Published by EH.Net (June 2019)

Hassan Malik, Bankers and Bolsheviks: International Finance and the Russian Revolution. Princeton, NJ: Princeton University Press, 2018. xviii + 296 pp. $35 (hardback), ISBN: 978-0-691-17016-9.

Reviewed for EH.Net by Benjamin Sawyer, Department of History, Middle Tennessee State University.

The Bolshevik repudiation of foreign debt, decreed in January of 1918, is one of the most significant, yet understudied, cases of sovereign debt repudiation in history. As with many early Bolshevik policies, repudiation has long been mired in the revolutionary rhetoric of the Bolsheviks and the denunciations of their opponents, both of which had strong inclinations to overstate October 1917 as a rupture in Russia’s historical narrative. Hassan Malik’s Bankers and Bolsheviks: International Finance and the Russian Revolution is a long-overdue reexamination of Soviet repudiation that places this tremendously important event within the greater narrative of Russian history and the global economy in the decades prior to World War I. In locating the continuities between the late-Tsarist and early-Soviet eras, as well as the connections between international financiers and Russian leaders, this book is an important contribution to our understanding of both Russian history and the history of international business and finance.

Malik’s narrative of Soviet repudiation begins in the nineteen century, when Russian finance ministers engineered a return to the gold standard and began looking abroad for the capital required to modernize the Russian economy. Over the following decades, Russian finance ministers secured substantial loans on the international market that propped up the Tsarist regime as it struggled with challengers both at home and abroad. Financial incentives and willful ignorance led French financiers, and later their British and American counterparts, to invest heavily in Russia in spite of clear economic and political warning signs that should have tempered their enthusiasm. Even as the Russian government grew increasingly frail during World War I, foreign financiers clung to their optimistic outlook on Russia’s future with such dedication that even the Bolshevik Revolution did not derail National City Bank’s plan to open a new branch in Moscow. Thus, when it became clear that neither the Bolshevik regime nor its position on foreign debt were fleeting, foreign lenders were shocked by a loss that they could, and probably should, have seen coming much earlier.

Within this greater narrative are a number of insightful observations about international finance, the Russian economy and the socio-political environment of Russia on the brink of revolution. Among the most significant of these is Malik’s account of the politicization of international finance in the decade before World War I. While contemporaries and scholars alike have considered foreign loans as crucial in stabilizing the Russian government after the 1905 revolution, Malik argues that they ultimately did more to weaken the regime in the long-run. The Bolshevik claim that the foreign loans were odious, which formed the basis of the repudiation decree, was not a view unique to Lenin and his inner circle; similar claims had emerged a decade earlier when a broad spectrum of political parties, ranging from socialists to the liberal Constitutional Democrats (Kadets) criticized the Tsar’s unwillingness to make foreign loans subject to Duma approval. Thus, as Russians faced the economic crisis brought on by World War I, the Bolshevik repudiation decree that caught many foreign investors off guard was steeped in a political rationale that was familiar to many Russians. In fact, Malik contends that the economic foundation laid by Tsarist-era policy almost guaranteed some form of default, regardless of who prevailed after 1917.

Malik’s conclusions are informed by an impressive set of sources, including the archives of Russian and French government agencies, financial institutions in the U.S., UK and France, and a broad set of contemporary periodicals. Collectively, these sources allow us to see the Russian economy as it existed on the ground and in the minds of those who facilitated the influx of foreign capital into the country in the late-Tsarist era. Documents in financial archives are particularly illuminating, as internal correspondence shows that foreign investors in Russia were not the rational actors assumed by theoretical models. Instead, foreign financiers saw Russia through an ideological lens, superimposing their own grand narratives on the country and either ignoring or discounting readily available information that challenged their optimism. Though many of these individuals may have sincerely believed their own stories, Malik contends that their willful ignorance ultimately makes them culpable in the losses sustained by debtholders and for providing fuel for Russia’s revolutionary upsurge. Anyone familiar with the literature on the foreign “fellow travelers” who visited Soviet Russia will find striking parallels in the utopian enthusiasm of foreign lenders in 1913 and that of foreign communists in 1921.

Bankers and Bolsheviks is an excellent book overall, and there is a lot here for future researchers to build upon. Perhaps the most notable silence here is the impact of U.S. financial support for the Russian government during World War I. Given the convincing argument that finance had become politicized, one expects that the $75 million in Russian dollar bonds that National City Bank sold on American markets in 1916 and the U.S. agreement to provide aid to the Provisional Government following the Root Commission in June 1917 must have had an impact on Russia’s economy and the Bolshevik attitude toward U.S.-held debt. As Malik suggests, and Kim Oosterlink’s work on Russian debt in France has shown, the universality of repudiation did not mean that Bolshevik attitudes toward creditor nations were equal. More work on the impact of pre-revolutionary finance on Soviet relations after 1918 thus seems a fruitful path for new research. Finally, the author’s claim that “bankers matter,” while perhaps unremarkable to the readers of this publication, is one that social and cultural historians should take seriously, as the archives of banks and other businesses are vast repositories of qualitative information that have yielded only a small fraction of their potential value.

Malik’s ability to engage with multiple fields in a single volume is impressive, but some readers may find portions of the book to be more useful than others. The opening chapter, which challenges Sergei Witte’s importance in shaping Russian finance, will likely be most valuable to historians of Russian finance, and the lengthy accounts of negotiations between Tsarist officials and foreign lenders might be of limited use to anyone not interested specifically in the individuals and institutions that were party to the loans. Those interested in the Russian Revolution may also quickly notice that there are far more bankers than Bolsheviks in the book, yet Chapter 5, “Revolutionary Default” offers an important account of how the events that preceded the October Revolution shaped the Bolshevik decision to repudiate foreign debt. Fortunately, the book’s structure makes finding and following particular arguments easy, so scholars can find the most relevant parts without much effort.

Overall, Bankers and Bolsheviks is an outstanding book that fills an important gap in the literature on Soviet repudiation. It belongs on the bookshelf of anyone interested in the history of foreign finance, global economic history, and twentieth-century Russian history.

Benjamin Sawyer is the author of “Manufacturing Germans: Singer Manufacturing Company and American Capitalism in the Russian Imagination during World War I,” Enterprise and Society, Vol. 17, No. 2 (June 2016). He is working on a book titled Carl Marks vs. the Soviet Union: Pre-Revolutionary Russian Debt and the Fight against Soviet Repudiation after the Bolshevik Revolution.

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