in order to stem the flow of Russian wealth abroad.
Peter's industrialization policy had a second purpose, equally important. His tax collectors were already wringing the Russian people lifeless to finance the war. The only long-term way to extract more revenue from his people, Peter realized, was to
increase the production of national wealth, thus increasing the tax base. To achieve this goal, the Tsar hurled himself and the power of the state into every aspect of developing the national economy. Peter viewed himself as personally responsible for the strengthening of the national economy, but at the same time he understood that private enterprise and initiative were the true sources of national wealth. His goal was to create a class of Russian entrepreneurs who would assist and eventually replace the sovereign and the state as producers of this wealth. It was not an easy task. By tradition, Russian noblemen looked disdainfully on any involvement in trade and industry and were determined not to invest their capital in commercial enterprises. Peter employed a combination of persuasion and force, preaching the dignity and usefulness of commerce and making trade and industry an honorable form of state service—like service in the army, navy or civilian bureaucracy. The government, through the College of Mining and Manufacturing, provided initial capital in the form of loans and subsidies, granted monopolies and tax exemptions, and sometimes simply erected factories at Treasury expense and leased them to private individuals or companies. These arrangements often were compulsory. In 1712, the state constructed a group of cloth factories to be managed by private merchants. 'If they do not wish to do this of their own free will,' declared the order, 'then they must be forced. Grant them facilities to defray the cost of the factory so that they may take pleasure in trading.'
Not all of the new enterprises flourished. A silk company formed by Menshikov, Shafirov and Peter Tolstoy was granted generous privileges and subsidies and still managed to fail. Menshikov quarreled with his partners and resigned, to be replaced by Admiral Apraxin. Eventually, having swallowed all of its original capital, the company was sold to private merchants for 20,000 roubles. Menshikov had better luck with a company formed to fish for walrus and cod in the White Sea.
The most productive partnership between state and private industry was in mining and heavy industry. When Peter came to the throne, Russia possessed some twenty small state and private iron foundries around Moscow, in Tula and at Olonets on Lake Onega. Declaring that 'our Russian state abounds in riches more than many other lands and is blessed with metals and minerals,' Peter began early in his reign to develop these natural resources. Among the foreigners employed by the Great Embassy for service in Russia were numerous mining engineers. Once the war began, the ironworks at Tula, founded by the Dutch father of Andrew Vinius and owned in part by the crown and in part by the ironmaster Nikita Demidov, were expanded to provide muskets and cannon for the entire army. The city of Tula became an immense arsenal, its various suburbs populated by different categories of armorers and smiths. After Poltava, Peter sent prospectors throughout the Urals looking for new deposits. In 1718, he established a College of Mining and Manufacturing, to encourage location and development of new mineral sites. In December 1719, a decree threatened with the knout any landowner who concealed mineral deposits on his lands or who obstructed prospecting by others. The rolling hills of the Urals, especially in Perm province, revealed themselves to be astonishingly rich in high-grade ores: the ore taken from the ground produced almost half its weight in pure iron. To help develop these rich veins, Peter turned again to Nikita Demidov. By the end of Peter's reign, a vast industrial and mining complex consisting of twenty-one iron and copper foundries had risen in the Urals, centering on the town of Ekaterinburg, named in honor of Peter's wife.* Nine of these works were owned by the state and twelve by private individuals, including Demidov, who owned five. Their production constantly increased, and by the end of the reign more than forty percent of all Russian iron was coming from the Urals. Within Peter's lifetime, Russian output of pig iron equaled that of England, and in the reign of Catherine the Great, Russia supplanted Sweden as the largest producer of iron in Europe. These flourishing mines and foundries made the state strong (16,000 cannon were in the arsenals at Peter's death) and Demidov enormously rich. On the birth of the Tsarevich Peter Petrovich, Demidov presented the infant with 100,000 roubles as 'tooth-cutting money.' In 1720, the infant's proud father made Demidov a count, a title which lasted until the end of the dynasty.
To facilitate trade, Russia needed more circulating currency. New Russian coins had been minted since Peter's return from the West with the Great Embassy, but coins were so scarce that merchants in Petersburg, Moscow and Archangel borrowed them at fifteen percent interest simply to keep their business operating. One reason for this scarcity was the ingrained habit of all Russians, from peasant to noble, of quickly hiding any money on which they could lay their hands. As a foreign visitor explained, 'Among the peasants, if by chance one happens to gain a small sum, he hides it under a dunghill, where it lies dead to him and to the nation. The nobility, being afraid of making themselves noticed and obnoxious to the court by the show of their wealth, commonly lock it up in coffers to molder there, or those more sophisticated send it to banks in London, Venice or Amsterdam.
*In 1918. Ekaterinburg was the site of the murder of the family of the last Russian Emperor, Nicholas II. Today, the city is named Sverdlovsk.
Consequently, with all the money thus concealed by nobility and peasants, it has no circulation and the country reaps no benefit from it.' At the beginning of the war, a decree declared that 'the hoarding of money is forbidden. Informers who discover a cache are to be rewarded with one third of the money, the remainder to go to the state.'
Another reason for the scarcity of coinage was an insufficiency of precious metals. Gold- and silversmiths who came to Russia became discouraged and went home, and many freshly coined roubles were defective as to both alloy and weight of metal. Peter knew this and it worried him, but as the mines simply were not producing enough gold and silver, he was forced to allow the debasement to continue. In 1714, to preserve the nation's economy, Peter forbade the export of silver, In 1718, merchants leaving Russia were searched and any gold, silver or copper coins found were confiscated. On the least suspicion, customs officers would dismantle the carriages or sledges in which merchants were traveling. In 1723, this regulation was strengthened by adding the death penalty for anyone caught exporting silver. On the other hand, the import of gold and silver was vigorously encouraged; there was no duty on these metals. And when Russians sold their goods to foreigners, they were not permitted to accept Russian money in payment, but had always to receive foreign money.*
Peter's commands, issued impatiently from above, often were received without the slightest understanding of what was wanted or why. This compelled the Tsar not only to supervise everything closely himself, but also to employ force to get things done. Traditionally conservative, Russians balked at innovations, and Peter told his ministers, 'You know yourselves that anything that is new, even if it is good and necessary, our people will not do without being compelled.' He never apologized for using force. In a decree in 1723, he explained that 'our people are like children who never want to begin the alphabet unless they are compelled to by the teacher. It seems very hard to them at first, but when they have learned it, they are thankful. So in manufacturing affairs, we must not be satisfied with the proposing of the idea only, but we must act and even compel.'
Commerce is a delicate mechanism, and state decrees are not usually the best way to make it work. In Peter's case, it was not simply the element of compulsion that detracted from the success of his efforts—he himself was not always sure what he wanted. When his attention wandered or he was distracted, those below
*All this has a familiar ring to foreigners who live or travel in the Soviet Union today.
him, uncertain as to his desires, did nothing and all activity stopped. Peter's methods were strictly empirical. He tried this or that, ordering and countermanding, seeking a system that worked, sometimes without thoroughly understanding what was needed or the nature of the obstacles confronting him. His constant changes in direction, his minute regulations leaving no scope for local adjustment, confused and drained initiative from Russian merchants and manufacturers. Once, when the Dutch ambassador was pressing for Russian approval of a new commercial treaty and had been frustrated by repeated delays, he was told by Osterman, 'Between ourselves, I will tell you the truth. We have not a single man who understands commercial affairs at all.'
There were occasions when enterprises foundered simply because Peter was not present to give instructions. His temper could be so fierce and unpredictable that, in the absence of specific orders, people were unwilling to take initiative and simply did nothing. In Novgorod, for example, a large number of leather saddles and harnesses had been stored for the army. The local authorities knew that they were there, but because no order to distribute them had come down from above, they were left until 'eventually, moldy and rotten, they had to be dug up with spades.' Similarly, in 1717, many oak trunks brought from central Russia through the canals to Lake Ladoga for use in building the Baltic fleet were left to wash up on the shores and bury themselves in mud, simply because Peter was away in Germany and France and had not left specific instructions for their use.
To bridge the gap between the innovative Tsar who, despite his consuming interest, was often occupied with
