Because the railways were nationalized first, and because of their vital importance to the general economic life of the nation, let us consider how the nationalization of railroad transportation worked out. The following table is taken from the report of the Commissar of Ways and Communications:
| Year | Gross Receipts (rubles) | Working Expenses (rubles) | Working Expenses per Verst (rubles) | Wages and Salaries (rubles) | Profit and Loss (rubles) |
|---|---|---|---|---|---|
| 1916 | 1,350,000,000 | 1,210,000,000 | 1,700 | 650,000,000 | +140,000,000 |
| 1917 | 1,400,000,000 | 3,300,000,000 | 46,000 | 2,300,000,000 | -1,900,000,000 |
| 1918 | 1,500,000,000 | 9,500,000,000 | 44,000 | 8,000,000,000 | -8,000,000,000 |
These figures indicate that the nationalization of railways during the nine months of 1918 was characterized by a condition which no country in the world could stand for a very long time. This official table affords no scintilla of a suggestion that nationalization was succeeding any better than the anarcho-Syndicalist management which preceded it. The enormous increase in operating cost, the almost stationary receipts, and the resulting colossal deficit require no comment. At least on the financial side the nationalization policy cannot be said to have been a success, a fact which was frankly admitted by the Severnaya Communa, March 26, 1919. To see a profit of 140 million rubles transformed into a loss of 8 billion rubles is surely a serious matter.
Let us, however, adopt another test than that of finance, namely, the service test, and see whether that presents us with a more favorable result: According to the official report of the Commissar of Ways and Communications, there were in operation on October 1, 1917—that is, shortly before the Bolshevist coup d’état—52,597 versts[45] of railroad line in operation; on October 1, 1918, there were in operation 21,800 versts, a decrease of 30,797. On October 1, 1917, there were in working order 15,732 locomotives; on October 1, 1918, the number had dwindled to 5,037, a decrease of 10,695. On October 1, 1917, the number of freight cars in working condition was 521,591; on October 1, 1918, the number was 227,274, a decrease of 294,317.
[45] One verst equals .663 mile, roughly, about two-thirds of a mile.
The picture presented by these figures is, for one who knows the economic conditions in Russia, simply appalling. At its best the Russian railway system was wholly inadequate to serve the economic life of the nation. The foregoing official figures indicate an utter collapse of the railways at a time when the nation needed an efficient railroad transportation system more than at any time in its history. One of the reasons for the collapse of the railway system was the failure of the fuel supply. In northern and central Russia wood is generally used for fuel in the factories and on the railways. Difficult as it might be for them to maintain the supply of coal under the extraordinary conditions prevailing, it would seem that with enormous forests at their disposal, so near at hand, they would have found it relatively easy to supply the railways with wood for fuel purposes. Yet nowhere in the whole range of the industrial system of Russia was the failure more disastrous or more complete than here. According to an official estimate, the amount of wood fuel required for the railways from May 1, 1918, to May 1, 1919, estimated upon the basis of “famine rations,” was 4,954,000 cubic sazhens,[46] of which 858,000 cubic sazhens was on hand, leaving 4,096,000 cubic sazhens as the amount to be provided. A report published in the Economicheskaya Zhizn (No. 41) stated that not more than 18 per cent. of the total amount of wood required was felled, and that not more than one-third of that amount was actually delivered to the railways. In other words, 82 per cent. of the wood fuel was not cut at all, at least so far as the particular economic body whose business it was to provide the wood was concerned. Extraordinary measures had to be taken to secure the fuel. From Economicheskaya Zhizn, February 22, 1919, we learn that the railway administration managed to secure fuel wood amounting to 70 per cent. of its requirements, and the People’s Superior Economic Council another 2 per cent., a very large part of which had been secured by private enterprise. If this last statement seems astonishing and anomalous, it must be understood that as early as January 17, 1919, Lenin, as President of the Central Soviet Government, promulgated a decree which in a very large measure restored the right to private enterprise. Already nationalization was being pronounced a failure by Lenin. In an address announcing this remarkable modification of policy he said:
[46] One sazhen equals seven feet.
If each peasant would consent to reduce his consumption of products to a point a little less than his needs and turn over the remainder to the state, and if we were able to distribute that remainder regularly, we could go on, assuring the population a food-supply, insufficient, it is true, but enough to avoid famine.
This last is, however, beyond our strength, due to our disorganization. The people, exhausted by famine, show the most extreme impatience. Assuredly, we have our food policy, but the essential of it is that the decrees should be executed. Although they were promulgated long ago, the decrees relative to the distribution of food products by the state never have been executed because the peasants will sell nothing for paper money.
It is better to tell the truth. The conditions require that we should pitilessly, relentlessly force our local organizations to obey the central power. This, again, is difficult because millions of our inhabitants are accustomed to regard any central power as an organization of exploiters and brigands. They have no confidence in us and without confidence it is impossible to institute an economic régime.
The crisis in food-supplies, aggravated by the breakdown of transportation, explains the terrible situation that confronts us. At Petrograd the condition of the transportation service is desperate. The rolling-stock is unusable.
Another reason for the failure of the railways under nationalization during the first year’s experimentation with that policy was the demoralization of the labor force. The low standard of efficiency, constant loafing, and idleness were factors in the problem. The interference by the workers’ councils was even more serious. When the railways were nationalized the elected committees of workers, while shorn of much of their power, were retained as consultative bodies, as we have already seen. Toward the end of 1918 the officials responsible for the direction of the railroads found even that measure of authority which remained to these councils incompatible with efficient organization. Consequently, at the end of 1918 the abolition of the workers’ committees of control was decreed and the dictatorial powers of the railroad directors made absolute. The system of paying wages by the day was replaced by a piece-work system, supplemented by cash bonuses for special efficiency. Later on, as we shall see, these changes were made applicable to all the nationalized industries. Thus, the principal features of the capitalist wage system were brought back to replace the communistic principles which had failed. When Lomov, president of the Chief Forest Committee, declared, as reported in Izvestia, June 4, 1919, that “proletarian principles must be set aside and the services of private capitalistic apparatus made use of,” he simply gave expression to what was already a very generally accepted view.
The “return to capitalism,” as it was commonly and justly described, had begun in earnest some months before Lomov made the declaration just quoted. The movement was attended by a great deal of internal conflict and dissension. In particular the trades-unions were incensed because they were practically suppressed as autonomous organs of the working-class. The dictatorship of the proletariat was already assuming the character of a dictatorship over the proletariat by a strongly centralized state. The rulers of this state, setting aside the written Constitution, were in fact not responsible to any electorate. They ruled by fiat and proclamation and ruthlessly suppressed all who sought to oppose them. They held that, industry having become nationalized, trades-unions were superfluous, and that strikes could not be tolerated because they became, ipso facto, acts of treason against the state. Such was the evolution of this anti-Statist movement.