January 12, 1918 – Bolsheviks Suspend Russia’s Debts
Pictured – “Capitalist of the world unite.” By dismissing Russia’s great debts to Britain and France, Lenin fatally weakened the relations between the Bolsheviks and the west. However, it did allow the Bolsheviks to portray the West in propaganda as greedy capitalists united against the revolution.
Conflict between the Bolsheviks and their nominal allies was never certain. Britain and France feared most the end of an Eastern Front versus Germany; except for several outspoken conservatives like Winston Churchill and Lord Curzon, they did not much care what politics the Russian government had, as long as it fought. The French military in fact preferred the Bolsheviks as an ally compared to the disorganized, tiny groups of loyalist Russians in the White movement.
Nevertheless, if Lenin wanted to assure poor relations with the west, he did so by repudiating Russia’s debts. Russia owed massive amounts of money to Britain, France, and the United States. The Tsarist government had figured it was easier to raise loans than taxes, and under its Finance Minister Sergei Witte had taken on huge loans from France since the 1890s to build infrastructure, industry, and the military. Russian credit was good, and the French were eager to strengthen a future ally. Throughotu the war Russia’s debts climbed higher and higher as they borrowed from their allies, particularly the British, to keep up the fight. By 1918 Russia owed some 12 billion rubles to its allies.
Russia’s economy had withered and fallen apart in the meantime. The ruble had been worth 30 kopecks before the war, now it had the purchasing power of 7. In a move that was both ideologically and economically motivated, Lenin announced a suspension to Russia’s payments of the debts on January 12, 1918.