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The Rate of Industrial Growth in Russia Since 1885*

Published online by Cambridge University Press:  03 February 2011

Alexander Gerschenkron
Alexander Gerschenkron
Affiliation:
Washington, D.C.
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Extract

The main purpose of this paper is to compare the rates of industrial A growth in various periods of Russian history from the middle of the eighties until the end of the interwar period and to describe briefly the specific factors that promoted or obstructed the process of industrialization of the country. While no definitive conclusions are reached, some of the similarities and differences between industrial developments before and after 1914 are pointed out in the last section of this paper. History in the conditional mood is an enticing pastime. However, I have successfully withstood the temptation to concentrate on estimates of the relative level of industrial output that Russia might have attained in the absence of a revolution.

Type
The Rate of Growth in Russia
Information
The Journal of Economic History , Volume 7 , Supplement S1 , 1947 , pp. 144 - 174
Copyright
Copyright © The Economic History Association 1947

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References

1 This index series was published in 1926 in the Economic Builetin of the Business Cycle Research Institute under the direction of Kondratieff, N. D..—Ekonomicheski bulleten'. V, No. 2 (1926), 12–20Google Scholar. The index was constructed on the basis of weighted geometric averages of the relative changes in the physical volume of production of the industries listed. Weights were based on the 1900 data concerning the number of workers and the horsepower employed.

The index covers industries with a total number of 1,269,500 workers in 1900, or 53 per cent of the number of industrial workers in Russia in that year. The index does not include machinery production, an omission which in view of the relative smallness of the industry before 1914 cannot have led to a serious distortion of the index. The index data refer to the wholc territory of pre-1914 Russia, that is to say, they include also the development of the textile center in Russian Poland and of coal extraction in the same region. No attempt has been made to adjust the index to the territory of the U.S.S.R. Accordingly, the precarious assumption had to be made that the rate of industrial development in territories lost after World War I was the same as in the rest of the country. Nevertheless, despite its obvious inadequacies, the index is undoubtedly the best statistical series of industrial production in prewar Russia. It should be remembered that it was prepared under the supervision of one of the most outstanding Russian economists and statisticians.

2 Computed from the slope of the exponential trend curves fitted to the index series.

3 Sobolev, M. N.Tamozhennaya politika Rossii vo vtoroy polovine XIX veka [Russia's Tariff Policy in the Second Half of the Nineteenth Century] (Tomsk, 1910), p. 826.Google Scholar

4 Schultze-Gävernitz, G. vonOcherki obshchestvennogo khozyaystva i ekonomicheskoy politiki Rossii [Essays on Russia's Social Economy and Economic Policy] (Petersburg and Moscow, 1900), p. 211.Google Scholar

5 Shteinfeld, M. “Politika zheleznodorozhnykh zakazov” [The Policy of Railroad Orders], Narodnoye Khozyaystvo [National Economy], 1902, No. 8, p. 35Google Scholar. When the construction of the Siberian Railroad began, British rails were offered at the price of 75 kopeks per pood, yet the domestic tender of 2 rubles per pood was accepted and advances of several million rubles were granted by the Treasury in order to increase output. Cf. Biriukovich, V. “Likvidatsiya promyshlennogo ozhivleniya” [Liquidation of Industrial Property], Vestnik Yevropy [The European Courier], 1901, No. 3, p. 335Google Scholar; and, similarly, P. Migulin, P.Russki gosudarstvenny kredit [Russia's Public Debt], III, No. 3 (1903), 736.Google Scholar

6 It may be noted that the introduction of the gold standard was carried out in accordance with a program conceived ten years earlier during the ministry of Vyshnegradski. The policy of persistent accumulation of the gold reserve was initiated even earlier by Vyshnegradski's predecessor, N. Kh. Bunge.

7 Cf. Ol', P. V.Inostrannyye capitaly v narodnom khozyaystve dovoyennoy Rossii [Foreign Capital in Russia's Prewar Economy] (Leningrad, 1925), pp. 23Google Scholar ff. About 48 per cent of the capital invested by 1900 went into mining and 16 per cent into machinery production.

8 Between 1881 and 1897 proceeds of indirect taxes increased by 80 per cent while proceeds of direct taxes fell by 38 per cent and constituted about one sixth of proceeds from indirect taxation.

9 Taxes on one acre of peasant land were almost seven times as high as those on one acre of the land of estate owners. Cf. Prokopovicz, S. N.Agrarny vopros v zyfrakh [The Agrarian Question in Figures] (Petersburg, 1907), p. 17.Google Scholar

10 Shvanebakh, B. E.Denezhnoye preobrazovaniye i narodnoye khozyaystvo [Monetary Reform and the National Economy] (Petersburg, 1901), pp. 20–21Google Scholar. As a result inferior bread substitutes, even chaff, became increasingly important in the diet of the Russian peasants. Cf. Kovalevski, M. M.Ekonomicheski stroy Rossii [Russia's Economic Regime] (Petersburg, 1899), p. 53Google Scholar. The economic decline of the Russian peasantry over the period is illustrated by the fact that between 1888 and 1899–1901 the number of farms without horses increased by 22 per cent, that of farms with one, horse increased by 25 per cent, while the number of farms with two or more horses decreased considerably. Cf. Maslov, P. P.Razvitiye zemledeliya i polozheniye krest'yan do nachala XX veka [The Development of Agriculture and the Conditions of the Peasants before the Twentieth Century] (Petersburg, 1909), p. 14.Google Scholar

11 The Act of June 2, 1897, set the maximum working day at eleven and a half hours. Even this limitation, however, was constantly evaded. Morcover, a subsequent decree of 1898 greatly narrowed the field of application of the act.

12 Kovalevski, Ekonomicheski stroy Rossii p. 113.

13 In 1900, the equivalent of about 85 current dollars a year. Cf. Finansov, Ministerstvo [Ministry of Finance], Statisticheskiya svedeniya o fabrikakh i zavodakh po proizvodstvam ne oblozhennym aktsizom za 1900 god [Statistical Data on Factories and Mills in Branches Not Subject to Excise Duties for the Year 1900] (Petersburg, 1903), p. 208.Google Scholar

14 It is not unlikely that the index series used tends to understate the actual rate of growth somewhat. The index is based on changes in physical quantities and does not adequately take into account improvements in quality; moreover, the exclusion of machinery output from the index tends to move in the same direction inasmuch as output of the metalworking industries increased 75 per cent between 1887 and 1897, while output of mining, for example, increased only 28.5 per cent.—Lyashchenko, P. I.Istoriya narodnogo khozyaystva SSSR [Economic History of the U.S.S.R.] (Moscow, 1939), I, 439Google Scholar. On the other hand, the volume of machinery production was still small in that period; the gross value of machinery output was only 70.7 per cent of that of the mining output.

15 In 1900–1901, 4,060 miles as against 4,530 in 1898–99.—Finn-Yenotayevski, A.Sovremennoye khozyaystvo Rossii [Russia's Contemporary Economy] (Petersburg, 1911), p. 48.Google Scholar

16 This decree was subsequently passed by the Duma as the Act of June 14, 1910.

17 The ukase of October 5, 1906, discontinued the power of the heads of peasant households and of the elective peasant officials over issuance to peasants of passports required for sojourn outside the village community.

18 The question may again be raised whether the index scries, on the basis of which the rates of growth have been computed, does not, for the reasons previously given (see p. 150, n. 14), understate the actual rate of growth. Machinery output may, indeed, have increased faster than that of industries included in the index. But the value of machinery output in 1913 was only 7.3 per cent of total industrial production.—Granovski, E. L. and Markus, B. L. eds., Ekonomika sotsialisticheskoy promyshlennosti [Economics of the Socialist Industry] (Moscow, 1940), p. 108Google Scholar. The effect of its omission, therefore, cannot be very great. The index series employed here shows an increase of 63.8 per cent between 1900 and 1913. Comparison of net industrial output in 1900 and 1913 at the constant prices of 1900 shows a similar-increase of 62.2 per cent. See Prokopovicz, S. N.Opyt ischisleniya narodnogo dokhoda po 50 guberniyam Yevropeyskoy Rossii [Essay on Computation of National Income for 50 Governments of European Russia] (Moscow, 1918), p. 67Google Scholar. Mr. Prokopovicz' computations apply to European Russia without Finland and what was at that time the czardom of Poland. The comparison appears to confirm the index series. It is true that even such a comparison in constant prices may not properly reflect such increases in the value of output as are associated with improvements in quality. Numerous such improvements did take place between 1900 and 1913, and some of these may not be reflected in the prices of 1900: the quality of steel, for example, increased greatly over the period, yet the 1913 product was in all probability included in the computation at the price of the lower quality product of 1900. No estimate of the extent to which an understatement of the index may be involved is attempted here, but on the whole the difference is very unlikely to be substantial.

19 Cf. S'yezdov, Soviet predstaviteley promyshlcnnosti i torgovli [Council of the Conventions of Representatives from Industry and Trade], Statisticheski yezhegodnik na 1914 god [Statistical Yearbook for the Year 1914] (Petersburg, 1914), pp. 663–64.Google Scholar

20 War and Navy budgets were, in 1912, about 75 per cent higher than in 1899. A considerable portion, perhaps one half, of this increase must be attributed to price changes. The effect of such increases in real expenditures as had taken place probably was very moderate. The failure of the government to carry out the plan of expansion and modernization of artillery was decisive in this respect. Cf. Ministerstvo Vnutrennikh Del, Tsentral'ny Slatisticheski Komitet [Ministry of Interior, Central Statistical Committee], Yezhegodnik Rossii no 1904 god [Russia's Yearbook for the Year 1904] (Petersburg, 1905), I, 370Google Scholar; Ministerstvo Finansov [Ministry of Finance], Yezhegodnik., Vypusk. 1914 goda [Yearbook, 1914] (Petrograd, 1914)Google Scholar; Soviet S'yezdov predstaviteley promyshlennosti i torgovli, Statisticheski yezhegodnik na 1914 god, pp. 393–94; Golovine, N. N.The Russian Army in the World War (New Haven: Yale University Press, 1931), pp. 32–34.Google Scholar

21 Ministerstvo Vnutrennikh Del, Tsentral'ny Statisticheski Komitet, Yezhegodnik Rossii na 1904 god, p. 294; Ministerstvo Finansov [Ministry of Finance], Narodnoye khozyaystvo v 1913 godu [National Economy in the Year 1913] (Petrograd, 1914), p. 579.Google Scholar

22 Prokopovicz, Opyt ischislcniya, p. 69.

23 Robinson, Geroid TanquaryRural Russia Under the Old Régime (London, New York, and Toronto: Longmans, Green and Company, 1937), p. 244.Google Scholar

24 Prokopovicz, Opyt ischisleniya, p. 67. According to a Soviet computation for the interwar territory, the corresponding figure was 28 per cent. Cf. Gosplan of the U.S.S.R., Kontrol'nyye zyfry na 1926–27 god [The Control Figures for the Years 1926–27] (Moscow, 1926), p. 214.Google Scholar

25 Cf. SSSR i kapitalisticheskiye strany [The U.S.S.R. and the Capitalistic Countries] (Moscow and Leningrad, 1939), p. 8.Google Scholar

26 At the 1900 prices the industry-agriculture ratio for 1913 becomes 57 per cent. At the 1926–27 prices the ratio is increased to 73.8 per cent. Cf. Prokopovicz, Opyt ischisleniya, p. 67, and idem, Russlands Volkswirtschaft unter den Soviets (Zurich and New York: Europa Verlag, 1944), pp. 358–59.Google Scholar

27 National Bureau of Economic Research, Income in the United States, Its Amount and Distribution, 1909–1919 (New York: Harcourt, Brace and Company, 1921), I, 18.Google Scholar

28 Cassel, GustavThe Theory of Social Economy (New York: T. F. Unwin, 1924), p. 63.Google Scholar

29 The rates for the five countries other than Russia have been computed on a compound basis, using the last year of the preceding and of the given period. For Russia, the slopes of the trends are used. The indexes have been taken from League of Nations, Industrialization and Foreign Trade (n.p.: League of Nations, 1945)Google Scholar, pp. 132–34. These indexes exclude mining and are, for this reason at least, not fully comparable with the Russian index as given in this paper.

30 On the basis of the previously given percentage (6.9) for the relation of the gross value of Russia's industrial output to that of the United States, the order of magnitudes involved may be very approximately shown as follows: in 1885, the United States industrial production was larger than that of Russia by 8,400 million dollars; in 1913 the difference was 34,860 million dollars. The dollars are of 1937 purchasing power; for the United States index, cf. the Report to the Committee on Banking and Currency, Basic Facts on Employment and Production, Senate Committee Print No. 4 (United States Government Printing Office, September 1, 1945), p. 4Google Scholar; for Russia, N. D. Kondratieff's index series was used; both series include mining; for the absolute value of output in the United States, cf. Statistical Abstract of the United States. 1942, pp. 885, 836.

31 Somewhat different results are reached if the 1926–27 price system is used. Since 1928, Soviet output and income statistics have been expressed in 1926–27 prices and some series were recomputed back to 1913. See the table on p. 161.

32 Vierteljahrshefte zur Konjunkturforschung, Sonderheft No. 31, Wagenführ, RolfDie Industriewirtschaft (Berlin, 1933), p. 23.Google Scholar

33 Zagorsky, S. O.State Control of Industry in Russia during the War (New Haven: Yale University Press, 1928), pp. 82–94.Google Scholar

34 Engeyev, A. “O platezhnom balanse dovoyennoy Rossii” [On Russia's Prewar Balance of Payments], Vestnik. Finansov [The Financial Courier], 1928, No. 5, p. 35Google Scholar. Cf. also for the period 1909–13. estimates by Pasvolsky, Leo and Moulton, Harold G.Russian Debts and Russian Reconstruction (New York: McGraw-Hill Book Company, 1924), p. 32.Google Scholar

35 At the beginning of the century large estates produced 50 per cent more grain per acre than the peasant farms. Cf. Prokopovicz, Agrarny vopros v zyfrakh, p. 62. In 1926–27, output of all grains was 5 per cent less than in 1914, while the volume of marketed grains was 51 per cent lower than in 1914.

36 Cf. Granovski and Markus, eds., Ekonomika sotsialisticheskoy promyshlennosti, pp. 38 ff.

37 Liubimov, N. “The Soviets and Foreign Concessions,” Foreign Affairs, IX (1930), 95–105.CrossRefGoogle Scholar

38 For the underlying index numbers, see the table on p. 161.

39 Sources for large-scale industry:

1920–32: Sotsialisticheskoye stroitel'stvo SSSR, Statisticheski yezhegodnik [Socialist. Construction of the U.S.S.R., Statistical Yearbook] (Moscow, 1935), p. 3.Google Scholar

1933–38: Sotsialisticheskoye stroitel'stvo SSSR, Statisticheski sbornik [Socialist Construction of the U.S.S.R., Statistical Handbook] (Moscow and Leningrad, 1939), p. 34Google Scholar. Sources for all industry:

1928, 1931, 1932: Sotsialisticheskoye stroitel'stvo SSSR, Statisticheski yezhegodnik. [Socialist Construction of the U.S.S.R., Statistical Yearbook] (Moscow, 1934), p. 36.Google Scholar

1929, 1933, 1938: Sotsialisticheskoye stroitel'stvo SSSR, Statisticheski sbornik (1939), p. 36.

1935, 1936, 1937: League of.Nations, Statistical Yearbook. (n.P.: League of Nations, 1940–41), p. 159. The base year has been converted from 1929 to 1913.

1930: Computed as geometric average of the immediately preceding year and the immediately following one.

1934: Gosplan of the U.S.S.R., Osnovnyye pokazateli narodno-khozyaystvennogo plana na 1936 god [Basic Indexes of the National Economic Plan for 1936] (Moscow, 1936), p. 8.Google Scholar

1939, 1942: Prokopovicz, Russlands Volkswirtschaft unter den Soviets, pp. 178, 181, 195.

1945: Speech of the President of Gosplan of the U.S.S.R., N. A. Voznescnski, Pravda, March 16, 1946, p. 2.

1940, 1950: “Zakon o pyartiletnem plane vosstanovleniya i razvitiya narodnogo khozyaystva SSSR na 1946–1950 gody [Law concerning the Five-Year Plan of Reconstruction, and Development of the National Economy of the U.S.S.R. for the Years 1946–1950], Pravda, March 21, 1946, p. 3.

40 Dobb, MauriceRussian Economic Development Since the Revolution (London: George Routledge and Sons, 1929), p. 236Google Scholar.

41 Sotsialisticheskoye stroitel'stvo SSSR, Statisticheski yezhegodnik (1934), p. 226; ibid., Sotsialisticheskoye stroitel'stvo SSSR. Stalisticheski sbornik (1939), p. 103.

42 According to Colin Clark, the combined food consumption of city and country dwellers was only 1 per cent higher in 1934 than in 1913. Per capita food consumption is likely to have been, in 1934, 11 per cent lower than in 1913, and, in 1937, still 6 per cent below 1913. Cf. Clark, ColinA Critique of Russian Statistics (London: Macmillan and Company, 1939), pp. 13Google Scholar, 68. Also, Frank Lorimer and League of Nations, The Population of the Soviet Union (Geneva: League of Nations, 1946), p. 135.Google Scholar

43 For a discussion of the problems involved, the reader is referred to my article, “The Soviet Indices of Industrial Output,” Review of Economic Statistics, XXIX (1947), 217–26.Google Scholar

44 Cf. the table on p. 161.

45 Cf. Sotsialisticheskoye stroitel'stvo SSSR, Statistichcski sbornik. (1939), p. 34.Google Scholar

46 Some indications of these shifts as compared with 1913 were apparent as early as 1928, but the extent of the changes was slight:

47 For the underlying index numbers, see the following: Crude oil:

1928: League of Nations, Statistical Yearbook (n.p.: League of Nations, 1938–39), p. 132.

1938: League of Nations, Statistical Yearbook (1940–1941), p. 129. Coal:

1928: League of Nations, Statistical Yearbook (n.p.: League of Nations, 1935–1936), p. 133.

1938: League of Nations, Statistical Yearbook (1940–1941), p. 134. Pig iron:

1928: League of Nations, Statistical Yearbook (n.p.: League of Nations, 1934–1935), P. 140.

1938: League of Nations, Statistical Yearbook (1940–1941), p. 140. Steel:

1928: League of Nations, Statistical Yearbook (n.p.: League of Nations, 1936–1937), p. 147.

1938: League of.Nations, Statistical Yearbook (1940–1941). P. 141.

48 The adjusted figures may be compared with an extrapolation of the 1907–13 trend which yields an index number of 452 in 1938. If it is assumed that industrial output would have been the same in 1918 as in 1913 as a result of the war and again the same in 1934 as in 1929 as a result of the Great Depression, the 1938 index number of the extrapolated trend is 246.

49 Tocqueville, Alexis deMélanges, fragments historiqucs et notes sur l'ancien régime. La Revolution et L'Empire (Paris, 1865), pp. 1–2, 53.Google Scholar

50 Cf. Miliukov, P. N.gosudarstvenny Khozyaystvo Rossii v pervoy chetverti XVlll stoletiya i reforma Petra Velikogo [Russia's State Economy in the First Quarter of the Eighteenth Century and the Reform of Peter the Great] (Petersburg, 1892), p. 735.Google Scholar Also,Kliuchevski, V. O.Kurs russkoi istorii [Course in Russian History] (Moscow, 1937), L, 32.Google Scholar

51 Speech of the President of Gosplan of the U.S.S.R., Voznesenski, N. A.Pravda, March 16, 1946, p. 2.Google Scholar

52 Charges to this effect were made in 1946 by the U.S.S.R. Ministry of State Control and given prominent place in the Russian press. At least in one case it was alleged that the 1926–27 prices were increased in order to raise output figures. Cf. United States Department of War, Foreign Broadcast Intelligence Service, “Daily Report,” European Section, No. 128, June 28, 1946; also, Pravda, July 31, 1946, p. 1.

53 For 1940 and 1950: “Zakon o pyatiletnem plane vosstanovleniya i razvitiya narodnogo khozyaystva SSSR na 1946–1950 gody,” Pravda, March 21, 1946, p. 3.Google Scholar

54 Cf. The New York Times, February 10, 1946, p. 30.Google Scholar

55 Output refers to that of manufacturing and mining.

56 American Iron and Steel Institute, “Release,” June 11, 1946.Google Scholar

57 It may be noted that the absolute increases in output over the period, under the assumptions made, would greatly exceed those of 1928–39; for example, between 1927 and 1939 steel output increased by 14.8 millions of long tons; the planned increase, 1950–63, is 34.6 million long tons.

58 Cf. Burns, Arthur F.Production Trends in the United States (New York: National Bureau of Economic Research, 1934), pp. 120 ff.Google Scholar

59 Bergson, Abram “The Fourth Five-Year Plan: Heavy Versus Consumers' Goods Industries,” Political Science Quarterly, LXII (1947), 199.Google Scholar