goldfields.
INDUSTRY 107
by the State. In the seventies of the last century the urgent demand for rails and substantial government orders gave birth to a flourishing industry, mainly centered in the south of Russia. Here, with a minimum of transport difficulties, the iron ore from Krivoi Rog and Mariupol was easily handled and the finished products rapidly found their way to ports of the Dniepre, Volga, Black Sea and the Caucasus. Subsequently, apart from isolated centers, like St. Petersburg and Moscow, the whole of the Russian iron ore industry was concentrated in the South. In 1913 it turned out over one-third of the total national output and this share continued to increase from year to year.
Development of the iron industry from the end of 19th century to 1913 (In millions of tons)
Iron and Steel
Iron and Steel
Pig
Iron
Semi-processed
Fully processed
Years
South
Total
South
Total
South
Total
1898-1902
1.351
2.646
1.054
2.470
0.880
1.972
1908-1912
2.254
3.301
1.930
3.600
1.654
3.916
1912
2.843
4.200
2.490
4.506
2.100
3.730
1913
3.109
4.640
2.718
4.922
2.313
4.043
Increase
1898-1913
1.758
1.994
1.664
2.452
1.433
2.071
Per cent
130.2
76
156.3
99.3
163.2
104.9
Though the above table shows substantial progress in all branches of industry, the blast furnaces and foundries were as yet not working to full capacity, the latter standing at 5,705,000 tons for pig iron, 5,475,000 tons for semi-processed, and 4,934,000 tons for fully processed iron and steel.
In 1914 Russia had moved up to fifth position among the iron and steel manufacturing countries of the world, having surpassed the production of Austro-Hungary and Belgium, and coming immediately after France.
By 1913 imports of pig iron from abroad fell to 0.67% of the
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total internal demand, whereas at the beginning of the period under review they amounted to approximately 50%.
The whole industrial structure of the country was largely dependent upon the prosperity and development of the iron and steel industry and its importance cannot be overstressed. This dependence was especially manifest during the war years of 1914-1918 when, after the desperate shortage of 1915, the industry was able to rally and adequately to meet the requirements in guns, shells, etc., of all our extensive and widely dispersed fronts.
A French appraisal of the industry as a whole, made by M. Cl. Aulagnon, depicts a healthy and prosperous state of affairs. M. Aulagnon was Councellor of Foreign Trade to the French Government and Director of several Russian and foreign metallurgical Companies. His views, published in "Science et Industrie" (Paris, 1924, p. 431), in an issue specially devoted to French and Russian mining interests command respect. This is what he says:
"Some of the individual plants of which the Russian metallurgical industry was composed were capable of producing and processing up to 500,000 tons of metal per annum and technically rivalled the best installations in Europe. Located as they were in the midst of a network of railways, by which they were served, and surrounded by clusters of workers' settlements with their churches, schools, clubs and theatres, they appeared to have risen out of the vastness of the southern steppes by the wave of a magic wand.
"These up-to-date plants, the coal fields, iron ore mines, immense machine factories and other ancillary industries, gravitating round them, were a striking proof of industrial achievement under Czarism, of Russian and foreign technical skill and wise capital investment."
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In the same issue (p. 73) another expert, M. E. Griiner, chairman of the "Krivoi Rog Mines" and deputy chairman of the Central Committee of "Houilleres de France" (French Coal Mines), gives us a more detailed description of the vigorous industrial life of the South:
"Between 1900 and 1913 new plants, manufacturing an amazing variety of articles, seemed to rise on all sides. Near the salt mines of Bakhmut there were factories producing chemicals, plate and crystal glass; a variety of metallurgical plants turning out steel pipes of every possible diameter, from narrow guage oil well piping to pipe lines for bringing the gushing oil to the ports of the Black Sea; others, manufacturing telephone and telegraph cables, accessories for the railway and water mains; yet others turning out agricultural machinery, all helping to lighten the burden of foreign imports.
"In the vicinity of the larger cities there were railway yards building fast, modern locomotives, luxurious coaches for the transcontinental lines, thirty and forty ton freight cars, an assortment of machinery for the mining industry and other industrial plants, spinning and weaving mills. Destroyers, fast cruisers and mighty battleships were being built and launched in the shipbuilding yards both of the Boog in the South and the Neva on the Baltic.
"The tempo of the industrial evolution that was taking place in Russia was as intense as in the United States a few decades earlier. The growing prosperity of both these industrially young countries was marching in step and everything augured well for the future."
THE TEXTILE INDUSTRY
The textile industry was one of the oldest in Russia, the best organized and one of the most important. Small family businesses had gradually merged into hugh industrial concerns
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employing 880,000 hands, and surpassing in size similar enterprises in Western Europe. The textile industry was well looked after by Government and owners alike, and, socially, was ahead of any of the other industries. Many of the big mills were like small well organized townships with their own schools, hospitals, infirmaries, day nurseries, rows of workers' dwellings, libraries, recreation centers and even theatres. In 1914 the annual output of the industry was valued at 1,000 million roubles. Most of the capital invested was Russian and the majority of the owners belonged to the old merchant families of Moscow.
Cotton
Priority of place as regards the number of factories, workers and turnover, in the whole range of textiles, was held by cotton. In 1912-1913, 410,000 tons of raw cotton were utilized by the spinning mills thus placing Russia third, after Great Britain and the United States. About two-thirds of this figure was grown in Asiatic Russia, as I have mentioned in the previous chapter.
Statistical figures of the International Cotton Federation show that in 1906-1907, 262,300 tons of yarn were produced by the Russian mills and 360,656 tons, six years later, 1912-1913. The number of shuttles increased by 42%, from 6,500,000 to 9,213,000.
The last available report, covering the period from 1906 to 1913, of the Russian Central Cotton Committee gives the following figures for finished cotton goods.
1900
1913
Increase
%
Number
of power looms
151.306
249.920
98.614
65.1
Finished
goods (tons)
192
589
321
67.2
Between 1906 and 1913 the value of foreign imports was reduced from 21,300,000 to 11,000,000 roubles, while exports to Persia, China, Turkey, Rumania, etc., rose from 25,000,000 to 43,895,000 roubles. At the same time, consumption per head
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within Russia increased by 100%. Coupled with the enormous growth of the population it is an indication of the expansion of the industry.
• Between 1911 and 1916, the London "Times" collected a series of reports from its correspondents in Russia on various branches of our industrial activity and subsequently published them in "The Times Book on Russia." Concerning the cotton industry, we are told that in the opinion of experts some of our mills were among the finest in the world as regards equipment, organization and management, especially those at Narva, which were compared favorably with the mills in Lancashire. (a) We read that the installations in Narva contained half a million shuttles, 4,000 looms, a workers' settlement of over 3,000 tenants, a hospital worth a million roubles, etc., all very modern and run with due regard to local conditions, (b)
Other mills, at Orekhovo-Zujevo, Bogorodsk and Kostroma, rivalled those of Narva in size and output; their reputation was world-wide due to the superb quality of the goods they manufactured.
Wool
The foundation of the woolen industry, second in importance to cotton, dates back to the reign of Peter the Great, like so many of our industries. At first, output was confined to supplying the needs of the Armed Forces, but, about 1850, woolen goods commenced to appear in large quantities on the market. Up to the end of the century, Russia exported considerable amounts of raw and semi-processed wool. However, at the turn of the century the increased demand for woolen goods at home and the consequent expansion of the woolen industry brought about a reversal in trade and imports of wool mounted steadily year by year. The breeding of the merino sheep was also being gradually superceded by other more profitable forms of animal
(a) P. 90.
(b) P. 91.
(a)
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husbandry. This new trend is illustrated by the following figures: 1901-1905, 23,315 tons imported, worth 33 million roubles; 1906-1910, 45,870 tons worth 40 million roubles; and 63,410 tons worth 89 million roubles in 1913.
The figures quoted relate to raw wool and indicate an enormous expansion of the wool weaving industry at home. From 1900 to 1912 nearly three hundred new factories were founded (916 and 1210), while the number of shuttles and power looms increased by 15% and 60% respectively. In 1912 a total of 1,423,627 shuttles and 43,173 power looms were operated by the industry and the output for the year amounted to 80 million yards of woolen textiles, an amount three times as large as that produced twenty years earlier.
Thanks to the improvement in the standard of living, the demand for woolen goods was, however, so high that in 1912, 27 million roubles worth was imported from abroad. In subsequent years these heavy import figures would, in all probability, have dropped with the expansion of the home industry, as shown by a reduction of 10 million in 1913.
Flax
Linen and furs were the best known items of our export trade ever since the early days of Russian history. "Muscovite linen" was greatly valued by the West in the Middle Ages, while the wealth in flax of our northern provinces amazed the first English trading captains at Archangel in the days of Queen Elizabeth I. Napoleon bought up vast quantities of Russian linen to clothe his armies and in the days of sail the navies of the world, including the British Navy, made extensive use of Russian sail cloth. Indeed, the quality of this cloth must have been held in high esteem by the experts for, when British manufacturers sought to introduce cloth of their own make to the American market, they were not averse to a little quiet juggling with the trade mark of the famous Russian Bruzgrine factory.
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In more recent times, linen cloth best known abroad was produced by our factories near Yaroslav.
The development of the industry followed the general trend of Russian industrial expansion and was most marked in the years preceding the 1914 war. Russia was then leading England and France as a linen weaving country and herself consumed 81,900 tons of raw flax annually as against 51,321 tons in 1900. The table below gives the difference in production between 1900 and 1913:
1900 1913
Spun linen yarn 33,450 tons 51,400 tons
Sewing thread 2,900 tons 4,344 tons
Looms 11,101 (9627 power) 15,957 (15,315 power)
Only 20% of the flax crop grown, which in 1914 amounted to 426,233 tons and represented 80% of the total world production, was utilized at home. The balance was exported abroad (four-fifth of the flax used in Europe was of Russian origin) and was worth over 100 million roubles.
Silk
In 1913, 10,730 tons of silk worm cocoons were produced in Russia: 108 tons in the South; 6,200 tons in Transcaucasia; and 4,422 tons in Turkistan. Large quantities of raw and semi-processed silk were also imported from abroad, averaging 1,620 tons, worth 14 million roubles in 1901 and 4,000 tons, worth 34.5 million roubles in 1913. The expansion of the silk weaving industry was in direct proportion to these figures, but manufactured silken goods from abroad were required to meet the demands of a rapidly expanding market. The value of these goods is quoted at 5.2 million roubles in 1901 and 7.9 million roubles in 1913. Though heavy, they do not minimize the importance to the industry of raw silk imports. The latest available authorative figures relate to the industrial census of 1908 and show 309 factories in operation with an annual output of 46 million yards of pure silk valued at 50 million roubles.
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Russia came sixth among the silk manufacturing countries of the world; the largest centers of production lay in the province of Vladimir near Moscow, and here was situated the famous Giraud factory, the largest in Europe and one of the finest in the world.
Hemp and Jute
The Russian Navy, created by Peter the Great, transformed the primitive craft of rope and cable making into an industry. At first, mainly centered in St. Petersburg, it gradually spread after 1880 to the. provinces of Yaroslav, Orel, Riazan and Perm. In 1912 production of string, ropes and cables totaled 26,410 tons. The industry was, however, heavily handicapped by climatic conditions, the latter affecting the yield of hemp which could never be guaged by the extent of the area under cultivation. Thus, 460,000 tons were harvested in 1908, only 311,640 tons in 1909 and 410,000 tons in 1912.
Large quantities of hemp were exported abroad: 47,541 tons, valued at 12 million roubles in 1908; 51,900 tons, at 17.4 million, in 1912; and 53,246 tons, at 20 million, in 1913.
Toward 1880 jute began to replace hemp on the market though the raw material was mainly imported from abroad, as efforts to acclimatize jute were on the whole unsuccessful. These imports rose from 100,246 tons in 1881 to 244,016 tons in 1901 and 385,246 tons in 1913. The ten existing factories, with 2,400 looms and 45,000 shuttles, were chiefly engaged in the manufacture of sacks, annually valued at 150 million roubles.
SUNDRY INDUSTRIES
Sugar
The refining of sugar from home grown sugar beet was among our major alimentary industries which also included
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distillation (3), brewing, the production of vegetable oils, canning, milling, fishing, etc. (a)
The first sugar refining factory was founded in 1802. Though the annual production of our factories in 1860 only amounted to 19,820 tons, twenty years later it had reached 260,656 tons. By a law passed in 1895, the amount of sugar allocated to the home market and the authorized reserves for export abroad were determined in advance. This law exercised a beneficial effect on the industry, which responded by extending the area of sugar-beet under cultivation, introducing better methods of refining and helping to reduce the cost of production.
In 1908 Russia joined the International Sugar Convention of Brussels for a term of 5 years and the Russian export quota was fixed at one million tons per annum. This agreement was renewed in 1913 and the quota increased by 250,000 tons.
Though an importer of foreign sugar in the nineties of the last century, Russia, by the last years before the First World War, had become the largest sugar producing country in the world.
Country
Area under sugar beet (acres)
Refineries
Annual Production (thousand tons)
Russia
1,767,500
289
1,823
Germany
910,000
341
1,361
Austro-Hungary
927,000
196
1,033
France
515,000
224
0,464
Holland
125,000
27
0,246
Belgium
140,000
74
0,213
Other countries (Europe)
280,000
106
0,509
Total
14,764,500
1,257
5,649
At home the consumption of sugar rose steadily and doubled in the decade between 1900 and 1910, passing from 673,770 tons to 1,193,442 tons, the actual consumption per head rising
(a) The Russian fishing industry was the largest in the world. In 1913 the value of Russian fish amounted to 133 million roubles; American, 95 million; and British, 65 million.
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by 48.44% from 12 to 17.8 pounds. The latter figure may, I think, be taken as a fair indication of the generally improved standard of living. Our export trade in sugar was also mounting even prior to the Brussels convention and showed an increase of 255% during the period mentioned above: 128,000 and 454,000 respectively.
Timber
Russia's wealth in timber needs no stressing. The generally accepted figure for the area covered by forests was 2,000 million acres of which 437.5 million were in European Russia and 1,562.5 in Asia. The immensity of this area becomes more apparent when it is compared with the combined timberlands of the U.S.A., Canada, Sweden, Norway, Austria and Hungary, amounting to 1,500,000 acres. In consequence, great importance was attached to the timber industry and timber constituted one of the main items of our export trade.
Exports of timber
Year
Thousand tons
Million roubles
Average per ton (roubles)
1901
3,471
55.680
16.04
1903
4,164
66.308
15.92
1905
4,429
76.867
17.35
1907
5,631
107.793
19.14
1909
6,960
126.575
18.20
1911
6,767
141.589
20.92
1913
7,607
162.796
21.36
Russian exports in the last year of this table were over a third higher than the combined amounts sold abroad by the countries previously mentioned.
Only one-fifth, however, of the total turnover was exported, the balance finding a ready market at home. Internal consumption was constantly on the increase, disposing of 9,016,400 tons in 1891 and 40,984,000 tons in 1911. During this period the number of sawmills increased from 1,430 to 1,931 and the labor
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force employed, from 73,964 to 100,051, a fact which illustrates the vitality of the industry and partly explains why it was able" to expand so quickly. In spite of these facts and the adoption of a better and more modern felling technique, the demand was so great that the price of timber continued to mount, as indicated in the table above.
The Russian peasant is amazingly skillful in the use of his short-handled axe, be it to dress the trunk of a felled tree or carve a cunningly modelled spoon, and carpentering was widespread both as a craft and an industry. A great variety of articles were manufactured of wood, ranging from domestic appliances to the luxurious furnishing of our passenger trains. There were factories for the building launches and boats, making packing crates and barrels along the banks of the Volga and other rivers, while many of the towns boasted of their model art schools and specialized in furniture and cabinet making and the manufacture of musical instruments.
Wood Pulp and Paper
The introduction of wood pulp for the manufacture of paper at the end of the last century quickly gave rise to a new industry in Russia. The wooded northern provinces, with convenient access to rivers, were admirably suited to supply the paper industry with the necessary raw material. In 1912, the industry, which was founded in 1901, was yearly turning out 147,560 tons of cellulose and 300,000 tons of paper against a combined original 164,000 tons. The industry was served by 1,500 paper factories of an aggregate 90,000 H.P. and employed 100,000 workers. It was mainly centered around St. Petersburg, where both wood pulp and cotton waste were used in the manufacture of paper, while Moscow specialized in cardboard casings for the well-known "Russian Cigarettes" which were exported to England, Germany, China (800 million per annum) and many other countries.
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Leather
The tanning industry was at all times a flourishing one in Russia and "Russian Leather" and dressed skins were for centuries well known abroad. Before the 1914 war, the internal supply was insufficient to meet the growing demand of the big factories, mainly situated in St. Petersburg, Moscow and Orel, and foreign skins and hides were imported from America and India. This imported raw material was turned into goods of the highest quality and re-exported abroad, the value of these re-exports rising from 345,00 roubles in 1901 to 852,000 in 1912.
Rubber
All rubber goods manufactured in Russia were necessarily made from imported raw material, synthetic rubber being unknown at the time under review. Nevertheless the industry deserves to be mentioned if only for the quality of the goods, especially tires, it produced. Trade names like "Treugolnik," "Provodnik," "Bogatyr," and "Cautchuk" had a deservedly good reputation and were familiar in many countries. (4)
The building industry
The importance of this industry, embracing a multitude of trades in a country entering upon an era of industrial expansion like Russia, is patent. Any detailed summary would require too much space and to illustrate the advances made I shall limit myself to quoting the figures relative to the output of cement which rose from 328,000 tons in 1908 to 1,246,000 tons in 1912.
Electricity
The mention of electricity at the present time in terms of its application, as it was then understood, may appear out of date. However, the use of electric power for lighting, urban traction, telegraph and telephones was extensive after the beginning of the century. All our large towns were served by powerful, up-
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to-date plants, while telephone and telegraph lines linked the remotest parts of the country. The output of varied electrical appliances, such as turbines, accumulators, signalling apparatus, etc., was rapidly expanding and was mainly centered in St. Petersburg and Moscow. Industry was quick to seize upon the advantages offered by electrical power and it was put to extensive use, especially in electro-chemical processes, by its many branches.
The chemical industry
In 1913 the chemical industry with an annual output of 600 million roubles and a labor force of 40,000, had doubled its production of ten years ago. The main articles manufactured were artificial manures, paints and varnishes. We were, nevertheless, dependent on Germany to a distressing degree for the supply of a wide range of chemical goods. In 1914, at the outbreak of the war, this dependence amounted to tragedy. Our allies, more technically advanced and better equipped could, no doubt, have come to our aid, had we not been separated from them by the common enemy. Faced with the immediate necessity of creating a chemical industry independent of foreign help and able to meet the enormous requirements of the war, the government resolutely tackled the problem with the able and energetic support of the Duma and the Zemstvos.
No time was lost, but it was over a year before production was sufficiently advanced to relieve the terrible shortages at the front. By 1916 there were 400,000 employed in the industry. Thirty-three factories were manufacturing sulphuric acid, nitric and nitrous compounds, while the thirty-two factories producing benzole and toluene not only met our military demands but also supplied civilian needs. Production of shells was 83 times and that of explosives thirty times greater than at the outbreak of hostilities. The ruthless demands of war thus
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