The Franco-Russian financial co-operation did not end German influence in Russian banking, which continued to exist on the eve ofthe First World War. All the major Petersburgbanks continued to workwithbanks in Berlin and Vienna. English capital became an important factor only immediately before the war. Petersburg banks undoubtedly played the central role in international banking connections. By 1914 the eight largest Petersburg banks controlled 61 per cent of the market share of joint-stock banks, which exceeded similar indicators of banking concentration in England and Germany.[399] On the eve of the First World War banks began to finance industrial enterprises more actively. Both Petersburg and Moscow banks played an important part in the development of industry in central Russia. The growing role of joint-stock banks affected their relationship with the State Bank. After the gold standard was introduced in Russia, the State Bank became the primary lending institution and commercial bank. It retained its status as the 'bank of banks', but by 1914 it nevertheless had less total financial strength than the joint-stock banks. Fifty joint-stock banks with 778 branches boasted balances of 6,285 million roubles compared to the State Bank's 4,624 million roubles.[400]
Banking houses also retained their influence in the economic life of the country, especially in St Petersburg and Moscow. By 1913 there were sixteen large banking houses in St Petersburg, including branches of Moscow firms. Among them were the banking houses: Zachary Zhdanov and Co., Kaftal, Handelman and Co., G. Lesin, A. I. Zeidman and Co., and I. E. Ginzburg. The Ginzburg banking house played an important role not just in the economy, but also in the cultural life of the capital at the beginning of the twentieth century. In Moscow, the banking house of Riabushinskii remained very influential. In 1912 it was reorganised by the Riabushinskii brothers into a large joint-stock commercial bank.
After the revolutionary events of 1905-7 the activity of political parties intensified, as did the consolidation of capital. These new party and business leaders took the initiative to formulate a programme for the development of Russia's productivity and industry. These problems were regularly discussed in St Petersburg at the meetings of the Council of Congresses of Representatives of Industry and Trade, where scholars and economists were invited to present research. In Moscow, the Riabushinskii banking house became a centre for such discussions, with debates on the economy taking place in P. P. Riabushinskii's apartment on Prechistinskii Boulevard. Famous historians, economists and law scholars took part in these discussions, including M. M. Kovalevskii, N. Kh. Ozerov, P. B. Struve and S. N. Bulgakov. Financial leaders' concern with the productivity of the country was reflected in a new series of commercial publications. In 1909-10 alone several newspapers and magazines appeared which were devoted to economics and finance: Birzhevoi artel'shchik, Finansovoe obozrenie, and the Bankovskaia i torgovaia zhizn .
In 1911, at a meeting of the Congress of Representatives of Industry and Trade, V. V. Zhukovskii, a St Petersburg businessman and one of the leaders of the Council of Congresses defined the role of commercial-industrial circles in the following manner:
We must think about the general situation of the country. We must take a systematic approach to solving the peoples' tasks, we must try to be a part of the very brains of the country, we cannot stop our ideological work. The wealth of the people is based not only on the land, but also in the factories; not only in money, but perhaps mainly in the people's moral foundations and values. And in this regard the commercial-industrial class needs to show its work, its ideas, its conscience. And once we succeed in uniting, we will have the right to define and work towards a government programme which is drawn up from our commercial-industrial perspective and which is a synthesis of our practical interests and our ideological viewpoints.[401]
The growth of business organisations' influence in the financial life of Russia was linked to the new industrial growth in the country. However, at least until the beginning of the First World War, despite the co-operation of the state with representatives of financial circles, there were no signs of direct participation by business circles in the formulation of economic policy.
Industrial growth was very strong in 1910 and continued until 1914. By 1913 there were 29,315 industrial enterprises in Russia, employing3,115,000 workers. The average yearly growth of industrial production was 8.8 per cent. Its value was 7,358 million roubles. Russia was second in the world in oil extraction, third in demand for cotton, fourth in steel production, fifth in coal extraction and sixth in iron ore.[402]
The grain harvest between 1909 and 1913 averaged 4,366.5 million pood yearly. This allowed Russia to increase its grain exports significantly, especially from 1909-10. However, already by 1914 the yield of almost all grain crops was dropping.[403]
On the eve of the First World War co-operation between Russian and French banks became even closer and more varied. The amalgamated railway loan of 1914 for 665 million francs, or 249 million roubles became an important event in Russo-French financial relations. Representatives of a large syndicate of powerful French banks helped float the loan, as did a small syndicate of provincial banks.
By i9i4, seventy-one Russian industrial properties were listed on the Paris stock market. Their total value was 642 million roubles, and they included the stocks of fifteen of Russia's largest metallurgical factories, twelve oil and fifteen coal enterprises, and five banks. In Paris, stocks of Russian coal enterprises were traded that amounted to 60 per cent of the total money invested in these companies.[404] The French controlled 80 per cent of Russia's
foreign debts, and 35 per cent of foreign capital invested in Russia came from
France. [405]
The Russian Empire entered the First World War with a significant state debt - more than 9 billion roubles. Of this, 4.3 billion roubles was foreign debt, more than twice the value of all foreign investment in the Russian economy. At the beginning of the twentieth century Russia had the second largest state debt, after France, but had the largest loan repayments. From i904 to i908, according to official statistics, Russia paid an average of 4.2 per cent interest on its foreign loans, and in the next 5 years paid 4.5 per cent annually, while France paid less than 3 per cent each year during the same period.[406]
Despite economic growth, Kokovtsov's policies became the object of sharp criticism in the press and by a series of influential opponents in government. Witte was one of the most uncompromising critics of Kokovtsov. He not only started a campaign against Kokovtsov in the press but also spoke out against him on 10/ 23 January 1914 at the State Council, accusing the minister of using the spirits monopoly not to fight alcoholism, but to 'pump out money from the people into state coffers'. 'The Russian people', said Witte, 'spend one billion roubles each year on vodka while the government spends only 160 million roubles on the Ministry of Education.'[407] The revenues from the sale of spirits occupied an important place in the budget not only in Russia, but in other countries as well. In the Russian budget, spirit sales were one of the most important sources of income. In 1895 the state received 16 million roubles from the sale of alcohol, and in 1913 - 675 million roubles. This was caused partly by the government's repeated increase of vodka prices.[408]
399
On the participation of French banks in the Russian economy, see R. Girault,
i999).
400
SeeB. V Anan'ich, S. V Kalmykovand Iu. A. Petrov,
401
I. Glivits, 'Politiko-ekonomicheskie vzglyady V V Zhukovskogo',
403
S. G. Beliaev,
404
B.A. Nikol'skii,
405
P. Renouvin and J.-B. Duroselle,
406
See
408
Beliaev,