Revolutionary Default

This chapter focuses on the 1918 Bolshevik default—the largest in history—and the continuation of the financial struggle by the Bolsheviks after the October Revolution from the perspective of both bankers and Bolsheviks. In exploring the drivers of the Bolshevik decision to default, the chapter reveals that the decision was rooted partly in Bolshevik ideology but also shaped by practicalities. Considering the very possible counterfactual scenario that the Bolshevik coup in early November 1917 had failed, it is difficult to imagine a situation whereby the Provisional Government or any successor would have been able to avoid at least a fairly significant default. In this sense, investors holding on to Russian debt before, during, and after the Bolshevik Revolution not only failed to account for political factors, but also failed to remain true to the narrow financial analysis that would have dictated caution even in the absence of a Bolshevik takeover. On the Bolshevik side, the decision to default was not just consistent with the Bolsheviks' previously articulated policies, but—from both a political and economic standpoint—rational.