The distributional effect of a financial crisis: Russia 1899–1905

ABSTRACT

Who pays for financial crises? This paper examines the period between the major Russian financial crisis of 1899–1902 and the Russian Revolution of 1905. Using newly constructed aggregate-level data and narrative evidence, this paper finds that in response to the crisis, the Russian government and industry transferred income and wealth from ordinary workers to industrialists and investors. The recipients of transfers weathered the crisis well and profited during the recovery, while employees’ wages and wealth fell behind.

KEYWORDS:

• Financial crises
• businesses
• labour
• income distribution
• Russia

JEL CLASSIFICATION:

• D31
• G01
• J8

Acknowledgements

I thank Alan de Bromhead, Chris Colvin, Lucy Newton, John Turner, participants at the HSE research day seminar for valuable comments, and three referees.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Calculated from GNP data in Gregory (2003, p. 234) and employment data in Izmesteva (1998).

2 Calculated from data in Strumilin (1960, pp. 116–117).

3 Inferred from data in Valetov (2017a, 2017b).

4 Calculated based on the average ratio of the sowed-to-gathered amount. Calculated based on data in Mikhailovsky (1921, p. 4).

5 Calculated from data in Dmitriev-Mamonov (1903, p. 7).

6 Calculated from data in Goetzmann et al. (n.d.a).

7 Calculated from data in Ministry of Finance (1903).

8 Calculated from data in Goetzmann et al. (n.d.a; n.d.b).

9 Industry output is calculated from data in Izmesteva (1998) and revenues are from the Yearbooks (Ministry of Finance, 1900-1907b).

10 Calculated from data in Ol (1925, pp. 12–13).

11 Calculated from data in Lyashchenko (1956, pp. 414–415).

12 Calculated from data in Izmesteva (2011a, 2011b).

13 Calculated from data in the Yearbooks (Ministry of Finance, 1900–1904a).

14 Calculated from data in the Yearbooks (Ministry of Finance, 1900-1904a).

15 Calculated from data in Valetov (2017a, 2017b).

16 Calculated from data in Izmesteva (1998).

17 Calculated from data in Izmesteva (1998).

18 Calculated from data in Pushkareva et al. (2011, pp. 68–69).

19 The data on strikes represents a collection of individual strikes that were compiled by historians from a multitude of primary sources, such as archival materials of police and the Ministry of Internal Affairs, over the course of several decades (Pushkareva et al., 1992, pp. 3–28).

20 Calculated from data in Pushkareva et al. (2011, p. 322). The original data source is the statistics on complaints collected by factory inspectors. Factory inspectors collected data from all firms with 15 workers or greater operating in the Russian Empire, except those in the mining industry, some manufacturing industries, and state-owned enterprises (Pushkareva et al., 2011, p. 41). This suggests that the actual total number of complaints was higher than reported by Pushkareva. The number of firms supervised by factory workers fell between 1900 and 1904 by 11.6 per cent (Volodin, 2007, p. 51), suggesting that the actual number of complaints was higher still.

21 Calculated from data in Izmesteva (1998) and Shilnikova (2013a).

22 Calculated from data in Shilnikova (2013b). For comparison, in the U.S. coal industry in 1930, the first year when data are available, only 0.9 workers were injured or killed for every 10,000 tonnes of coal extracted (Moyer, Jones, & Wrenn, 1952, p. 52). The original data source is the statistics on injuries and deaths compiled by the Council of Miners of Southern Russia (1901, 1903, 1905).

23 Calculated from data in Pushkareva et al. (2011, p. 126). The data on the mining industry are not available.

24 In 1899, there were 1009 joint-stock companies and in 1904, there were 1159 firms (Ministry of Finance, 1900b, 1905a).

25 Calculated from data in Izmesteva (1998).

26 Calculated from data in Kafengauz (1994, pp. 505–516).

27 Calculated from data in Ministry of Finance (1903-7c).

28 To determine corporate tax rates, I review all the tax-related laws in Polnoe sobranie zakonov (1902a, 1902b, 1903, 1904, 1905, 1907).

29 Workers’ wages are from Pushkareva et al. (2011, p. 290). The original data source is the statistics on wages compiled by factory inspectors (Ministry of Finance, 1902–1907с). Allen and Khaustova (2019) report nearly identical wages for workers in large scale industry.

30 Inferred from Ministry of Finance (1899–1906a).

31 The tax rate is from Polnoe sobranie zakonov (1885).

32 To keep on the conservative side, I assume that the hours worked per worker stayed constant over this period. The lack of data on the physical output of other industries does not allow me to estimate their productivity.

33 Workers’ wages are from Pushkareva et al. (2011, p. 292). Inflation, based on a basic needs basket of goods, is from the data appendix in Allen and Khaustova (2019).

34 An average worker’s pay in 1900 was 15.6 roubles per month, according to Pushkareva et al. (2011, p. 290).

35 Inflation, based on a basic needs basket of goods, is from the data appendix in Allen and Khaustova (2019).