Revolutions - 10.58- Inflation and Scarcity

Episode Date: June 28, 2021

Inflation and scarcity are not exactly solid foundations to base the stability of a regime. Link: The Hero of Two Worlds bookshop map Tell us where you pre-ordered the book!

And welcome to revolution. Episode 10.58, inflation and scarcity. We spent the last two episodes discussing Russia's bloody trudge through World War I, taking us from the summer of 1914, roughly up to the fall of 1916. And as we discussed, there was nothing inevitable about Russia's failures. They were caused by and exacerbated by incredible mismanagement. But it's not as if Russia was on the verge of losing the war, at least not more or less than any of the other great powers. Heading into the end of 1916, it's not like any army or government on any side was like, yes, this is awesome and the war is going great for us.

We're so happy about our situation. And when you take a look at it, what we find is that out on the front lines, the war had kind of stabilized. And many of the worst logistical issues, the munitions and weapon shortages that plagued them through the first two, years of the war had been largely resolved. Now, morale was still terrible out there, don't get me wrong, and we'll get into that more as we go forward, but morale was terrible everywhere across all of Europe. They were all suffering through a war that killed millions, pointlessly, and endlessly. So this week, we are going to turn our attention to the domestic front, because just as things were sort of stabilizing out on the front lines, a social,

economic and political crisis was breaking out back home, and that is going to be the main source of the February Revolution. This was a crisis centered especially in the urban areas that will trigger unrest, agitation, and direct action that will provide fuel for the ever-enlargining political opposition to Nicholas and Alexandra. And we've been here many times before on the podcast. This is how revolutions are made. People with money, influence, power and ambition, who feel stifled and frustrated with the existing regime, and believing they now have to take drastic action in order to avert what they see as a national catastrophe, being supported by and driven by agitation in the street that has a lot more to do with

literal bread and butter concerns, like there's no bread or butter. So let's talk about what's going on in these urban areas, because like I said, this is where the February Revolution is going to come from. For starters, we should say that we're not exactly dealing with an economic depression or hard times as such. The war, in fact, triggered an economic boom. Even with the inefficiencies and corruption and contradictions inside the urban industrial sectors that were supplying the military, ramped up wartime production drew literally millions of peasants into working-class industrial jobs in the cities. Between 1914 and 1916, the population of the cities of Russia grew from,

22 million to 28 million. So this is not about an economic depression or unemployment. Everyone had a job and everyone was working and everyone was getting paid. So the economy is just happily chugging along, right? In the wartime boom, everybody's employed, everyone's happy. Things are robustly being produced and everyone's wages are going up and everything is great. Right? Well, no. There were two huge problems that started to take hold that drove the urban population from people just going about their business to people launching a revolution. Those two problems were inflation and scarcity. Inflation and scarcity. This is the one-two punch that is going to knock out the Romanovs. So, let's talk about them.

Fighting a war means paying for a war. The Russian government did several things to meet their financial obligations. They contracted some foreign loans. mostly from Britain. They issued war bonds like all the other great powers, but none of this was quite enough. They did not, for example, find as many takers for their war bonds as the other great powers. The government was also loath to impose new taxes, and in fact in one critical area, they actually managed to knock out a significant pillar of their annual tax revenue. But we'll talk about that in a second. So absent other options, they embrace the expedient of printing more paper currency to pay their bills.

Prior to the war, Russia was on a strict gold standard, and nearly every note in circulation was backed by an equivalent amount of gold housed somewhere in the empire. But they disengaged themselves from the gold standard to meet wartime financial needs. Between the summer of 1914 and the end of 1916, the amount of paper money in circulation increased by something like 600 to 800 percent. That is a lot. A big effect of all this paper printing was price inflation, especially the prices of vital commodities like food. And now I'm sure you already know what I'm going to say next. That's right, the rise in

prices was not matched by a rise in wages. So every day, everyone's take-home pay bought them less and less at the store. This was especially true for anyone on a fixed salary, lower-level bureaucrats, doctors, teachers, those sorts of professions. They just kept receiving the same paychecks as the prices began to soar. But it was not just a dynamic of rising prices and stagnant wages. In fact, between 1914 and 1916, average wages of the urban working classes practically doubled. The problem was that over that same period, the average cost of basic necessities quadrupled. And so even though they were making more, they were still able to buy.

less. So from the lowest ranks of the unskilled working class on up through the previously comfortable professional middle classes, people are taking their wages to the store, the market, the bakery, and finding they were simply unable to buy the things they needed with the amount of money they had. Now, maybe inflation alone, bad as it was, would not have been a revolution sparking crisis. Were it not for the fact that it was also being met by an acute scarcity of those same necessary commodities. And I am talking here about really basic stuff, food, fuel for fires, coats and boots, tools, anything and everything you actually need to live on a daily basis. Shop shelves were bare. Scarcity became a problem which, like inflation, impacted not just laborers

and workers, but white-collar workers, bureaucrats, functionaries, lawyers, doctors, and teachers. They were all staring at the same bare shableness. shelves. Even rich factory owners had to sometimes shut their plants down because they could not find enough coal to heat their furnaces. The causes of wartime scarcity were structural, and they were also understandable. The needs of the army came first, both in terms of what was produced and who got priority use of the railroads. And there are stories, for example, of grain that was supposed to go to feed Petrograd rotting in a depot because the rail cars never moved. The food was there, it was available, it just never got access to the railroads to take it where it needed to go.

Or we can look at the coal supply. Russia's recent orientation toward Britain meant Petrograd had been getting most of its coal imported from Britain rather than transported internally by rail, which was more expensive, took longer, and a far more difficult journey. Then when the war started, an enormous obstacle called Germany now stood between Petroids. Metrograd and its British supply of coal. There's also just a very basic supply and demand problem here. You take all those rural workers who were conscripted into the army or who took jobs in the city, and you're turning people producing food into people who need food.

There were about 8 million men now out on the front lines. And as I just said, the populations of the cities increased by about 6 million in just two years. and in particular, what this led to was a collapse of productivity from large commercial estates. Those big estates had been the entities traditionally producing the grain that fed the cities. But the population transference caused by the war basically removed the wage labor force working those big estates. Almost overnight, there was no one to work the estates and productivity collapsed. And while I'm out here in the countryside, we do need to talk about the fact that what we're talking about here today is a great crisis in the urban centers, in the cities. From everything I have read, the rural areas and the peasantry were actually enjoying some of the best times of their lives during World War I.

You know, the ones who weren't drafted into military service. What's going on is that with so many bodies having been removed from the rural areas and shipped out to the front line or into the cities, there was much less pressure on the villages they left behind. As inflation began to set in, and the peasantry realized that growing things just to sell for paper money that would soon be worthless, they stopped selling things for worthless paper. They voluntarily withdrew from market crops and focused on subsistence farming. They just kept everything for themselves. So as the cities were starving, the peasantry was actually eating more and better than ever.

They had stores of reserves. they were feeding their animals better than ever, and it was with mounting bitterness that it was remarked a cow in the countryside ate better than a worker in the city. So when we talk about the social crisis that drove the February Revolution, we are talking about a mostly urban phenomenon.

No one angle of these big structural problems, supply, demand, transportation, and distribution explains the alarming scarcity of necessary commodities in the cities. but combined, they created an alarming scarcity of necessary commodities in the cities, which, as you can imagine, also fueled the ongoing price inflation that was also rampant. All of this was combining to make everybody hungry, miserable, and angry. The government's response to these two great issues of inflation and scarcity was utterly feeble.

Both problems were greatly exacerbated by the passively incompetent, quote-unquote, leadership from the government. As we have discussed over the past two episodes, Empress Alexandra and Rasputin promoted men who were loyal to Empress Alexandra and Rasputin with almost no regard whatsoever to whether they were qualified for the job. Now, even these unqualified ministers knew there was a problem, and there was a lot of talk about what could possibly maybe be done. But they just kind of never did anything. A few times in 1950, and 1916, they made half-hearted stabs at requisitioning food from the rural areas at fixed prices, but none of it was pursued with any kind of vigor or purpose.

To make matters worse, while they didn't do anything about it, they also didn't let anyone else do anything about it. Various elected municipal councils in several cities volunteered to take up the task of providing for their populations, but the government wouldn't let them do it. They did not want those municipal bodies to become too important or too powerful. The Petrograd Municipal Council asked the government for authority to organize distribution of food, and the government said, no, you can't do it. The general feeling inside the halls of the Imperial Palace was that this was all just a temporary thing that everybody needed to endure on account of the war. Now, one great example of government mismanagement was the decision in the summer of 1914 to ban the sale of vodka. The government had a monopoly on the

sale of vodka, and for vague reasons of moral and physical health, the government stopped selling vodka at the beginning of the war. Now, this might seem like a small thing, maybe even a good thing, but the vodka ban touched on almost every facet of what was feeding into the February Revolution. For example, roughly one quarter of direct state tax revenue was coming from the tax on vodka. So when they stopped selling it, that alone knocked out 25% of annual state revenue, which was mostly made up by printing that much more paper money. It was also, as you can imagine, a major source of resentment in the lower classes, as they were the ones who drank the vodka. Fancyer liquors and wine was not subject to the same ban. So high society could get as drunk as they

wanted as often as they wanted, and only the lower classes were prohibited from their drink of choice. This is the kind of thing that will make people angry all on its own. It also, of course, did very little to solve their desire to drink. It simply drove more people into the black market, a black market that started being supplied by various kinds of moonshine. And a great deal of this moonshine was made with incredibly dangerous mixtures of chemicals, the kinds of mixtures that will make you go blind or kill you, and there was actually a minor epidemic of people dropping dead after drinking poisonous moonshine concoctions. So the vodka ban was a blow to one of the key pillars of state revenue and a source of almost daily resentment and anger against the ruling class, and also

it was literally killing people. By the fall of 1916, things were reaching threat level midnight. The main cities of Petrograd and Moscow were only receiving about one-third of the amount of food they needed to feed their populations and only about half the fuel they needed for their fires. So, even if grain was delivered, bakeries did not have the means to turn it into bread because they could not heat their ovens. And so that brings us back to one of the all-time leading locations of radicalization throughout human history. No, not the university.

No, not reading groups, studying censored literature. No, not clandestine meetings of revolutionary parties. I am talking about breadlines. There is no place in human history that more quickly and more completely radicalizes a formerly, politically inert population than a breadline. A bunch of angry and hungry people standing in close proximity to one another for hours and hours on end can pretty quickly talk themselves in to some pretty heavy ideas. The breadlines in the Russian cities were inhabited mostly by women.

In the fall of 1916, for example, women workers in the factory would work all day, and then simply move over to go stand in line for bread, which they frankly did not know whether they would even get. In 1914 and 1915, they would take along stools so they could at least sit down. By 1916, the stools were replaced by cots and beds, because it was hardly even worth it to go home anymore. So these women were just bouncing back and forth between factory ships. and shifts in the breadline trying to get food. It is estimated that the working women of Petrograd spent 40 hours a week in various food lines

simply trying to acquire the basic necessities for their family. And then, of course, there's the problem of every time you go into these stores, the wages you're taking in are buying them less and less. So the reports now coming out of the police departments and the Akrona and various other observers is that we have a situation of anger and unrest and increasing tension that looks a lot like 1905. And there are two great long quotes from Richard Pipes' history of the Russian Revolution, called creatively the Russian Revolution, which I'm just going to quote to you now.

The first one is a police report to the Ministry of the Interior in October 1916. It is essential to concede as an unqualified and incontrovertible fact that at present, the internal structure of Russia's political life confronts the very strong threat of the relentless approach of great turbulence brought about and explainable exclusively by economic factors, hunger, the unequal distribution of food and articles of prime necessity, and the monstrous rise in prices. For the broadest strata of the population of the vast empire,

the problem of food is one of the dreadful, inspiring impulse that drives the masses toward grassy. affidual affiliation with the growing movement of discontent and hostility. There exists in this case concrete and precise data that makes it possible to assert categorically that until now this entire movement has had a purely economic basis, virtually free of any affiliation with the strictly political programs. But this movement needs only to take a concrete form and find expression in some specific act, a pogrom, a large-scale strike,

a major clash between the lower strata of the population and the police, etc., to assume at once, absolutely, a purely political aspect. The second quote is also from the fall of 1916, and it's from the chief of the Petrograd Corps of Gendarme. He said, The exceptional seriousness of the period which the country is living through and the countless catastrophic disasters with which the possible imminent rebellious actions of the lower classes of the empire,

angered by the difficulties of daily existence, can threaten the entire vital structure of the state, urgently demand, in the opinion of loyal elements, the extreme necessity of speedy and comprehensive measures to remove the existing disorder and to relieve the excessively laden atmosphere of social disaffection. As recent experience has shown, under existing conditions, halfway decisions, and some palliative, accidental measures are entirely inappropriate. So let's go back to what we were talking about at the end of episode 10.54,

and the Tsar hoping that when he declared war in the summer of 1914, that all the labor unrest that had been building since the Lena Goldfield massacre would disappear as everyone joined this great patriotic war effort. It's at least part of the reason why he declared war. And now here two years later, we have reports from people with their eyes and ears on the ground in Petrograd and Moscow, saying the people are more upset than ever. Work stoppages are beginning. People are throwing down their tools and marching out in protest. And as the police report said, in the beginning they were protesting insufficient wages and scarcity of bread. But by now, they were connecting the dots that their social and economic problems may require an abrupt, political solution. Now, as we have discussed over the past two episodes, this was a conclusion that

had already been reached by many of the elites in Russia. In fact, it's sort of where we ended the last two episodes, with a group of Russian leaders deciding the real problem here was very specifically Nicholas and Alexandra. Now, originally, most of these leaders coming to this conclusion were progressives and liberals, but by now even conservatives, arch-royalists, and members of the upper nobility were joining the so-called progressive bloc, demanding a complete overhaul of the government. Deputations from the United Nobility, an organization created after 1905 to defend the traditional rights of the aristocracy, were going to the czar and saying, you need to change the government, you need better ministers. You need to work with the Duma.

And the thing is at this point, I can't really shorthand all this criticism as being directed at the Romanov family. Because by now, critics included members of the Romanoff family. Nicholas's siblings and cousins were going to him and saying the same thing, and also hinting as gently as possible that the Tsar needed to stop listening to his wife, that Rasputin was a huge problem. Now, none of these people wanted to overthrow the monarchy, far from it. But they were becoming convinced that it might soon become necessary to save the monarchy from the monarchs. By the fall of 1916, there were very few members of elite society who were not hypercritical of Nicholas and Alexandra.

You'd be hard pressed to find anybody who thought the emperor and empress were like doing a bang-up job. and that's liberals and conservatives alike, forward-looking industrialists and backward-looking aristocrats. All of high society was unifying against them. This is a political situation that has come down to a very tiny clique surrounding Nicholas and Alexandra, who were hyper-loyal sycophants and who held all the power and wielded it terribly, surrounded by a mass of angry and frustrated people,

who believe that for the good of Russia, something might have to be done, something that might require an abrupt political solution. One of the things that unified opposition to the imperial couple across the ideological spectrum was the widespread belief that Russia's difficulties during the war were the result of treason in high places. One of the things that made Alexandra so odious was not that she was merely incompetent or in over her head or listening too much to her peasant holy man, but that she was German. Alexandra came from the Germanic part of the extended royal dynasty ruling Northern Europe, and right from the start, she was accused of being sympathetic to the Germans,

maybe even hoping they won the war. The sycophantic minister, she promoted, were accused of taking bribes from the German government, secretly arranging to conduct a separate peace that would sell out Russia but make them rich. When Alexandra elevated a guy named Boris Sturmer to the rank of de facto prime minister earlier in 1916, his German name increased suspicions that there was a pro-German anti-Russian clique at the very heart of power. These accusations of a pro-German treasonous faction inside the Imperial Palace helped trigger patriotic and nationalistic fear and outrage.

The problems that beset Russia were not caused by stupidity but treason. And as we'll see, the February Revolution was in large part a patriotic and nationalistic movement against suspected foreign usurpers. The opposition leaders came to believe they had to act decisively and outside of all constitutional measures to remove the influence of foreigners and traitors. Now, as I've said, most of this is not true. Alexandra was not a pro-German secret agent trying to destroy the Russian war effort from the inside. but that's hardly the point. The point is that they are going to come to believe that pushing out Nicholas and Alexandra

is a supreme act of patriotism. So all through the fall and winter of 1916, there are, inside the ranks of the high nobility and the upper reaches of the army, conversations about what to do about Nicholas and Alexandra and Rasputin. There are anecdotal rumors of several different palace coups being planned, one involved detaining the imperial couple in a rail car and forcing Nicholas to name his brother as regent, and then he would then appoint a government approved by the Duma. Apparently Prince Lavov, the liberal noble leader of the Zemstva Union,

was in loose talks with various high-ranking military officers, including the hero of the war, General Bursilov, to compel Alexandra to cede all her authority to Grand Duke Nikolai, who would then appoint Prince Levov Prime Minister of a government-approve. proved by the Duma. General Bursilov said if he has to choose between the emperor and Russia, I march for Russia. These palace coup talks were extremely preliminary and obviously never happened, but it speaks to the mounting sense of frustrated alarm prevailing everywhere, especially up in high places.

In these same circles, and at this same time, there was also talk about what to do to neutralize Rasputin, who was now almost universally considered a malevolent threat to national security. That would be one plot that did come to fruition. Now, for like a quick beat, it looked as though maybe the prevailing atmosphere of exasperation and alarm were finally getting through to the imperial couple. In September 1916, Nicholas and Alexandra sacked the minister of the interior and appointed a guy named Alexander Proto Popoff. Protopopov was a leading member of the Duma

from the conservative liberal octobrist faction. He had never actually served in any part of any ministry. He was a businessman, a textile manufacturer, and a landlord. He had no experience in government or bureaucratic administration. But he was a leading and trusted member of the Octobists, and his appointment to be minister of, of the interior, was taken by everyone as the Tsar turning sharply in the direction of compromise and reason. Here was a man the Duma approved of and trusted, now running arguably the most

important ministry in the empire. But whatever hopes were raised by Protopov's appointment quickly gave way to disappointment and disillusionment. He was not really cut out for the job, especially not in a time of great national crisis. He was, very adept at talking about big plans and big ideas, but displayed no will or ability to implement any of these plans or ideas. He fancied himself the next Stilippin, but had not one-one one-thousandth of Stilippin's energy. Now, part of the problem, though, was that Proto-Pov's ideas were often rooted in laissez-faire economics. He believed it was the government's job to get out of the market's way. And so even as the urban grain supply was put under the Ministry of the

Interior's jurisdiction because the lack of food was becoming a security threat, Proto Popov did the opposite of actively intervening to get supply trains filled and rolling to the cities. It also turns out that Proto Popov was enormously vain and susceptible to flattery. When Alexandra offered him all the trappings of imperial favor, he went weak in the knees. He had never enjoyed perks of office like this, and he became enamored with the lifestyle. Well aware he owed his position and new lifestyle to the favor of Alexandra, he wasn't going to do anything to upset her. Whatever hope there was that Proto Popov would be a voice of firm reason inside the Imperial Palace vanished almost overnight.

Alexandra's aggressive cultivation of Proto Popov was also a calculated part of a larger plan. According to the lingering vestiges of the Constitution of 1906, the Duma had to approve the annual budget. They had only held sporadic sessions over the course of the war and had not yet met at all in 2016, but they needed to be called into session before the end of the year to approve the budget. So when recommending the appointment of Proto Popov to her husband, Alexandra wrote that his elevation would dampen the hostility of the Duma and help them navigate the budget to speedy approval,

and basically once that was done and everyone had gone home, Proto Popov would have served his usefulness and could be discarded if he made any real trouble. Meanwhile, the progressive block of the Duma delegates themselves prepared for this coming session, which was set to begin on November 1st. All through October 1916, leaders and parties convened to discuss strategy and tactics. It would be the first chance they would have to voice all their concerns

and put pressure on Nicholas, Alexandra, and the government. But they didn't know how hard they should push. At conferences of the cadet party, for example, Pavel Milikov attempted to steer his colleagues towards being willing to accept compromises from the Tsar to get a more competent and trustworthy government appointed, but not to get too overheated and risk triggering full-blown social revolution out in the streets.

But the left wing of the cadets now loudly demanded the time for all that was passed, the time for compromise was passed. They needed to aggressively confront the Tsar and force him to back down. They had tried petitions and delegations and appeals back in the fall of 1915, and the so-called revolt of the ministers, which we discussed in episode 10.56, resulted in the Tsar blowing them off and dissolving the Duma. They could not make the same mistake twice. In the end, this argument carried the day.

Even Milikov concluded it was a risk, but probably a necessary risk. They were all in Petrograd and well aware of the major crisis brewing in the streets and in the breadlines. Meliakov and the other cadets received their own reports that the Duma was now being talked about as a useless institution that did nothing for the people. That the new session beginning November 1st would be something of a moment of truth. Either the Duma would prove it was willing to aggressively stand up for the people, or they would find themselves swept aside when the deluge finally came. So they resolved to adopt the most confrontational posture possible

and refuse to accept any compromises from the government. It was incredibly risky, but the conclusion was that anything less would be even riskier. And next week, the Duma will face this moment of truth, and we will finally introduce a guy who will be among the loudest and most confrontational of all the Duma delegates, Alexander Kerenzky. Now, before we go, I just want to thank everyone who has pre-ordered Hero of Hero of Two Worlds so far.

And to those of you who have submitted the name and location of the bookstore you ordered Hero of Two Worlds from, there are now more than 2,000 entries on that map. And there's a link to where you can go to do this included in the show notes to this week's episode. Thank you very, very much. And please, if you haven't pre-ordered the book, go ahead and take this opportunity to do so now. I'm also right now in the middle of recording the audiobook. And in fact, when I'm done recording this week's episode, I'm just a little bit of the book.

going to turn my attention to finishing it off. I'm in the back third of the book. I'm at chapter 19. And I just got to say, um, if you do a thing where you read the first third of a book or the first two thirds of a book and then put it down, look, I'm guilty of doing that too, but, but don't do that with Hero of Two Worlds. I think the back third of the book is actually my favorite part. It's certainly the stuff you won't find in any other biography of Lafayette, which usually cut out after he winds up in an Austrian prison. So please pre-order Hero of Two Worlds. And next week, we will come back and have everybody start screaming, quite literally screaming, at the czar.