Russia under the Old regime

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cheapest; with the other, it opened up to others the opportunity to do openly and legally what until then they had been doing surreptitiously, namely to compete with the merchants as traders and manufacturers. The legislation ensured that its major beneficiary would be dvoriane and peasants. Trade and manufacture were reunited with agriculture, and the centre of economic activity shifted to the village. The crown's withdrawal from direct participation in economic activity (it retained control only of the major defence industries) not only did nothing to help die middle class, but confronted it with the competition of the rural classes, more ubiquitous and formidable even than royal monopolies.

The consequemces made themselves felt soon enough. Peasants throughout Russia began now to trade on an unprecedented scale, cornering much of tlhe market in foodstuffs (cereals, garden produce and cattle) and implements for the home and farm. Already at Catherine's Legislative Commission (1767-8), the merchants loudly complained of peasant competition. By the beginning of the nineteenth century the bulk of the trade iin Russia was controlled by peasants who could trade openly without paiying the onerous annual certificate fee imposed by the government on merchants belonging to the urban guilds, and without bearing the variouis responsibilities which the merchants had to shoulder on behalf of the state.

In industry, too, the new laws produced dramatic results. Dvoriane now proceeded to take away from the merchants some of the most profitable branches of manufacture and mining in which the latter had established a strong presence between 1730 and 1762. Alcohol distilling had become a dvoriaitie monopoly in the eighteenth century: a privilege which allowed thejm to make profitable use of surplus grain. After 1762, many of the Ural; mines and metallurgical industries fell under the control of wealthy lanided families like the Stroganovs (merchants by origin, enobled early in tthe eighteenth century) and Vorontsovs, who had at their disposal unliimited servile labour. These gentlemen-industrialists of the eighteenth cemtury edged out merchants from a number of industries. Already in n 773 a fifth of the factories belonged to dvoriane, the turnover of which was equal to nearly one-third of the turnover of all die Russian manufactures.16 In the decades that followed, dvoriane extended their hold "on manufacture. Statistics compiled in 1813-14 indicate that, in additiion to all the distilleries, they owned 64 per cent of the mines, 78 per centt of the woollen mills, 60 per cent of the paper mills, 66 per cent of the glass and crystal manufactures, and 80 per cent of die potash works.16 Tlhe merchants now had to watch helplessly as some of the most profitablle branches of industry were taken over by classes based in the counttryside and rooted in agriculture. The posad population remained stagnant in the course of the eighteenth century, barely exceeding 3 per cent or 4 per cent of the total; of this number nearly half were concentrated in Moscow and adjoining areas to the north and nortii-east.

No less serious competition came from peasants. A remarkable byproduct of Catherine's economic legislation was the emergence of large-scale serf industry. Although not unique to Russia - a similar phenomenon has been observed in eighteentii-century Silesia - in no other country has it attained comparative economic importance. It is among the obrok-paying peasants of the central provinces, especially from the Moscow region, that the capitalist spirit first made its appearance in Russia. When between 1767 and 1777, in order further to stimulate rural enterprise, Catherine passed laws allowing the establishment of textile manufactures without registration, both state and proprietary peasants began to expand their household looms into large mills employing hundreds of hands. A high proportion of such entrepreneurs were Old Believers, a religious minority which compensated for the disabilities inflicted on it (such as double soul tax) by developing a strong economic drive and a sense of social discipline. Especially active were state peasants and serfs of very rich landlords, rural groups which traditionally enjoyed the greatest freedom. On the estates of Count Shere-metev, Russia's wealthiest landed proprietor, several villages developed into major industrial centres, the entire adult population of which engaged in manufacture.

Peasant entrepreneurs from the beginning concentrated on the mass consumer market which state and dvoriane manufacturers largely ignored. Cotton textiles were their most important product, but they also played a leading role in the manufacture of pottery, linen cloth, hardware, leather goods and furniture. Whole villages specialized in the production of a single item, for example, ikons. Peasant entrepreneurs living on private properties remained serfs even after having amassed vast fortunes. Such bonded magnates paid rents running into thousands of rubles a year. If the landlord consented to give them their freedom -which, for obvious reasons, he was loath to do - they were required to pay enormous sums. The serfs of Sheremetev paid for their redemption 17,000-20,000 rubles; on occasion the price could rise as high as 160,000 rubles.* Some had serfs of their own, and lived in truly seigneurial style.

The peasant entrepreneur in Russia worked under the most adverse conditions imaginable. He had one advantage, and that was proximity to the soil; his labour costs were low and in bad times his working force could always fall back on farming. But his personal situation was very

* The early nineteenth-century silver ruble can be roughly estimated as equivalent to 75 cents in US currency of the time.