Russia under the first Romanovs from Cambridge history of Russia, volume 1

The economy, trade and serfdom

RICHARD HELLIE

Commerce and the merchantry

The Russian economy in the period 1613-89 was quite sophisticated. The leaders of the hypertrophic Muscovite state were basically monetarists a la Milton Friedman who understood well that the quantity and quality of the money in circulation determined the price level. The currency was based on silver, primarily reminted thalers imported from other countries in Europe because Muscovy in that period mined no precious metals, which did not exist on its territory. By manipulating the quantity and quality of silver in the currency, the government could make the price level rise, fall or remain constant.

Throughout these decades of the 'short Russian seventeenth century', the price level of commodities varied wildly for brief periods, but always returned sooner or later to the median for the period.[99] Events such as famines and wars also had an impact on the price level, but they were not nearly as dramatic as the monetary impacts. Thus prices tended to rise for the Smolensk war (1632-4) and the Thirteen Years War (1654-67), but the major inflationary swing in prices in 1662-3 was caused not by the war, but by the government's devaluing the currency. This commenced at the end of the 1650s, when the government decided to try to pay for the war by replacing the silver currency with copper coinage.[100] Probably because faith in the government was strong, the 'bogus currency' was accepted at 'face value' for four years. A crisis occurred only when the government began to refuse to accept the copper coinage for tax payments and when word began to circulate that government leaders were minting copper coins for their own profit. Then bedlam broke loose, prices skyrocketed and the populace of Moscow rebelled in the famous Copper Uprising. Almost immediately the government increased the silver content of the currency by 2 per cent, all protest subsided and prices fell back to the median. Aside from war years, prices generally were stable for long periods of time. Of course crop failures caused temporary, localised price spikes. The general rule of the data on this period is that whenever an agricultural commodity price veers far from the median (i.e. looks 'wrong'), the source will typically say that the high price was the result of a crop failure.

All commerce in Russia was based on cash or barter. Russia had no banks until the middle of the eighteenth century,[101] and the merchants were not Rothschild-types who could proffer loans to the government or to each other. The Russian merchantry had a reputation for dishonesty, and the level oftrust was certainly very low Monasteries had reserves, which sometimes the government would 'borrow': there is no evidence that such 'loans' were ever repaid. The nexus between the mercantile monasteries, integrated vertical conglomerates which engaged in production and trade and the merchant class is not fully understood.

The government understood that its capacity to control prices generally was extraordinarily limited. One might expect that a government with pretensions akin to those of the Muscovite Agapetus state'[102] would have been in and out of the market all the time, but this was not the case. In its purchases, the government both in Moscow and at the local level generally was a 'price taker', that is, it paid market prices if it wanted to buy something. Only very rarely did the government impose price controls on ordinary traded goods, such as sturgeon in 1623 on the lower Volga.[103] The major exception was the price of slaves: the government set the price of limited service contract slaves at 2 roubles apiece during the Time ofTroubles and raised it to 3 roubles apiece in the mid-i62os.[104] Earlier the price for slaves had been set by the market;[105] the intervention by the government changed the composition of slaves. Forcing a buyer to pay the same price for a young child as for a prime-age worker motivated buyers to bypass the over-priced slaves who thus could not get the welfare which the institution of slavery provided. Whether the government had anticipated this consequence of its action is unknown. The government was able to intervene in the pricing of slaves because all purchases of slaves had to be registered with the government. Without registration of the slave in the Slavery Chancellery (see Chapter 12 above), the buyer had no legal claim to his chattel, who then would have been able to flee with impunity. The government was not similarly involved with any other sale transactions in Muscovy. One might imagine that the government, which by the time of this chapter had complete control over the economic factors of land and labour, would have been similarly involved with registration of the sale of immovable property, but the fact is that sales of agricultural land were almost non-existent.[106] As shown in Chapter 16 above, government control over most of the agricultural land fund plus the right of clan redemption combined to stifle free sales transactions in land.

The vast quantity of price data permit the calculation of costs for almost anything when quantitative data are available. Thus the cost of the great Smolensk fortress, built between 1596 and 1600, perhaps the largest construction project in the sixteenth-century world, can be calculated at about 1.5 million roubles.[107] One can further calculate that the government saved vast quantities of money by abandoning that stationary form of defence in favour of the system of the fortified lines south of the Oka in the seventeenth century, and that, moreover, around mid-century, the army cost about one-eighth of Muscovy's GDP.[108]

Muscovite legislation did much of what it could to facilitate commerce. Interest on loans in common law was limited to 20 per cent in the sixteenth century.[109] In 1649, however, it was forbidden.[110] Although Russia was in the Roman law tradition in many respects because much of its law came from Byzantium, Russia for some reason never developed the Roman law of contract.[111] Other areas of law of interest to merchants, such as the storage of goods, however, were well developed and it would be fair to say that the legal climate for trade was generally favourable. Throughout most of this period access to courts was inexpensive, trials were expeditious and judges seem to have been relatively (if not totally) honest. Muscovite law helped to lower commercial transaction costs.

Muscovy had a well-developed group of merchants of all types, ranging from petty merchants who traded in local market stalls to long-distance merchants such as the Stroganovs who traded in salt, furs, precious objects and imported goods. The long-distance merchants used slaves to expand their family firms as was done in other countries, especially in Africa. The merchants were greatly facilitated by a number of institutional factors which considerably ante-dated this period. Most crucial was the practice stressed during Ivan IV's minority that Russia had 'one faith, one unit of currency and one measure'. This was strengthened in 1653 by a proclamation of standard units as well as a rationalisation of internal customs fees. Although internal customs collections were not abolished until 1753, they seem to have been relatively few and seem not to have inhibited commerce significantly. Given these factors, it is not surprising that Russia had something approximating a single market in the seventeenth century: costs of any similar item were similar throughout Russia, with differences being accounted for by the cost of transportation. Merchants had sufficient information to learn of differences in the costs of similar items throughout the country, and took advantage of arbitrage opportunities wherever they might arise by shipping goods from low-cost areas to higher-cost areas whenever it would have been profitable. By 1689 merchants, who created dynasties often lasting three generations, could trade unhindered throughout much of the Eurasian land mass, from the White Sea in the north to the Caspian Sea in the south, from Smolensk in the west to the Pacific Ocean in the east. This trade provided opportunities for significant accumulation of capital - which was spent on large houses, the Church, luxury goods and household slaves, who produced little or nothing and consumed much.

99

This is evident for the most common commodity, rye, but holds for nearly everything else as well. See Richard Hellie, The Economy and Material Culture of Russia 1600-1725 (Chicago: University of Chicago Press, 1999), p. 14 (see Fig. 2.1) et passim.

100

Richard Hellie, 'Russia, 1200-1815', in Richard Bonney (ed.), The Rise of the Fiscal State in Europe, c.1200-1815 (Oxford: Oxford University Press, 1999), p. 494 et passim.

101

Arcadius Kahan, The Plow, the Hammer, and the Knout. An Economic History of Eighteenth- Century Russia, ed. Richard Hellie (Chicago: University of Chicago Press, 1985), pp. 311-18.

102

See 'Agapetos', in The Oxford Dictionary of Byzantium, ed. A. P. Kazhdan, 3 vols. (New York: Oxford University Press, 1991), vol. I, p. 34.

103

Hellie, Economy, pp. 80-1.

104

Richard Hellie, Slavery inRussia 1450-1725 (Chicago: University of Chicago Press, 1982), p. 63.

105

There was one exception: as noted in Chapter 16 above, the Sudebnik of 1550 had placed a price cap of 15 roubles on military slaves.

106

So far, no one has produced any Muscovite land transaction between non-relatives with both the units of lands and the prices paid - presumably the definition of a market. This is most evident in the work of Valerie Kivelson: see her Autocracy in the Provinces: The Muscovite Gentry and Political Culture in the Seventeenth Century (Stanford, Calif.: Stanford University Press, 1996). This makes comparison between the prices of farm land in Muscovy and elsewhere impossible. See also Hellie, Economy, pp. 392, 631.

107

Richard Hellie, 'The Costs of Muscovite Military Defense and Expansion', in Eric Lohr and Marshall Poe (eds.), The Military and Society in Russia 1450-1917 (Leiden: Brill, 2002), p. 49.

108

Ibid., p. 66 .

109

E. I. Kolycheva, Agrarnyi stroi Rossii XVI veka (Moscow: Nauka, 1987), p. 117.

110

Richard Hellie (trans. and ed.), The Muscovite Law Code (Ulozhenie) of1649 (Irvine, Calif.: Charles Schlacks, 1988), ch. 20, art. 39. (Cited henceforth as Hellie, Ulozhenie.)

111

Richard Hellie, 'Russian Law from Oleg to Peter the Great', in Daniel H. Kaiser (trans. and ed.), The Laws ofRus' -Tenth to Fifteenth Century (Salt Lake City, Ut.: Charles Schlacks, 1992), pp. xi-xl.