The King of Vodka (17 page)

In the end, Vyshnegradskiy was forced to halt grain exports and provide more than 160 million rubles to aid Russia's starving citizens. Hundreds of relief efforts were launched throughout the country as volunteers, including Chekhov and Tolstoy, rushed to help their countrymen. “I cannot describe in simple words the utter destitution and suffering of these people,” wrote Tolstoy to his wife, Sonya. Then, the writer and his two older daughters organized canteens throughout the hardest hit regions.
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Vyshnegradskiy's reputation sank, as newspapers skewered him for pursuing policies built on little more than quicksand. Shortly thereafter, perhaps due to the crisis itself, sheer exhaustion, or the harsh words hurled his way, Vyshnegradskiy had a stroke; his health never recovered fully. On August 30, 1892, Vyshnegradskiy tendered his resignation, leaving much of his agenda, including the wine monopoly, incomplete.

Smirnov presumably welcomed the reprieve, but he knew it would be brief. Momentum for the vodka monopoly was on the tsar's side. What's more, Vyshnegradskiy's replacement was not a man to get sidetracked. Count Sergey Witte was a nobleman by birth who would ultimately become one of the country's most powerful, most progressive, and most controversial statesmen. He made his intentions clear from the start. He wanted to craft a new Russia—a nation that was modern, industrialized, and economically formidable. The vodka monopoly, he predicted, would help him do it.

S
ergey Witte was an imposing figure in just about every way. He was a head taller than the average Russian male, and sported a solid, square physique. His wide shoulders looked as if they had been chiseled out of a slab of giant marble. His massive head and expansive forehead seemed out of proportion with the rest of his body while his nose, appearing long and almost fractured, caused at least one person to observe that it made him look “like a crocodile.”
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According to one of his closest friends, it was impossible not to notice Witte. “He was a man of strong mind and hard will, with notable originality in his physical appearance, way of thinking, and way of doing. Everything in him demonstrated passion, inspiration, spontaneity, and inhuman energy. He was a warrior in his nature, a bold warrior.”
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Smirnov probably already knew of this man and his outstanding qualities. Witte arrived at the Imperial Palace preceded by an armload of achievements. He was a shrewd businessman, having turned the Southwest Railway into
one of the most profitable railroads in Russia. He also was a courageous man of deep convictions. One story, possibly apocryphal, tells that Witte first caught the tsar's attention while he was working as an administrator for the busy Southwest Railway, which covered the Ukraine and Belarus regions. Despite urging from the tsar's officials, Witte declined to increase the speed of the imperial train when it passed through, which was known for its excessive, sometimes dangerously fast pace. Witte's bold refusal in 1888 infuriated the imperial party until the tsar's train, returning to St. Petersburg from the summer residence in Yalta, derailed later that year. The royal family luckily survived, and it was at that moment that Aleksander III recalled and appreciated Witte's stubbornness and his prophetic warning that “it was better to sacrifice speed than the life of the Emperor.”
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Within a year, Witte was rewarded when he was appointed to the prominent post of the tsar's Director of Railway Affairs. He immediately proved his worth, relying on his work experience and a degree in mathematics to streamline operations and improve the department's financial health. He also made a name for himself by overseeing the massive construction of the all-important Trans-Siberian Railway, which began in 1891, and by introducing an effective freight tariff to pump more money into the treasury and protect domestic industries. By the time Witte became Russia's minister of finance in August 1892, he had earned an admirable reputation and had the complete confidence and support of Aleksander III.

When it came to the vodka monopoly in particular, Witte also could count on the tsar's personal commitment. In his memoirs Witte contends that controlling liquor sales was one of Aleksander III's primary objectives. “He was very grieved that the Russian people squandered so much money on liquor and saw a liquor monopoly as a means of reducing drunkenness…. He was ready to take the bold step of replacing the excise tax system with one under which the government, as the exclusive
purchaser of liquor from distilleries, could regulate liquor production and then be the sole seller of liquor to the public.”
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Although Witte was more fiscally than morally motivated, he embraced the mandate. Almost immediately following the tsar's official approval of the monopoly on June 6, 1894, Witte moved into offense. He continued the state policy of playing down the government's budgetary needs and emphasized once again the more popular notion that the monopoly would “put an end to the grievous influence of the retailers of spirits on the moral and economic condition of the people.”
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Smirnov, not the intended target of the minister's insults, nonetheless had to have recognized that his support from the monarchy was on the wane. His spirits industry was being singled out—by the tsar and his top lieutenants, all of whom wholeheartedly backed the monopoly, as did the church. Clergy were more and more taking up the cause of sobriety, organizing and leading temperance groups throughout Russia. The anti-alcohol message was a cornerstone of the church's fledgling movement aimed at improving the deteriorating lives of workers and peasants. Strikes, some supported by a young and determined new leader, Vladimir Lenin, reappeared with the industrial boom of the 1890s. These incidences increased steadily, and like a mutating virus became more and more immune to the state's efforts at suppression.

It seemed that the one thing on Smirnov's side now was time. The vodka monopoly could not escape the quagmire of politics and government bureaucracy. Implementing such drastic reform would not be accomplished overnight. The state had to set up mechanisms for collecting new taxes and fees; it had to hire locals free from any association with the private spirits industry to monitor liquor supplies and their quality; it had to educate officials and citizens about the details of the new measure; and finally, it had to assume responsibility for a gigantic, unwieldy industry. This monopolization would include the building of
more than 350 distillation warehouses and the opening of up to 18,000 state wine shops by 1899 alone.
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Witte recognized the enormity of the task and determined that he should seed the reform first in places where both alcohol consumption and vodka revenue collected by the state were historically low. In this way, the government would exercise more control over the reform rollout and not be overwhelmed by it. He could also see whether the monopoly would indeed capture more money for the monarchy and reduce drunkenness at the same time. Four eastern provinces—Samara, Orenburg, Perm, and Ufa—were selected as testing grounds.

This methodical rollout became Smirnov's advantage.

 

F
ROM
1893
TO
1895 Smirnov turned outward. Russia was changing quickly throughout the decade, and Smirnov realized his personal and commercial longevity depended on his doing so as well. No longer could he be singularly focused on his own image—whether he appeared pious enough, charitable enough, or honored enough. A variety of troubles loomed on the horizon, above and beyond the pending monopoly. Smirnov had to grapple with a shifting business environment as well, which under Witte was moving swiftly toward more expansive industrialization and more Westernized business practices. A variety of capitalistic institutions, from commercial banks to stock exchanges to ventures with private shareholders, were multiplying across the country. Industries from oil to iron to transportation were undergoing enormous growth.

Closer to home, there was the man himself, who at the age of sixty-two in 1893 was beginning to show signs of his advancing years. The debonair vodka king, though still quite distinguished, was losing his sharp features, particularly around his bluish gray eyes. In place of the taut gaze was a more haggard
look. Puffy bags drooped from Smirnov's eyes, stretching it seemed for the floor where they could rest. But they could not rest—not yet. Smirnov had three grown sons with varying interests and abilities to consider and for whom he must make plans—not to mention five daughters and two younger sons. He also had to think about Mariya, a woman swirling within high society who at thirty-five was still beautiful, energetic, and full of want for aristocratic pleasures.

Turning to his family, Smirnov might have found himself wondering where he had gone wrong. He had given his children everything, including a deep and often tender love evidenced in letters he wrote to them.
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They had first-class academic, religious, and cultural educations, as well as rich social lives. They had traveled abroad to destinations throughout Europe, often as a family.
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They had never known hardship, certainly not the kind that had defined Smirnov in his youth. In a world so limited for so many, the opportunities for Smirnov's children seemed boundless. Taken together, the Smirnovs should have been the idyllic family.

But as Smirnov's children grew into adulthood, their differences and potential shortcomings began to fracture the family. Perhaps it was the stereotypical consequence of wealth's corrupting influence, or the natural result of having fathered children by different mothers, or simply the nature of life in nineteenth-century Russia. Whatever the reason, Smirnov's plan for a smooth transition to the next generation was in jeopardy.

Smirnov could and did depend on his eldest son. In most ways, Pyotr Petrovich was the model heir. At age twenty-five, he was serious, hard-working, driven, and full of promise. Smirnov did not hesitate to put his eldest boy in charge of his operations in St. Petersburg, dispatching his son to the capital city for two years to oversee a large cellar and vodka warehouse. While
in St. Petersburg, Pyotr demonstrated not only his managerial prowess but also his own entrepreneurial zeal, opening and operating a popular teashop on top of his other duties.
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Smirnov was more than pleased with his son—except for one thing. While in St. Petersburg, Pyotr had an illicit affair with a married woman. Few details are known about the romance between Pyotr and Eugeniya Ilyinichna, an elegant woman believed to have been married to a doctor when the two met. According to family lore, Pyotr fell desperately in love with Eugeniya, and despite the threat of scandal they carried on a passionate relationship. Eugeniya ultimately chose to leave her husband for Pyotr, risking the deep-seated stigma and disgrace attached to divorce in pre-revolutionary Russia. The couple married in 1893, according to church records, the same year Eugeniya gave birth to a daughter, Tatiana.

There is little doubt that the sordid affair angered Smirnov. It went against his rigid religious convictions and strict moral compass. He may have ordered his son to end the relationship or face serious repercussions. The conflict between Pyotr and his father was mentioned briefly in a letter to Aleksandra, Smirnov's youngest daughter, by a suitor who was having trouble gaining Smirnov's blessing for his own attempts at courtship. The suitor asked to meet Pyotr to get some advice on how to deal with what he regarded as Smirnov's fanatical and unflinching disapproval. “Tell your older brother [Pyotr] to set a date when I could come and speak to him about some things…I would like to know, because your brother suffered from him [because of his affair], to what extent your father's despotism may spread and what I should beware of.”
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Smirnov could be tyrannical in business and at home, though with age his stronghold had begun to loosen. Pyotr was unquestionably Smirnov's best shot at an enduring legacy, and he probably knew it. In a highly uncharacteristic act, the father, whose threats went unheeded, essentially condoned the son's affair. He
appointed Pyotr to handle a vital restructuring of his business in 1893. In a letter addressed to “my dear son, Pyotr Petrovich,” Smirnov granted his son the right to represent the elder's interests. Confidence in the young man was unwavering. “I trust you in all the acts which will be done by you according to the laws. I will not argue nor will I contradict you,” wrote Smirnov.
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He wanted Pyotr to spearhead the establishment of a joint-stock company, a tool used widely in other developing nations and an increasingly popular one employed by Russian businesses. The structure allowed for ownership stakes to be distributed among a select group of directors. Until this time, Smirnov's vodka business was managed like most other family-run operations in his country: as a vast, one-man show. But Smirnov and other progressive business leaders could see they needed to move beyond this antiquated, autocratic model. When the vodka maker applied for his joint-stock company in 1893, there were just 522 of them with a capitalization of about 600 million rubles. By the end of the century, the number had swelled to 1,996, according to the Ministry of Finance, with overall capital estimated at nearly 2 billion rubles.
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Along with issuing stock, which required approval from the tsar, Smirnov took the unusual step of asking the ruler to allow him to pass all his personal awards and honors to his company, including his cherished title of Purveyor to the Imperial Court.
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This request, believed to be the first of its kind for a vodka enterprise in Russia, proved yet again Smirnov's foresight and ability to craft innovative measures before others. Smirnov was arming his business for the post-Pyotr Arsenievich era, concerned that his decades of hard labor, which had made him one of the wealthiest and most prominent businessmen in Russia, would evaporate with his passing. Smirnov's assets at the time included nine houses in
Moscow, a
dacha
(country home), and a vodka factory. In addition, he leased twenty-one warehouses for his liquors.

Witte personally signed off on Smirnov's restructuring in 1894, which valued his company at 3 million rubles, roughly $39 million in today's dollars. Newspapers carried the announcements informing the public that Smirnov had selected his son Pyotr, and Nikolay Venediktovich Smirnov, a cousin, to serve alongside himself on the company's new board of directors. Mariya, Smirnov's wife, took on the post of alternate director. The omission of Smirnov's two other eldest sons from the slate of directors was telling. They were still quite young, of course. Nikolay was just twenty then and Vladimir eighteen, but Smirnov had other reasons to keep them removed from his commercial affairs.

Nikolay had often been cause for concern. He began life when his mother, Nataliya, died. Physically, he appeared fit and robust. His face was long like his father's, and his dark handlebar mustache and goatee were full. He was handsome, though he lacked the confident air about him that both Pyotr and Vladimir had in abundance. In school, according to records, Nikolay received average marks. Whether these factors contributed to what family members later described as his unstable, neurotic temperament, remains a mystery, but it appeared that Nikolay did not possess a sense of responsibility and was therefore ill prepared for the demands of business—at least in his father's mind.