How do governments interface with high finance? When and how can financial factors contribute to political revolutions? In this well-written volume, Hassan Malik, a historian and financial strategist based in London, provides an innovative and carefully researched study of the international world of Russian foreign borrowing in the three- plus decades leading up to and through the 1917 Revolutions and 1918 debt repudiation. His focus is on the ways that political and policy changes in Russia were intertwined with how foreign banks and bankers—Barings, J.P. Morgan, Paribas, the Rothchilds, Societe Generale, and so on—interpreted and reacted to the Empire’s economic developments and public finances. He argues that finance and financial concerns played a critical role in the chain of events that eventually undermined the Tsarist state and created conditions ripe for the Bolshevik Revolution and debt default. In constructing this argument, Malik delves deeply into varied secondary literatures and into the memoirs, media accounts, and archival records of Russian and European state officials and the global banking elite of the period. It is in this last contribution that Bankers & Bolsheviks truly excels. Malik’s account is built around a series of vignettes that bring this world of finance and politics to life in ways that illuminate how international capital markets actually functioned during this period, and why developments in Russia’s international debt relations matter for our understanding of the fall of the Imperial regime.

The study is bookended by an Introduction, Conclusion, and substantive Appendix (more on that below), with five roughly chronological chapters in between that trace the evolution of Russian foreign borrowing between approximately the 1880s and 1920. In connecting the study to literatures in finance, the economic history of sovereign borrowing and global capital markets, and the sociology and history of revolutions, the introduction usefully emphasizes three key contributions of Bankers & Bolsheviks. First, Malik—drawing on work by Marc Flandreau and others—argues that an understanding of late Imperial Russian finance must be grounded in the beliefs, decisions, and interactions of “gatekeepers” that intermediated funds across global capital markets. Investment bankers and lender and borrower government figures played an outsized role in mitigating information asymmetries in the market for loanable funds, in promoting investments of all sorts to each other and to small depositors. These actors often accrued considerable market power along the way, thus influencing the characteristics of Russia’s public and private financing. At the same time, these gatekeepers also acted in ways that prioritized cultural, political, or paternalistic objectives over the risk and return concerns that underpin economic models of capital flows. Second, to document how and why these actors took the actions that they did over the period 1890-1918, Malik intentionally focuses on the archival records and memoirs of Western banks and bankers, ambassadors on all sides, and Russian ministries and state officials. By connecting this evidence to select quantitative information, along with the financial and revolution historiography of these decades, Malik improves our understanding of the micro-structure upon which sovereign borrowing and cross-border capital flows actually happened. Third, Malik notes in the introduction how scholars of the Bolshevik Revolution have not given Imperial Russian finances enough attention, despite Lenin and others (especially among the far left) at the time placing debt and fiscal concerns centrally in their opposition to the regime.

In Chapter 1, Malik offers a refreshingly revisionist perspective on the policies that underpinned Russian involvement in global capital markets from the 1880s onward. Known collectively as the Witte program, after Sergei Witte, Minister of Finance during their enactment (but not their origination), Malik clearly shows how these measures— from tariffs, to state railroad and industrial subsidies, to efforts to adopt the gold standard (done in 1897)—supported growing engagement with Western financial capital. At the same time, the author emphasizes that the resulting borrowing was not sufficiently diversified across lenders, as the overreliance on French funding subjected Russia to higher costs of debt and external political interference. This, in turn, contributed to the long negotiations over the famous 1906 sovereign loan, one of the largest in history to that point, and one that historians have long framed as “saving” Imperial Russia on the brink of collapse following war and revolution. However, as Malik details in Chapter 2, while this loan did help sooth Russian finances, the bankers and government officials involved in arranging this deal failed to pressure for further democratic reforms (through any sort of conditions imposed by the French lenders and state) and did not adequately consider the opposition’s assertion (from many parties, inside and outside the Duma) that the backroom signing of this debt agreement was non-democratic and even “odious.” Thus, Malik interprets the 1906 loan as a failed opportunity to put Russia on a less treacherous path.

In Chapters 3 and 4, Malik outlines the trajectory of lender / borrower interactions from the 1906 loan to 1917. Prior to the war, foreign capital poured into Russia, with growing involvement of American and British banks alongside the long-standing French lenders. As the economy recovered from the tumult of the early 1900s, Malik argues that leverage levels rose across the economy, from sovereign borrowing to rural mortgage debt, a trend that did not reverse through the first years of the war. While he never invokes Hyman Minksy, Malik argues that this boom period was accompanied by growing systematic fragility, which would have likely resulted in a significant crisis if not for growing defense spending and the war. Malik does a wonderful job showing how competition among the financial “gatekeepers,” implicit and explicit guarantees by governments on both sides, and geopolitical forces worked to keep foreign lending high, even as signs of unrest, fiscal problems, and economic decline were increasingly evident during the war.

This leads to the penultimate and central chapter of the narrative: Chapter 5’s account of the financial aspects of the 1917 Revolutions and the repudiation of sovereign debt by the Bolshevik authorities in early 1918. Continuing the narrative, Malik notes that foreign lenders largely maintained incredible optimism about investment opportunities in Russia over 1917, with even a slight uptick following the February Revolution and establishment of the Provisional Government. This view persisted despite rapidly worsening public finances and inflation, deteriorating living conditions, and rising social and political unrest. Even the Bolshevik coup in October did little to immediately dent this perception. Malik’s account, grounded again in memoirs, correspondences, and media accounts, excavates the ways that lenders continued underestimated the shifting risks of Imperial Russian sovereign debt and other assets, right up to the default in 1918. Malik provides a convincing counterfactual story that any regime, communist or otherwise, would have defaulted in some way given the fundamental shocks roiling the Russian economy by 1917. The ideological motivations of the Bolshevik regime to default on the prior governments’ debts (“finance as a revolutionary weapon,” p. 194) were known but largely ignored by the gatekeepers and investors who simply could not comprehend such a violation of the “morals” of global financial relations. While debt negotiations were a key feature of Soviet foreign economic relations over subsequent decades, Malik does not follow those in much detail, choosing to end his study in the immediate wake of this “betrayal.” The Conclusion largely summarizes the narrative while reinforcing, in closing, the importance of considering the stories of individual borrowers and lenders in the study of global capital markets.

Bolsheviks & Bankers is a fascinating and largely convincing study of how late Imperial Russia’s interactions with global capital markets generated tensions that contributed to the Revolutionary movements and the largest sovereign default in history. Malik writes well and provides an impressively sourced look into how capital actually flowed to a key emerging market of the period. This reviewer found much to applaud and only three small aspects of the study to take issue with. First, while the use of memoirs and correspondences of and among Western bankers and state officials (Western and Russian) is an important contribution, Malik does not delve into the thinking of domestic borrowers or financiers. Such material is relatively scarce in Russian archives, but they are not absent. The tensions and fragilities emphasized in Chapters 2–5 would have been sharper if non-state borrower perspectives were incorporated. Second, while Malik does relate his source material to trends in key quantitative indicators, a deeper examination of the available data on Russian and foreign bank balance sheets, industrial production, government budgets, stock market dynamics, and agricultural changes would have provided a better context for his analysis of individual thought processes. As Malik himself notes, the archival and memorial record is certainly selected in unknown ways—a fuller analysis of related data would have help alleviate concerns about possibly biases. Finally, Hassan provides a substantial Appendix detailing his argument that the 1918 Bolshevik debt repudiation was the largest in history. This effort merits little more than a small footnote in the main text, but one could imagine a slight reframing of Chapter 5 that would have put this finding front and center, allowing it to serve as a robust motivation for the larger study.

Overall, these are relatively minor concerns. Malik has written a wonderful account of why and how finance mattered for a key emerging economy during a transformative period in its history. Scholars and policymakers of all sorts would benefit enormously from the insights Bankers & Bolsheviks offers into how international capital markets worked in the first era of globalization.