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Bankers and Bolsheviks$
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Hassan Malik

Print publication date: 2018

Print ISBN-13: 9780691170169

Published to Princeton Scholarship Online: May 2019

DOI: 10.23943/princeton/9780691170169.001.0001

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Investing in the Revolution

Investing in the Revolution

(p.129) 4 Investing in the Revolution
Bankers and Bolsheviks

Hassan Malik

Princeton University Press

This chapter explores in detail the story of 1917 through the novel perspective of foreign bankers who were on the ground at the time and shows how and why some of the leading financiers in the world remained optimistic about Russia until the very eve of the Bolshevik coup. Three broad factors can be identified as contributing to the Western investment boom in the Russian markets from 1914 through late 1917. First, in contrast to later observers, many contemporary foreign investors did not perceive Russia as suffering from an economic crisis—even as late as 1917. Second, a remarkably high degree of risk appetite shaped investor decision making and was in turn the product of moral hazard from government guarantees and competitive pressures. Third, geopolitics and feelings of patriotism within the context of the First World War pushed investors to engage the Russian market in the hopes of advancing home-country interests. Finally, contemporary investors felt that by investing in Russia they were participating in the transformation of a society—a belief that would enable them to overlook much of the political instability and violence of the revolutionary events of 1917.

Keywords:   foreign bankers, Western investment boom, Russian markets, foreign investors, economic crisis, investor decision making, geopolitics, patriotism, First World War

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