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According to Catherine's legislation, which remained in force until 1870, and still exists in some of its main features, the towns were divided into three categories: (1) Government towns (gubernskiye goroda)—that is to say, the chief towns of provinces, or governments (gubernii)—in which are concentrated the various organs of provincial administration; (2) district towns (uyezdniye goroda), in which resides the administration of the districts (uyezdi) into which the provinces are divided; and (3) supernumerary towns (zashtatniye goroda), which have no particular significance in the territorial administration.

In all these the municipal organisation is the same. Leaving out of consideration those persons who happen to reside in the towns, but in reality belong to the Noblesse, the clergy, or the lower ranks of officials, we may say that the town population is composed of three groups: the merchants (kuptsi), the burghers in the narrower sense of the term (meshtchanye), and the artisans (tsekhoviye). These categories are not hereditary castes, like the nobles, the clergy, and the peasantry. A noble may become a merchant, or a man may be one year a burgher, the next year an artisan, and the third year a merchant, if he changes his occupation and pays the necessary dues. But the categories form, for the time being, distinct corporations, each possessing a peculiar organisation and peculiar privileges and obligations.

Of these three groups the first in the scale of dignity is that of the merchants. It is chiefly recruited from the burghers and the peasantry. Any one who wishes to engage in commerce inscribes himself in one of the three guilds, according to the amount of his capital and the nature of the operations in which he wishes to embark, and as soon as he has paid the required dues he becomes officially a merchant. As soon as he ceases to pay these dues he ceases to be a merchant in the legal sense of the term, and returns to the class to which he formerly belonged. There are some families whose members have belonged to the merchant class for several generations, and the law speaks about a certain "velvet-book" (barkhatnaya kniga) in which their names should be inscribed, but in reality they do not form a distinct category, and they descend at once from their privileged position as soon as they cease to pay the annual guild dues.

The artisans form the connecting link between the town population and the peasantry, for peasants often enrol themselves in the trades-corporations, or tsekhi, without severing their connection with the rural Communes to which they belong. Each trade or handicraft constitutes a tsekh, at the head of which stands an elder and two assistants, elected by the members; and all the tsekhi together form a corporation under an elected head (remeslenny golova) assisted by a council composed of the elders of the various tsekhi. It is the duty of this council and its president to regulate all matters connected with the tsekhi, and to see that the multifarious regulations regarding masters, journeymen, and apprentices are duly observed.

The nondescript class, composed of those who are inscribed as permanent inhabitants of the towns, but who do not belong to any guild or tsekh, constitutes what is called the burghers in the narrower sense of the term. Like the other two categories, they form a separate corporation, with an elder and an administrative bureau.

Some idea of the relative numerical strength of these three categories may be obtained from the following figures. Thirty years ago in European Russia the merchant class (including wives and children) numbered about 466,000, the burghers about 4,033,000, and the artisans about 260,000. The numbers according to the last census are not yet available.

In 1870 the entire municipal administration was reorganised on modern West-European principles, and the Town Council (gorodskaya duma), which formed under the previous system the connecting link between the old-fashioned corporations, and was composed exclusively of members of these bodies, became a genuine representative body composed of householders, irrespective of the social class to which they might belong. A noble, provided he was a house-proprietor, could become Town Councillor or Mayor, and in this way a certain amount of vitality and a progressive spirit were infused into the municipal administration. As a consequence of this change the schools, hospitals, and other benevolent institutions were much improved, the streets were kept cleaner and somewhat better paved, and for a time it seemed as if the towns in Russia might gradually rise to the level of those of Western Europe. But the charm of novelty, which so often works wonders in Russia, soon wore off. After a few years of strenuous effort the best citizens no longer came forward as candidates, and the office-bearers selected no longer displayed zeal and intelligence in the discharge of their duties. In these circumstances the Government felt called upon again to intervene. By a decree dated June 11, 1892, it introduced a new series of reforms, by which the municipal self-government was placed more under the direction and control of the centralised bureaucracy, and the attendance of the Town Councillors at the periodical meetings was declared to be obligatory, recalcitrant members being threatened with reprimands and fines.

This last fact speaks volumes for the low vitality of the institutions and the prevalent popular apathy with regard to municipal affairs. Nor was the unsatisfactory state of things much improved by the new reforms; on the contrary, the increased interference of the regular officials tended rather to weaken the vitality of the urban self government, and the so-called reform was pretty generally condemned as a needlessly reactionary measure. We have here, in fact, a case of what has often occurred in the administrative history of the Russian Empire since the time of Peter the Great, and to which I shall again have occasion to refer. The central authority, finding itself incompetent to do all that is required of it, and wishing to make a display of liberalism, accords large concessions in the direction of local autonomy; and when it discovers that the new institutions do not accomplish all that was expected of them, and are not quite so subservient and obsequious as is considered desirable, it returns in a certain measure to the old principles of centralised bureaucracy.

The great development of trade and industry in recent years has of course enriched the mercantile classes, and has introduced into them a more highly educated element, drawn chiefly from the Noblesse, which formerly eschewed such occupations; but it has not yet affected very deeply the mode of life of those who have sprung from the old merchant families and the peasantry. When a merchant, contractor, or manufacturer of the old type becomes wealthy, he builds for himself a fine house, or buys and thoroughly repairs the house of some ruined noble, and spends money freely on parquetry floors, large mirrors, malachite tables, grand pianos by the best makers, and other articles of furniture made of the most costly materials. Occasionally—especially on the occasion of a marriage or a death in the family—he will give magnificent banquets, and expend enormous sums on gigantic sterlets, choice sturgeons, foreign fruits, champagne, and all manner of costly delicacies. But this lavish, ostentatious expenditure does not affect the ordinary current of his daily life. As you enter those gaudily furnished rooms you can perceive at a glance that they are not for ordinary use. You notice a rigid symmetry and an indescribable bareness which inevitably suggest that the original arrangements of the upholsterer have never been modified or supplemented. The truth is that by far the greater part of the house is used only on state occasions. The host and his family live down-stairs in small, dirty rooms, furnished in a very different, and for them more comfortable, style. At ordinary times the fine rooms are closed, and the fine furniture carefully covered.