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Foreign Enterprise in Russian and Soviet Industry: A Long Term Perspective

Published online by Cambridge University Press:  11 June 2012

John P. McKay
John P. McKay
Affiliation:
Associate Professor of History, University of Illinois, Urbana
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Abstract

This examination of the role of foreign enterprise in Russian and Soviet industrial development from 1632 to the present indicates that it was a significant one. Tsarist and Soviet Russia used foreign enterprise to their own advantage very skillfully by periodically acquiring advanced industrial technology and thereby reducing their own “backwardness” relative to the West. In doing so, they succeeded in remaining firmly in control of their own economic affairs, an achievement that often eluded other countries.

Type
Research Article
Information
Business History Review , Volume 48 , Issue 3: Multinational Enterprise , Autumn 1974 , pp. 336 - 356
Copyright
Copyright © The President and Fellows of Harvard College 1974

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References

1 See, in particular, Amburger, Erik, Die Familie Marselis: Studien zur russischen Wirtschaftsgeschichte (Giessen, 1957)Google Scholar; Strumilin, S. G., Istoriia chernoi metallurgii v SSSR, vol. 1 (Moscow, 1954)Google Scholar; and Stoskova, N. N., Pervye metallurgicheskie zavody Rossii (Moscow, 1962).Google Scholar These and other relevant sources are used and discussed by Fuhrmann, Joseph T., The Origins of Capitalism in Russia: Industry and Progress in the Sixteenth and Seventeenth Centuries (Chicago, 1972).Google Scholar Despite certain flaws and a rather pretentious title, this workis a useful drawing together of existing knowledge on the foreign contribution to early Russian iron manufacturing, and I have used it extensively in conjunction with the above-mentioned monographs.

2 Fuhrmann, Origins of Capitalism, 59–63.

3 Ibid. 70.

4 Ibid., 68–72, and the sources cited there, particularly Strumilin, Istoriia, 1, 98–118.

5 Fuhrmann, Origins of Capitalism, 72–79.

6 Strumilin, Istoriia, I, 105.

7 Kafengauz, B. B., Istorii a khoziaistva Demidovykh v xviii-xix vv (Moscow, 1949), 33Google Scholar; Strumilin, Istoriia, I, 204.

8 In 1780 Russia produced 110,000 metric tons of pig iron while England produced 40,000; in 1800 they were about even at 162,000 tons for Russia and 156,000 tons for England. Strumilin, Istoriia, I, 204.

9 Origins of Capitalism, 244–245.

10 Amburger, Die Familie Marselis, 124–126.

11 Ibid., 186–189; Liashchenko, P.I., History of the National Economy of Russia to the 1917 Revolution (New York, 1949), 292–294.Google Scholar

12 Ibid.; Portal, Roger, L'Oural au XVIIIe siècle: Etude d'histoire èconomique et sociale (Paris, 1950), 54–60.Google Scholar

13 Liashchenko, History, 294–296; Blackwell, William L., The Beginnings of Russian Industrialization, 1800–1860 (Princeton, 1968), 24–28.Google Scholar

14 For evidence supporting this hypothesis, see Portal, L'Oural, 54–57, and Fuhrmann, Origins of Capitalism, 131–134.

15 These figures are based upon Ol', P. V.Inostrannye kapitaly v narodnom khoziaistve dovoennoii Rossi (Leningrad, 1925)Google Scholar, as processed by Eventov, L. Ia., Inostrannye kapitaly v russkoi promyshlennosti (Moscow, 1931), 20.Google Scholar These and other estimates of foreign investment in Russian industry are discussed in detail in McKay, John P., Pioneers for Profit: Foreign Entrepreneurship and Russian Industrialization, 1885–1913 (Chicago, 1970), 24–37.CrossRefGoogle Scholar

16 Blackwell, Beginnings, 243.

17 Ibid., 255–261.

18 von Schulze-Gävernitz, Gerhardt, Volkswirtschaftliche Studien aus Russland (Leipzig, 1899), 90–97.Google Scholar

19 Blackwell, Beginnings, 241–242.

20 Ibid., 246–247; Amburger, Erik, “Der fremde Unternehmer in Russland bis zur Oktoberrevolution im Jahre 1917,” Tradition, II (1957), 337–355.Google Scholar

21 There is no equivalent for Russia of Henderson's, W.Britain and Industrial Europe, 1750–1870 (Leicester, 1965)Google Scholar, which deals only with Western Europe, although the transfer of skills and technology from the more to less advanced industrial area issimilar. The following discussion of English entrepreneurs is based primarily on Blackwell, Beginnings, 249–253.

22 Ibid., 252; Haywood, Richard Mowbray, The Beginnings of Railway Development in Russia in the Reign of Nicholas I, 1835–42 (Durham, N.C., 1969), 20–21, 51–52.Google Scholar

23 Blackwell, Beginnings, 253; McKay, Pioneers for Profit, 41, 114–116.

24 My discussion is based primarily upon Professor Blackwell's excellent presentation in Beginnings, 303–323. Further detail and clarification will undoubtedly come with the second volume of Professor Haywood's comprehensive history of Russian railroads.

25 Blackwell, Beginnings, 303–304.

26 Quoted by Blackwell, Beginnings, 311.

27 The origins of Russian railways have been most thoroughly studied by Haywood in his Beginnings of Railway Development in Russia, upon which the above is based.

28 Cameron, Rondo E., France and the Economic Development of Europe, 1800–1914 (Princeton, 1961), 275–283Google Scholar; Mai, Joachim, Das deutsche Kapital in Russland, 1850–1894 (Berlin, 1970), 44–45.Google Scholar

29 Our knowledge of foreign enterprise in Russian railroad construction in this period is sketchy and often contradictory. Cameron states that Russian investors unloaded their shares of the Main Company in Paris as quickly as possible (France, 115), while Liaschenko (History, 491) states that normally it was the foreign constructors who dumped their shares on Russian capital markets.

30 Mai, Das deutsche Kapital, 44–63.

31 Liashchenko, History, 490.

32 McKay, Pioneers for Profit, 28, and footnote 15 above.

33 Gerschenkron, Alexander, “The Rate of Growth of Industrial Production in Russia Since 1885,” Journal of Economic History, 7, Supplement (1947), 147.CrossRefGoogle Scholar

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36 Baudhuin, Fernand, Le capital de la Belgique et le redement de son industrie avant la guerre (Louvain, 1924), 164–167.Google Scholar

37 The best example of this was the Bonnardel Group, which grew from an investment of considerably less than 4,800,000 francs placed in the Huta-Bankova Steel Company of Tsarist Poland in 1877 to a number of firms with a stock-market capitalization of 168,000,000 francs in 1900. See McKay, Pioneers for Profit, 39–71, 337–367.

38 Ibid., 72–111.

39 Iu. B. Solov'ev, “Mezhdunarodnyi bank i frantsuzskii finansovyi kapital,” in Akademiia Nauk SSSR, Trudy leningradskogo otdeleniia instituta istorii, Monopolii i inostrannyi kapital (Moscow, 1962), 395.Google Scholar

40 Gerschenkron, Economic Backwardness, 10, 127–130.

41 See McKay, , “Elites in Conflict in Tsarist Russia: The Briansk Company,” in Jaher, Frederic C., ed., The Rich, the Well-Born, and the Powerful: Elites and Uper Classes in History (Urbana, Ill., 1974), 179–202.Google Scholar

42 See the valuable study of Laue, Theodore Von, Sergei Witte and the Industrialization of Russia (New York, 1963).Google Scholar

43 McKay, Pioneers for Profit, 11, for full citation. (This important document has been translated by Von Laue, Theodore, Journal of Modern History 26 [1954], 60–75.)CrossRefGoogle Scholar

44 See Vyshnegradskii's general rationale, as well as his specific intervention in favor of foreign enterprise in the petroleum industry, in Akademiia Nauk SSSR, Institut istorii, Leningradskoe otdelenie, Monopolisticheskii kapital v neftianoi promyshlennosti Rossii, 1883–1914 (Moscow, 1961), 114–116.Google Scholar

45 McKay, Pioneers for Profit, 83.

46 For details, see McKay, John P., “John Cockerill in Southern Russia, 1885–1905: A Study of Aggressive Foreign Entrepreneurship,” Business History Review, XLI (Autumn, 1967), 243–256.Google Scholar

47 Ol' Inostrannye kapitaly v narodnom khoziaistve, 12–13.

48 See Hirschman, Albert, The Strategy of Economic Development (New Haven, 1958), 35–39Google Scholar; McKay, Pioneers for Profit, 201–241.

49 For details see the chapter on management in McKay, Pioneers for Profit, 158–200.

50 See Diakin, V. S., Germanskie kapitaly v Rossii; elektroindustriia i elektricheskii transport (Leningrad, 1971), 135–161.Google Scholar

51 Landes, David S., “Some Thoughts on the Nature of Economic Imperialism,” Journal of Economic History, XXI (1961), 496–511.CrossRefGoogle Scholar

52 On NEP and its origins, see Nove, Alec, An Economic History of the U.S.S.R. (London, 1969).Google Scholar

53 Address of April 9, 1921, as quoted in Krimmer, Alexandre, Sociètès de capitaux en Russie impèriale et en Russie soviètique (Paris, 1934), 394.Google Scholar

54 By the Treaty of Rapallo, signed April 16, 1922, the Soviet Union and the Weimar Republic “reciprocally renounced all war claims and war losses. Germany also agreedto renounce compensation for nationalized property in the U.S.S.R., [provided that the Soviet Government does not satisfy similar claims of other States.]” Sutton, Anthony C., Western Technology and Soviet Economic Development, 1917 to 1930 (Stanford, 1968), 316–317.Google Scholar This and the second volume of Dr. Sutton's projected three-volume study have provided invaluable data for this article.

55 Sutton, Western Technology, I, 8.

56 Krimmer, Sociétés de capitaux, 400–415.

57 Sutton, Western Technology, I, 9. Krimmer, Sociétés de capitaux, 417, using different Soviet sources, gives only 138 concessions of these two types through September 1926. No doubt there is a problem of definition, since the Soviet government considered any contract with foreign companies or individuals as being a concession, according to Krimmer.

58 Part of the problem is that Sutton tends to lump all foreign activity together in his analysis, although he is aware of the different types and indeed spells them out.

59 The Development of the Soviet Economic System (Cambridge, 1948), 125–126.

60 See Krimmer, Sociétés de capitaux, 416–425, for various estimates.

61 Sutton, Western Technology, I, 320.

62 Ibid., 16–27.

63 Sutton, Anthony, Western Technology and Soviet Economic Development, 1930–1945 (Stanford, 1971), 61–64.Google Scholar

64 Ibid., 249.

65 Nelson, G., Industrial Architecture of Albert Kahn Co., Inc. (New York, 1939), 18–19Google Scholar, as quoted in Sutton, Western Technology, II, 249.

66 Chicago Tribune, November 24, 1973, sec. 2, p. 7.

67 Sutton, Western Technology, I, 340.

68 Strumilin, Istoria, I, 85.