Chapter 3 Crimean War (1854–56)
The Crimean War was the first war when the belligerents had to seriously grapple with the fundamental problem of trade with the enemy. This chapter shows how the adoption of neutral rights created inadvertent consequences for the belligerents’ wartime commercial policies, forcing them to reconsider how to resolve the trade-off between military and economic imperatives. Starting the Crimean War in a world without neutral rights, the belligerents initially prohibited all wartime trade with the enemy. However, in 1854, the ice on the Baltic Sea melted later than usual, leaving a significant portion of French products—already paid for but not yet delivered—stranded in Russian ports. Requiring neutral assistance to rescue its property, France convinced Britain, then Russia, to adopt the Declaration of the Rights of Neutrals. This declaration represented a completely novel situation for wartime trade. Had the belligerents adhered to their initial wartime commercial policies of severing all trade, they would have prioritized the interests of neutral merchants over their own. Having created the fundamental problem of wartime trade, Britain, France, and Russia had to find a solution to it.
The British and Russian solutions cohere with the predictions of the wartime trade theory. Both states approached wartime commercial policy at the product level, examining which products their enemies could convert into military capabilities quickly and which products were essential for their domestic industry and government revenue. Both states tailored their policy to their expectations of the war, which resulted in quite different wartime commercial policies. Expecting a short, peripheral campaign, Britain had the freedom to explore a lax commercial policy. It radically altered its initial, pre-neutral rights, policy to legalize wartime trade with the enemy to avoid relative losses vis-à-vis neutral countries. However, the export of military and naval stores to the enemy was still prohibited, preventing Russia from using the gains from trade to increase its military strength in the current war. Russia, on the other hand, expected a long, high-stakes war on its own territory. It needed a restrictive wartime commercial policy. Problematically, most of its European exports contributed greatly to its GDP and could not be diversified away from Britain. Russia had to walk a thin line between prohibiting trade from which the enemy could benefit militarily and continuing to export raw materials to the enemy to support its own economy.
The French response to the adoption of neutral rights does not follow the predictions of wartime trade theory. Though France still grappled with the fundamental problem of trade with the enemy, the protectionist structure of its economy allowed it to create a different solution. The French solution was to change the tariff schedule to remove prohibitive tariffs from alternative sources of the products the country needed. By removing these tariffs, France diverted trade away from Russia without affecting state revenue. It mostly relied on the war itself to make trade with Russia less profitable for its domestic merchants.
To avoid breaking up the narrative, this chapter starts with an assessment of the belligerents’ war expectations during the conflict and then outlines their initial wartime commercial policies, formulated for a world with no neutral rights. It explores the negotiations over the Declaration of the Rights of Neutrals and shows how each belligerent grappled with the inadvertent consequences of the declaration, explaining the British decision to allow trade with the enemy, the French tariff-change scheme, and the Russian balancing act between prohibiting militarily sensitive trade and permitting economically important trade. The final section provides statistics of the observed wartime trade between the belligerents.
War Expectations
The Crimean War started with no expectations of war at all. Russia intended on a quick coercive maneuver to extract a foreign policy concession from the Ottoman Empire. When Britain, France, and Austria arrayed against it, Russia quickly withdrew its troops and considered the incident over. Britain and France, however, were not satisfied. They pursued their campaign against Russia by invading Sevastopol, expecting that a confrontation between two great powers and a sole opponent would be quick and easy. Russia agreed with this grim assessment, preparing for a long and difficult fight on its own territory. When the initial French and British assaults failed to deliver a decisive victory, their war expectations likewise turned toward a long struggle.
russia expects a long, high-stakes war
The immediate cause of the Crimean War was the question of holy places in the Ottoman Empire. The Russian government wanted the sultan to recognize their right to protect Eastern Orthodox believers, just as the French were recently given the right to protect Roman Catholic believers. To force the sultan’s hand, Russia sent troops into Moldavia and Walachia. However, Nicholas I did not intend a military struggle, only coercive diplomacy. And the maneuver was interpreted as such by the European great powers. The British government officially notified Russian ambassadors that it did not see the troop movement as grounds for war.1 The Turkish government, facing unwanted domestic pressure to declare war on a militarily superior opponent, hoped European powers would mediate on its behalf. When it became clear that European pressure would fall on the Ottoman Empire, not on Russia, the sultan declared war on October 4, 1853.
With only the Ottoman Empire for an opponent, Nicholas I was confident of both a naval and a land victory.2 This belief was widely shared, and feared, by the European powers.3 Despite this assessment, Russia did not form a short war expectation; indeed, it wished to avoid war altogether. Nicholas I was aware that the Concert of Europe would not allow Russia to control the Turkish Straits or the mouth of the Danube, much less the substantial territory of the Ottoman Empire.4 Any gains from war with Turkey would be forfeit at the peace conference despite the costs spent acquiring them. Additionally, the Russian ambassadors in London were informed that any attacks on Turkish ports, where European powers continued their commercial interactions, would provoke a British and French response.5 In the interest of avoiding a conflict with European great powers and in the understanding that a war would bring no permanent gains, Russia preferred to avoid a military confrontation.
To this end, the Russian army received orders not to initiate military action against Turkish forces without provocation.6 Although it was permitted to fire on passing troops from well-defended positions, the army was not allowed to pursue Turkish troops. Even when the tsar, incensed by the initial skirmishes, wanted to start a major offensive against Turkish positions in the principalities, his close adviser and commander of the Russian army in the Danube, Ivan Paskevich, warned him off from such action. The military commander specifically emphasized that the tsar’s plans would elicit a reaction from the Western fleets.7 Thus, through the beginning part of the “war,” the Russian army was prevented from fighting its opponent.
The situation changed when British and French entry into the war became inevitable and Austrian entry a definite possibility. After Russian forces destroyed the Ottoman navy at the Battle of Sinope—a battle fought to interdict military supplies to Ottoman troops in the Caucasus—and prompted Western fleets to enter the Black Sea, it became evident to Russia that the coercive maneuver had failed and that other European great powers were likely to interfere if the conflict continued.8 In some ways, this removed the need to avoid active engagement with the Turkish army. With inadvertent provocation no longer an issue, the Russian army moved to siege Calafat in February 1854 and Silistria in March 1854. Even with the French and British declaration of war, their troops would not make it to the region for some time. There was, therefore, a window of opportunity to gain leverage to pressure a favorable diplomatic conclusion to the conflict. However, this gamble depended on Austrian neutrality. Despite the fact that Russia had come to its rescue in 1848, Austria reciprocated by joining the coalition against Russia on this occasion. Following an Austrian ultimatum, Nicholas I removed his forces from the Danubian principalities before the British and French armies even made it to the region.
Pulling out of the principalities satisfied Austrian aims and effectively gave Austria the opportunity to remain neutral for the rest of the war. Given the stated British and French war aims, the removal of Russian troops from the Danubian principalities should have also ended hostilities with these two Western powers. However, Britain and France wanted war. Having already whipped up public support, gathered the troops and funds for a military campaign, and taken the trouble to transport their troops all the way to the Ottoman Empire, they did not want to leave without a military victory.9
The allied decision to attack Crimea changed Russian war expectations. Faced with two great power opponents, Russia believed the war would turn into a long, high-stakes struggle. Memories of what had happened the last time Russia stood alone against the military might of the entire continent were still strong.10 Moreover, the war was set to continue on Russian territory, threatening Russian access to the Black Sea. Constantly wary that Austria might join the coalition against Russia, Paskevich split the army between defending Russia’s western border and protecting Crimea.11 In Crimea, the Russian officers started out feeling confident they could hold off the invading forces until winter but still expecting that the fighting would continue into the next season with the cold, weary French and British troops.12 The failure to win quick victories against the Western troops as they landed in Crimea and the subsequent failure to achieve a victory at the Battle of Inkerman (1854) solidified the expectation of a prolonged war.13 The expectation of a long, intense war stayed unchanged for the remainder of the conflict.
britain and france expect a short, easy war
On February 27, 1854, Britain and France sent an ultimatum requiring Russia to remove its troops from Moldavia and Walachia within six days or else face war. The tsar did not reply to the ultimatum. While both Britain and France had been preparing for battle since February, their official declarations of war were not issued until March 27 for France and March 28 for Britain.
Neither side had a clear conception of their war aims. The British government was divided between Lord Aberdeen, who favored chasing Russians out of the Danubian principalities and restoring Turkish sovereignty,14 and Lord Palmerston, who advocated severely decreasing Russian influence in the Ottoman Empire, as well as in Europe more generally.15 France favored waging a Crimean campaign in addition to removing Russians from the principalities, but only if Austria and Prussia could be persuaded to join the war effort.16 Austria feared the possibility of Russia-backed nationalistic uprisings on its territory and was solely focused on the Danubian principalities. To the extent that all interested parties could agree, the official policy became to force Russian troops out of the two Turkish territories. The allied commanders agreed that Russian troops could be swiftly destroyed by Austrians and Turks striking from one side and French and British from the other.17
This campaign never occurred. By the time the allied troops landed at Varna on August 11, 1854, the tsar had already ordered a withdrawal and Russian troops were mostly gone. The Austrian army was taking over control of Moldova and Walachia amid some squabbling with the Turkish troops.18 Having accomplished its goals, Austria adopted neutrality, ending the possibility of allied pursuit of the Russian army to Russia’s western holdings.19
The incident that officially brought Britain and France to war was resolved; however, neither country was prepared to let the war end. In Britain, the media labeled the Battle of Sinope a massacre and demanded retribution.20 Napoleon III, likewise, hoped to use the vivid perceptions of the battle as a pretext to take stronger action against Russia and promote the alliance with Britain.21 Allied military commanders were frustrated that mobilization would leave them absent a chance for glory.22 Both governments perceived great pressure to gain a significant military victory over Russia.23 They settled on a Crimean campaign, centered on a British plan to strike a decisive blow at Sevastopol.24 The city was the center of Russian power in the Black Sea, and it was assumed that without naval power, Russia’s coercive leverage over Turkey would wither.25 Furthermore, it was assumed that the fall of Sevastopol would force Russia to immediately sue for peace.26 Confidence was high among the British military that Sevastopol could be taken in a few days, as the Russian military power was thought to be greatly overestimated.27 Palmerston believed the entire operation would take around six weeks.28 France, for its part, needed a quick victory as Napoleon III anticipated French public opinion turning against the war.29 Already his opposition stressed that Britain was dragging France into a war that could not benefit France.30 Napoleon III accepted the Sevastopol strategy as the most likely to grant him the victory he needed.
The allies expected to conclude the Crimean campaign by Christmas.31 This was reflected in the preparations for the offensive. No plans were made for wintering in Sevastopol, and no winter provisions were requisitioned. The British soldiers arrived in their parade uniforms, designed for summer.32 Indeed, the warm supplies that were sent to Crimea by November 1854, which were destroyed in the November 14 hurricane, were prepared by concerned British citizens, not the government. The French were slightly better equipped, providing their soldiers with sheepskin. While they were envied by the British, it was hardly enough for a Russian winter. Likewise, there was little thought given to providing proper shelter to the troops; tents let in water from both the rain and the standing water in the camp.33 Provisions were clearly intended for a short campaign.
Expectations of a short war ended with the Battle of Inkerman on November 5, 1854. On the eve of the battle, it was believed that a renewed bombardment of Sevastopol would allow the allies to storm the fortress and win their quick victory. Instead, the stalemate that resulted from the battle severely exacerbated the allied limited manpower problem. They were forced to abandon any plans of attacking the fortress and focus on siege tactics.34 In addition to the men lost in battle, more men and many supplies were lost to a hurricane on November 14, which claimed twenty-one ships filled with medical equipment, warm winter supplies, food, and ammunition.35
After November, the allies’ changed war expectations were reflected in their investments in a long-term strategy. The British camp was located about ten kilometers from Balaklava, where the British ships landed and had access to supplies. Through the first phase of the war, the allies struggled to transport supplies from their ships to the battle camp for lack of good roads and carts. In November, the British government made plans to construct a railroad from Balaklava to the British camp. Construction materials had started to arrive by the end of January 1855, and the railroad was finished by the end of March, putting an end to at least one logistical problem.36 This costly—in terms of both funds and time—investment exemplifies a change toward an expectation of a long war.
Initial Commercial Preferences
The belligerents’ initial wartime commercial policies were formulated in February 1854. They were designed for a world where neutral rights were not universally guaranteed. Neutral commerce on the seas was liable to capture. If belligerents lacked the naval might to patrol the seas themselves, they could issue letters of marque to individual ship owners to capture commerce on the states’ behalf. Belligerents entered the war expecting to lose the revenue from trade with the enemy for the duration of the conflict yet content that neutrals would not take over their market share in the enemy’s economy. As explained in chapter 1, in a world without neutral rights, it made logical sense to prohibit all wartime trade with the enemy. This is precisely what Britain and France adopted as their initial wartime commercial policies. As Russia did not expect to fight Britain and France at this stage of their coercive maneuver, it did not prepare an initial wartime commercial policy.
britain prohibits wartime trade
The commercial relationship between Britain and Russia at the time of the Crimean War can be characterized by mutual dependence. To remain competitive in global markets, British industry relied on Russian raw materials, which were of a higher quality and more favorable price than the alternatives. Russia supplied 17 percent of the grain Britain imported37 and a high proportion of bristles, flax, hemp, hides, linseed, tallow, and raw wood.38 The British manufacturing of linen, canvas, candles, soap, brushes, and oils was largely dependent on imports of raw materials from Russia.39
As for Russia, Britain was its primary trading partner, consuming 40 percent of Russia’s European exports and providing for 30 percent of Russia’s imports.40 Direct British exports to Russia were falling in the years leading up to the Crimean War. Between 1848 and 1852, they fell by 43 percent.41 Yet Britain continued to buy more than half of all the raw materials Russia sold. It imported on average 64 percent of Russia’s oilseeds, 43 percent of its wool, 77 percent of its lard, 66.7 percent of its flax, 60.8 percent of its hemp, 50 percent of its tallow, and 63 percent of its timber.42 This made Britain a very important market for Russian exports.
British leaders understood that severing trade with Russia would come with considerable economic pain. It was often argued that Britain could exploit its VIP customer status with Russia, absorbing nearly half of Russia’s European exports, to damage Russian commerce.43 However, this would be a double-edged sword as the British industry could not substitute or find alternative exporters for the large quantity of raw materials received from Russia. Some in Britain hoped that other countries might be willing to resell Russian produce during the war, yet the probability of this enemy commerce reaching British shores was very low in a world without neutral rights. In 1853, anticipating the war, British merchants purchased considerably more raw materials from Russia than in previous years.44 Expecting a complete prohibition on trade with the enemy, British and French merchants stockpiled Russian produce.
The initial British wartime commercial policy did not disappoint the expectations of its merchants. All wartime trade with the enemy was prohibited. By the end of March 1854, two orders-in-council were publicized emphasizing the prohibition on wartime trade. The first allowed all Russian ships, vessels, and goods to be seized as lawful prize.45 The second forbade British ships from entering or clearing out of Russian ports and issued a general embargo on Russian ships using any ports.46
Concurrently, a strict blockade of enemy ports was craftily designed to interfere with Russia’s merchant marine, cut off Russian imports from all sources, and still allow for the possibility of some Russian exports.47 Since Britain was dependent on importing raw materials from Russia, even in a world without neutral rights, it sought a policy that would permit some wartime trade for reasons of economic necessity. Britain assumed that to circumvent the blockade, commercial traffic would be redirected by land to the first open non-Russian port from which Russian products could be exported to their original destinations. Not all products would be able to weather the land transfer or be worth exporting given the increased price of transportation; the lack of established infrastructure for commercial traffic over land was expected to further hamper Russian trade.48 The blockade, then, was meant to prevent Russia from exporting any bulky or expensive items, such as timber and coal, while allowing the possibility of export of the primary materials that Britain needed, such as hemp, flax, oilseeds, and tallow.49 However, even if Russian products survived the costly land transfer, there was no guarantee they would make it to the British Isles because privateers hired by either side could view this trade as liable for capture. Britain prioritized severing trade with the enemy but hoped that some trickle of raw materials would still be attainable to keep domestic industries supplied.
france curses the ice
The commercial relationship between France and Russia immediately preceding the Crimean War was nowhere near as close as the Russian relationship with Britain. While France was the third-largest trading partner for Russia, for France Russia ranked below the United States, England, Sardinian states, Belgium, German states, and Spain. France imported about 7 percent of Russian goods and provided for approximately 8 percent of Russian imports.50 Russia mainly imported silk, wine, wool cloth, and the madder herb from France, none in significant quantity.51
France purchased a small share of the major Russian exports, including grains, lard, flax, timber, oilseeds, wool, potash, and bristles.52 The French share of these exports was less than 5 percent of the product total exported by Russia to Europe. The exception was flax, of which France imported 452,167 silver rubles’ worth in 1853, which amounted to 10 percent of Russia’s European export of flax.53 However, Russia had a considerable number of alternative countries willing to buy the flax, and France had several alternative suppliers.54
The extent of the commercial relationship with Russia was summed up by the minister of commerce: “If commercial relations with Russia were momentarily suspended, our supplies should not suffer much.”55 Out of the main commodities that France imported from Russia—cereals, oilseeds, wool, brass, raw tallow, linseed, hemp, pitch, and tar—with the exception of cereals and flaxseeds, Russian products were considered to be of limited importance in foreign purchases.56 For most of these products, the French level of stocks at the beginning of 1854 was considerably higher than at the beginning of 1853, in large part because of enterprising merchants anticipating the wartime cessation of trade with Russia. The stock of linseeds at the beginning of 1854 stood at 39 percent of the yearly consumption, with foreign countries (excluding Russia) being capable of making up another 23 percent.57 Existing stockpiles would last France around two-thirds of a year, which was expected to be long enough to survive a short break in commercial relations with Russia.
Only in the import of cereals did the French believe their current stockpiles to be insufficient for the period of war.58 At the same time, France did not use Russian cereals for domestic consumption but instead reexported it.59 Thus French leaders were confident that their population would not suffer for want of grain and hoped to make up for potential losses with cereals imported from the United States.
On the basis of such an assessment, France expected to easily weather the inevitable break in commerce with Russia. There was, however, one major complication. Trade with Russia, at the time, mostly worked on a system of capital advances, which ensured that paid-for products were brought to ports by the time navigation was possible. In 1854, the ice on the Baltic Sea was slow to melt. On the eve of war, numerous French merchants, having already paid for Russian products, found that they would not be able to ship these goods to France because of the war. Letters from all the regional chambers of commerce flooded Paris, all about the same concern.60 In this instance, merchants were not concerned with permission to initiate new transactions during the war; they wanted to complete transactions that had begun a year before the war. Otherwise, Russia would profit doubly at the expense of French merchants: first, from the payment already advanced, and second, from the products Russia could export to other customers because of the wartime break in commercial relations with France. The problem was aggravated by an inadequate number of French ships wintering in Russian harbors; they would not be able to carry all the previously purchased products back to France.61 Given the impending war, there would not be time for multiple runs. In a world without neutral rights, France was ready to sever trade with Russia even for the presumed short war. Yet it needed to rescue the already purchased products stranded in Russian ports.
Declaration of the Rights of Neutrals
While Britain and France were both prepared to sever all trade with the enemy, they had to settle on a unified policy toward neutral commerce for the duration of the war. Anything short of that would interfere with their ability to prosecute the war.62 Neither country had any interest in offending neutral states or giving them a reason to enter the war on Russia’s side.63 Beyond that, their traditional views parted. In previous wars, France had determined the legality of commerce by the origin of the ship: neutral ships, even those carrying enemy products, were allowed to pass; enemy ships, even those carrying neutral property, were legitimate prize of war.64 English policy, on the other hand, focused on the origin of the goods. Enemy products found on neutral ships were seized; neutral products found on enemy ships were not.65 England also enforced the rule of 1756: a neutral country could not, in wartime, engage in trade that would be entirely new for it. This prevented neutral countries from engaging in coastal trade to help a belligerent move products and information from port to port.66
Given the number of French-bought products of Russian origin stuck in Russian ports, it was essential for France to garner British agreement to the principle that the flag covers the merchandise as well as to the abandonment of the rule of 1756.67 If Britain agreed to safe passage for Russian goods on neutral ships, France could hire neutral ships to export what was already paid for.68 Likewise, allowing neutrals to engage in coastal trade in Russia would free neutrals to collect the prepaid products and deliver them to France. The British, however, had little interest in making these concessions. Through the middle of March 1854, the Office of the Committee of Privy Council for Trade maintained that Russian goods, even on neutral ships, could be seized and the purchase of Russian goods at neutral ports would be considered illegal.69 The French regional chambers of commerce were up in arms when they heard that the British Foreign Office was making merchandise of Russian origin, even if purchased before the war and transported on neutral ships, liable to capture.70 While acknowledging the British intent to injure Russian trade, they likened British cruisers to pirates for seizing property on neutral ships.71 Their major complaint was that the property of Russian origin that Britain proposed to capture had already been paid for by French merchants and was in French perception already French goods, so the measure would mostly injure French and to some extent British merchants, not Russia.
To secure British agreement on the principle that the flag covers the merchandise, France had to accept the British principle that neutral property on enemy ships must be returned to its neutral owners.72 Both sides also agreed to refrain from issuing letters of marque—privateering becoming counterproductive when neutrals were legally allowed to carry enemy produce. Together these concessions set the basis for the Declaration of the Rights of Neutrals. Worded almost identically in both states, the declaration was published in Britain on March 28 and in France on March 29. Under the new laws, neutral ships were allowed to carry any products regardless of origin, with the exception of the contraband of war and communications of the enemy.73
Britain also demanded that France agree to a strict blockade of all Russian ports.74 The blockade was the centerpiece of the initial British wartime policy and appeared more important as Britain began to concede on neutral rights.75 A strict blockade was the best way to ensure that Russia could not resupply during the war. Britain also needed the blockade to ensure that Britain and France were not the only two countries forced to give up trade with Russia at the outbreak of war.76 A strict blockade would force all other states to stop seaborne trade with Russia as well. In addition, it was hoped that preventing British exports from reaching Russia would so inconvenience the Russian upper classes that they would pressure the Russian emperor to sue for peace.77
While France had to acquiesce to the blockade to receive their preferred version of the Declaration of the Rights of Neutrals, a strict blockade presented a problem to its main commercial objective: removing product already bought by French merchants from Russian ports. The concessions on neutral rights, allowing neutral ships to carry products of Russian origin, meant little if no ships were allowed out of Russian ports. France attempted two strategies to circumvent this obstacle. First, they pressed the British to grant a grace period to Russian ships to finish their commercial affairs in allied ports and return to Russia safe from capture. Second, the French proposed a complicated system of licenses to be granted to both friendly and neutral merchants, allowing them to break the blockade.
Regarding the grace period, France argued that numerous treaties defended this principle.78 A treaty between France and Russia from 1787 granted merchants on both sides a full year to settle their affairs in the belligerent country before being granted safe passage home.79 Additionally, a similar reciprocal relationship already existed between Russia and Turkey in the current war. Turkey provided a monthlong grace period to Russian commercial interests in its ports to finish loading ships and leave the country unmolested, and by reciprocity, Russia allowed the same privileges to Turkish ships in Russian ports.80 Russia even avoided capturing Turkish ships after the days of grace expired if the Turkish ships could prove that they had been loaded before the grace period ended.81 France suggested that if the allies extended such a policy toward Russia, Russia would reciprocate by allowing French and British ships time to load Russian merchandise and leave the country. The French minister of commerce raised the point that reciprocity with Russia would require the agreement of the Sultan; otherwise, the Turks could legally capture Russian ships despite the safety promised by France and Britain.82 But, as with many other decisions, Turkish cooperation was taken for granted.
Throughout these negotiations, the French Ministry of Commerce was inundated with letters from French merchants attempting to pressure the government into settling on a lengthy grace period and providing additional security guarantees for the transfer of French merchandise, regardless of the flag of the ship carrying it.83 Such requests were disregarded. French industry concerns about recovering prepaid produce from Russia found purchase with the government because ignoring it would have significantly affected state coffers.84 It was doubted that many industries would have the resources to purchase another round of raw materials for the year if they did not manage to make a profit from the goods already purchased from Russia. This new round of concerns, on the other hand, aimed at making the conduct of business during war marginally easier. The lengthy grace period and additional security-guarantee requests were forwarded to the minister of foreign affairs, who continually rejected them on the grounds of the expediency of war.85 Unlike the formation of peacetime commercial policy, in war, the state imposed its own preferences on commerce to ensure the security of the state.
Like the French Ministry of Commerce, the British Foreign Office, the Board of Trade and the Treasury were overflowing with letters from merchants requesting permission to import Russian produce paid for before the war. Before the Declaration of the Rights of Neutrals, the British cabinet was content to fall back on the advice of the Queen’s Advocate, compiled based on precedent from previous wars.86 Merchants were informed that, despite their hardship, they could not import products of Russian origin during the war as this would constitute trading with the enemy.87 However, after the decision to grant the days of grace, this position was softened. If Russia reciprocated, British merchants would be allowed to import the products already paid for before the war started. At this point, however, no relaxation on the prohibition of wartime trade was considered. The British and French grace period was set at six weeks to accommodate the greatest distance a Russian ship might have to travel.88 Russia ultimately reciprocated with its own policy of a six-week grace period for allied ships to finish their business in Russian ports and leave safely.89
One issue remained to be settled: the question of licensing wartime trade. According to French proposals, licenses should be given in four situations: (1) to allow French and British merchants to transport from Russian ports, blockaded or otherwise, products purchased before there was any knowledge of the war; (2) to allow neutral ships to transport from blockaded Russian ports goods purchased before the war; (3) to allow friendly and neutral merchants to transport grain that was already paid for on advance from Russia’s next harvest; (4) to allow French and British merchants, under certain circumstances, to purchase Russian raw materials necessary for their domestic industry.90 The first two conditions would aid the French in rescuing their merchants’ products of Russian origin from Russian ports. The third condition would alleviate any concerns France had about grain shortages. The last condition would basically allow licensed trade with the enemy, specifically in products that would contribute the greatest revenue to the French state.
The British government strongly opposed licensing as it would interfere with their strict blockade. Three arguments were brought forth to convince the French to abandon their scheme. First, because of the chaos created by licenses granted during the Napoleonic Wars, it was widely accepted that licenses led to fraud and the creation of a black market in permissions to trade across enemy lines. Second, if licenses were sparingly given, while this would help control wartime trade, it would also create domestic monopolies based on who received such a license.91 If the licenses were given fairly and therefore indiscriminately, it would render the prohibition on trade moot. Third, since the French had already agreed to a strict blockade, licenses to enter Russian ports would counteract that agreement.92
Denied a general license on wartime trade, France proposed a few special licenses for extraordinary conditions that might occur in the future. They also expected a promise from the British government that, at the request of either government, consultations would occur over exempting specific Russian ports from blockade.93 The British Admiralty and the Council Office rejected the request for special licenses on the same grounds as general licenses.94 However, Britain grudgingly conceded to the consultations as negotiations over the French demand to leave Archangel free of blockade were already underway.95 Ultimately, the French agreed to refrain from any licensed trade but maintained the ability to forestall and occasionally remove blockades from Russian ports from which they needed to remove merchandise.
russia reciprocates
As France and Britain hoped, Russia reciprocated their position on neutral rights. On April 16, 1854,96 the Russian Ministry of Finance published a declaration in a supplement to the Commercial Gazette laying out the Russian policy toward enemy belligerents. A six-week grace period was extended to all French and English merchant vessels, and safety was assured to all ships with papers showing that they were loaded before the grace period ended.97 Russia, likewise, adopted the principle that the flag covers the merchandise, establishing that “English and French goods, even should they belong to subjects of Great-Britain or France, [would] be allowed to be imported under neutral flags into [Russia’s] Ports in accordance with the usual Custom House tariff regulations, without any hindrance on [Russia’s] part.”98 Neutral goods transported on enemy ships were also safe from capture. However, unlike the allied governments, Russia reserved the right to consider the entire ship a legitimate prize of war if it carried contraband products.99
Changes to Wartime Commercial Policy after the Declaration
The Declaration of the Rights of Neutrals was proposed and adopted because the Baltic Sea ice was slow to melt in 1854. Once they embraced it, all three belligerents found themselves in unfamiliar territory. For the first time, they were involved in a war where neutral countries could carry on trade between enemy belligerents. Prohibiting all trade with the enemy suddenly became considerably more costly and in part counterproductive. The three belligerents dealt with this new fundamental problem of trade with the enemy differently.
Matching the expectations of wartime trade theory, Britain legalized trade with the enemy to avoid relative losses vis-à-vis neutral states. However, products that Russia could use to increase its military strength in the current campaign were prohibited from trade. France found an alternate solution to the wartime trade dilemma by changing its tariff schedule to make trade with Russia unprofitable and trade with alternative trading partners considerably less expensive, thereby avoiding the costs of severing wartime trade. Russia’s behavior followed the predictions of the wartime trade theory, though because of its different war expectations, its policy diverged greatly from Britain’s. Expecting a long, high-stakes war on its own territory, Russia was incentivized to prohibit as much trade as its economy could sustain. While making payments for enemy imports difficult and prohibiting the export of grain and other necessities of war, Russia continued exporting raw materials to the enemy to avoid substantial revenue losses.
britain allows wartime trade
In Britain, it was the president of the Board of Trade, Edward Cardwell, who pointed out that an inadvertent consequence of combining a strict blockade with the Declaration on the Rights of Neutrals would be to throw all British-Russian trade into neutral hands. The direct outcome of severing trade with Russia would be to damage British interests with no harm done to Russian interests.100 At the same time, Dr. Stephen Lushington, the Admiralty judge, sent a memorandum to the cabinet detailing his position that while British ships were not welcome in Russian ports, British merchants should be allowed to trade with Russia.101 The Privy Council discussed this proposal on April 6, 1854,102 coming to the conclusion that there was no reason for “preventing British subjects from supplying what is allowed to be supplied without restriction by neutrals.”103
Using this reasoning, the British government radically altered its initial wartime commercial policy. On April 15, a new order-in-council proclaimed that “all vessels under a neutral or friendly flag, being neutral or friendly property, shall be permitted to import into any port or place in Her Majesty’s dominions all goods and merchandize whatsoever, to whomsoever the same may belong; and to export from any port or place in Her Majesty’s dominions to any port not blockaded any cargo or goods, not being contraband of war, or not requiring a special permission, to whomsoever the same may belong.”104 With the exception of British ships entering Russian ports, as their safety in Russian ports could not be guaranteed,105 trade with the enemy was legalized. When this new policy was communicated to the French, the French ambassador in London told the British minister of foreign affairs that France had no objections to the British measure. France, however, would not follow suit because the “French legislature [left] the prohibition of commerce with the enemy almost without sanction.”106
At the end of September 1854, with the expectation of the immanent fall of Sevastopol and the possibility of a larger campaign against Russia, with the expected length of war increasing, the cabinet reassessed this trade policy. James Wilson, the financial secretary of the Treasury, championed severing trade with Russia, while Edward Cardwell argued for continuing it.
Wilson, and his supporters, focused mostly on a bilateral comparison: “Like all other steps taken in war, the policy of restricting trade must depend upon the balance of advantages and disadvantages—both parties being considered; upon the fact whether the penalty to be inflicted upon the enemy is greater than the sacrifice at which it is made.”107 Citing the comparison that more than half of Russian exports would be affected by a break in commercial relations compared to only 6 percent of British exports, they argued that prohibiting wartime trade would leave Britain better off than Russia.108 Additionally, much fault was found in the blockade, which was not established as quickly as desired and was too easily circumvented by land trade through Prussia.109 Adherents of this view believed that the increased cost of land passage of Russian goods was borne by the British consumer.110 Wilson advocated a complete prohibition on trade with Russia through either a prohibitive tariff on Russian products or a requirement of letters of origin on all British imports. Without providing much evidence, it was expected that Britain could easily find alternative suppliers for the raw materials its industry needed, while Russia would suffer a huge loss.
In contrast, Edward Cardwell, defending wartime trade with Russia, stressed that focusing solely on a bilateral comparison missed the new reality of neutral trade. Britain, a manufacturing nation, had a different relationship with commerce than Russia, an agricultural nation. For Russia, losing this trade was a question of profit only; for Britain, it was a question of competitiveness on the world markets and the survival of domestic industry.111 For Britain, adjusting to alternative suppliers of raw materials would necessitate decreased production at an increased cost, as no other combination of states could furnish Britain with all it needed. The consequence would be to lose market share to competitors from neutral states, who could continue to benefit from trade with Russia. Answering the other levied critiques, Cardwell showed that the blockade served its function of limiting Russian imports while allowing Russian exports. It was also pointed out that after the first year, the additional cost of the land transfer would no longer be borne by the British importer but by the Russian exporter.112 During the Committee in Council meeting on October 30, Cardwell’s argument triumphed.113 The decision was approved by the cabinet, whose members favored Cardwell’s defense of the original policy.114
Problematically, the British government formed its wartime commercial policy on the assumption that the majority of trade with Russia did not carry significant security externalities. Whereas proponents of severing trade argued that capital advances from Britain to secure the next year’s produce from Russia, amounting to about ten million pounds, would be invested directly into the Russian war effort,115 supporters of wartime trade were convinced that only a trivial portion of this payment would reach the Russian government.116 Not only was the Russian government accused of total inefficiency in tax collection; the revenue from trade was expected to accrue to the Russian aristocracy instead of the government. While some Russian domestic actors would profit from wartime trade, the Russian government would not be able to take advantage of the trade to increase its military capabilities—and definitely not in a timely manner.
However, not all trade with Russia was deemed safe. A month before declaring war, Britain prevented the export to Russia of several marine engines—which were almost finished and destined for nearly completed Russian ships.117 To explain the necessity for this measure, the prime minister cited the importance of preventing exports of military stores that had the potential to increase Russia’s military capabilities for the coming war.118 In fact, England later placed these engines into ships used to enforce the blockade.119
It was not only marine engines that Britain was concerned about. On February 18, 1854, it prohibited the export of arms, ammunition, gunpowder, military and naval stores, and articles “judged capable of being converted into, or made useful in increasing the quality of, military or naval stores, that is to say marine engines, screw propellers, paddle-wheels, cylinders, cranks, shafts, boilers, tubes for boilers, boiler plates, fire bars, and every article, or any other component part of an engine or boiler, or any article whatsoever, which is, can or may become applicable for the manufacture of marine machinery.”120 This initial effort at controlling a wartime commercial policy at the product level proved a tad ham-fisted. The Committee of the Privy Council became inundated with letters from merchants demanding to know why they were not allowed to continue exporting arms to countries that were nowhere near Russia.121 An amendment to the proclamation, issued by an order-in-council on April 11, placed a geographic scope on the prohibition, preventing these products from reaching Russia or Russian colonies.122 With a further order-in-council on April 24, the cabinet once more refined the prohibition: only gunpowder, saltpeter, brimstone, arms and ammunition, marine engines and boilers, and component parts thereof were prohibited from export to “any place in Europe north of Dunkirk, or to any place in the Mediterranean Sea east of Malta”—in other words, the Russian Baltic or Black Sea ports.123 Preparing for a short war, Britain only prohibited trade in products that would quickly increase Russian military capabilities.
The formation of wartime commercial policy remained squarely based on the government’s management of the trade-off between the economic and security consequences of wartime trade. Domestic interests were not allowed to affect how the policy was made. However, letters from merchants requesting exemptions to prohibitions on wartime trade did serve a useful purpose for the government. They provided specialized knowledge around product differentiation. For example, when the British government prohibited the export of round bars to Russia, merchants could advise that the security externalities Britain was concerned with came from a specific subset of round bars; thus, the prohibition was amended to prohibit the export of round bars from 5⁄8 to ¾ of an inch in diameter.124
After this formulation of the wartime commercial policy, the list of prohibited items was amended at times that closely follow battlefield changes. As the expected length of war increased, additional materials required for shipbuilding were added to the prohibitions. Likewise, Britain started to prohibit more products required for the manufacture of arms. In the formulations of the orders-in-council, these products were described as those “capable of being converted into or made useful in increasing the quantity of military and naval stores.”125 This broader description captured an increase in the number of products prohibited from trade with Russia, as more products could be made militarily useful in a longer war. The orders were also geographically scoped. Whenever Britain wanted to prohibit products from reaching the Baltic theater, the order would read “any place in Europe north of Dunkirk.”126 These prohibitions generally targeted products necessary for naval construction.127 If Britain wanted to prevent products from reaching the Black Sea theater, the orders would read “any place in the Mediterranean Sea east of Malta.”128 These products tended to be useful in the manufacture of arms and gunpowder. For examples, see table 3.1.
When the war stretched long enough for the British forces to burn through all of their military stockpiles and to start straining for resupply, the tenor of the orders-in-council changed once more. In a further broadening of the prohibitions on wartime trade, products were prohibited from export if they could be “used in the manufacture of military and naval stores.”129 The geographic scope of the prohibitions also changed: products were not allowed to leave the country. The focus shifted from preventing the enemy from increasing its military capability to ensuring the British army had access to the supplies it needed to continue fighting. In a roundabout way, these efforts served to increase the amount of revenue available to the British government, or rather made the war effort less expensive. By prohibiting the export of products necessary for the military, the government prevented merchants from selling these goods at higher world prices and forced them to settle for lower domestic prices. Thus, Britain not only increased the domestic supply of the very products it needed but also decreased its own cost of purchasing them.
Date | Prohibiting the export of: | Region targeted |
|---|---|---|
Nov 30, 1854 | Lead, nitrate of soda, blue lias, Portland cement, “or any article commonly used in the manufacture of marine cement” | Any place in Europe north of Dunkirk |
Jan 2, 1855 | Rescinding order of Nov 30 | |
Aug 7, 1855 | Sulphate of potash and muriate of potash | Any place in Europe north of Dunkirk or any place in the Mediterranean Sea east of Malta |
Aug 7, 1855 | Rivet iron, angle iron, round bars, rivets, strips of iron, sheet plate iron, Low Moor plates | Any place in Europe north of Dunkirk or any place in the Mediterranean Sea east of Malta |
Aug 28, 1855 | Rescinding the order prohibiting the export of iron east of Malta | |
Aug 30, 1855 | Rivet iron, angle iron, rivets, strips of iron, Low Moor and bowling plates, sheet plate iron exceeding ¼ of an inch, and round bars of from 5⁄8 to ¾ of an inch diameter | Any place in Europe north of Dunkirk |
Sep 20, 1855 | Rescinding previous order—nitrate of soda and lead can now be shipped east of Malta | |
Sep 20, 1855 | Chlorate of potass | Any place in Europe north of Dunkirk or any place in the Mediterranean Sea east of Malta |
Nov 1, 1855 | Saltpeter, nitrate of soda, sulphate of potash, muriate of potash (chloride of potassium), and chlorate of potash | All foreign countries |
Dec 27, 1855 | Saltpeter, nitrate of soda, sulphate of potash, muriate of potash (chloride of potassium) | British possessions in North America, including West Indian Islands |
Dec 28, 1855 | Rescinding order to prohibit export of chlorate of potass | |
france amends tariff schedules
The French government was content with the concessions received in the negotiations with Britain. The Declaration of the Rights of Neutrals and the six-week grace period provided French merchants the opportunity to export previously purchased products stuck in Russian ports. The concession to selectively remove a blockade from Russian ports provided the possibility to occasionally extend the grace period, allowing still more ships to deliver their cargo to France. Mostly, this method was used to export timber through the White Sea ports.130
While the adoption of the Declaration of the Rights of Neutrals forced France to grapple with the fundamental problem of trade with the enemy and reconsider its wartime commercial policy, its solution was different from Britain’s. To avoid relative losses vis-à-vis neutral countries, the French foreign minister laid out a plan to alter the tariff schedule to make trade with alternative suppliers more profitable than trade with Russia.131 Previously prohibitive tariffs on trade with alternative partners were reduced or removed. Such a strategy was only possible because of the French protectionist economy,132 but it did allow France to both deny Russia any gains from trade and avoid its own revenue losses. Alternative sources of supply or substitutes were located for products that were necessary for French industry and were supplied by Russia in peacetime. For example, flax was to be imported from Belgium and the Germanic states, wool from Algeria and Turkey, and wood from the United State and Austria. Flaxseeds destined for the production of oil were to be replaced with sesame seeds. Previously prohibitive tariffs levied against these suppliers were considerably reduced or removed completely for the duration of the war (see table 3.2). Thus, while the cost of importing Russian products was increasing—thanks to the British blockade forcing Russian trade to continue by land—the cost of importing similar products from other sources was being substantially lowered.
At the start of the war, the French wartime commercial policy focused on raw materials necessary for French manufacturing. This was reflected in the specificity of the changing tariff schedules. For example, the Imperial Decree of April 29 allowed the temporary duty-free import of raw tallow, provided it would be used in France for the manufacture of candles or of stearic acid and provided the candles and acid were meant for export.133 Additionally, import taxes on the raw materials imported from Russia in peacetime were lowered or removed when imported from the French colonies or other non-European countries. For example, on May 10, 1854, the import duty on raw wool from South Africa was lowered by 40 percent.134 On June 19, 1854, the duty on wool cotton from the French colonies was eliminated.135 As French stockpiles of specific raw materials decreased, reductions in tariffs followed to incentivize the replenishment of these stocks.
The protectionist nature of the French economy allowed France to obviate the economic imperative to trade with the enemy. Changes in tariff schedules maintained French import levels largely without impact on the revenue of the state. In peacetime, trade in raw wool with Russia was open and trade with South Africa closed, but during the war, France switched the position of both states. With state revenue mostly unchanged and French industry continuing to function largely as normal, France did not concern itself with potential losses relative to neutral states during the war; it was free to follow the security imperative to sever trade with the enemy. However, the French government did not take the additional step of publishing a law prohibiting wartime trade with Russia for the duration of the Crimean War. While a prohibition on trade with the enemy existed in French common law, infractions were not seriously punished, as can be gleaned from the French response to the British decision to permit wartime trade.136 They did not particularly need to be—the French wartime commercial policy removed the incentives to engage in trade with Russia. There was no profit in it.
Date | Tariff changes |
|---|---|
Mar 4, 1854 | Allows duty-free import of colored tartar crystals for export after conversion to cream of tartar or crystalline tartaric acid |
Mar 4, 1854 | Changes import tax on cachou, making import from countries beyond Cape Horn on French ships free |
Mar 22, 1854 | Opens the ports of Boulogne and Calais to import shawls of foreign origin to be embroidered in France |
Apr 22, 1854 | Removes export tax on manure |
Apr 29, 1854 | Allows temporary duty-free import of raw tallow for export after conversion to stearic acid or candles |
May 6, 1854 | Charges the same import tax as raw tallow for oil of all kinds, except fish oil |
May 10, 1854 | Lowers import tax on raw wool coming from South Africa |
Jun 13, 1854 | Changes import tax on turmeric root, making import from India on French ships free |
Jun 19, 1854 | Removes import tax on wool cotton from French colonies |
Jun 24, 1854 | Extends until 31 Dec 1854 the exception of navigation taxes for flour, rice, potatoes, and dry vegetables (original exception made on Sep 5 and Dec 3, 1853) |
Jun 26, 1854 | Removes import tax on molasses spirit from French colonies |
Jul 1, 1854 | Temporarily permits import of iodine to be refined into potassium iodine |
Aug 19, 1854 | Lowers or removes import tax on vanilla and beet, as well as wood satin, root and wood barberry, scented wood, sassafras, exotic reeds, pods and seed dye, oak apple, iron ore, stone marble, and potash if imported by French ships from outside of Europe |
Oct 5, 1854 | Increases import tax on salted meat |
Oct 5, 1854 | Increases import tax on liquor wine in barrels |
Oct 9, 1854 | Extends until July 31, 1855 the exception of navigation taxes for flour, rice, potatoes, and dry vegetables |
Oct 25, 1854 | Removes import tax on medical plants if imported on French ships from outside Europe |
Nov 6, 1854 | Removes import tax on cinchona bark if imported on French ships from outside Europe |
Nov 29, 1854 | Prohibits export of grain and flour until July 31, 1855 |
Dec 20, 1854 | Provisionally changes import tax on sugar, raisins, and molasses |
Dec 20, 1854 | Reduces import tax on animal fat of all sorts; fish oil from foreign fishing; olive oil, seed oil, palm oil, coco oil, touloucouna oil, and illipe oil; sesame seeds, poppy seeds, rape seeds, and flaxseeds; candles; and stearic acid |
Still, as the expected length of war increased, France took measures to further increase the cost of trade with Russia. On July 18, 1854, a prize court was set up in Paris to arbitrate claims from captured vessels.137 In the middle of November, after the anticipated quick victory was out of reach, France declared that any ship caught with prohibited merchandise would not only forfeit the merchandise but incur a 20 percent duty on its value when brought to France for arbitration.138 This finally instituted a financial penalty on anyone still trading with Russia.
The French tariff-based approach to wartime commercial policy also explains why the British government had to remind France to prohibit the export of arms and ammunition from France during the war.139 When such a decree was published, it showed that the French government had a wider conception of which products related to the war effort. Of the five categories of products prohibited from reaching the enemy, two corresponded to the British prohibition: (1) arms and (5) all things to do with machinery for building ships. France also added, “(2) Lead, sulfur, saltpeter, flints, fulminating powder capsule, wooden rifle, projectiles and ammunition of any kind; (3) Articles relating to clothing, camping, equipment and military harnesses; (4) Horses.”140 When Britain realized that the war would last longer than the initially anticipated campaign, it added prohibitions on some of the products listed in the second French category. France did not have to bother with such distinctions as its protectionist policies provided a different solution to the fundamental problem of trade with the enemy. Only one product—sodium nitrate—was added to the list of prohibited exports after the war started, and even this addition occurred on April 16, 1854, before any military action occurred.141
However, on December 8, 1854, after it became clear that the siege of Sevastopol would be a long endeavor, France intensified the prohibition on the export of arms. Whereas before the prohibition prevented arms, ammunition, and the rest from leaving the territory of the French Empire, after December these products could not even be transported within the empire.142 Similar to British efforts to use prohibitions on trade to lower the costs of the war, this decree made it easier for the French government to access domestic supplies when they were necessary to resupply the army.
Throughout the war, France was conscious of the possibility of having to restart trade with Russia for reasons of necessity. They attempted to build this option into their negotiations with Britain in the form of a licensing system.143 While the licensing plan failed to garner agreement, the need to open trade with Russia during the war did materialize. France was most concerned about the grain trade, which was prohibited from export from Russia at the start of the war. The memories of political repercussions from the famine of 1847 were strong, and the French government was anxious to forestall even rumors of potential shortages.144 On November 29, 1854, France prohibited the export of grain and flour until July 31, 1855, to ensure adequate domestic supplies.145 However, the war stretched longer than that, and the situation became more urgent. From the start of the allied naval campaign in the Azov Sea (1855), France was determined to access Russian grain stored in those ports.146 Although the military campaign was not the most successful, the French government persuaded Britain to open the blockade on the Azov Sea specifically for merchants carrying grain.147 Incidentally, this was done in parallel, yet with no signs of official consultation, with Russia granting licenses to neutral merchants to export grain from those very ports, overriding the general prohibition on such export.
russia protects indispensable trade with the enemy
When Britain and France decided to attack the Crimean Peninsula, Russia found itself in an unenviable position of expecting a long, high-stakes war. Since the great powers allied against it would have considerable opportunity to convert the gains from trade into military capabilities for the coming war, Russia had to be strategic with its wartime commercial policy. Unfortunately, prohibiting trade with the enemy, and Britain specifically, would come at considerable economic cost. No other market was large enough to soak up Britain’s share of Russian exports.
As the war transitioned from a coercive maneuver against Turkey to a military confrontation against Britain and France, Russia prohibited the export of gold coin.148 In part, this prohibition helped the government fund the war effort; in part, it was a response to the anticipated war-driven inflation. People demanded specie as opposed to credit notes.149 For the wartime commercial policy, the prohibition made paying for imports from Britain and France much more difficult.
One of the most consequential Russian exports was grain. Its export contributed greatly to Russian revenue; however, grain was also necessary to feed an army. The domestic increase in demand due to the war allowed Russia to divert some grain toward domestic military consumption without losing revenue. However, to protect the agricultural sector, and thus the long-term security of the state, the remainder of the grain still needed foreign markets, and two of Russia’s European customers could use this trade to increase their military strength. On March 1, 1854, Russia prohibited the export of grain through Odessa and all Black Sea and Azov Sea ports until September 1, 1854.150 This prohibition had a significant effect on the grain trade, as 71 percent of Russian grain left the country through those ports.151 Still affecting only trade leaving the southern ports of Russia, the prohibition was extended indefinitely on September 19.152 Prohibiting grain export from Russia’s southern borders artificially increased grain’s conversion time into enemy military capabilities. This allowed Russia to maintain its domestic economy without substantially compromising its current war effort. Exporting grain from St. Petersburg or across Russia’s western land border with Europe substantially increased its transportation time, especially since Britain and France would need to ship it straight back to Russia’s southern border, where their troops were fighting.
On November 26, 1855, the prohibition on grain export became more stringent: grain could no longer be exported through the European borders, including the one with Poland.153 The decree specified that the additional measure was “due to the scarcity of the current crop year.”154 Indeed, the harvests of both 1854 and 1855 provided lower than normal yield. At the same time, increased domestic stocks of grain were politically useful. To forestall any domestic unrest, the Russian government focused on ensuring that the hardships of war did not affect food prices. Preventing grain from leaving the country accomplished just that: the abnormally high supply within the country depressed the price to such an extent that outside the immediate field of battle, the price of grain was lower during the war than in peacetime.155
Aside from grain, Russia could little afford to prohibit the export of its raw materials to the enemy. The revenue received from this trade was too substantial to sever even during the war. Instead, Russia facilitated trade with neutral countries as intermediaries to enemy states. On June 30, 1854, Russia started by making trade across the western European land border considerably easier.156 By July 5, 1854, a new tariff schedule affecting products crossing Russia’s western land border with Europe had reduced duties on twenty-eight categories of raw materials and semifinished goods and seventy-nine categories of manufactured goods.157 Additionally, Russia invested in improvements in the transportation infrastructure between St. Petersburg and Memel, Prussia, the first neutral port across the Russian border—that is, the closest non-blockaded port open to Russia.158
While facilitating trade across northern European borders, Russia prevented the movement of weapons and ammunition into the Caucasus. On September 3, 1854, when it was clear that Britain and France would continue the war on the Crimean Peninsula, Russia focused on making it more difficult for militarily useful products to reach that region of the empire. It accomplished this in a rather obscure way. An imperial decree forbade the import into the region, by land or by sea, of any products that were “forbidden for import into the Transcaucasian Black Sea Ports by the general tariff of 1850.”159 The general tariff of 1850 mostly prohibited the import of various classifications of weapons and ammunition.160 Of course, it also included tea, animal skins, and lottery tickets. But for the most part, the effect of the imperial decree was to prevent weapons and ammunition from reaching the enemy on the battlefield.161
The third facet of Russia’s wartime commercial policy, matching British and French policies, was to prevent items necessary for the military from leaving the country. On August 24, 1855, all cloth was prohibited from being exported through the European land border.162 On January 4, 1856, it was declared that meat, in any form or preparation, could not leave through the European border.163 During this time, the complete list of items that could not leave the country contained sheep wool, all meat, cloth (through European borders), cattle, horses and pigs (through the western land border), grain wine and spirits (from Bessarabia and two other provinces), ropes and cables, all fabric (from Black Sea ports and Danubian ports), and hay (through the northwestern border).164 According to a report by the Russian Ministry of Foreign Trade, “During the war, the items that were forbidden from leaving our country to European nations were those that were required in large quantities for our army or those that the enemy might need for theirs.”165 Following the same logic as their British and French counterparts, these prohibitions forced domestic merchants to sell their merchandise at lower domestic prices instead of being tempted by higher world prices. This had the double effect of increasing the domestic supply of necessary goods and decreasing the cost to the state of resupplying the military.
Observed Level of Wartime Trade
Table 3.3 shows the bilateral trade between the belligerents of the Crimean War from 1852 to 1856. As is evident from these data, the war had a detrimental effect on the total amount of trade between Russia and Britain and between Russia and France. By 1855, direct Russian exports to France and Britain fell below 1 percent of the 1851–53 average. Russian imports from these countries dropped as well, although by a smaller percentage. Nevertheless, as soon as the war ended, trade between all participants in the war rebounded to its heightened 1853 level.
It is also evident that direct trade with the enemy occurred during the war. Despite the Russian prohibition on the export of grain through southern ports and the blockade on the Baltic ports, Russian grain still made up 9 percent of all British grain imports in 1854.166 A sizable amount of Russian grain made it to England in 1855, transported through Prussia.167 At the same time, trade in products that could be diversified away from the enemy was slowly transferred to other states as the war dragged on. While Britain started the war importing substantial amounts of Russian lard, 2,301,351 pounds’ worth in 1853, this dropped to 26,880 pounds in 1855. Lard had a number of substitutes, including coconut butter and palm butter, which Britain could get from North America or its colonies.168
Russian exports to | Russian imports from | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
1852 | 1853 | 1854 | 1855 | 1856 | 1852 | 1853 | 1854 | 1855 | 1856 | ||
England | 42.9 | 66.0 | 12.3 | 0.1 | 64.2 | 24.6 | 27.9 | 8.8 | 0.9 | 22.3 | |
France | 6.9 | 15.2 | 3.3 | 0.04 | 16.9 | 8.6 | 7.8 | 4.0 | 1.0 | 6.2 | |
Turkey | 7.3 | 5.8 | 1.5 | 0.4 | 7.0 | 4.6 | 4.7 | 2.7 | 2.1 | 6.5 | |
Sardinia | 2.7 | 3.6 | 0.8 | 1.9 | 0.3 | 0.3 | 0.1 | 0.4 | |||
Allies total | 59.8 | 90.6 | 17.9 | 0.5 | 90.0 | 38.1 | 40.7 | 15.6 | 4.0 | 35.4 | |
Prussia | 10.4 | 13.5 | 18.7 | 18.1 | 19.0 | 13.7 | 15.4 | 20.1 | 42.9 | 33.5 | |
Austria | 5.7 | 7.6 | 8.4 | 6.4 | 7.2 | 5.9 | 5.9 | 4.9 | 7.2 | 8.7 | |
Transit total | 16.1 | 21.1 | 27.1 | 24.5 | 26.2 | 19.6 | 21.3 | 25.0 | 50.1 | 42.2 | |
Others | 24.2 | 25.7 | 8.5 | 2.5 | 30.6 | 25.4 | 27.2 | 13.8 | 2.2 | 27.4 | |
Total | 100.1 | 137.4 | 53.5 | 27.5 | 146.8 | 83.1 | 89.2 | 54.4 | 56.3 | 105.0 | |
Source: Nifrontov 1971, 72; Tarle 1950, 50–51.
In addition to the direct trade with the enemy, considerable indirect wartime trade took place through Prussia and Austria. As Russian ports were blockaded during the war, Russian trade continued through the closest non-blockaded port—Memel, Prussia—and through the land border with Europe, through Austria. Justifying British fears regarding relative losses to neutral states, Prussia maintained its wartime share of Russian exports even after the war ended. Prussia also emerged as the main exporter to Russia after the war, surpassing England.
It should be emphasized, however, that bilateral trade statistics alone do not present a full picture of wartime commercial policy. A sizable portion of Russian exports dropped during the war years because Russia, itself, prohibited the export of grain. Grain accounted for around 30 percent of all Russian European exports.169 Another large portion of Russian trade disappeared because of the too-frequent peace conferences during the war; with the possibility of peace breaking out, merchants were wary of paying for the transport of products through Prussia because the flow of products by the much cheaper peacetime seaborne routes might resume.170
This examination of the Crimean War showed how the adoption of neutral rights forced states to grapple with the fundamental problem of trade with the enemy. Initially preparing to fight in a world without neutral rights, all of the belligerents were comfortable with the one-size-fits-all-wars policy of severing wartime trade with the enemy. It was only after the negotiations for the Declaration of the Rights of Neutrals were concluded that each of the belligerents realized how different the new world they created would be. With neutral countries permitted to take up trade that the belligerents severed, preventing enemy resupply was considerably more difficult and relative losses vis-à-vis neutrals considerably more pressing. The belligerents needed a much more strategic approach to wartime commercial policy.
Radically altering its wartime commercial policy after the adoption of the Declaration of the Rights of Neutrals, Britain legalized trade with the enemy. Matching the predictions of the wartime trade theory, Britain could afford a lax wartime commercial policy, as it expected a short, peripheral campaign. Only products that could quickly increase Russia’s military capabilities in the current war were prohibited from trade. To minimize losses relative to neutral states, which could negatively affect the British economy, the rest of the products were allowed. When the war proved difficult to end in one quick campaign, the British wartime commercial policy expanded to prevent more products from increasing Russia’s military strength.
Russia, on the other hand, expected a long, high-stakes war on its own territory. As wartime trade theory predicts, it adopted a restrictive wartime commercial policy. However, Russia could not sever all of its trade with Europe, as exports of raw materials to the European belligerents contributed greatly to the Russian GDP. Severing the trade would have done considerable damage to Russia’s ability to channel state revenue into future security. Thus, Russia was left walking a thin line between severing as much trade as possible to prevent its enemies from increasing their military capabilities and protecting enough trade to maintain the domestic economy.
France found a very different solution to the fundamental problem of trade with the enemy. Having a protectionist economic system allowed France to simply avoid addressing the novel question of neutral commerce. Instead, French leaders removed the prohibitively high tariffs on alternative suppliers of necessary products that used to come from Russia, redirecting trade to countries where security externalities were less sensitive. This reshuffling of the tariff schedule made it redundant for France to even prohibit wartime trade with Russia as the war itself and the new trade incentives to redirect trade made economic engagement with Russia unprofitable for French merchants.