Russian-American Industrial Corporation
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The Russian-American Industrial Corporation (RAIC) (Russian: Русско-американская индустриальная корпорация) was an international economic development venture launched in 1922 by the
Amalgamated Clothing Workers of America Amalgamated Clothing Workers of America (ACWA) was a United States labor union known for its support for "social unionism" and progressive political causes. Led by Sidney Hillman for its first thirty years, it helped found the Congress of Ind ...
in conjunction with the government of
Soviet Russia The Russian Soviet Federative Socialist Republic, Russian SFSR or RSFSR ( rus, Российская Советская Федеративная Социалистическая Республика, Rossíyskaya Sovétskaya Federatívnaya Soci ...
. The corporation, mostly funded measure by small donations from sympathetic American union members, was conceived as a mechanism for the launch of new clothing factories to help alleviate the economic distress which had wracked the Soviet republic during the recently terminated era of
Civil War A civil war or intrastate war is a war between organized groups within the same state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government policies ...
and
War Communism War communism or military communism (russian: Военный коммунизм, ''Voyennyy kommunizm'') was the economic and political system that existed in Soviet Russia during the Russian Civil War from 1918 to 1921. According to Soviet histo ...
. About $2 million was raised in the RAIC campaign, which was expended to launch or modernize 34 facilities, with the employment of 17,500 garment workers in Soviet Russia. Corporation stockholders received an interest payment of 5% annually until the program was terminated in 1925.


History


Background

The
Russian Revolution The Russian Revolution was a period of Political revolution (Trotskyism), political and social revolution that took place in the former Russian Empire which began during the First World War. This period saw Russia abolish its monarchy and ad ...
of 1917 and the bitter and bloody
Civil War A civil war or intrastate war is a war between organized groups within the same state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government policies ...
which followed left the economy of
Soviet Russia The Russian Soviet Federative Socialist Republic, Russian SFSR or RSFSR ( rus, Российская Советская Федеративная Социалистическая Республика, Rossíyskaya Sovétskaya Federatívnaya Soci ...
shattered. Cities were depopulated as peasant-workers returned to the villages of their origin for a planned redistribution of land. Short of labor, raw materials, and organizational capability, factories were shuttered and industrial production plummeted. The Great Famine of 1921 swept the country, killing millions through starvation and disease. Through it all the governing
Bolshevik Party " Hymn of the Bolshevik Party" , headquarters = 4 Staraya Square, Moscow , general_secretary = Vladimir Lenin (first)Mikhail Gorbachev (last) , founded = , banned = , founder = Vladimir Lenin , newspaper ...
stood firm as the world's first
Socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
republic, offering a contrasting vision of a bountiful future that captured the imagination of wage workers around the world, motivating many to action. In the United States many of those most anxious to help were those recent émigrés from the
Russian Empire The Russian Empire was an empire and the final period of the Russian monarchy from 1721 to 1917, ruling across large parts of Eurasia. It succeeded the Tsardom of Russia following the Treaty of Nystad, which ended the Great Northern War. ...
, including hundreds of thousands of
Jews Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...
who had escaped the
anti-Semitic Antisemitism (also spelled anti-semitism or anti-Semitism) is hostility to, prejudice towards, or discrimination against Jews. A person who holds such positions is called an antisemite. Antisemitism is considered to be a form of racism. Antis ...
regime in seeking a better life in the new world. Many of these worked in the American garment trades, manufacturing clothing and participating in a burgeoning
New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
-based trade union movement in such unions as the
Amalgamated Clothing Workers of America Amalgamated Clothing Workers of America (ACWA) was a United States labor union known for its support for "social unionism" and progressive political causes. Led by Sidney Hillman for its first thirty years, it helped found the Congress of Ind ...
(ACWA) and the
International Ladies' Garment Workers' Union The International Ladies' Garment Workers' Union (ILGWU), whose members were employed in the women's clothing industry, was once one of the largest labor unions in the United States, one of the first U.S. unions to have a primarily female membe ...
(ILGWU). Not only was there pressure from the rank-and-file below to do something to aid the embattled Soviet regime, but many union officials were themselves radically minded immigrants to America who had departed Russia some years previously with a strong interest in lending aid to the so-called proletarian dictatorship in Soviet Russia. Chief among these was
Sidney Hillman Sidney Hillman (March 23, 1887 – July 10, 1946) was an American labor leader. He was the head of the Amalgamated Clothing Workers of America and was a key figure in the founding of the Congress of Industrial Organizations and in marshaling labor' ...
, born in
Žagarė Žagarė (, see also other names) is a city located in the Joniškis district, northern Lithuania, close to the border with Latvia. It has a population of about 2,000, down from 14,000 in 1914, when it was the 7th largest city in Lithuania. Žag ...
,
Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...
(part of the
Russian empire The Russian Empire was an empire and the final period of the Russian monarchy from 1721 to 1917, ruling across large parts of Eurasia. It succeeded the Tsardom of Russia following the Treaty of Nystad, which ended the Great Northern War. ...
) in 1887. As a youth Hillman had become a
Marxist Marxism is a Left-wing politics, left-wing to Far-left politics, far-left method of socioeconomic analysis that uses a Materialism, materialist interpretation of historical development, better known as historical materialism, to understand S ...
and had actively worked for the revolutionary overthrow of Tsarism from 1903 as a member of the Bund and the
Menshevik The Mensheviks (russian: меньшевики́, from меньшинство 'minority') were one of the three dominant factions in the Russian socialist movement, the others being the Bolsheviks and Socialist Revolutionaries. The factions eme ...
wing of the
Russian Social Democratic Labor Party The Russian Social Democratic Labour Party (RSDLP; in , ''Rossiyskaya sotsial-demokraticheskaya rabochaya partiya (RSDRP)''), also known as the Russian Social Democratic Workers' Party or the Russian Social Democratic Party, was a socialist pol ...
(RSDLP). It would be Hillman who would conceive of the institution known as the Russian-American Industrial Corporation as a mechanism to import garment-making machinery and organizational know-how to Soviet Russia in a tangible effort to aid the successful development of the Russian Revolution.


Formation

The idea to establish a corporation for the construction of clothing factories was born in the summer of 1921. Already in that year there was a model American-inspired industrial colony established in the
Kuznetsk Basin The Kuznetsk Basin (russian: Кузнецкий угольный бассейн, Кузбасс; often abbreviated as Kuzbass or Kuzbas) in southwestern Siberia, Russia, is one of the largest coal mining areas in Russia, covering an area of aroun ...
of
Western Siberia Western Siberia or West Siberia (russian: Западная Сибирь, Zapadnaya Sibir'; kk, Батыс Сібір) is a part of the larger region of Siberia that is mostly located in the Russian Federation. It lies between the Ural region an ...
, the brainchild of émigré
IWW The Industrial Workers of the World (IWW), members of which are commonly termed "Wobblies", is an international labor union that was founded in Chicago in 1905. The origin of the nickname "Wobblies" is uncertain. IWW ideology combines general ...
activist William "Big Bill" Haywood and Dutch communist S. J. Rutgers.Philip S. Foner, ''History of the Labor Movement in the United States: Volume 9: The TUEL to the End of the Gompers Era.'' New York: International Publishers, 1991; p. 311. This input of American organizational know-how and technology had been credited with a tenfold rise in worker productivity in the
Kemerovo Kemerovo ( rus, Ке́мерово, p=ˈkʲemʲɪrəvə) is an industrial city and the administrative center of Kemerovo Oblast, Russia, located at the confluence of the Iskitimka and Tom Rivers, in the major coal mining region of the Kuznetsk Ba ...
coal mines, and had spurred the interest of Soviet government officials in replication of the program in other fields. The idea for a similar joint effort in the Soviet textile industry emerged during the Russian leg of a European fact-finding mission of ACWA president Hillman. Hillman spent more than a month in Soviet Russia studying the difficult situation facing its textile industry.''RAIC Prospectus,'' p. 4. Shocked by the famine and disrepair, Hillman advocated the immediate appropriation of financial aid to Soviet Russia, believing that infusion of foreign capital would be required to restore the Russian industrial base. Hillman proposed expanding the Kuzbas model, reorganizing and establishing a section of the industry in accordance with American practice and American technology.Foner, ''History of the Labor Movement in the United States: Volume 9,'' p. 312. This proposal met with official approval, and two hours of negotiations with Soviet leader
Vladimir Lenin Vladimir Ilyich Ulyanov. ( 1870 – 21 January 1924), better known as Vladimir Lenin,. was a Russian revolutionary, politician, and political theorist. He served as the first and founding head of government of Soviet Russia from 1917 to 19 ...
ensued to finalize the particulars. Hillman and Lenin signed a formal agreement, naming nine factories for the project — six in
Petrograd Saint Petersburg ( rus, links=no, Санкт-Петербург, a=Ru-Sankt Peterburg Leningrad Petrograd Piter.ogg, r=Sankt-Peterburg, p=ˈsankt pʲɪtʲɪrˈburk), formerly known as Petrograd (1914–1924) and later Leningrad (1924–1991), i ...
(today's St. Petersburg), and three in
Moscow Moscow ( , US chiefly ; rus, links=no, Москва, r=Moskva, p=mɐskˈva, a=Москва.ogg) is the capital and largest city of Russia. The city stands on the Moskva River in Central Russia, with a population estimated at 13.0 million ...
— conditional upon the raising of $1 million for the project in the United States. The initiative was originally conceived as one which would eventually extend beyond the clothing industry into other divisions of Soviet industry, Hillman declared in an interview with the official state newspaper '' Izvestiia'' prior to his departure. The matter was taken to the 5th National Convention of the Amalgamated Clothing Workers, held in
Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...
in May 1922, and was ratified there. In a speech to union members, Hillman charged the Allied powers with engaging in a systematic campaign "to starve Russia into submission to the rule of international financiers" and argued that aid to Soviet Russia was not a matter of being for or against Bolshevism, but rather "for or against slaughter of millions of people."Foner, ''History of the Labor Movement in the United States: Volume 9,'' p. 313. Hillman's report was warmly applauded and plans for the establishment of a new international development company fell rapidly into place. Papers were filed in
Delaware Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent Del ...
on June 2, 1922, to legally incorporate the new entity, to be known as the Russian-American Industrial Corporation (RAIC). Funds for the project were to be raised by having union members purchase
capital stock A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. "Share capi ...
in RAIC, priced at $10/share. Sales of stock were not packaged as a de facto donation but rather as an interest-bearing investment, the principal of which was to be insured by
Lloyd's of London Lloyd's of London, generally known simply as Lloyd's, is an insurance and reinsurance market located in London, England. Unlike most of its competitors in the industry, it is not an insurance company; rather, Lloyd's is a corporate body gov ...
. An office for the project was maintained at 31 Union Square, Room 902, in New York City."Russian-American Industrial Corporation Endorsed by Debs,"
''Appeal to Reason'' irard, KS whole no. 1388 (July 8, 1922), p. 3.
The RAIC project was endorsed by popular
Socialist Party Socialist Party is the name of many different political parties around the world. All of these parties claim to uphold some form of socialism, though they may have very different interpretations of what "socialism" means. Statistically, most of th ...
leader
Eugene V. Debs Eugene Victor "Gene" Debs (November 5, 1855 – October 20, 1926) was an American socialist, political activist, trade unionist, one of the founding members of the Industrial Workers of the World (IWW), and five times the candidate of the Soc ...
, freed from prison six months earlier, who noted the low share price made it possible for workers "to invest according to his means in this most timely and laudable undertaking to contribute America's full share toward the reconstruction of Russia and the promotion of the highest human welfare throughout the world."


Development

Following approval of the RAIC program by the convention of the Amalgamated Clothing Workers, Hillman returned to Soviet Russia in the summer of 1922 to hammer out additional details of the enterprise.Foner, ''History of the Labor Movement in the United States: Volume 9,'' p. 315. Contracts were negotiated with the chief economic planning organizations of the day, including an agreement with the
Council of Labor and Defense The Council of Labor and Defense (Russian: Совет труда и обороны (СТО) Sovet Truda i Oborony, Latin acronym: STO), first established as the Council of Workers' and Peasants' Defense in November 1918, was an agency responsible fo ...
(STO) authorizing RAIC to do business with various Soviet agencies and another with the Supreme Council for National Economy (Vesenkha) insuring the RAIC's contracts and pledging a dividend of 8% on invested funds if either the Soviets or the Americans sought to terminate the company after a three-year trial period. The first investment by RAIC took the form of small machine parts and other machinery, with delivery beginning in August 1922. Despite promises to raise $1 million to fully finance the effort, American fundraising through sale of stock fell short of the mark, although an initial payment of $200,000 was made early in 1923. RAIC's operations were governed by a nine-member Control Board, seven of whom were Soviets owing to the unequal financial commitment of the two parties to the enterprise. Day-to-day management of RAIC's manufacturing facilities was largely turned over to American skilled workers and experts, with the introduction of American production methods into backwards Russian industry being one of the primary appeals of the program from the perspective of the Soviet regime. The nine initial factories provided to RAIC by the Soviet government were to be expanded to a network of fifteen facilities around the country under the terms of the contractual agreement.Foner, ''History of the Labor Movement in the United States: Volume 9,'' p. 316. These factories were to produce a range of consumer commodities, including shirts, coats, suits, overcoats, underwear, caps, gloves, and other fabric goods. Factories were staffed both by Soviet and American workers, most of whom were returning émigrés from Tsarist Russia, numbering in the hundreds. Investment eventually topped the $2 million mark with RAIC production ultimately expanded to 34 factories, employing 17,500 workers in total. Dividends were twice paid to stockholders, an initial partial payment of 3% paid at the end of 1923, covering the first half year of productive operations, and a second payment of 5% in January 1925, covering the year 1924. News coverage of the latter payment asserted the total number of stockholders in RAIC to be 5,500.Foner, ''History of the Labor Movement in the United States: Volume 9,'' p. 318.


Termination and legacy

The Soviet economy's recovery via the market-oriented New Economic Policy (NEP) alleviated the need for external capitalization of the consumer goods industry. RAIC was consequently terminated by the end of 1925.Foner, ''History of the Labor Movement in the United States: Volume 9,'' p. 321. The company's impact during the first years of NEP had been significant, with its factories in eight cities reckoned to have produced more than twenty percent of total Soviet clothing output in those years. In addition to a lessened Soviet need for foreign investment in consumer dry goods production, a contributing factor to the end of RAIC was economic necessity on the American side, with the coffers of the Amalgamated Clothing Workers and the personal finances of its members drained by a protracted tailoring strike in 1925. RAIC provided a lasting impact by helping to regularize financial connections between the Industrial Bank of Moscow and two banks owned by the ACWA — the Amalgamated Trust and Savings Bank of Chicago and the Amalgamated Bank of New York. This relationship made possible the transfer of additional funds from workers in America to their family members in the Soviet Union, with more than $9 million being so transmitted by the start of 1925. This significantly eased the dire economic situation of Soviet citizens attempting to rebuild their lives amidst economic chaos.


See also

*
Amtorg Trading Corporation Amtorg Trading Corporation, also known as Amtorg (short for ''Amerikanskaya Torgovlya'', russian: Амторг), was the first trade representation of the Soviet Union in the United States, established in New York in 1924 by merging Armand Hamme ...
(Amtorg) *
All Russian Co-operative Society The All-Russian Co-operative Society (Arcos) was the principal body responsible for orchestrating Anglo-Soviet trade in the early days of the Soviet Union, following the development of Vladimir Lenin's New Economic Policy. Its headquarters was ...
(Arcos)


References

{{reflist, 2


Further reading

* A.A. Heller
"A Program of Reconstruction,"
''Soviet Russia,'' vol. 7, no. 9 (Nov. 1, 1922), pp. 230–232. * Robert Minor
"A Splendid Opportunity,"
''Soviet Russia,'' vol. 7, no. 11 (Dec. 1922), pp. 301–303. * L.I. Prokova, "В.И. Ленин и Русско-американская индустриальная корпорация" (V.I. Lenin and the Russian-American Industrial Corporation), ''Вопросы истории КПСС,'' No. 4 (1964). —In Russian.
"Our Workers Investing in Russia,"
''The Literary Digest,'' vol. 74, no. 2, whole no. 1681 (July 8, 1922), p. 13.


RAIC publications


''The Russian-American Industrial Corporation for Aid in the Economic Reconstruction of Russia: Prospectus.''
New York: Board of Directors of the Russian-American Industrial Corporation, 1922. * ''Der Wiederaufbau Russlands und die Aufgabe der Arbeiterschaft: Eine Erläuterung der Pläne und Ziele der Russian-American Industrial Corporation.'' (The reconstruction of Russia and the task of the working class: an explanation of the plans and objectives of the Russian-American Industrial Corporation) New York: Russian-American Industrial Corporation, 1922. * Sidney Hillman, ''Доклад о настоящем положении России.'' (Speech on the current situation in Russia) New York: Board of Directors of the Russian-American Industrial Corporation, n.d. . 1923 * ''The Russian-American Industrial Corporation: Report to the Board of Directors and Stockholders on Conditions in Soviet Russia and Contracts.'' New York: Russian-American Industrial Corporation, 1923.
''Report of the Directors and Financial Statement Submitted to Second Annual Meeting of Stockholders of the Russian-American Industrial Corporation, Feb. 26, 1924.''
New York: Russian-American Industrial Corporation, 1924.


External links

* Tim Davenport (ed.)

Early American Marxism website, via Marxists Internet Archive, www.marxists.org/ 1922 establishments in Russia 1925 disestablishments 1920s economic history Economic history of the Soviet Union Soviet Union–United States relations