The Straining of Productive Capacity: The Russian Example

Abstract

As the war dragged on it became clear that some of the belligerents were not able to meet the economic strains it imposed. Italy, Austria-Hungary, and Russia, all relatively underdeveloped economically, found their limited resources overtaxed by the war and had difficulties in organizing for total war. The problem was particularly acute in Russia where economic weakness was combined with the inability of the bureaucratic central government to recognize the need for economic mobilization and to carry out that mobilization effectively. The government acted belatedly to control allocation of materials or prices, a problem intensified by the fact that the Russian war effort was financed largely by increased issue of paper currency. The demands of the immense army absorbed the greater part of the production of both heavy and light industry and this starved the consumer market. The following report describes the serious problems of falling production and rising prices faced by the Russian metals industry.