She also contemplated a Charter for the State Peasants, which would have given them corporate status through their village communities, as well as secure property rights and the possibility of defending them before law courts. The draft was completed and ready to be promulgated: why it was never issued remains uncertain, though it seems likely that Catherine was deterred by the thought that its promulgation was bound to awaken dangerous hopes among the private serfs.11 It was potentially extremely important, for it would have been the first occasion on which a Russian monarch accorded full property rights to peasants. Taken together, Catherine’s Charters constitute her version of a society ruled by law; but this makes the exclusion of the state peasants (not to mention the serfs) an even more glaring anomaly.
The disordered and unpredictable condition of the laws was matched by the state of the empire’s finances, which proved a lasting obstacle to attempts to mobilize the resources of population and territory. The fundamental problem was that, at least until the late eighteenth century, Russia was straining itself to the utmost to sustain the role of European great power, and could do so only by exploiting the population in ways which prevented them from deploying their own economic enterprise.
Like most eighteenth-century European states, Russia had no unified state budget, merely a collection of estimates or recorded expenditures for various departments, which could be enlarged for the requirements of the court and imperial favourites, and were occasionally reduced by loans from them. From the information we have, at the time of Peter’s death in 1725 military and naval expenditure made up about 70% of the treasury’s outgoings (6.5 million rubles out of 9.1 million). Most of the new expenditure arose from the introduction of the recruitment system, the creation of large infantry regiments and the introduction of improved firearms, ammunition and artillery.12
The introduction of the poll tax had been essential to cope with these unprecedented expenditures. It both simplified the tax system and made it much more productive, increasing revenues appreciably. Local branches of the Kamer-Kollegiia were set up all over the country, and local landowners and army officers were mobilized for the task. Since landowners were now in effect agents for both taxation and recruitment, their practical powers over the serfs were greatly augmented. Army units were used to back them up with coercion, when that was needed, as was frequently the case.
This was a remarkably centralized fiscal system for a country with such tenuous communications, and it is scarcely surprising that it did not always function as planned. Arrears and late payments were normal. Peasants and posad people (townsfolk) quite often refused point-blank to pay the levies due from them and were sometimes prepared to bolster their cause by armed resistance. Alternatively, following a long tradition, they might abandon their holdings and flee to the frontiers of south and east, to fill the ranks of Cossacks, odnodvortsy (single householders) and Old Believer communities.13 Thus heavy-handed tax-collecting undermined the very wealth it was supposed to tap.
By the middle of the century, when expenditure increased sharply, especially during the Seven Years’ War, it was obvious that more money could not be raised through the poll tax, and the authorities decided instead to cover the chronic deficits by increasing indirect taxes, the most remunerative of which was on alcoholic liquor, and by issuing paper money. These two methods – debauching the people and debauching the currency, Keynes might have called them-proved addictive [!] and lasted in one case well into the nineteenth century, in the other right up to 1917.
Apart from brief and not very successful experiments at direct administration, the state liquor monopoly was farmed out, and was a source of enrichment to its agents – officials, landowners, merchants and publicans – right up to the 1860s, when it was replaced by an excise levy. Between 1724 and 1759, the revenue from the sale of liquor rose from 11% to 21% of the state’s income, while by the 1850s it had reached about 40% of the total, declining to about a third in the 1880s.14
It would be an exaggeration, but not an absurd one, to say that the empire was kept financially afloat on the proceeds of the drunkenness of the people. It was naturally far easier to raise revenue from thirsty drinkers than by means of punitive expeditions from reluctant poll-tax payers. Russian popular custom demanded bouts of heavy drinking at times of celebration, whether christenings, weddings and funerals or public festivals. Not to consume huge quantities of alcohol on such occasions, often over several days, was to render oneself liable to ridicule or worse. With the growth of towns and of migratory work during the nineteenth century, a new and probably more pernicious drinking culture took hold, involving casual heavy consumption in taverns with workmates on pay day, without the relatively long periods of abstinence in between such as marked rural customs. The state deliberately took advantage of these habits to augment its income – which meant in turn that it came to have a stake in popular drunkenness and even alcoholism.
It also had a stake in the corruption of its own officials. The liquor farm was auctioned out every four years, on which occasions the prospective farmers (otkupshchiki), to win the franchise, would undertake to sell vodka at approved (low) prices while generating maximum revenues for the state. In practice it was impossible for them to keep these promises without resorting to illegal methods, for example, adulteration, shortweight or claiming to have only expensive liquors in stock when by law they were obliged to have ordinary ones always available for sale. Provincial officials often considered bribes from publicans for indulgence over unavoidable abuses a normal and regular part of their income, which in many cases roughly doubled their meagre official salaries. As one commentator put it, ‘the police officials are themselves farmed out to the tax farmers’.15
The Ministry of Finance admitted as much in a circular of 1859, which instructed governors to turn a blind eye to abuses. ‘A certain increase in the sale of improved beverages at higher prices does not breach the tax farm regulations and should not be regarded as an abuse on the part of the farmers, but is rather the consequence of the calculations necessary for the successful transfer to the Treasury of 366,745,056 silver rubles, which the farmers are obliged to surrender over the present four-year period.’16 As Herzen remarked, ‘Who can buy from the government a fixed quantity at a fixed price, sell it to the people without raising its price, and pay the government ten times as much? Of course, having made such deals with the tax farmers, the government not only cannot prosecute them for abuses, but is actually obliged to protect them … The government is consciously robbing the people, and then dividing up the spoils with the tax farmers and others who have participated in the crime.’17
Corruption, then, was not just a side-effect of the liquor tax system. It was a necessary consequence of the state’s desperate need to raise cash in a still largely natural economy. One should not regard these expedients as all that unusual: both ancient Rome and 17th-18th century France relied on tax-farming for much of their income. But in both cases this reliance was damaging, and in Russia too it obstructed both economic growth and the state’s ability to mobilize real wealth in the interests of the population as a whole. In the words of Charles Tilly, Russia was a state being formed by means which were highly ‘coercion-intensive’, because the country was so poor in capital. The poll tax, paper money and the farming of the liquor; monopoly were natural methods to adopt in the circumstances.18 That does not alter its obstructive effects.
Paper money (assignaty) was introduced in 1769, and inevitably public confidence in it fell fairly rapidly: