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A Note on Russia's Merchandise Balance and Balance of Payments During the Industrialization Era

Published online by Cambridge University Press:  27 January 2017

Paul R. Gregory
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Extract

Russia's balance of trade (torgovyi balans) and balance of payments (raschetnyi balans) were matters of great concern to the tsarist government before and after the introduction of the gold standard in 1897. Tsarist officials feared that the gold reserves required to maintain (or to go on) the gold standard would be lost if payments abroad exceeded receipts. Moreover, there was concern over the potential loss of political and economic independence if the government had to borrow abroad regularly in order to cover international payments deficits. Russia's foreign policy toward France and Germany was affected significantly by this consideration. Thus, considerable importance rested on the reported estimates of these two balances.

Type
Notes and Comment
Information
Slavic Review , Volume 38 , Issue 4 , December 1979 , pp. 655 - 662
Copyright
Copyright © Association for Slavic, East European, and Eurasian Studies. 1979

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References

1. By “balance of payments” I mean net foreign investment or, in other words, the balance of trade including invisibles and services, such as interest and dividend payments abroad and tourist expenditures abroad. The conceptual definition is the one adopted by the League of Nations in 1938. It is described in Frei, L. I., Omovnye problemy mezhdunarodnykh raschetov (Moscow: Mezhdunarodnaia kniga, 1945, pp. 30–33.Google Scholar

2. For a clear statement of contemporary concerns at the time of the introduction of the gold standard, see Sharapov, S. F., Tsifrovoi analiz raschetnogo balansa Rossii za 15-letie (St. Petersburg: Bernshtein, 1897)Google Scholar, introduction.

3. For a discussion of the foreign policy implications of the Russian balance of payments, see Bonwetsch, Bernd, “Handelspolitik und Industrjalisierung: Zur aussenwirtschaftlichen Abhängigkeit Russlands,” in D. Geyer, ed., Wirtschaft und Gesellschaft im vorrevolutionären Russlcmd (Cologne: Kiepenheur und Witsch, 1975), to. 277–301.Google Scholar

4. I have described the various estimates of the Russian balance of payments—by 01', Vyshnegradskii, Migulin, Engeev, Pasvolsky and Moulton—in Paul R. Gregory, “The Russian Balance of Payments, the Gold Standard, ! and Monetary Policy: A Historical Example of Foreign Capital Movements,” Journal 9f Economic History, 39, no. 2 (June 1979).

5. The major work in this area is P. V. 01', Inostrannye kapitaly v narodnom khosiaistve dovoennoi Rossii: Materialy dlia isucheniia estestvennykh proievoditel'nykh sil SSSR (Leningrad, 1925). Other important works are;: Vainshtein, A. L., Narodnoe bogatstvo i narodnokhoziaistvennoe nakoplenie predrevoliutsipnnoi Rossii (Moscow: Gosstatizdat, 1960 Google Scholar; Bovykin, V. I., “K voprosu o roli inostrannogo kapitala v Rossii,” Vestnik Moskovskogo universiteta, 1964, no. 1, pp. 55–83.Google Scholar

6. For an attempt to establish confidence intervals for Russian foreign indebtedness, see Bovykin, “K voprosu o roli inostrannogo kapitala.”

7. See Engeev, T. K., “O platezhnom balanse dovoennoi Rossii,” Vestnik finansov, 1928, no. 5, pp.77 and 82.Google Scholar

8. The available estimates place net tourist expenditures at approximately sixty million rubles in the early 1890s, about one hundred million rubles in the early twentieth century, and around two hundred million rubles in 1913.

9. Sontag, John, “Tsarist Debts and Tsarist Foreign Policy,” Slavic Review, 27, no. 4 (December 1968): 529–41.CrossRefGoogle Scholar

10. Pokrovskii, V. I., ed., Sbornik svedenii po istorii i statistike vneshnei torgovli Rossii, vol. 1 (St. Petersburg: Departament tamozhennykh sborov, 1902).Google Scholar

11. This result is cited by Pasvolsky, L. and Moulton, H. G., Russian Debts and Russian Reconstruction (New York: McGraw-Hill, 1924), appendix 4, p. 187.Google Scholar

12. Pokrovskii, Sbornik svedenii, pp. 11-35.

13. Obzor vneshnei torgovli Rossii po evropeiskoi i aziatskoi granitsam za … god, annual ed., 28 vols. (St. Petersburg: Departament tamozhennykh sborov, 1885-1913), 5: 5 and 14.

14. Miller, Margaret S., The Economic Development of Russia 1905-1914, 2nd ed. (London: Frank Cass, 1967, pp. 40–45.Google Scholar

15. Tariffs were normally on weight not value; therefore, an exaggerated customs valuation would not raise the tariff obligations of the importer.

16. Major purchases of military equipment by the War Ministry did not enter into the import data, but were handled separately.

17. These prices were quoted regularly in such commercial publications as Vestnik finansov and Svod tovamykh tsen.

18. Pasvolsky and Moulton, Russian Debts, pp. 186-87.

19. Pokrovskii, Sbornik svedenii, p. 35.

20. According to Pokrovskii's data, the London wheat price was 13 percent above the customs price, while Königsberg prices of rye and barley were generally SO percent above customs prices. The higher German price differentials reflect Germany's restrictive tariff policies toward Russian cereals; German tariff policy is discussed by Bonwetsch, “Handelspolitik und Industrialisierung,” pp. 280-94. The London price differential is consistent with independent data on transport costs cited by Gregory, Paul, “Russian National Income in 1913—Some Insights Into Russian Economic Development,” Quarterly Journal of Economics, 90, no. 3 (August 1976)Google Scholar, statistical appendix. The cost of transporting grain was about four and a half rubles per ton in 1913, or approximately 10 percent of the domestic price of grain products (weighted by share of exports). Commissions and insurance fees would then add on additional costs to these shipping charges.

21. Pokrovskii, Sbornik svedenii, pp. 14 and 35.

22. I was unable to find information on the calculation of the evaluation fee, but I assume it to be modest. Even though it was likely to be modest, the possibility that it would represent a nonsignificant share of the exporter's margin cannot be ruled out. Moreover, it does not rule out the possibility of corruption on the part of customs officials. However, I believe that the most important check on understated customs evaluations was the ready information on market prices, as I argue in the text.

23. The most detailed study of regional price variation is Koval'chenko, I. and Milov, L., Vserossiiskii agrarnyi rynok, XVIII-nachalo XX veka (Moscow: Nauka, 1974.Google Scholar For data on seasonal price differences, see Svod tovamykh tsen, published annually by the Ministry of Trade and Industry.

24. Obzor vneshnei torgovli Rossii po evropeiskoi i aziatskoi granitsam sa 1908 god (St. Petersburg: Departament tamozhennykh sborov, 1910), pp. 5-6.

25. Bonwetsch, Bernd, “Das ausländische Kapital in Russland,” Jahrbücher für Geschichte Osteuropas, 22, no. 3 (1974): 419.Google Scholar

26. It should be noted that the Obzor series does indeed net out goods shipped through Russia to third countries by counting only commodities released for domestic consumption; whereas the statistics of other countries could likely include double-counting. Moreover, as the figures for 1908 indicate, the difference between foreign aggregate and Obzor import valuations is fairly small, and is probably accounted for by transport costs (the foreign figures are f.o.b. and the Russian import figures are c.i.f.) plus some double-counting. Thus, in my view, the foreign data on exports to Russia generally support the validity of the Obzor import series.

27. I share this judgment with B. V. Avilov, the compiler of the statistical appendix on Russian economic development for the Granat encyclopedia. Avilov argued that prerevolutionary Russian foreign trade statistics were quite reliable, an enthusiasm he did not hold for other official statistical series ( Avilov, B. V., ed., appendix to “Ekonomicheskoe razvitie Rossii v XIX i v nachale XX veka,” Entsiklopedicheskii slovar’ russkogo bibliograficheskogo instituta Granat, 7th ed., vol. 36, pp. 4 and 66).Google Scholar This position is also supported by a major study of the reliability of foreign trade statistics conducted in the Soviet Union by Dvoretskii ( Dvoretskii, E. V., Rossiiskoia statistika vneshnei torgovli kak istoricheskii istochnik [Moscow: Akademiia nauk, Institut istorii SSSR, 1974]).Google Scholar

28. See Gregory, “The Russian Balance of Payments, the Gold Standard, and Monetary Policy.”