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Regulation

The New World and the Ukraine–Russia Breadbasket

Summer 2022 • Regulation
By Thomas Grennes

The Russian invasion of Ukraine has reminded the world that war in Europe isn’t just the stuff of history books. It also demonstrates how war can affect the world’s food supply, as both Ukraine and Russia have long been major global suppliers of wheat and other grains.

This makes the new book Oceans of Grain, by University of Georgia history professor and Guggenheim fellow Scott Reynolds Nelson, especially timely. Nelson has written five other history‐​oriented books, including the award‐​winning Steel Drivin’ Man: John Henry, the Untold Story of an American Legend and A Nation of Deadbeats: An Uncommon History of American Financial Disasters.

Oceans of Grain covers some 14,000 years of human history, beginning with the origin of bread, with an emphasis on the era in which the modern wheat market developed, from the 18th century to the end of World War I.

New World food / The book focuses on the breadbaskets of the United States, Russia, and Ukraine, though it also gives a little attention to Canada, Argentina, and Australia, and passing mention of South and East Asia. Nelson often writes as if Russia and Ukraine are one land, in part because the border between them has shifted many times throughout history. His use of the word “grain” is nearly synonymous with “wheat,” though he does offer limited discussions of corn (maize), oats, barley, and rice.

Grain has been crucial to human life for millennia. Expressions such as “Bread is the staff of life” and prayers such as “Give us this day our daily bread” illustrate the historical importance of bread and wheat. Technical change that has raised productivity in grain production has increased the standard of living for hundreds of millions of people, and negative shocks to the grain sector have caused crises and wars.

Expansion of grain production in the 19th century to the then‐​newly settled regions of the United States, Canada, Argentina, and Australia greatly benefited grain consumers around the world, but it harmed traditional producers in Russia and elsewhere. The benefits for Europe were previously described in a 1997 Journal of Economic History article by Kevin H. O’Rourke as the “distributional effects of Christopher Columbus.” According to O’Rouke, transport innovations such as steamships and railroads “exported New World land to Europe, embodied in New World food.”

Geography and transport / Geography has been crucial to the location of grain production and the pattern of world grain trade. The fertile chernozem (Russian for “black soil”) of Ukraine, parts of Russia, and neighboring lands was conducive to early grain production. Ancient “black paths” used by oxcart drivers led from the interior of Ukraine to Black Sea ports. Centuries ago, grain was shipped through the Turkish Straits on both ends of the Sea of Marmara to the Aegean Sea and then onto the ancient Greek and Roman civilizations along the Mediterranean. Control of those straits, the Bosporus and Dardanelles, has long been crucial and has led to many wars involving Russia and Turkey. Even today, following the Russian invasion of Ukraine, access to the Turkish Straits by Russian ships is a crucial military issue.

Transport innovations have had a major effect on the pattern of world trade. Improvements in navigation and sailing ships were followed by the transition to steam ships. The development of Odessa on the Black Sea was a major contributor to Ukrainian grain exports. Grain ports have been described as the children of empires, and Nelson points out the Greek term emporion — “marketplace” — is the etymological root of both “emporium” and “empire.”

Other innovations also played important roles. Improvements in communication, such as the telegraph and undersea cables, aided long‐​distance trade. Improvements in explosives (nitroglycerin) contributed to the construction of deep‐​water harbors that can handle bigger ships. Better explosives also helped build the Suez Canal. Completed in 1869, it reduced travel time from London to Calcutta from six months to 30 days. The shortcut from the Mediterranean Sea to the Indian Ocean permitted the bypassing of the southern tip of Africa.

Grain policy / Government policies have had an important effect on the pattern of world grain trade.

Russian Tsarina Catherine II (1762–1796), better known as Catherine the Great, sought to develop a more grandiose Russian empire by making the country a major grain exporter. Russia’s partitioning of the Polish–Lithuanian Commonwealth added territory from the Baltic Sea in the north to the Black Sea in the south that included fertile wheat‐​growing land.

According to Nelson, Catherine was influenced by the French Physiocrats, led by François Quesnay, who thought that agriculture was the main source of wealth. Catherine believed that Russia’s becoming a large grain producer would free its citizens from having to rely on other countries for their basic food. She also admired the benefits received by Poles from transporting grain down the Vistula River to Gdańsk. By increasing Russian production and exports of grain from Black Sea ports through the Turkish Straits, Catherine expected to convert Constantinople to “Tsargrad.”

She promoted Russian wheat production in various ways, including increasing the power of landlords over serfs that made the serfs more like slaves. She also followed the anti‐​Semitism of earlier tsars who restricted Jews from living in old Russia. Jews were underrepresented as grain growers and overrepresented as middlemen in the grain sector. According to Nelson, this made it easy for Catherine to believe they were “leeches” who profited off the work of others. She limited the area where Jews could live to an area called the Pale of Settlement, which mostly came from land recently acquired from the partition of Poland–Lithuania. The Pale included Ukraine, with its rich black soil for growing grain, and Odessa was founded during her reign. Adding the Jewish population of the Pale made Catherine the ruler of the largest Jewish population in the world.

A grain “invasion” / At the time of Catherine, the United States had not become an important grain exporter. But after 1865, the American Great Plains were settled, the U.S. rail network expanded, and ships and communication improved. Those innovations contributed to the United States becoming a major producer and exporter of grain.

O’Rourke’s 1997 article described the expansion of U.S. exports as a “grain invasion” of Europe. Train tracks substituted for the ancient black paths, carrying the Plains’ bounty to U.S. ports and then onto Europe. Development of multinational grain companies like Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus (known collectively as ABCD) also contributed to a major change in the pattern of trade. The migration of labor from Europe to the United States and other emerging exporters aided the production of the newly settled farmland.

This grain invasion increased the world supply of land devoted to wheat. That harmed European landowners, and they sought protection from their governments. German landowners successfully lobbied Chancellor Otto von Bismarck, who responded with protectionism in the form of tariffs. He was supported in this by ultranationalist politician and history professor Heinrich von Treitschke, who blamed cheap imports for the fall of the Greek and Roman empires.

Russian leaders, including Prime Minister Sergei Witte and Finance Minister Ivan Vyshnegradsky, sought to regain Russia’s export prominence. They promoted a long and costly railroad expansion through Siberia to Port Arthur in Manchuria, believing it would become a major port for Russian grain exports to the Pacific. Japan resented the Russian encroachment in their neighborhood and defeated Russia in the Russo–Japanese War of 1905. The defeat was an embarrassment to the government of Witte and Vyshnegradsky, and the Marxists used it in their calls for revolution. Frequently stated goals of the Bolshevik revolutionaries were “Peace, Land, and Bread.” Nelson suggests that the humiliating military defeat may have contributed to Russia’s participation in World War I and drove Russia into revolution.

The United Kingdom was a prominent exception to grain protectionism. Parliament did impose the protectionist Corn Laws (“corn” in British English encompasses all grains) in 1815, but the beginning of the Irish Potato Famine (1845–1852) led to the laws’ repeal in 1846. British grain production fell as a result, but the broader economy prospered. Land devoted to grain production decreased and real wages rose. Many British cities, including London and Liverpool, doubled in size between 1845 and 1860. European workers gained from greater access to grain, and European socialist parties generally supported free grain imports.

Parvus / Nelson illustrates the connection between developments in the grain sector and politics by following the colorful life of Israel Lazarevich Helphand (sometimes spelled “Gelfand”; 1867–1924), who used the pseudonym “Alexander Lvovich Parvus” or just “Parvus.” He was the odd combination of a widely read journalist with a doctoral degree in political economy from the University of Basel, a Marxist theorist and practitioner, and a wealthy grain trader. According to Nelson, Parvus was the thinker whom Vladimir Lenin, Leon Trotsky, and Rosa Luxemburg most admired. Parvus was born in a shtetl in Belarus and his family moved to Odessa, where his father became a grain trader. Odessa was also the home of David Leontyevich Bronstein, who raised and traded grain. His son, Lev Davidovich Bronstein, would later take the pseudonym “Leon Trotsky.”

Parvus has been rediscovered recently, and he was the subject of recent television series in both Russia (“Demon of the Revolution,” 2017) and Turkey (“The Last Emperor,” 2017–2020). Nelson claims that both series distorted and glorified Parvus’s true role in the Russian Revolution.

Conclusion / Oceans of Grain is a good read. It is imaginative and bold in suggesting that shocks to the grain sector may have contributed to wars and revolutions. Relevant data are usually presented to support the hypotheses. Even though they are not always convincing, they do stimulate thought.

There are inevitable omissions, but all good stories must leave out some details. Nelson’s extensive focus on the emergence of U.S. grain production and exports is appropriate given the resulting negative effects on European grain producers and positive effects on European grain consumers. However, his limited attention to Canada, Argentina, and Australia is disappointing because they contributed to those effects on Europe. Failing to examine the competing producers in some detail could exaggerate the effects of American grain exports to Europe.

The current Russian invasion of Ukraine certainly gives this book special relevance. Putin aspires to control the territory of the old Russian Empire, and he considers Russia and Ukraine inseparable. Nelson tells the story of how the combined Russia/​Ukraine once dominated grain trade with Europe, and how the United States and other newly settled grain exporters successfully challenged that dominance. Russia and Ukraine remain among the world’s largest wheat exporters today. The fertile black soil north of the Black Sea continues to be a major source of wheat and daily bread for millions of people.

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About the Author
Thomas Grennes

Professor of Economics Emeritus, North Carolina State University