Russia under the Old regime

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policies might in time have produced something resembling a middle class were it not that they were vitiated by other measures favouring the dvorianstvo. The crown in effect gave the landowning class all the economic privileges, including monopoly on serf labour, while concurrently throwing trade and manufacture open to the other estates. The result was to undercut the more narrowly circumscribed middle class.

In 1648, the posad people of several towns rebelled. After order had been restored, the government made an effort to satisfy their worst grievances. The Code of 1649 formally granted members of the posad communities something they had long demanded, namely the exclusive right to engage in trade and manufacture. It also deprived slobody of their tax immunities and eliminated 'white' (i.e. tiaglo-exempt) places from the cities. However, these measures proved unenforceable, as seen from the steady stream of edicts required to reconfirm them. Russian peasants were forced by economic conditions to keep on selling at markets and fairs their agricultural surplus and the products of household industry, and they did so with the connivance of landlords. Measures against foreigners were easier to enforce. In the same year (1649), under the pretext that the English nation, by executing its legitimate king, had forfeited the claim to favoured treatment, Moscow revoked the century-old privileges of the Muscovy Company. The New Trading Statute (Novotorgovyi Ustav), issued in 1667, considerably restricted the liberties of all foreign merchants, forbidding them once again under the penalty of confiscation to engage in retail trade. By such measures, this time strictly enforced, foreign commercial competition was gradually eliminated.

The government's attitude towards the business class changed even more noticeably in the latter's favour with the accession of Peter 1. On his voyages to the west, Peter was greatly impressed by the prosperity which he saw all around him. Quickly grasping the basic principles of mercantilism on which national wealth was then believed to rest, he decided to make the Russian economy self-sufficient. He went out of his way to protect indigenous business, introducing the first comprehensive protective tariff (1724). By requiring all merchants and manufacturers to hold licences, he tried to restrict these occupations to members of the urban estates. His attempt to fashion a bourgeoisie failed, but the effort, once initiated, was never abandoned. The government henceforth no longer treated traders and artisans as sheep to be fleeced and began to act as their patron.

To stimulate private enterprise Peter abolished in 1711 royal commercial monopolies in all commodities but grain, vodka, salt and tobacco. For a while Russia enjoyed something close to internal free trade. But the merchants, taught by experience, were in no hurry to take advantage of the opportunities, probably fearing that Peter's measures were temporary, and that once monopolies were reinstituted they would suffer losses. Indeed, soon after Peter's death the monarchy reclaimed its commercial monopolies and things went back to normal.

Peter had more success in his industrial undertakings because here vital military considerations were involved. The standing army which he had created required uniforms and weapons in quantities far exceeding Russia's manufacturing capacity. They could not be imported from abroad for lack of money; and even had money been available, Peter could hardly have agreed to become a hostage of foreign suppliers in a matter affecting national security. He had no choice, therefore, but to construct his own defence industries. Calculations by modern historians indicate that during his reign the number of manufacturers and mining enterprises quadrupled. Nearly all the new industries worked for the military. As a rule, the government founded industries at its own expense and either operated them itself through the College of Manufactures and the College of Mining, or farmed them out to individual entrepreneurs chosen from the ranks of dvorianstvo and the merchant class. In the latter event, the state retained the property rights exactly as it did in the case of pomestia. Private entrepreneurs enjoyed only the right of possession, accorded to them and their heirs as long as they ran the enterprises to the government's satisfaction - otherwise they reverted to the crown.* Under Peter, as in the seventeenth century, the manufacturers and mines worked exclusively for the state. Only that part of their output which the state did not need could be sold on the open market. The government bought the product of privately operated industrial and mining enterprises at fixed prices, usually at cost. Profits had to be made on the sale of the surplus. The quality and quantity of the product were specified; failure to meet the specifications entailed penalties, and, in case of recurrence, confiscation and fines. In return for this service, industrial and mining entrepreneurs were exempt from service obligations and taxes. In this manner some private fortunes were indeed made, e.g. that of the Demidov family, which supplied the state, at low cost, with armaments from their Tula foundries.

The energy with which Peter tackled industrial development and the success he had in raising productivity must not obscure the fact that he was acting in a very traditional Muscovite manner. He treated his entrepreneurs as he would ordinary dvoriane, that is withou t the slightest

* For which reason it is grossly misleading to assert (as is done, for example, by E.I. Zaozerskaia in Voprosy Istorii, No. 12, 1947, p. 68, and many other historians) that a large proportion of the manufactures founded under Peter 1 'belonged* to merchants or dvoriane. Even those founded wholly or pardy with private capital, were not private property in the true sense of the word, since the government could at any time take them away from the 'proprietors'. Soviet historians have understandable difficulty in grasping the difference between ownership and possession.