Part 5 of the Series: Centenary of the Russian Revolution and the Repudiation of Debt

The French press in the pay of the Tsar

4 August 2017 by Eric Toussaint , Nathan Legrand

With the overthrow of Tsarism in February 1917 and the seizing of power by the Bolsheviks and their Socialist Revolutionary allies in October, numerous previously confidential documents were made public (see further on). This allowed Boris Souvarine, a Franco-Russian communist activist to consult Russian imperial archives. He discovered a vast organisation of complicity with the French press that pre-dated the First World War, aimed at promoting Tsarist bond issues to French investors. This affair, in which influential people were corrupted and became accomplices, was denounced by the communist daily L’Humanité in a series of daily articles entitled ’The abominable venality of the French press’ that appeared over a period of several months during 1923 and 1924.

How the Tsarist regime procured the French press in order to issue bonds

Since the end of the 19th century the empire of the Tsar had chosen Paris as its preferred financial market Financial market The market for long-term capital. It comprises a primary market, where new issues are sold, and a secondary market, where existing securities are traded. Aside from the regulated markets, there are over-the-counter markets which are not required to meet minimum conditions. for bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. issues. The bonds were purchased by many French investors and small savers. At the beginning of the 20th century this funding had become a pillar of the Tsarist regime that in 1904-5 was at war with Japan at the same time as it sought to put down internal discontent and repress the 1905 revolutionary movement. After losing the war against Japan, in 1906 Russia made a big bond issue on the Paris market. Arthur Raffalovich, diplomat and secret adviser, in Paris, to the Russian minister of Finance, was charged with promoting Russian loan certificates up to the First World War. It was his correspondence with his superiors in Russia that revealed complicity in corruption and coercion between the Tsarist regime and many big French newspapers, mostly Parisian (such as Le Figaro, Le Petit Journal, Le Temps and Le Matin), big French banks (notably Crédit lyonnais and the Banque de Paris et des Pays-Bas, which has become BNP Paribas) as well as Senators and Ministers. Among them Raymond Poincaré, who was to become President of the French Republic (i.e. head of the French State) in 1913, was implicated for his actions while he was President of the French Council (i.e. head of the French government) and Foreign Minister in 1912 (his Finance Minister, Louis-Lucien Klotz was also implicated at the time); he was again President of the French Council and Foreign Minister when the scandal exploded. However, the affair was no bother to him: he remained President of the French Council until 1924, and again from 1924 also holding the post of… Finance Minister! The role played by the Paris Stockbrokers Stockbrokers A firm, or individual, that acts for clients to buy and/or sell orders on stock markets and charges a fee or commission. ’ Corporation was central to the coercion pressed on the Tsar’s government. Between 1900 and 1914, the Russian government distributed 6.5 million francs to the French press.

Boris Souvarine

When the affair blew up, the corruption of the press by the financial sector was far from being new. A scandalous French fund raising scheme to build a canal in Panama had functioned in the same way. In the case of the Russian issues the Russian empire and the issuing banks purchased advertising in the newspapers of greater distribution that praised the Russian financial situation and the solvency of the Tsarist debt. According to Raffalovich this advertising involved censorship – news of difficulties in Russia’s war against Japan or of the revolutionary unrest in 1905 was not considered to be presentable to potential investors! The documents indicate that there may also have been false subscriptions. The Stockbroker’s Corporation, newspaper board members and politicians blackmailed the Russian government into making bigger payments and so maximised their profits.

The revelations in L’Humanité are based on authentic documents. Among the incriminated newspapers, only Le Matin initiated proceedings against the communist organ. From the first day of the trial, Vladimir Kokovtsov, the Tsar’s Finance Minister almost without interruption between 1904 and 1914, and head of the government between 1911 and 1914, was called to the box. A reactionary exiled in France, it was not in his best interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. to put the press under accusation but he did bear witness to the honesty of his former collaborator Raffalovich. L’Humanité was technically condemned to pay 10,000 francs damages compared to the 1,500,000 francs demanded by Le Matin and the court recognised the authenticity of the revealed correspondence. Finally, in 1924, Maurice Bunau-Varilla, the owner of Le Matin, himself highly implicated in the affair no longer hid his sympathies for the authoritarian nationalisms coming to power in Europe to resist communism. He supported Fascist Italy and later Nazi Germany. During the occupation of France, Le Matin collaborated with the Vichy regime. After the liberation of France it was shut down.

L’Humanité - 5 December 1923 (click to enlarge)

Translated by Vicki Briault, Mike Krolikowski and Christine Pagnoulle

Part 1: Russia: Repudiation of debt at the heart of the revolutions of 1905 and 1917
Part 2: From Tsarist Russia to the 1917 revolution and the repudiation of debt
Part 3: The Russian Revolution, Debt Repudiation, War and Peace
Part 4: The Russian Revolution, Peoples’ Right to Self-determination, and Debt Repudiation
Part 5: The French press in the pay of the Tsar
Part 6: Russian bonds never die
Part 7: Diplomatic manoeuvers around Russian debt repudiation
Part 8: In 1922 creditor powers again attempt to subjugate the Soviets
Part 9: The Soviet counter-attack: the Treaty of Rapallo, 1922
Part 10: Genoa (1922): proposals and, counter-proposals on the Tsarist debt
Part 11: Debt— Lloyd George blames the Soviets
Part 12: Reasserting debt repudiation ends with success

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

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