Free The King of Vodka by Linda Himelstein Page B

trounced by ineptitude. He stared at Arseniy. This one seemed sane enough; he did not look stupid; he was clean and respectful; he was even a bit literate. Arseniy had also understood how to play the game. The table head tucked his ten-ruble tip deeper into his pocket.
    Everything seems to be in order , the table head would declare, signing his name to Arseniy’s application. Go pay your fees and I will see that you get your guild certificate.
    Arseniy moved quickly through the chancellery into another room where officials sat, collecting fees and registering capital announcements. Arseniy settled his accounts there and proclaimed his capital to be 2,400 rubles, or roughly $1,800 in 1858, the minimum allowed to enter the merchant estate at the time. * He was then encouraged to contribute to the “poor fund.” Arseniy threw in several kopeks to satisfy the officer, who then handed him a certificate. It was Arseniy’s ticket, the one that would set him on the path already crossed by his brothers.
    Arseniy returned to the chancellery. The last paper Arseniy signed that day was an oath. “I, Arseniy Aleksiyev, a peasant freed by Lady Demidova, added to the Moscow Merchants third guild, put my signature in the house of the Moscow City Society which obliges me to pay all the state and city taxes without delay. I pledge not to do anything that may bring harm to my rank. My family and I are of the Russian Orthodox faith. We’re neither eunuchs, nor dukhobors, nor molokans, † nor Jews nor any other especially insidious sect. Furthermore, I will bear responsibility if this should prove false.” 6
    The Smirnov men, all of whom were covered by Arseniy’s application, could now cast off their serf history like a heavy coat in summer. They had become Russian merchants.
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    B ACK AT ONE of Ivan’s shops where Pyotr was working, the conversation flowed. Indeed, it overflowed. In all likelihood, Arseniy and his son rambled on about finding just the right spot from which to peddle wines. They batted around ideas for running the business, what exactly they would sell, and how they wouldsell it. They even discussed the possibility of distilling their own vodka. The Smirnovs were now poised to enter the vodka fray. And the vodka industry was getting ready for them, too.
    Problems in the vodka business had been bubbling for some time. It was a complicated—and especially corrupt—aspect of Russian life. The government relied on revenue from vodka sales. By the late 1850s, an eye-popping 46 percent of the state’s budget came from taxes on vodka. 7 This revenue gave the tsar and his top lieutenants every incentive to encourage drinking. The more the people drank, the more the state collected.
    The nobility, which enjoyed the exclusive right to produce grain alcohol, had no reason to quarrel with the state’s position. They too benefited from prolific drinkers. Then there were the tax farmers. In Russia, these were the two hundred or so enterprising entrepreneurs, often merchants, nobles, or members of the petite bourgeoisie, who paid the government for the rights to distribute vodka within specific regions. They bid on these rights at auctions held every four years. The winner received the vodka, at a fixed price, and a license that allowed them to trade it and collect taxes. It was risky for the licensees because they had to buy their entire lot of vodka and hope to sell it all.
    Still, the contracts were as precious for the state as they were for the tax farmers. Demand for vodka was endless while supply could be controlled. Given the stakes, would-be distributors would do almost anything to win the auction, including bribery. It was estimated that successful tax farmers paid off as many as 90 percent of the officials in the vodka trading chain of command. The costs of these payoffs by just one farmer to local officials, according to a study published by the minister of finance, amounted