In spite of all these disturbances, the dislocation of industry was not immediately felt in the Army to an appreciable degree, because attention was concentrated upon the Army at the expense of the vital necessities of the country itself, and also because for several months there had been a lull at the Front. In June, 1917, therefore, we were provided adequately, if not amply, for an important offensive. Imports of war material through Archangel, Murmansk, and partly through Vladivostok had increased, but had not been sufficiently developed by reason of the natural shortcomings of maritime routes, and of the low carrying capacity of the Siberian and of the Murmansk Railways. Only 16 per cent. of the actual needs of the Army were satisfied. The military administration, however, clearly saw that we were living on the old stores collected by the patriotic impulse and effort of the country in 1916. By August, 1917, the most important factories for the production of war materials had suffered a check. The production of guns and of shells had fallen 60 per cent., and of aircraft 80 per cent. The possibility of continuing the War under worse material conditions was, however, amply proved later by the Soviet Government, which had been using the supplies available in 1917 and the remnants of Russian Industrial production for the conduct of civil war for more than three years. This, of course, was only possible through such an unexampled curtailment of the consuming market that we are practically driven back to primitive conditions of life.
Transport was likewise in a state of dislocation. As early as May, 1917, at the Regular Congress of Railway Representatives at the Stavka, the opinion was expressed, and confirmed by many specialists, that, unless the general conditions of the country changed, our railways would come to a standstill within six months. Practice has disproved theory. For over three years, under the impossible conditions of Civil War and of the Bolshevik Régime, the railways have continued to work. It is true that they did not satisfy the needs of the population even in a small measure, but they served the strategical purposes. That this situation cannot last, and that the entire network of the Russian Railways is approaching its doom, is hardly open to doubt. In the history of the disintegration of the Russian Railway System the same conditions are traceable which I have mentioned in regard to the Army, the villages, and especially the industries: the inheritance of the unwise policy of the past in regard to railways, the excessive demands of the War, the wear and tear of rolling stock, and anarchy on the line, due to the behaviour of a licentious soldiery; the general economic condition of the country, the shortage of rails, of metal and of fuel; the “democratisation” of Railway Administration, in which the power was seized by various Committees; the disorganisation of the administrative and technical personnel, which was subjected to persecution; the low producing power of labour and the steady growth of the economic demands of the railway employees and workmen.
In other branches of the Administration the Government offered a certain resistance to the systematic seizure of power by private organisations, but in the Ministry of Railways that pernicious system was introduced by the Government itself, in the person of the Minister Nekrassov. He was the friend and the inspirer of Kerensky, alternately Minister of Railways and of Finance, Assistant and Vice-President of the Council of Ministers, Governor-General of Finland, Octobrist, Cadet (Constitutional Democrat), and Radical Democrat, holding the scales between the Government and the Soviet. Nekrassov was the darkest and the most fatal figure in the Governing Circles, and left the stamp of destruction upon everything he touched—the All-Russian Executive Committee of the Union of Railways, the autonomy of the Ukraine, or the Kornilov movement.
The Ministry had no economic or technical plan. As a matter of fact, no such plan could ever be carried out, because Nekrassov decided to introduce into the Railway Organisation, hitherto strongly disciplined, “the new principles of Democratic Organisation, instead of the old watchwords of compulsion and fear”(?). Soviets and Committees were implanted upon every branch of the Railway Administration. Enormous sums were spent upon this undertaking, and, by his famous circular of May 27th, the Minister assigned to these organisations a very wide scope of control and management, as well as of the “direction” which they were henceforward entitled to give to the responsible personnel in the Administration. Executive functions were subsequently promised to these organisations.... “Meanwhile the Ministry of Railways and its subordinate branches will work in strict accordance with the ideas and wishes of the United Railway Workers.” Nekrassov thus handed over to a private organisation the most important interests of the State—the direction of the Railway policy, the control of the Defence, of industries, and of all other branches dependent upon the railway system. As one of our contemporary critics has said, this measure would have been entirely justified had the whole population of Russia consisted of railway employees. This reform, carried out by Nekrassov on a scale unprecedented in history, was something worse than a mere blunder. The general trend of Ministerial policy was well understood. In the beginning of August, at the Moscow Congress, which was turned into a weapon for the Socialist parties of the Left, one of the leaders declared that “the Railway Union must be fully autonomous and no authority except that of the workers themselves should be entitled to interfere with it.” In other words, a State within a State.
Disruption ensued. A new phase of the arbitrariness of ever-changing organisations was introduced into the strict and precise mechanism of the railway services in the centre as well as throughout the country. I understand the democratisation that opens to the popular masses wide access to science, technical knowledge, and art, but I do not understand the democratisation of these achievements of human intellect.
There followed anarchy and the collapse of Labour discipline. As early as in July the position of the railways was rendered hopeless through the action of the Government.
After holding the office of Minister of Railways for four months, Nekrassov went to the Ministry of Finance, of which he was utterly ignorant, and his successor, Yurenev, began to struggle against the usurpation of power by the railwaymen, as he considered “the interference of private persons and organisations with the executive functions of the Department as a crime against the State.” The struggle was conducted by the customary methods of the Provisional Government, and what was lost could no longer be recovered. At the Moscow Congress the President of the Union of the Railwaymen, fully conscious of its power, said that the struggle against democratic organisations was a manifestation of counter-Revolution, that the Union would use every weapon in order to counteract these endeavours, and “would be strong enough to slay this counter-Revolutionary hydra.” As is well known, the All-Russian Executive Committee of the Union of Railways subsequently became a political organisation pure and simple, and betrayed Kornilov to Kerensky and Kerensky to Lenin. With a zeal worthy of the secret police of the old régime, it hunted out Kornilov’s followers, and finally met an inglorious end in the clutches of Bolshevik Centralisation.
We now come to another element in the life of the State—Finance. Every normal financial system is dependent upon a series of conditions: general political conditions, offering a guarantee of the external and internal stability of the State and of the country; strategical conditions, defining the measure of efficiency of the National Defence; economic conditions, such as the productivity of the country’s industries and the relation of production to consumption; the conditions of labour, of transport, etc. The Government, the Front, the villages, the factories, and the transport offered no necessary guarantees, and the Ministry of Finance could but have recourse to palliatives in order to arrest the disruption of the entire system of the currency and the complete collapse of the Budget, pending the restoration of comparative order in the country. According to the accepted view, the main defects of our pre-War Budget were that it was based upon the revenue of the spirit monopoly (800,000,000 roubles), and that there was scarcely any direct taxation. Before the War the Budget of Russia was about 3½ milliards of roubles; the National Debt was about 8½ milliards, and we paid nearly 400,000,000 roubles interest per annum; half of that sum went abroad, and was partially covered by 1½ milliards of our exports. The War and Prohibition completely upset our Budget. Government expenses during the War reached the following figures: