The Extractive Industries and Society 5 (2018) 384–392

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The Extractive Industries and Society

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Original article

Baku and its oil industry through war and revolution: 1914–1920 T
⁎
Jonathan Sicotte
Higher School of Economics–International Center for the History and Sociology of the Second World War, Staraya Basmannayaul., 21/4, Moscow, Russia

A R T I C LE I N FO A B S T R A C T

Keywords: From 1914 to 1920, Baku and its oil industry were undermined by intersecting social, political and military
First world war crises that would critically challenge its economic development. These events would force the multiple gov-
Russian civil war ernments that would come to control it (including the Russian Empire, the RSFSR, and the Democratic Republic
Oil of Azerbaijan) to develop contrasting production and regulatory strategies in order to address deepening pro-
Ethnic conflict
duction shortfalls versus the increasing instability that was plaguing the city. This article will analyze the effi-
Baku
cacy of these governmental responses during this period of increasing chaos, and the ultimate result of these
Azerbaijan
responses.

1. Introduction
At the outbreak of the First World War, Baku was a city on the edge
of economic, political, and social upheaval. Its towering oil derricks
formed the core of an economic revolution that was crucial to the es-
tablishment of the modern oil industry as we know it today—a re-
volution that remapped the geography of the energy industry of the
period. However, as its machinery pumped, the city was hit by repeated
waves of ethnic violence and interurban warfare as the former Russian
Empire fractured after 1917 (Suny, 1972, pp. 218, 335).1 Baku was a
city that was created by the industrial age yet struggled to grasp a stable
hold of it during a time of war and revolution.
In order to fully analyse this period, this article explores the re-
lationship of state intervention and oil production by investigating the
policies of three governments in Baku (Imperial Russia, affiliates of the
Russian Socialist Federative Socialist Republic (RSFSR), and the
Azerbaijan Democratic Republic (ADR))—specifically, their attempts to
protect and usurp oil production in the city across the First World War
and the Russian Civil War. It also examines how these policies reflected
comparable processes of calculated political and economic adaptation.
In this milieu, the focus is on how each successive state tried to conduct
economic interventions in the industry against complicating factors,
such as active foreign intervention by neighbouring hostile powers, and
growing ethnic and social divisions within the city.
At the most basic level, there was a common goal between the three
governments across this period: maximize the economic and financial
effectiveness of the industry and the revenue that came from it.
However, the methodology of each government spoke not only to its
own political culture but the practicality of finding an answer to the
immense military, social, and economic challenges facing the industry
as a whole: the Tsarist government attempted to find a balance between
excise taxes, price controls, and a otherwise relatively free market ap-
proach to state intervention; the Soviets took initial first steps toward
both centralization and nationalization (RGAE, f. 270, op. 1, d. 8, l.
50–55), and the ADR moved from a policy of nationalization to prior-
itizing taxation and revenue generation under British occupation.2
Moreover, each government was forced to negotiate with an ethnically-
and religiously-diverse workforce that had increasingly become politi-
cally active during periods when increasing stress was being placed on
the city by states attempting to secure it. In essence, each government
tried to meet many of the same challenges through a process of adap-
tation (at times forced adaptation) during periods of growing instability
(Table 1).
Nevertheless, at their core, all of these policies were focused on a
desperate drive to support domestic oil production, and these attempts
at addressing falling production show a comparable policy of economic
and political flexibility versus shifting geopolitical and other inter-
secting conditions.3 This flexibility displays the relative similarity in
attitudes toward pushing development in all three cases, and that the
interests of the state in all three cases required a shift in methodology
depending on the economic and geopolitical circumstances at play.
There was no major “civilizational” between the three regimes, but

⁎
Corresponding author.
E-mail address: Jsicotte@hse.ru.
1
The “March Days” and the Battle of Baku in September, 1918, were two of the most critical incidents of ethnic violence to hit the city across the Russian Civil War.
2
Concession policy was directly controlled through Moscow through the Main Concession Committee.
3
In general, this flexibility had a tendency toward pushing increasing state intervention in this oil industry as further geopolitical pressures were placed on the specific regime
controlling the city.

https://doi.org/10.1016/j.exis.2018.04.001
Received 22 September 2017; Received in revised form 18 February 2018; Accepted 10 April 2018
Available online 08 May 2018
2214-790X/ © 2018 Elsevier Ltd. All rights reserved.
J. Sicotte The Extractive Industries and Society 5 (2018) 384–392

Table 1 Therefore, both in peacetime and in war, globalization affected Baku to

“Budgeted” Oil Workers from Alexandr Stopani’s 1909 Survey (Stopani, 1916,
5)
Number of Workers
Russian 717
Armenian 503
Georgian 40
Tatar/Azerbaijani 165
North Caucasian 254
Lezgini 139
Persian 393
Other 33
Total 2244
rather a continuity of what could arguably be termed pragmatism in the
face of increasing pressures being placed on each state.4 However, it is
clear that this struggle also arguably came at a growing human cost.
The focus of this investigation is the economic ramifications of the
First World War and the Russian Civil War on state policy, and the
circumstantial pressures placed on those policies. This article will move
beyond a political history of the city during this period, and narrow its
focus to a comparative economic relationship between successive states
and the oil industry. In comparison to histories that focus more gen-
erally on the Russian oil industry itself, such as Vagit Alekperov’s Oil of
Russia or A.A. Fursenko’s The Battle for Oil, my focus is less on the
rivalry of private interests for access to Baku’s fields and more on the
relative responses by individual enterprises to address their own self-
interests. In addition, this article, in comparison to other more broad
works on the period, such as Tadeusz Swietochowski’s Russian
Azerbaijan and Audrey Altstadt’s Azerbaijani Turks, will specifically
address governmental attitudes toward the oil industry alongside the
broader political and geopolitical circumstances of the period.5
2. Baku in the late imperial period
The First World War was not the first war, in a sense, that was multi-
continental; colonial wars during the eighteenth century were often
attached to European struggles, such as the Seven Year War, but it was
the first modern war of its kind that occurred after the industrial re-
volution in Europe—a conflict where the needs of supplying the war
itself would truly be felt globally on a scale never previously imagined
(Stevenson, 1998, pp.1, 45).6 The needs of industrialization required
increasing access to commodities, specifically petrochemical fuels, in
order to conduct warfare in the modern era as well as to feed domestic
economies, especially in Western Europe and North America.
The fact that the world had now become increasingly reliant on
more efficient forms of energy (specifically petroleum products, such as
kerosene before 1910 and fuel oil after 1900) to keep both its militaries
and their economies functioning had made crude oil itself obviously an
increasingly invaluable strategic commodity. Baku at the start of the
First World War remained the largest supplier of kerosene (essential for
rail transport in the Russian Empire) as well as benzene in Eurasia
(Holquist, 2002, pp. 20–21, 30–32), and this fact alone made control of
the city essential to the broader struggle for the former Empire.7
an extent comparable to any major global city in contemporary times,
and the chaotic nature of the geopolitical situation in Europe and much
% of the former Russian Empire would only enhance endeavours to con-
trol it.8 The attitudes of governments toward state intervention in
31.9 Baku’s oil markets and their subsequent attempts at managing the po-
22.45
litical upheaval brought by ethnic and political identity formation
1.8
7.35 during this period—as well as labour disturbances—became linked with
11.3 the broader geopolitical struggle that would interconnect all of these
6.2 elements.
17.5
Revolutionary Baku was created in the fluidity of this geopolitical
1.5
100
contest. The main powers that were vying for it (the British Empire, the
Russian Imperial government, and the Soviets) all had their own vision
of the manner in which Baku would actually be ruled after they con-
quered it. British influence was not only felt in the number of their
troops and in the duration of their stay, but also in their entry into Baku
as a third force in the already complex political circumstances of the
city. As a result, they were able to negotiate with the local government
there as they saw fit (NAUK, CAB 24–44-91, 1–2).9
While significant foreign private investment had been successful in
fully developing the fields in and around Baku and the rest of the
Absheron peninsula by the beginning of the First World War, making up
nearly 90% of total Russian production by 1914 (ARDTA), f. 798, op. 3,
d. 3867, l. 225–356), profits from this industry largely did not flow back
to the Tsarist state itself, but to the domestic and foreign companies that
owned the drilling rights to the fields. The Imperial government saw
little direct revenue from Baku’s production itself; instead, almost the
entirety of Russian revenue from the city through the war was primarily
tied to excise or consumption taxes, including indirect excise taxes on
fuels such as kerosene, or alcohol taxes, which on their own made up a
quarter of state revenue (Holquist, 2002, p. 32). Therefore, although
petroleum production increased dramatically before 1900, the state
largely relied on taxing the sale not the production of kerosene (Beliaev,
2002, pp. 550–560; Kotsonis, 2014, p.76). Moreover, petroleum on rail
transportation was often given preferential treatment by the state;
“[railroad] rates were manipulated” by the Russian government “to
promote the export of certain products,” such as petroleum (Kelly,
1976, pp. 909, 914). The combination of these two factors helped es-
sentially subsidize the industry largely outside the hands of direct state
ownership, but detached the interests of the state from capturing direct
rents from the industry.
This approach had benefits, including improvements in local private
industrial infrastructure that allowed the industry to supply a domestic
source of kerosene, which in turn offset the need for fuel importation
from abroad (McKay, 1983, p. 608). Moreover, Tsarist tax policy ef-
fectively subsidized the industry by allowing producers to re-invest a
larger share of their profits by prioritizing taxation on the consumption
of kerosene, not profits from it (McKay, 2011, p. 349; Owen, 1995, p.
178), which in turn likely contributed to the expansion of private do-
mestic and foreign investment in the industry.10 However, there re-
mained the question of whether, by the First World War, this revenue
generation was enough address the expanding security needs of the
Russian Empire, and if competitive private interests had in fact ham-
pered infrastructure development, such as struggle over the construc-
tion of the Baku-Batumi pipeline (McKay, 1983, pp. 621–622).11

4
On that point, specifically the Bolsheviks and their methodology during this period
can be traced alongside the other governments of this period as a part of a common
political and economic discussion.
5
Ronald Suny’s Baku Commune is without question important work on this period as
well, specifically on the local political conditions in Baku between 1917 and 1918.
6
One can argue that many of the colonial wars of the 18th and 19th century were also
global in nature, but it is industrialization and mobilization of manpower on such a co-
lossal scale that made the First World War unique.
7
Baku itself was transformed during this period from a relatively small port city to an
industrialized urban area, and the oil industry itself, until the turn of the century, was
only a portion of this industrializing process, a process that also included 184 other in-
dustrial enterprises, including machining and textiles.
8
It needs to be also mentioned alongside the broader struggle for Baku’s oil industry
that Baku remained the cultural capital of the Azerbaijani community, and the home of
vast majority of the Azerbaijani intelligentsia.
9
The British War Cabinet saw both the movement of the Central Powers into
Transcaucasia in 1918 and the rise of the Bolsheviks as relatively equal threats.
10
Tsarist Russia did have a progressive corporate tax after 1898, however, the amount
of revenue generated was relatively small due to the fact that firms could largely cir-
cumvent it through increasing their relative capitalization versus income thus greatly
decreasing their tax liability.
11
It can also be argued that private interests often conflicted both with each other and
that of the state, as illustrated by the 20-year period it took for the Baku-Batumi kerosene

385
J. Sicotte
Moreover, Russia’s oil industry did not exist without significant
overseas competition. It faced serious competition in terms of produc-
tion, most clearly from fields in the United States—in particular, wells
situated in Oklahoma, California, and Texas. By 1914, Baku’s propor-
tion of the global industry had fallen to 15% of production (or roughly
8.5 million metric tons a year) while North American oil production
only continued to expand, largely unaffected by the outbreak of the
First World War.12 However, nowhere else in Europe was oil still pro-
duced in such substantial quantities as in Baku, including the then-
declining fields in Galicia and, after 1910, Romania (RGAE, f. 4372, op.
5, d. 34, l. 4, l. 76; Frank, 2007, pp. 182–186, 262).13
In addition, production in Baku was complicated by the relatively
heavy nature of its crude, which made benzene production significantly
more difficult without chemical cracking, which largely limited export
opportunities to kerosene and machine oils. Moreover, in the broader
context of total Russian trade, oil, and its by-products represented only
a small portion of Russian exports compared to agricultural commod-
ities, such as grain and, to a lesser extent, metals, such as iron (Goodwin
and Grennes, 1998, p. 406). While the Russian Empire, unlike the So-
viet Union, did not rely on oil or gas as a major export commodity, the
infrastructure constructed in Baku provided a reliable source of do-
mestic energy for lighting and transportation in the form of kerosene
and necessary machine oils, which were necessary for domestic in-
dustrialization (Goldman, 1980, pp. 34–35).
3. Baku and its workers during the late imperial period
The diversity of the workforce in Baku’s fields was a key factor in
not only its development but in the city’s experience through the war
and revolutionary period and how governments were in turn forced to
react to growing political and social instability from 1917 to 1920. As
shown in Alexander Stopani’s 1909 survey of 2244 workers employed
by oil companies, 717 (31.9%) were reported as Russian, which likely
included others Slavic Europeans; 503 (22.45%) were reported as
Armenians; 40 (1.8%) were reported as Georgians; 165 (7.35%) were
reported as “Caucasus Tatars” or Azerbaijanis; 254 (11.3%) were re-
ported as other Caucasian ethnicities, most likely Chechen or Dagestani;
139 (6.2%) were Lezgini or Laz; 393 (17.5%) were reported as
“Persians,” which included Azerbaijani speakers from northern Persia;
and another 33 ethnicities were represented in small numbers (Stopani,
1916, p. 5)14 Of those 2244 workers, 902 (40.2%) came from European
portions of the Russian Empire; a similar number, 912 (40.6%), came
from the area of Transcaucasia (including Baku) controlled by the
Russian Empire; and 412 (18.8%) came from international destinations,
principally Northern Persia, a region largely populated by Azerbaijani
speakers (Stopani, 1916, 4). Consequently, Baku, just before the First
World War, had absorbed a large mixed work force from not only the
Russian Empire but from Northern Persia, which gave Baku’s fields a
reliable and diverse source of low-cost labour from across both the
region and the Russian Empire.
There are clearly some surprising results from the survey, specifi-
cally the relatively high numbers of Persians, and Lezgini, versus the
relatively low number of native Tatars/Azerbaijanis, most of who were
employed in the industry in an unskilled capacity (Tsentraliyi statis-
ticheskii komitet [Central Statistical Committee], 1977, Table 13). In
(footnote continued)
pipeline to finally be completed.
12
This decline may have started after the violence of 1905; however, as will be shown,
production generally recovered afterwards. A more pertinent explanation is the relatively
limited nature of available leases, and simply the comparably vast economy of scale of the
American oil industry.
13
Romanian production would only reach comparable levels by the mid to late 1920s.
Russian oil generally was between 2 and 3% of total exports during the Tsarist period.
14
It should be stressed that “Azerbaijani” as a separate identity was beginning to form
by 1900, but Azerabijanis were still often referred to as “Caucasian Tatars” in statistics
through late Imperial period.
386
The Extractive Industries and Society 5 (2018) 384–392
contrast, the numbers of Russians and Armenians generally correlated
with state census data of Baku from the period and generally took more
highly skilled positions.15
Furthermore, most of the larger firms in Baku prior to the turn of the
century were owned by ethnically Armenian or Russian owners; how-
ever, according to Stopani, at least 345 Azerbaijanis were still involved
in the ownership of smaller firms (Altstadt, 1992, p. 37). However, by
the First World War, the largest operations in Baku were gradually
consolidated in foreign-owned enterprises, such as Branobel and Shell,
which began to increasingly dominate the industry (McKay, 1983, p.
608). Overall, despite an ownership presence in smaller firms, Azer-
baijanis, especially working Azerbaijanis, were comparatively more
isolated from the industry than other ethnicities, and more likely to
engage in occupations that existed before the oil boom of the late 19th
century, particularly in trades and agriculture (Altstadt, 1992, pp.
34–35).
Moreover, workers often lived distinctly different lives. Data from
1909 shows there was a clear divergence in the number of workers with
families, based on ethnicity. Russians and other European workers
usually had a higher percentage of families: 60.1%. Other ethnic groups
had a significantly lower percentage (Stopani, 1916, p. 17). For ex-
ample, only 12% of Armenian and Georgian workers had families with
them, while Caucasian Tatars/Azerbaijans and Lezgini workers were
even lower: 10.9% and 10.1%, respectively (Stopani, 1916, p. 17).
Northern Persian and other Tatar workers with families comprised an
even smaller percentage of the population: 5.1% and 3.5%. The reasons
for these differences is uncertain; it could reflect how the polls were
conducted or that Russian and other European workers simply felt more
secure about bringing their families with them. Nevertheless, these
statistics illustrate that higher degree of employment continuity and a
more stable family life was also correlated with higher wages. The re-
sult of this divergence was a considerable difference in home life, which
reflected a longer-term access to housing and, in general, a longer-
lasting connection to the city (Stopani, 1916, p. 24). Furthermore, this
divergence in family size and age amongst ethnic groups correlated
with differences in total income of individual workers. Workers with
broadly European heritage on average earned an annual income of
543.7 rubles versus 416 to 336.7 rubles for other groups (Stopani, 1916,
p. 17). Pay based on individual ethnicity was more complicated: Rus-
sian workers routinely were paid 400.57 rubles annually (significantly
less than the average of other European workers) versus 444.69 for
Georgians, 371.90 for Armenians, 341.36 for Lezgini, 369.31 for Cau-
casian Tatars, 338.63 for Persians, and 323.76 for Azerbaijanis
(Stopani, 1916, p.17).
While, on average, Russians were paid higher than Muslim workers,
their pay largely fell between Christian Georgian and Armenian
workers, who were more likely to take administrative positions due to
higher degrees of literacy. According to compiled Branobel numbers,
literacy among Azerbaijani workers was as low as 18% and among
other Muslim workers as low as 5%; in contrast, literacy rates among
Russians were 76% and 51% respectively (Garskova & Akhanchi, p.1).
According to Stopani, of 661 Russians surveyed 175 (26.4%) had sal-
aries of 400 rubles or less, this is a contrast to 116 out of 151 (76.8%)
“Caucasian Tatars” and 329 out of 484 (67.9%) Armenians (1916, 40).
However, this was complicated by the fact that even low-paid Russian
workers had significantly higher levels of literacy (between 76 and
66%) (Garskova & Akhanchi, p.1).
These statistics illustrate that a higher degree of employment con-
tinuity, as well as skill, and this continuity was correlated with higher
wages. Nevertheless, any narrative focusing on an intentional ad-
vantage for Russian and East Slavic workers is, in reality, undermined
15
This difference may be explained by the simple fact that the existence of the
Azerbaijani population largely preceded the mass expansion of the industry during the
late 19th century.
J. Sicotte The Extractive Industries and Society 5 (2018) 384–392

by the complex pecking order between the different ethnicities in Baku. Table 2
Moreover, data on the worker wages collected by Stopani and Branobel Russian Oil Production, 1901–1932 in Thousands of Metric Tons (Altshuler,
complicate constructing a strict hierarchy among workers based on 1935, 11–41).
simply ethnicity itself; rather, pay was also the result of other factors: 1901 11,506 1917 8795
the skill and experience of individual workers themselves. 1902 11,017 1918 3777
While the relationship between identity and wages was complex, 1903 10,316 1919 4443
1904 10,762 1920 3869
differences in ages were correlated with considerable divergence in the
1905 7468 1921 4179
domestic lives of workers and their families. Furthermore, because 1906 8064 1922 4916
Baku was heavily reliant on a migrant labour force, and because this 1907 8540 1923 5518
labour supply was highly flexible, especially for unskilled labourers; 1908 5619 1924 6317
and in this competitive environment, wages usually followed skill and 1909 9149 1925 7590
1910 9389 1926 8762
experience based on the relative demand for workers.16 It is evident
1911 9177 1927 10,494
from Stopani’s statistical work that the more experienced workers—and 1912 9293 1928 12,542
especially those with better skills— would naturally accrue higher 1913 9205 1929 14,021
wages, regardless of ethnicity, and at times age was more strongly 1914 9172 1930 17,205
1915 9438 1931 23,161
correlated with higher pay than with ethnicity itself. However, while
1916 9968 1932 22,310
the complex origins of wage differences in relation to identity was a key
aspect of labour relations, it does not seem the aforementioned statis-
tical data, on its own, can accurately explain the widening division that Table 3
existed specifically between the Azerbaijani and Armenian commu- Russian Oil Exports 1901–1932 in Thousands of Metric Tons (Goldman, 1980,
nities, especially after 1905.17 p. 14–15)
While all three governments would inherit the complex economic
1901 1559 1917 n/a
stratification of the workforce in Baku (as will be shown), the growing 1902 1535 1918 1.716
division between the Azerbaijani and Armenian communities was more 1903 1784 1919 0.013
than simply an issue of labour competition; it was more likely due to the 1904 1837 1920 0.085
pressures of war-time shortages, competitive local politics, and outside 1905 945 1921 7.4
1906 661 1922 52
geopolitical pressures. These pressures, in turn, would create further
1907 773 1923 84
tension between the Azerbaijani and Armenian communities and 1908 797 1924 712
greatly complicate the abilities of each government to stabilize future 1909 796 1925 1372
production. 1910 859 1926 2086
1911 855 1927/1928 2782
1912 839 Late 1928 795
4. Declining production before the Russian civil war 1913 984 1929 3859
1914 529 1930 4713
In the context of raw production immediately before the war—and 1915 78 1931 5225
1916 n/a 1932 6117
in contrast to the United States—oil production in Baku continued to
decline as its fields were continuously depleted without new drilling to
make up the growing difference (Table 218). This is likely due to metric tons in 1907 to 529 metric tons by 1914) before the war, and
technological limitations of local drilling as well as leasing restrictions declined considerably more by 1918 (to only 1.7 metric tons)
on new fields after 1905 (Alekperov, 2010, pp. 144–145,148–149).19 (Goldman, 1980, p. 14–15). The industry experienced a continuous
Consequently, major realignment in production occurred during the decline over the period that was both reflected both a decline in pro-
first two decades of the twentieth century. In total, the production from duction totals and exports. This decline was likely due in part to a lag in
Baku’s enterprises fell from a high of 671,500,000 Pds (poods) (11.5 technological investments in Baku’s fields compared to those of the
million metric tons) in 1901 to 480,900,000 Pds (8 million tons) in United States, as well as the inability of the oil industry in Baku to
1906, a 30% decline over six years. Furthermore, by 1918, it had fallen access funding for modern technology, including rotary drills while oil
even further, to 3.7 million metric tons, a decline of 68% since 1901 prices remained relatively depressed during the pre-war period (British
(Ibid.). This reduced production was effectively the first major supply Petroleum, 2018, p. 17).21 This technological gap was then exacerbated
collapse of an oil-producing centre of Baku’s size; it significantly sur- by the growing impact of the First World War as the industry stopped
passed the earlier decline the Pennsylvanian fields and left a yawning exporting. Production fell significantly further in 1915 as the Darda-
gap in the broader Russian oil market (Table 320). nelles were cut off by the Ottoman entry into the conflict: severing oil
Total Russian petroleum exports equally languished (from 1559 shipments from Batumi to the Mediterranean. This decline in exports
almost certainly contributed to the broader troubles the industry was
16
This includes both native Azerbaijanis and the large workforce of migrant workers facing during this period as the industry was essentially cut off from
from Northern Persia who were also ethnically Azerbaijani. almost all sources of foreign revenue via exports.
17
Persian and native Azerbaijan workers were almost entirely Shia Muslim, while the Across the war, as production began to level out and then slowly
Russian and Armenian population was Russian and Armenian Orthodox, respectively.
decline, private sector investments fell as well; the industry was slowly
However, by the First World War, religious identity on its own played a minor role in
Baku as political and ethnic identity became increasingly fused.
thrown into a crisis as it progressively became starved from capital,
18
Limited leasing of new fields in 1906–1907 by the Imperial Duma almost certainly putting it only further behind its rivals in North America, especially in
limited the expansion of the industry; it took until 1912 for a new leasing law to go into regards to investing in new drilling. While production continued, the
effect, by which point the First World War was already on the horizon. war effort and its demand for stable work force (plus the lack of reliable
19
Oil production statistics from the First Five-Year Plan (1928–1932) show a dramatic
access to foreign markets) placed unaccustomed financial pressure on
increase in production, essentially the last major expansion of onshore production for the
industry. See Goldman, The Enigma of Soviet Petroleum, 14–15. The data for 1927 also
local production. In addition, by 1915, Russia became increasingly
includes production from January to September, 1928. Data for 1928 only includes isolated from Western Europe and the rest of the Entente. Baku’s
production from October to December, 1928.
20
From 1900, the international price of crude fell from over $35 in 2015 US dollars to
21
between $20 and $17 dollars from 1905 to 1914. This shift in pricing likely had a knock In this context, a non-white market price means oil sold by legitimate producers at a
back effect on investment in Baku. higher rate than the sanctioned government price.

387
J. Sicotte
industry was in a dramatically inferior position compared to Californian
and Texan fields in the United States, a country at peace and with vast
access to domestic capital to reinvest in its industry. While production
surged in North America, it continued to decline in Baku due to limited
market and capital access brought by lack of trade access. Nevertheless,
while production did decline as a whole, it did not necessarily decline
for every major producer of oil in Baku during the later years of the
First World War (Post. 1918, pp. 11–12).
As the war began, continual underinvestment caused considerable
shifts in the relative levels of oil production in Baku between major
producers. The Nobel Brothers, in 1916 alone, accounted for 1.36
million tons of production, and their group in total represented 1.96
million tons or roughly 25% of total production. By 1917, the group
total had fallen to 1.37 million tons or 22%). This was a modest dif-
ference on paper but represented a substantial yearly change compared
to the relative position of other companies (Post. 1918, pp. 11–12,
Appendix 8c and 12). The second largest group of producers in Baku,
the Russian Society Oil group, also experienced a noticeable change
before the revolution, from 1.16 million tons in 1916 to 1.02 in 1917. In
comparison, the Lomonossoff group, the third largest producer, actually
increased its nominal production, from 1.13 million tons in 1916 to
1.23 million tons in 1917. Finally, the Shell group saw a relatively
modest decline in comparison, from 773 thousand tons in 1916 to 681
thousand tons in 1917, hovering around 10% of production (Post. 1918,
pp. 11–12, Appendix 8c and 12). This wide variance in production
shows that during a period of dramatically increased economic pressure
there was still a possibility for production growth. While most of the
industry did see a decline, the experience of the Lomonossoff group and
its gain in production shows that individual firms could nevertheless
thrive in this environment, even if most could not.
Poor labour relations compounded the effect political struggles
would have on resulting production numbers, likely contributed to by
an imbalance between a growing labour supply and a relative lack of
demand before the war, leading to depressed wages and poor working
conditions. A prime example of the effect of these circumstances was
the labour difficulties experienced by Branoble itself, and its increas-
ingly contentious relationship with its workers and their unions as
production would continue to stagnate (ARDTA, f. 798, op. 1, d. 485, d.
504, d. 545, d. 655, d. 2003, and d. 2048). While obviously, the Nobel
Brothers (“Branobel”) was not unique in these labour struggles, the
primacy, and visibility of these struggles between Branobel and its
workforce highlight the depth of labour strife and its potential side
effect on production across the period due to reoccurring work inter-
ruptions (Lund, 2013, pp. 277–280).
Partially due to these factors and the fact that oil became increas-
ingly important to the war effort during the First World War, the
Imperial government conducted its first wartime intervention into the
industry. By 1916, it was clear that the war had increasingly pressured
Russia’s economy as wartime demand for oil only continued to grow.
However, supply only mildly increased, from 9.1 million tons in 1914 to
9.9 million tons in 1916, while prices skyrocketed, from 42.2 kopeks
per pood to over 60 kopeks per pood by 1917 (Pohshishevskii, 1927,
pp. 17–18). Higher prices correlated with higher demand during the
war; however, due to only minimally increased supply, the Tsarist
government was forced to continue intervening to secure public and
private access to oil at an affordable price. By December 31st, 1915, the
government introduced price controls at 45 kopeks per pood
(Pohshishevskii, 1927, p. 18), but in the end, refused to engage in
partial nationalization of the industry.
The efficacy of this approach was limited. While official (or “white”)
prices of 45 kopeks were lower than what they had been previously,
black market prices, as high as 68.7 kopeks per pood by 1917 (Suny,
1972, p. 63), increasingly accrued a premium over the “white” price for
oil in the Russian market because producers attempted to seek the
highest price for their products by re-orientating deliveries.22 While the
supply of affordable oil to the government for transportation and
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The Extractive Industries and Society 5 (2018) 384–392
critical industry mildly increased when the market was focused on the
war effort, it was insufficient to fully fuel the entire wartime economy,
in part due to the industry’s restricted access to labour and to in-
sufficient sources of public and/or private capital investment. Due to a
combination of factors, there remained an imbalance between domestic
high demand and limited supply (Suny, 1972, p. 63).23
Fuel oil had made up most of the production in Baku since the
1890s, although alongside fuel oil, sizeable amounts of kerosene and
small but increasing amounts of benzene and machine oils were also
being regularly produced (Fursenko, 1990, 11). The prime result of this
imbalance was that the imperial government was not actually able to
appreciably increase its access to oil due to the failure of price controls
to provide petroleum products at the price the government desired.
Thus, by the time of the February Revolution, this limited supply be-
came a growing issue for the Russian economy; supplies dwindled to
small and medium industries while the government struggled to meet
its wartime goals (RGIA, f. 1458, op. 1, d. 1731, l. 202–235).24 More-
over, the slow unwinding of the oil industry also directly impacted the
local economy by decreasing demand for local labour, which almost
certainly exacerbated tensions that existed before the war. By 1917,
Baku was primed for upheaval.
5. Revolution and its aftermath
Due to these challenges, the future of the oil industry increasingly
became uncertain after the February Revolution in February 1917 as
the Imperial government dissolved, and by fall 1917 as the Provisional
Government’s grasp on the far-reaching areas of the empire became
increasingly tenuous. Adding to this uncertainty, the growing division
among the local parties of Baku, especially the left-wing parties and the
Provisional Government in Petrograd, increased the possibility of
greatly heightened political discord in Baku (Swietochowski, 2004, pp.
95–99). As oil production dropped, the headwinds facing the industry
were compounded by growing social instability in the city, including
increasing numbers of mass demonstrations and strikes as the price of
food continued to rise and supply stocks dwindled in Baku ((Altstadt,
1992, 76; Suny, 1972, 62)).25 In addition, while the February Revolu-
tion unleashed a flurry of revolutionary activity that helped broaden
the range of local politics, especially on the left, it also enhanced ethnic
division as local politics solidified along ethnic lines. This was espe-
cially the case in Baku and was exemplified by the growth of the largely
Azerbaijani liberal Müsavatist and socialist Himmät Parties and the
Armenian Revolutionary Federation or the Dashnaktsutyun (“Dash-
naks”) (Swietochowski, 2004, pp. 73–74, 107–111).
By mid-1917, it was clear that the relative calm in Baku had come to
an end. As political chaos increasingly gripped Baku across 1917, po-
litical consensus in the city crumbled, total oil production in 1917 fell
to less than 9 million metric tons (Altshuler, 1935, 11–41).26 The future
of the oil industry effectively came under the control of various political
factions (including Mensheviks, Bolsheviks, and other ethnic parties)
that filled the gaping political void left by the fall of the Tsar and then
collapse of the Provisional Government after the October revolution. By
March 1918, the Bolsheviks and their Dashnak allies temporally
emerged victorious over the other factions in their struggle over the city
22
This was exacerbated if not largely caused by the relative devaluation of the Russian
ruble across the war. By 1917, the market value of the ruble was 30–40% of its pre-war
value.
23
This also included larger enterprises, such as Branobel.
24
According to Suny, between 1914 and 1917, prices for bread rose 100%; sugar, 51%;
milk 205%; and eggs, 290%. These increases likely were caused by genuine shortages and
the relative devaluation of the Tsarist ruble.
25
A combination of rising food prices, political instability and the previous issues
inherited from the Tsarist period understandably affected production during this period.
26
These and other records from Glavkoneft lay out future Soviet plans for Baku’s in-
dustry with the assumption that Baku’s industries could be fully consolidated by the
summer of 1918.
J. Sicotte
(RGASPI, f. 70, op. 3, d. 4, l. 38–46).
The October Revolution permanently altered the relationship be-
tween the state and the industries it governed. While the Provisional
Government had relatively weak control over the remains of the former
Russian Empire by October 1917—especially its fringes, such as
Baku—the rise of the Bolsheviks and RSFSR precipitated a dramatic
shift in attitude toward state intervention in the economy. As early as
December 1917, within weeks of the October Revolution, the
Bolsheviks, in agreement with the Russian Union of Engineers and other
trade groups, had asserted the need for management of the oil industry
through “centralized district and regional committees” that would be
run, in theory, “with broad participation of the workers” in the oil in-
dustry in order to help “defend workers in their fight. . for better
working conditions” (RGAE, f. 6880, op. 1, d. 19, l. 1).27 In this context,
after the October Revolution and the establishment of the RSFSR, the
Communist Party (Bolshevik) saw itself as the natural representative of
the workers and their interests as part of the oil industry.
Nevertheless, as early as the spring of 1918, the language used by
(now Soviet) officials in the Central Oil Committee (Glavkoneft) shifted
from revolutionary language centred on working class issues to a pro-
gressively more standard bureaucratic one, focused largely on the
routine of administration from Moscow—especially an ongoing debate
over centralization of the oil industry under state ownership (RGAE, f.
6880, op. 1, d. 19, l. 2–10). Furthermore, the minutes of meetings of the
Central Committee of Glavkoneft tended to focus more on the benefits
of centralized administration of the oil industry—especially its desire to
extract an optimal amount of revenue from it (RGAE, f. 6880, op. 1, d.
19, l. 2–10). The overall focus of the meetings turned from tearing
down the functions of the former imperial state to building the new
structures needed to administrate what very clearly had become a key
industry for the fledgling Soviet state, a state that would struggle to
develop an advantageous balance of trade with for then hostile Western
powers.
At this point, the RSFSR could effectively control only a portion of
the major cities in central Russia itself, and while their influence in
Baku was limited, the local Bolsheviks had managed to garner some
influence over the political process in Baku (in the Municipal Duma)
and on the city’s streets (Suny, 1972, pp. 191–193). The Bolsheviks
remained unable to effectively administer Baku independently until
after March 1918, at which time they were able to gather enough in-
stitutional support (alongside the ethnically-Armenian Dashnaks) to
take direct control of the city. This transition of power wold result in a
bloody pogrom against the Azerbaijan population that would leave up
to 12,000 dead and halt oil production for the next month (RGIA, f.
1458, op. 1, d. 1731, l. 202–235; Peace Delegation of the Republic of
Azerbaijan of the Caucasus, 1919, pp. 18–19). By April 1918, the
Central Committee of the Communist Party itself attempted to control
the affairs of the petroleum industry from Moscow through their cadres
in Baku and issued orders to begin planning the consolidation of the
industry. It was at this point that the Communist Party largely bypassed
the local workers and their unions in order to prioritize the expansion of
the industry. This change represented a broad shift from what was
basically a grassroots and largely ad hoc revolutionary government to a
centralized bureaucratic one, which nevertheless was still formally
supposed to represent the needs of a “worker-peasant state” through an
orientation to centralization (RGAE, f. 6880. op. 1, d. l, l. 27–93). The
first companies to be formally nationalized were the Caspian-Black Sea
Society and the Mazut Alliance on June 2.
By July 1918, the Glavkoneft’s central committee cited continued
production in Baku as critical to the success of the revolution and de-
manded that any “suspension of production due to nationalization must
27
Their only reliable root of access was across the Caspian Sea to Astrakhan; however,
by July 1918, sea access was contested by elements of the Caspian Flotilla hostile to the
Bolsheviks.
389
The Extractive Industries and Society 5 (2018) 384–392
be avoided in every way possible” (RGAE, f. 6880, op. 1, d. 4, l. l). The
committee’s overt actions to manage production are clear through its
continued attempts to push a closer, more controlled form of nationa-
lization from Moscow across mid-1918 as the hold of the Bolsheviks
over the city slowly weakened (RGAE, f. 6880, op. 1, d. 4, l. l). This
included Lenin himself, who, on June 25th, 1918, stressed to Stepan
Shaumian, the leader of the Bolshevik cadres in Baku, the importance of
securing the industry as quickly as possible, but to do so in a way that
did not jeopardize production (RGASPI, f. 70, op. 3, d. 4, l. l). Baku’s oil
represented something far greater than simply another industry to be
administered; it represented an industry vital to national interests and
the long-term survival of the RSFSR.
The Soviets had achieved some of their goals in nationalizing pro-
duction on an administrative level in the rest of the RSFSR; however,
the isolation of Baku from their nearest area of control, Astrakhan,
along with limited public support in Baku itself, kept local Bolshevik
control relatively short-lived until late July 1918, when their hold over
Baku disintegrated as the Bolshevik-Dashnak alliance splintered due to
promises of British assistance to the Dashnaktsutyun. Shaumian had
previously noted that the Bolsheviks, predictably, had a difficult time
independently finding local support, especially from the “mostly
Muslim peasantry” due to their increasingly “anti-Soviet” attitudes”
(RGASPI, f. 70, op. 3, d. 4, l. 71–74). This was almost certainly due to
Bolshevik alliance with the Dashnaks, and the fact that the Bolsheviks
were at least indirectly complicit in the March pogrom. Their sub-
sequent inability to engage with the Muslim Azerbaijanis would cost
them dearly in terms of support and would limit recruitment from
among only certain sectors of Baku’s industry workforce, primarily
Russians and Armenians (RGASPI, f. 70, op. 3, d. 4, l. 74). While the
Bolsheviks in Baku were desperate to consolidate control, without ad-
ditional workers, they had considerable difficulty in conducting the
street-by-street fighting they needed to maintain order, for Baku was
nearly entirely severed from the rest of Bolshevik-controlled territory in
the RSFSR.28
As the conflict worsened in Central Baku, Bolshevik control over the
city slowly weakened as the Bolsheviks were unable to meaningfully
engage with the Azerbaijani population, and Bolshevik forces, mostly
composed of ethnic Russians and Armenians, lacked the numbers they
would need to hold the city on their own (RGASPI, f. 70, op. 3, d. 4, l.
77, 78). By August 1918, control of Baku’s environs was wrested from
the Bolsheviks and their allies and briefly replaced by the trans-Caspian
Directorate, a provisional government backed by the British Empire.
While oil output declined to some degree across 1918, according to
Branobel numbers, it nevertheless remained relatively stable until
September 1918, when production entirely halted (RGIA, f. 1458, op. 1,
d. 1634).
6. The arrival of the British and the foundation of the Azerbaijan
democratic republic
Adding to the chaos, the intervention of the British in August of
1918 through the so-called “Dunsterforce” complicated the situation
further by drawing increased British involvement into an already ex-
plosive situation. The ostensible goal of this formation, consisting of
little over two battalions, was to help secure Baku with the aim of
eventually assuring further British control, primarily over its oil-pro-
ducing region inside the Absheron Peninsula (Gokay, 1998, p. 38).29
This strategy was principally based on both Baku’s proximity to Persia
and the importance of regional oil production to emergent energy
28
Officially, British troops were sent to stymie Ottoman designs in the region. There is
evidence that during the summer of 1918 there was some cooperation between the
Bolsheviks and the British to resist Ottoman advances, although this cooperation was
undermined by British assistance of White and anti-Bolshevik forces on other fronts.
29
This is best illustrated by an appeal for further support of British interests in Baku by
Richard Tweed, managing director of Baku Russian Petroleum Company Co. Ltd.
J. Sicotte
policies of the British Empire. The British entry into Baku was a re-
inforcement of previous oil supply routes to Europe as well as a defence
of British influence inside the Middle East, Transcaucasia, Central Asia,
and, most importantly, on the Indian subcontinent (NAUK, MUN 6603,
5–7).30
At a meeting of the Royal Geographic Society, Lieutenant Coronel
G.S.F. Napier (Napier, 1919), the former military attaché to the British
Embassy in Tehran, laid out the future importance of Baku to overall
British military interests in the region:
More recently the military operations o/f Sir William Marshall in the
north for the expedition to Baku and Sir Percy Sykes and his South
Persian Rifles for the establishment of order in the south, have led to
the great improvement in communication which I have described
above. In conclusion I would emphasize the extreme importance of
maintaining and extending this road system for the development of
our commerce and for the maintenance of order after the war. The
country with its sharp fall from the plateau to the Mesopotamian
plain lends itself better to the construction of motor roads than of
railways, and in view of the great supplies of petrol at Ahwaz and at
Baku it seems to me that the future of communication undoubtedly
lays in motor transport (1919, p.15).
Therefore, Baku not only provided territorial access to the rest of
Transcaucasia, a point of control that facilitated British communica-
tions in the region, but Baku could act as a key supplier of oil that
allowed the British to maintain strategic control of colonial supply
lines. Of course, because Iran was an internationally recognized state
and Azerbaijan had already declared independence on May 28th 1918,
British policy was forced to recognize that the political dynamics of the
area had evolved differently compared to other parts of the Middle East
under its control. Nevertheless, the British government obviously still
wanted to further its own explicit interests in the region, including
energy resources, in part to maintain control of its own scattered co-
lonial possessions.
By late August 1918, the control of the trans-Caspian Directorate
over Baku remained tenuous at best, and by September 3rd, the
Ottoman Army and their Azerbaijani nationalist allies had reached the
gates of Baku. As Baku’s defences collapsed with the withdrawal of
British forces in the face of Ottoman advances, the pogroms that fol-
lowed in Baku were an immediate tragedy for thousands of residents of
Baku, a calamity that claimed as many as 15,000 lives, most of which
were Armenian (NAUK, CAB 24–68-44, 1–2). The ultimate legacy of
these events was a further physical and economic drain on the popu-
lation alongside the oil industry itself as the life in the city was dis-
rupted. In addition, these events not only greatly enhanced ethnic
friction that was already present in the region, but they greatly ex-
acerbated already existing ethnic division in Baku. The pogrom against
was transformative of not only Baku as a populated environment, in-
flicting another savage blow to the city’s population, but also effected
the ability of private enterprise to continue to extract crude from the
fields surrounding the city. At this point, production bottomed out as
facilities closed for much of September while Baku was thrown into
chaos (NAUK, f. 1458, op. 1, d. 1731, l. 231). The conflict over Baku
had not only cost the lives of thousands, it had completely disrupted the
industry that had largely motivated the struggle over the city.
Soon after, the subsequent Armistice of Mudros on October 30th,
1918 and the end of the First World War opened a yawning political
vacuum in Transcaucasia as Ottoman forces withdrew from Baku.
Consequently, the Azerbaijani government at that point had compara-
tively restrained ability to control territory ostensibly under its control
and was forced to develop its economy independently in order to
30
According to the Soviet 1926 census, 89% of the population of Karabakh was still
Armenian; this correlates with the high number of Armenian representatives from the
region sent to the 1922 Azerbaijani Communist Party Congress.
390
The Extractive Industries and Society 5 (2018) 384–392
support itself. While Baku was jointly occupied, Azerbaijani national
forces had been nearly reliant on Ottoman forces in the taking of Baku.
The government itself had little formal experience in administrating a
war-torn and still ethnically divided city (Smith, 2001, pp. 212–213,
216). In addition, the Azerbaijani government had to deal with the fact
that Baku likely still remained majority non-Azerbaijani, including
parts of its countryside—especially Nagorno-Karabakh (TSSU Soyuz
ССР, 1928–29, Table 4).31 While the Azerbaijani government struggled
to find an adequate way of acquiring revenue from Baku’s oil industry,
it also found itself in a complicated strategic situation as the Ottoman
Empire was forced out of the war (NAUK, CAB 24–145-30, 4).32 By
November 1918, there was little way for the ADR to oppose British
post-war intentions in the region.
Previously, when it had fully solidified itself after taking Baku in
September, the newly relocated government of the ADR at first flirted
with the idea of continuing petroleum nationalization that the
Bolsheviks had started earlier in 1918 (ARDA, f. 24, op. 1, d. 110, l.
72–73).33 Foremost, the Azerbaijani government saw oil production as
a potential source of desperately needed revenue, partly due to the
expansion of the Azerbaijani military after the First World War
(Holquist, 2002, pp. 20–21, 30–32). Documented communication be-
tween Branobel and the government specifically illustrates the em-
phasis that the Azerbaijani Republic was putting on long-term projec-
tions for future government revenue growth from oil sales; by June
1918 prices for machine oils had risen to 4 rubles and 90 kopeks per
pood due rapidly growing inflation (ARDA, f. 24, op. 1, d. 287, l. 3–7
and d. 56, l. 48), but were otherwise comparable in market value to
other markets.34 It is readily apparent that the primary hope of the
Azerbaijani government for nationalization was for the state to utilize
oil resources as a source of long-term state revenue as central Russia fell
deeper into its civil war and the Tsarist-era ruble disintegrated. This
theoretically allowed the fledgling state the more reliable source of
income it needed, especially in light of the state’s military needs in-
cluding reinforcing its military without Ottoman assistance (ARDA, f.
24, op. 1, d. 287, l. 3–7 and d. 56, l. 48).
By November 1918, the ADR began to reverse course and distance
itself from nationalization (ARDA, f. 24, op. 1, d. 160, l. 2). This shift
was most likely caused by increased international isolation of the ADR
and the needs of the government to reach a compromise with the British
government and international companies, specifically Branobel and
Shell, both of which were naturally hostile to the idea of nationalization
(ARDTA, f. 798, op. 1, d. 2148, l. 7–11, 19).35 Nevertheless, despite
moving away from nationalization, the ADR was still forced to secure a
revenue source through direct taxation, even if the industry itself re-
mained in private hands (ARDA, f. 24, op. 1, d. 110, l. 184). The oil
industry and industries that supported it were responsible for almost
the entirety of industrial production in Baku, and therefore increased
production was absolutely essential to the survival of the inchoate
Azerbaijani state—especially since its economy was heavily reliant on
private oil operations. Even if the government itself did not control the
companies, it still needed them to remain profitable enough in private
hands to suitably tax (ARDA, f. 1, op. 1 d. 16, l. 4). However, direct
31
From archival material, it is clear that the British War Cabinet, until the fall of 1918,
was still concerned about Ottoman strength in the region as a broader danger to the
interests of the British Empire, particularly in India.
32
The DRA kept consistent records of its planning, which were subsequently held by
the Soviets until 1992.
33
It is difficult to calculate the exact value of the price due to the devaluation of the
Russian ruble from 1918 and 1919; by the third quarter of 1918 the exchange rate from
rubles to British Pounds was 80 to 1. In terms of 2015 US dollars, this is roughly 7–8
dollars a pood or 60 dollars a barrel for machine oil (8.5 poods to a barrel of oil). This
price was generally comparable to the 42 dollars a gallon (in 2015 dollars) that US ex-
porters were charging for a barrel of kerosene in mid-1918
34
These companies included Branobel.
35
The ADR recorded that the British requested fuel supplies for their operations not
only in Transcaucasia, but in Persia as well.
J. Sicotte
requests for petroleum by British occupation authorities cut into the
supplies available for other potential customers (ARDA, f.24, op.1,
d.127, l. 4, 14).36
Production began to recover by 1919 to just a little over 4 million
tons as the city began to recover from the severity of the violence in-
flicted in 1918; however, production continued to remain far below
pre-war levels (Altshuler, 1935, pp. 11–41). While the ADR had been
politically open to foreign investment and refrained from nationaliza-
tion, but production growth was slow to materialize partly due to a lack
of foreign investment (likely due to regional instability) as well as
limited access to the Black Sea and European markets (Smith, 2001, pp.
212–213). This was primarily due to a hostile relationship with both
Georgia and Armenia, a situation that stunted exports (Goldman, 1980,
pp. 14–15).
Furthermore, the ethnic heterogeneity of the city, even after the
pogroms, coupled with continued lack of political unity, led to extended
political violence and instability through 1919. As Michael J. Smith
documented in “Anatomy of a Rumor,” this instability continued to
plague the city until intervention by the Soviets in April 1920, who
applied a firmer hold on the city through force (Smith, 2001, p. 211).
However, the use of force Soviets would undoubtedly leave its own
legacy, especially considering the continuity of political violence that
would happen under, head of internal security and then under the party
head of the Azerbaijani SSR, Mir Jafar Bağırov during the 1930s.
7. Conclusion
By 1920, after years of revolution, civil war, and minimal infra-
structure investment, Baku accounted for only 4.4% of total global oil
production (RGAE, f. 4372, op. 5, d. 34, l.4; f. 4372, op. 5, d. 34, l. 76).
In terms of domestic output, when the Soviets took Baku in 1920,
output from Baku equalled only 42% of 1914 production or (3.9 million
tons), a slight decrease from 1919. This decline was likely compounded
by the relative age of the fields, many of which had been in production
before 1905. While Baku’s relative strength versus its overseas com-
petition weakened considerably, Baku’s fields nevertheless continued to
dominate total oil production in the former Russian Empire (RGAE, op.
11, d. 15, l. 115–116; Alekperov, 2010, pp. 154–155).
The Russian Empire and its successor states (the ADR and the
RSFSR) had presided over an immense drop in total production across a
six-year period, and this affected how individual governments reacted
to the industrial indicators inside Baku. Nevertheless, the explicit in-
terests of each government continued to centre on promoting im-
mediately available production, and each government was certain of
the direct economic benefits provided by this increase in available fuels,
specifically kerosene (RGAE, op. 11, d. 15, l. 115–116; Alekperov,
2010, pp. 154–155).37 While Baku may seemingly be less of an eco-
nomic prize as a result of this continuous decline in production, the
various governments (as well as British) that had fought for control of
Baku during the Russian Civil War all held higher expectations of its
future output than the amount they were realistically able to produce
considering circumstances at play (GARF, f. 6764, op. 1, d. 94, l.
12–16). Furthermore, the expectation of expanded production did not
meet the reality of years of under-investment and technological stag-
nation the fields had suffered, especially from 1914 to 1920, nor did it
take into consideration the dramatic political and ethnic tensions that
36
Baku had additional cultural significant to the ADR due to its existence at the cul-
tural and intellectual heart of late-Tsarist Azerbaijani society.
37
As shown in Sarah Brinegar’s article, “The Oil Deal: Nariman Narimanov and the
Sovietization of Azerbaijan, ” in Slavic Review, as well as her recent dissertation, “Baku at
All Costs: The Politics of Oil in the New Soviet State, ” it is certain that the oil industry
was the motivating factor in the Soviets returning to Baku. Baku’s industry continued to
remain productive enough, even if it was at reduced levels, to make the “oil deal” be-
tween Nariman Narimanov and Lenin (in order to re-take Baku in April 1920) possible in
the first place.
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The Extractive Industries and Society 5 (2018) 384–392
already split Baku’s society. Nevertheless, as production declined and
the potential for exportation was eroded, the necessity of oil production
still attracted governments to intervene economically and militarily in
Baku and invest considerable resources to do so.38
The strategic and (equally important) economic necessity of oil
forced governments that controlled the city to develop increasingly
flexible and largely interventionist methodologies to both harness the
economic potential of the fields and navigate the treacherous geopoli-
tical waters that surrounded them—but this struggle came at an in-
creasingly large material and human cost, a cost exacerbated by the
desperation of the governments involved.39 In turn, the damage of this
struggle almost certainly had a negative feedback effect on production
as violence and instability wracked the city, which in turn sapped
further investment.
Consequently, one legacy of both the development of Baku’s oil
industry as well as a broader geopolitical contest over it not only cor-
related with growing political violence in the city, but the alliances
created by this struggle set the stage for explosive inter-ethnic violence
in March and September 1918. While it is not certain this violence was
inevitable, the contest over Baku and its industry was undoubtedly a
key factor in those pogroms as the decline of the industry placed further
pressure on the Armenian and Azerbaijani communities when the city
was hit with shortages and political instability. In essence, Baku, by
1917, was primed for violence, and the geopolitical struggle over it
essentially lit the fuse as the powers that held the city simultaneously
attempted to adapt to the rapidly deteriorating economic circumstances
in an effort to secure the benefits of continued oil production. Damages
resulting from the geopolitical struggle for the city only compounded
the myriad difficulties the industry was facing—from aging fields to
ethnic division. There remained a process of adaptation by the parties
in order to try to salvage the economic situation despite increasing
material and human costs of doing so.
Furthermore, the return of the Soviets to Baku in April 1920 was
almost certainly motivated by re-securing Baku’s oil fields. Moreover, it
can be argued that the Soviets took the lessons of the Civil War to heart
after they instituted crash nationalization and pressed an expansion of
drilling after they took physical control of the city. It can also be as-
serted that the previous experience of the Bolsheviks during this period
may have helped framed later Soviet methodology towards nationality,
security, and surveillance. Documentation from the Central Committee
of the Azerbaijani Communist Party (TsK AKP (b)) from the late 1920s
indicates that TsK AKP (b) still feared Baku would continue to be in-
teriorly and exteriorly vulnerable to disruption by groups affiliated with
both the Musavatists and the Dashnaks, and reinforced its security
policy as a result, arguably reflecting fear of a return of the instability of
the Civil War period and its economic consequences (RGASPI, f. 613,
op. 2, d. 54, l. 74–75, 120).40
Ultimately, the strategic nature and potential profitability of Baku’s
oil industry before and during the First World War forced a catastrophic
collision of competitive ideologies, geopolitical forces, and ethnic
identity. However, the events of this period also illustrate the parallel
flexibility of ostensibly ideological disparate governments when faced
with many of the same geopolitical and economic challenges. These
challenges and their responses created a milieu that not only inspired
rapid changes of governance, especially in 1918—as well the brutality
of ethnic violence—but also had ramifications that would mould the
rest of the history of Baku and Azerbaijan across the twentieth-century.
38
However, it should be emphasized despite the multiple changes of government that
occurred across this period, none of them purposefully dismantled or damaged infra-
structure related to the oil industry.
39
This included purges as early as the late 1920s, prompted by suspected Armenian
and Azerbaijani nationalist infiltration.
40
Baku formed almost the entirety of Russian production during this period.
J. Sicotte
Acknowledgements
I want to acknowledge the contributions of Chris Nordquist and
Elizabeth Jagla as well as the staffs of the multiple archives accessed as
part of this project.
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Archives Accessed:
Azerbaijan
ARDA – State Archive of the Republic of Azerbaijan.
Fond 24 – Azerbaijan Democratic Republic
ARDTA – State Historical Archive of the Republic of Azerbaijan.
Fond 798 – Branobel – Petroleum Production Company Nobel Brothers, Ltd.
Russia
GARF – State Archive of the Russian Federation.
Fond 6764 – People’s Commissariat of Foreign Trade – RSFSR
RGAE – Russia State Archive.
Fond 4372–Syndicate of Oil Production of the USSR
Fond 6880–Union of Engineers of the RSFSR
RGASPI – Russian State Archive of Socio – Political History.
Fond 70–Azerbaijani Committee of the CPSU
RGIA – Russian State Historical Archive.
Fond – 1458–Oil Manufacturing of the Russian Empire
The United Kingdom
NAUK – National Archives of the United Kingdom (Kew, United Kingdom).
MUN 4–Ministry of Munitions of the United Kingdom
CAB 24–War Cabinet of the United Kingdom