Lenin met the bourgeois offensive with characteristic energy. When the financial powers of Petrograd refused to co-operate, he replied with a decree nationalizing the banks. When repre sentatives of industry tried to sabotage production, a decree nationalized their factories and created a Supreme Economic Council to manage them. Other decrees followed in rapid suc cession, as one branch after another of the old economic system declared passive war. At first, probably, these were measures of immediate necessity rather than a part of the Bolsheviks' de liberate programme. In a sense they were the beginnings of the later "militant communism," but all of the responsibility for their adoption cannot be laid upon Bolshevik shoulders. Some form of centralization was necessary to prevent economic collapse, and Lenin had previously published a pamphlet demanding State control over transport and the means of production, such as had been adopted by the western belligerents, not as a form of Socialist expropriation, but to save the country from chaos.
The nationalization of industries was legalized in Dec. 1917. At first it was applied haphazard, to meet sabotage by individual enterprises or groups. No entire industry was nationalized until May 1918, when a department of the Supreme Economic Council was organized to supervise the monopoly production of sugar. The following month oil production was centralized in the same way, and various commodities, such as yarn, matches, tobacco, tea, coffee, spices, were declared State monopolies. It was not until June 28, 1918, that all industrial and commercial enterprises of more than i,000,000 rubles' capital were declared the property of the State.
Lenin at once decided for peace, but acceptance of the German terms was not reached without a struggle in the Communist Central Committee. Lenin still believed that a general European revolution, as the result of war exhaustion, was not far distant. His prime object, therefore, was to gain time; a breathing-space, as he called it. His associates argued that to yield was to betray the Revolution. Trotsky remained neutral. He produced an epi grammatic phrase, "Neither Peace nor War!" and proposed to allow the Germans to advance without resistance.
Verbatim reports of this discussion published in Moscow showed that it was only by a threat of resignation that Lenin beat down the adverse majority in the Central Committee. Trot sky was replaced as commissar of foreign affairs by Chicherin, ex-diplomat and noble but a Communist of long standing, who renewed the Brest-Litovsk (q.v.) negotiations on Feb. 28, 1918. Chicherin's instructions gave him little scope for the diplomatic subtleties he afterwards displayed. On March 3 he accepted the German terms on behalf of the Soviet Government. The so-called Independent Government of the Ukraine had already signed a separate treaty admitting German suzerainty, and this Chicherin was forced to confirm. The Soviet Government further agreed to pay a large indemnity or its equivalent in raw materials. Poland and the Baltic States were left in the hands of the Germans, and the armies of General von der Goltz and General Mannerheim soon crushed the revolutionaries in Finland.
Lenin had won his breathing-space, but the agricultural and mineral resources of the Ukraine and the oil of the Caucasus were at the disposal of the Germans, and the German General Staff was now free to concentrate its forces against the Allied front in France. On March 5, however, two days after the signature of the treaty, Trotsky proposed to Bruce Lockhart, the British high commissioner, and to Raymond Robins of the American Red Cross, who was acting as liaison between the Soviet Government and the American ambassador, that ratification by the Congress of Soviets in Moscow might be prevented on condition that the Allies and the United States promised aid against Germany and restrained the Japanese from occupying Vladivostok. The British and American representatives appear to have regarded. Trotsky's proposal favourably and to have advocated its accep tance in despatches to their respective Governments, but they received evasive replies. The Congress of Soviets ratified the treaty on March 16 by a majority of 523.