Urban Russia is a product of very recent history; more precisely, of the last few decades. At the end of the reign of Peter I, in the first quarter of the eighteenth century, the town population numbered somewhat more than 328,000, i.e., about 3 per cent of the total population of the country. At the end of the same century, it amounted to 1,301,000, about 4.1 per cent of the total population. By 1812 the urban population had risen to 1,653,000, which was equivalent to 4.4 per cent of the total. By the middle of the nineteenth century it was still no more than 3,482,000 – 7.8 per cent of the total. Finally, according to the last census (1897) the population of the towns numbered 16,289,000, i.e., about 13 per cent of the total population. 
If we consider the town as a social-economic formation and not merely as an administrative unit, we must admit that the above figures do not give a true picture of urban development: the history of the Russian State shows us numerous instances where charters were granted to or withdrawn from towns for reasons which were far from scientific. Nevertheless, these figures do clearly show the insignificance of the towns in pre-Reform Russia and their feverishly rapid growth during the last decade. According to the calculations of Mikhailovsky, the increase in the urban population between 1885 and 1887 was equivalent to 33.8 per cent, i.e., more than double the increase in the population of Russia as a whole (15.25 per cent), and nearly three times the increase in the rural population (12.7 per cent). If we add to this the industrial villages and hamlets, the rapid growth of the urban (in the sense of non-agricultural) population appears more clearly still.
But the modern Russian towns differ from the old ones not only in the number of their inhabitants but also in their social type: they are centres of commercial and industrial life. The majority of our old towns played hardly any economic role; they were military and administrative centres or fortresses, their inhabitants were employed in one or another form of State service and lived at the expense of the exchequer, and in general the city was an administrative, military and tax-collecting centre.
When a non-service population settled within the precincts of the town or on its outskirts, for protection against enemies, this did not in the slightest degree interfere with their continuing with their former agricultural pursuits. Even Moscow, the largest town in old Russia, was, according to M. Milyukov, simply ‘a royal manor, a considerable portion of the population of which was connected in one way or another with the court, either as members of the suite, as guards, or as servants. Out of over 16,000 households, according to the census of 1701, not more than 7,000, that is, 44 per cent, were settlers and craftsmen, and even these lived in the State suburb and worked for the palace. The remaining 9,000 belonged to the clergy (1,500) and the ruling estate’. Thus, the Russian towns, like the towns under the Asiatic despotisms, and in contrast to the craft and trading towns of the European Middle Ages, played only the role of consumers. In the same period the towns of the West more or less successfully established the principle that craftsmen had no right to live in the villages, but the Russian towns never strove after such aims. Where, then, were manufacturing industry and the crafts? In the country, attached to agriculture.
The low economic level, with the intense depredations of the State, did not permit of any accumulation of wealth or social division of labour. The shorter summer in comparison with the West allowed a longer winter leisure. Owing to these factors, manufacturing industry was never separated from agriculture and was not concentrated in the towns, but remained in the countryside as an occupation auxiliary to agriculture. When, in the second half of the nineteenth century, capitalist industry began to develop widely, it did not encounter any urban crafts but, in the main, only village handicraft. ‘For the one and a half million factory workers, at the most, that there are in Russia’, writes M. Milyukov, ‘there are still not less than four million peasants engaged in domestic manufactures in their own villages, who continue to carry on at the same time their agricultural occupations. This is the very class from which ... the European factories arose, but which did not in the slightest degree participate ... in the setting up of Russia’s factories.’
Of course, the further growth of the population and of its productivity created a basis for the social division of labour. This naturally applied also to the urban crafts. As a result, however, of the economic pressure of the advanced countries, this basis was seized by large-scale capitalist industry, so that the town handicrafts had no time to develop.
The four million rural craftsmen comprised the very element which, in Europe, formed the nucleus of the town population, entered the guilds as masters or journeymen, and subsequently found themselves more and more left outside the guilds. It was precisely the craftsman class that constituted the bulk of the population in the most revolutionary quarters of Paris during the Great Revolution. This fact alone – the insignificance of our urban crafts – had immeasurable consequence for our revolution. 
The essential economic feature of the modern town lies in the fact that it works up raw materials supplied by the country. For that reason conditions of transport are decisive for it. Only the introduction of railways could so greatly widen the sources of supply for the town as to make it possible to concentrate such large masses of people. The necessity for concentrating the population arose out of the growth of large factory industry. The nucleus of the population of a modern town, at least of a town possessing some economic and political significance, is the sharply differentiated class of wage-workers. It was this class, as yet substantially unknown during the period of the Great French Revolution, that was destined to play the decisive role in our revolution.
The factory industrial system not only brings the proletariat to the forefront but also cuts the ground from under the feet of bourgeois democracy. In previous revolutions the latter found its support in the urban petty-bourgeoisie: craftsmen, small shopkeepers, etc.
Another reason for the disproportionately large political role played by the Russian proletariat is the fact that Russian capital is to a considerable extent of foreign origin. This fact, according to Kautsky, resulted in the growth of the number, strength and influence of the proletariat being out of proportion to the growth of bourgeois liberalism.
As we have said above, capitalism in Russia did not develop out of the handicraft system. It conquered Russia with the economic culture of the whole of Europe behind it, and before it, as its immediate competitor, the helpless village craftsman or the wretched town craftsman, and it had the half-beggared peasantry as a reservoir of labour-power. Absolutism assisted in various ways in fettering the country with the shackles of capitalism.
In the first place it converted the Russian peasant into a tributary of the Stock Exchanges of the world. The absence of capital within the country and the government’s constant need for money created a field for usurious foreign loans. From the reign of Catharine II to the ministry of Witte and Durnovo, the Amsterdam, London, Berlin and Paris bankers systematically strove to convert the autocracy into a colossal Stock-Exchange speculation. A considerable part of the so-called internal loans, i.e., loans realized through the home credit departments, were in no way distinguished from foreign loans, because they were in reality placed with foreign capitalists. Proletarianising and pauperising the peasantry by heavy taxation, absolutism converted the millions of the European Stock Exchange into soldiers and battleships, into prisons and into railways. The greater part of this expenditure was, from the economic point of view, absolutely non-productive. An enormous share of the national product was sent abroad in the form of interest, and enriched and strengthened the financial aristocracy of Europe. The European financial bourgeoisie, whose political influence in parliamentary countries during the last ten years has grown uninterruptedly and has forced the commercial and industrial capitalists into the background, converted, it is true, the Tsarist Government into its vassal; but it could not and did not desire to become a component part of the bourgeois opposition within Russia. It was guided in its sympathies and antipathies by the principles formulated by the Dutch bankers Hoppe and Co., in the conditions for the loan to Tsar Paul in 1798: ‘interest must be paid irrespective of political circumstances’. The European Stock Exchange was even directly interested in the maintenance of absolutism, for no other government could guarantee such usurious interest. State loans, however, were not the only means whereby European capital was imported into Russia. The very money, payment of which absorbed a good part of the Russian State budget, returned to the territory of Russia in the form of commercial-industrial capital attracted by the untouched natural wealth of the country, and especially by the unorganized labour-power, which so far had not been accustomed to put up any resistance. The latter period of our industrial boom of 1893-99 was also a period of intensified immigration of European capital. Thus it was capital which, as before, remained largely European and which realized its political power in the parliaments of France and Belgium, that mobilised the working class in Russia.
By economically enslaving this backward country, European capital projected its main branches of production and methods of communication across a whole series of intermediate technical and economic stages through which it had to pass in its countries of origin. But the fewer obstacles it met with in the path of its economic domination, the more insignificant proved to be its political role.
The European bourgeoisie developed out of the Third Estate of the Middle Ages. It raised the standard of protest against the pillage and violence carried on by the first two estates, in the name of the interests of the people which it itself desired to exploit. The estates-monarchy of the Middle Ages, in its process of conversion into bureaucratic absolutism, relied on the population of the towns in its struggle against the pretensions of the clergy and the nobility. The bourgeoisie made use of this for its own political elevation. Thus, bureaucratic absolutism and the capitalist class developed simultaneously, and when these two came into conflict, in 1789, the bourgeoisie proved to have the whole nation behind it.
Russian absolutism developed under the direct pressure of the Western states. It copied their methods of government and administration much earlier than economic conditions here permitted the rise of a capitalist bourgeoisie. It already disposed of a tremendous standing army and a centralised, bureaucratic and fiscal machine, and had entered into irredeemable debt to the European bankers, at a time when the Russian towns still played an absolutely insignificant economic role.
Capital intruded from the West with the direct co-operation of absolutism, and in a short period converted a number of old archaic towns into centres of trade and industry, and even created, in a short time, commercial and industrial towns in places that previously had been absolutely uninhabited. This capital frequently appeared in the form of large impersonal shareholding companies. During the ten years of the industrial booms of 1893-1902 the total share capital increased by two milliard roubles, whereas during 1854-92 it had increased by only 900 millions. The proletariat immediately found itself concentrated in tremendous masses, while between these masses and the autocracy there stood a capitalist bourgeoisie, very small in numbers, isolated from the ‘people’, half-foreign, without historical traditions, and inspired only by the greed for gain.
1. The figures are taken from Milyukov’s Essays. The urban population of all Russia, including Siberia and Finland, was given by the 1897 census as 17,122,000 or 13.25 per cent of the total. (Mendeleyev, Towards the Understanding of Russia, St. Petersburg 1906, 2 vols., table on p.90)
2. At a time when uncritical comparison between the Russian revolution and the French revolution of 1789 had become commonplace, Parvus very sagaciously pointed out this fact as being responsible for the particular destiny of the Russian revolution. – L.T.