Russia under the Old regime

204

Caveat emptor - 'let the buyer beware' - was rendered in Muscovite Russia as 'the pike plies the seas to keep the carp awake'; the saying was apparently so much in circulation that even foreigners were able to quote it. Mackenzie Wallace writing at the end of the nineteenth century aptly described Russian businessmen, small and large alike, as basically horse-traders. How highly they esteemed cunning may be gathered from a story told by a seventeenth-century traveller to Moscow of a Dutchman who so impressed the local merchants by his ingenuity in defrauding customers that they petitioned him to teach them his art. There is no indication that these eager students of business practices had a comparable interest in the creative sides of Dutch commerce.

Except for twenty or thirty gosti, and their companions in the two sotni, Muscovite merchants hived in a state of perpetual anxiety, being defenceless against the service class which administered, judged and taxed them, and in the process pitilessly bullied diem. Giles Fletcher was struck by the intimidated traders he had met in Russia:

If they have anything, they conceal it all they can sometimes conveying it into monasteries, sometimes hiding it under the ground, and in woods, as men are wont to do where they are in fear of foreign invasion... I have seen them sometimes when they have laid open their commodities for a liking [for approval] (as their principal furs and such like) to look still behind them and towards every door; as men in some fear that looked to be set upon and surprised by some enemy. Whereof asking the cause, I found it to be this, that they have doubted lest some nobleman or syn boiarskii of the Emperor's had been in company and solaid a train upon them to pray upon their commodities perforce.18

Under such conditions capitalism could hardly take root. And indeed, Russian commerce tended towards natural forms of exchange. In terms of money and credit, it remained until the middle of the nineteenth century at a level which western Europe had left behind in the late Middle Ages. Trade in Muscovite Russia and in considerable measure in Russia of the imperial period was mainly carried out by barter; money was employed mostly for small-scale cash-and-carry transactions. The principal form of capital was merchandise. It was not unusual for Muscovites to buy from foreigners on credit some commodity and later to offer it to them for repurchase at a discount. This practice perplexed foreigners but it makes sense if one allows for the acute shortage of money. The Russians used goods as collateral for loans from monasteries or rich individuals, which they employed in quick speculations. Once the profit had been pocketed, the merchandise was of no further use and, if necessary, could be disposed of at a loss. As late as die nineteendi century, Jewish merchants were reputed to sell grain in Odessa at a lower price than they had paid the producers and still come out ahead.

The primitive, pre-capitalist character of Russian commerce is demonstrated by the importance of fairs. Common in medieval Europe, fairs disappeared from there following the introduction of bills of exchange, letters of credit, joint stock companies, stock exchanges and all the other marvels of modern commerce. In Russia they remained in widespread use until the end of the nineteenth century. The largest of these, the summer fair at Nizhnii Novgorod, attracted annually a quarter of a million traders. The goods offered for sale included oriental merchandise, headed by tea, for which international prices were set here, textiles, metals and products of Russian household industry. Nizhnii Novgorod's was the largest fair in the world; but beside it there were in the middle of the nineteenth century several thousand fairs of medium and small size scattered throughout Russia. Their decline set in only in the 1880s with the spread of railways.

Given the extreme scarcity of money in circulation, it is not surprising that until modern times Russia had virtually no commercial credit or banking. Nothing so dispels the deceptive panoramas of a flourishing Russian capitalism painted by communist historians, partly out of misplaced patriotism, partly to justify the triumph of'socialism' in a backward country, than the fact that the first successful commercial banks in Russia were founded only in the 1860s; until then, the country got along with two banks owned and operated by the state. Capitalism without credit is a contradiction in terms; and business ignorant of credit is no more capitalist than urban inhabitants without self-government are bourgeois.

The Russian merchant had no knowledge of that whole elaborate structure of commerce on which western European wealth was built. He was usually illiterate, even when doing business in the millions; and even if he knew how to read and write, he usually had no idea how to keep account books, preferring to rely on memory. Ignorance of bookkeeping was a major cause of business failures in Russia and a great deterrent to growth of firms. Many a successful enterprise collapsed after the death of its founder because his heirs could not carry on for want of account books. Risk capital, the sinews of capitalist development, was absent; what there was of it came either from the state treasury or from foreign investors. As late as the early twentieth century, the Russian middle class regarded the investor as the lowest species of businessman, far below the manufacturer and merchant in prestige.13 The Russian government first began to interest itself in the well-being of its business class in the middle of the seventeenth century, and from then on it never ceased to encourage private enterprise and promote an indigenous bourgeoisie. Given the power of the Russian state, these