Rosa Luxemburg
The Industrial Development of Poland

Part I:
The History and Present State of Polish Industry

1.3 The Period of Large-Scale Industry in Poland

Since the beginning of the century, Russia, as was mentioned, adhered to a highly protectionist policy. The Crimean War, however, caused a change here as in all other areas of social life. In the “liberal period” of the 1860s tariffs were significantly reduced. This free-trade turn did not last long, however. Because of the reforms themselves, especially the costly railroad construction, the government ran enormously into debt to foreign countries, and the gold tariff was introduced in 1877 with the object of getting hold of gold. With this, Russia entered onto a course of even stricter protectionist policies.

With the exchange rate of the paper ruble falling, the gold tariff meant an increase in the tariff rate of 30 per cent in the first years and of 40 to 50 per cent in following years. In 1880 a deficit in the state treasury developed once more as a result of the abolition of the salt tax. A general tariff increase of 10 per cent ensued in 1881 as a replacement. In 1882, several individual tariff rates were raised, such as those for linen, wool yarn, chemical products, dyes, etc.; in 1884, a repeated increase in various individual tariff rates occurred, for example that for silk yarn; in 1885, an almost general increase of the tariff of 20 per cent; in 1887, once again a partial climb in individual tariffs, and the same in 1891.

Obviously the purpose of protectionism, when not fiscal revenue, was above all protection of domestic industry from foreign competition.

The results of such a substantial forcing up of the tariff were twofold. First, the import of foreign manufactured and half-finished goods declined rapidly. The total imports over Russia’s European borders in millions of gold rubles annually amounted to:

1851-56     74
1856-61 120
1861-66 121
1866-71 212
1871-76 364
1876-81 326
1881-86 304
1886-91 224
1891 220
1892 219

The import of manufactured and half-finished goods, which were dutied much higher than raw materials, shrivelled up even more severely than the above table indicates. Thus a place was made in Russian markets for native – Russian and Polish – industry, which was freed to a great extent from foreign competition.

The other natural result was the general climb in commodity prices. It has recently been calculated that the Russian consumer may pay much more for most commodities than, e.g., the German consumer; thus

for tea   304%
for tobacco 687%
for coal 200%
for paper 690%
for linen 225%
for cotton products 357%
for agricultural machinery 159%

As for the metal industry: a pood of wire nails of medium size, for example, costs an American 1 to 1.50 rubles, while a Russian pays 3.20 rubles in tariffs alone on these articles and 4 to 8 rubles for the whole product. In relation to the value of the most important metals, the tariff in 1896 made up: iron ore, 70 per cent; iron, 45 per cent; and steel, 35 per cent.

Under such monopoly conditions Russian and Polish industry began to rake in colossal profits from the domestic market. We can get an approximate notion of these profits from the official statements of the manufacturers themselves. In 1887, for example, net profits were declared:

by the Russian Cotton Spinning Mills, St. Petersburg   15.0%
by the Moscow Manufacturing Company 16.0%
by the Balin Manufacturing Company 16.0%
by the Narva Linen Spinning Mill 18.0%
by the Sampson Cotton Spinning Mill 21.3%
by the Yekaterinhof Cotton Spinning Mill 23.0%
Rabeneck Cotton Dye Works 25.4%
by the Izmailov Cotton Spinning Mill 26.0%
by the S. Morosov Works 28.0%
Neva Cotton Weaving Mill 38.0%
by the Krenholm Works 44.9%
by the Thornton Wool Works 45.0%

From more recent times we have no less surprising statements of profits in the Russian metal industry. The metallurgical enterprises of the southern district yield on the average a profit of 50 per cent, the colossal works of the Englishman Hughes as much as 100 per cent. “Not without interest,” writes the Ministry of France’s official organ, “is the utilization of the profits obtained, which gives rise to the impression that the companies, faced with a downright excess of profits, are as it were uncertain what to do with them,” i.e., under which column in the official reports to enter the winnings so as to conceal their staggering size.

The influence of monopoly prices on the size of capitalist profits, together with the relationship of the latter to outlays for labor power, is most strikingly shown by the following little juxtaposition. The market price of raw iron in Kiev in July 1897 amounted to 85 kopeks per pood; of that, the costs of production in Russia made up 45 kopeks, including wages at 4 kopeks per pood – with a net profit of 40 kopeks. The relation of profits to cost of production and to wages was thus 10:11 and 10:1 respectively.

The profits of Polish entrepreneurs were in no way inferior to the enormous profits of the Russians, as we will see. For example, at the beginning of the 1890s the dividends of the sugar factories in Poland amounted to as much as 29 per cent. In the textile industry, 40 per cent profits were regarded as a normal phenomenon. But these official manufacturers’ statements are notoriously 30 to 50 per cent smaller than the profits actually obtained.

Thus, after all the main conditions of industrial development – a domestic market, means of transport, an industrial reserve army – had been called to life in the years 1860-1877, the supervening tariff policy created a hot-house atmosphere of monopoly prices that placed Russian and Polish industry in an absolute El Dorado of primitive capitalist accumulation. In the year 1877 an era of feverish enterprise and grandiose accumulation of capital began, combined with the bounding growth of production. The total picture of Poland’s industrial development under the effect of the relationships sketched above shows itself as follows:

In millions of rubles
Total Production Cotton Industry Wool Industry Linen Industry
1860   50.0
  8.1   4.3 1.2
1870   63.9 10.2   4.0 1.2
1880 171.8 33.0 22.0 5.0
1890 240.0 47.6
35.5 6.5

The strongest upswing between 1870 and 1880 – for all industry +169 per cent, for the cotton industry +223 per cent, for the wool industry +450 per cent, for the linen industry +317 per cent – is chiefly a result of the first three years (1877-80) of the new era in tariff policy. As we will see below, the introduction of the gold tariff brought with it not only the sudden establishment of many new enterprises but also the transfer of a number of German factories from Saxony and Silesia to the western part of Poland. Of the largest factories which the official inquiry organized in 1886 found in Poland, 18.1% were founded before 1850,

  6.8%   in 1850-60
13.6% in 1860-70
29% in 1870-80
32.5% in 1880-86.

Thus 61 per cent of all large factories were established after 1870. As for the extent of production, in the period 1870-1890 it had almost sextupled in the textile industry as a whole. The following table shows quite specifically the influence of the tariff policy: of the most significant factories,

18.1% were founded before 1850,
37.2% in 1850-1877
44.7% in 1877-1886.

Thus almost half (today even more) of all the large factories in Poland originated since 1877 as direct results of the protectionist tariff policy.

This expansion of production went handinhand with a revolution in the means of production themselves. Everywhere in place of the small, scattered factories appeared modern industrial large-scale enterprises with extensive use of steam power and the newest technical equipment in construction and operation. The concentration in industry in general in Poland presents itself as follows:

  1871   1880 1890
Number of workers 76,616 120,763 ca. 150,000      
Value of production (in million rubles) 66.7 171.8 240
For one firm (in rubles) 3,239 8,063 71,248
For one worker (in rubles) 882 1,422 1,600

However here the average figures are, as usual, not suited to giving a true idea of the revolution taking place, since this was of course not accomplished equally in all branches of industry. Most characteristic are the figures for the textile industry. Here we find:

  1871   1880   1890
Number of factories 11,227 10,871 635
Number of workers 28,046 45,753 60,288
Production (in million rubles) 18.1 57.6 88.4
Workers per factory 2.5 4.2 95
Production per factory (in rubles) 1,612 5,303 139,298

But within the textile industry the cotton industry shows the revolution in the most vivid way:

  1871   1880   1891
Number of factories 10,499 3,881 163
Number of workers 19,894 19,576 26,307
Production (in million rubles) 10.4 30.8 47.6
Workers per factory 1.9 5 162
Production per factory (in rubles) 994 7,950 291,736

The surprising growth of the cotton industry can also be measured in the number of spindles. These amount to:

1836       7,300
1840   27,300
1850   61,300
1863 116,200
1870 289,500
1875 385,500
1879 449,600
1882 467,600
1888 ca. 600,000      

According to other sources the number of spindles grew during a period of ten years (1877-1886) from 216,640 to 505,622, i.e., 134 per cent. In the same period, the number of spindles in the Russian cotton industry shows an increase of 32 per cent (in particular, 45 per cent in the Moscow district, 10 per cent in the Petersburg district); that in the North American industry (1881-1891), 30 per cent; and in the English, 8 per cent. The number of looms grew from 1877 to 1886: in the Russian cotton industry, 46 per cent (in particular. 50 per cent in the Moscow district, 25 per cent in the Petersburg district); but in Poland, 139 per cent.

The use of steam power to a greater extent begins only in the 1870s, but since then it has grown quickly.

  1875   1890
Steam horsepower in
industry as a whole
14,657 51,800
of that:
in the textile industry   4,220 26,772
in mining   1,803 10,497

In the branches on which an excise was not levied, steam horsepower almost doubled again in the two-year period from 1890 to 1892, growing from 41,303 to 81,346.

In 25 years, the whole outward appearance of the country had changed from the ground up. In the midst of this, the little town of Lodz quickly grew up into a large center of the textile industry, into a “Polish Manchester,” with the typical appearance of a modern factory city – countlesssmoking factory chimneys packed tightly one next to the other, a population made up almost exclusively of factory personnel, and a municipal life regulated by factory whistles, revolving exclusively around industry and trade. Here we find a series of giant establishments, among which the Scheibler factory, with its yearly production of 15 million and its 7,000 workers, claims first place. In the southwestern corner of the country, on the Prussian border, a whole new industrial area sprang up as though charmed out of the ground, where factories suddenly emerged amid forests and rivers, preceding the building of cities, with everything grouped around them from the beginning. In the old capital, Warsaw, the collection point for all handicrafts, handicraft greatly elevated itself. But at the same time it frequently fell under the domination of merchants’ capital. Small- and middle-sized independent workshops dissolved themselves into cottage industry, and large warehouses of finished handcrafted goods stepped into the foreground as collection points for small production. The trade of the whole country was concentrated from now on in the Stock Exchange and in countless banking and commission firms. Praga, a suburb of Warsaw, became the center of large-scale metal industry, and the gigantic Zyrardow linen factory in Warsaw, with its 8,000 workers, transformed itself into its own little city.

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Last updated on: 28.11.2008