'J 5 '^ <^3 ■^■vi-f RUSSIA : ITS TRADE AND COMMERCE RUSSIA : ITS 1 ^ ,^ AND COMMERGfi EDITED BY (JV a JAtlJ^^Cnr"^^ ) ARTHUR RAFFALOVICH ^ _ Russian Privy Councillor Fellow of the Royal Statistical Society President of the Russian Chamber of Commerce of Paris London P. S. KING & SON, LTD. ORCHARD HOUSE, WESTMINSTER 1Q18 PREFATORY NOTE During the visit of a Russian Mission to London in the early da^^s of the war, a conversation took place in the ofhce of Mr. Arthur King, that sanctum of exact and up-to-date information on pohtical and economic questions, between him and the editor of the present work. It was recognized that there were in England a large number of books on Russia, some of them of the highest value, such as the classic work of Sir Mackenzie Wallace,^ and that, in connexion with the several international exhibitions held in England and the United States, publications describing Russia from a commercial, industrial and financial point of view had been issued in the English language by the Russian ^ Wallace, Sir Mackenzie : Russia. l:^e\\' and enlarged edition, 2 vols., 1912. Mention should be made here of a veritable economic encyclopaedia on Russia, prepared by the Department of Trade and Manufactures, Ministry of Finance, Petrograd, for the World's Columbian Exposition at Chicago in 1893, and issued in 5 vols., under the title of The Industries of Russia. The fifth volume of this series was written by the great Russian Geographer, P. P. Semenov, and bore the title Siberia and the Great Siberian Railway. Also La Russie a la fin du ige siecle, \witten in French, and published in connexion with the Paris Universal Exhibition in 1900 ; and an Enghsh translation of the work edited by M. V. I. Kovalevsky, Director of the Depart- ment of Trade and Manufactures at Petrograd, published in connexion with the Glasgow International Exhibition, 190 1. V vi PREFATORY NOTE Ministry of Finance, which at that time inchided the Department of Trade and Manufactures, now a separate Ministry. As they looked over the shelves of a collection of books on contemporary Russia, they agreed that there was need for a new work giving a reliable description of Russia, its agriculture, forests and mines, and stating the resources in raw material that it offers to home trade and what it is capable of putting upon the world's markets. In the sug- gested new work it was considered useful to explain concisely the Russian organization of credit, mone- tary system and financial administration. Their attention was turned to Russia as a former customer of Great Britain, and without going back as far as the sixteenth century and Chancellor's voyage, it was easy to acknowledge all that Russia owed to England as her industrial and commercial teacher and as the purchaser of her raw materials, and to show the advantages which would accrue to the two great Empires, between whom there is no cause of conflict, by more intimate relations founded upon a deeper mutual knowledge. Frorri this conversation between Mr. King and the Editor the idea of a book on Russia originated — an idea warmly welcomed by those competent to ensure its being carried out. The compilation was entrusted to M. Krivelsky, chief editor of the periodical publi- cations of the Russian Ministry of Finance, to whom we owe the collection of articles written by distin- guished Russian specialists on the various economic questions discussed in this volume. This book was ready at the beginning of 191 7, PREFATORY NOTE vii as far as the correcting of proofs, etc. The fateful events of March, 1917, however, delayed comple- tion. Then came the Maximalist coup-de-main with its all-destroying influence, which dehvered to the enemy a Russia degraded, enslaved, parcelled out, bloodstained by civil warfare, and from which security of hfe and property have temporarily disappeared. Nevertheless, a country like Russia cannot exist outside all that represents law and order and respect for public and private contracts. Destructive anarchy destroys itself. Whatever may be the later disposition of Russia, whether centrifugal or centripetal influences will prevail, the partition of its territories cannot be pursued to isolation, or to the restoration of Chinese walls between the different districts — there are too many economic ties for that. With this idea, and considering the mass of information contained in the following pages, the publisher and the editor believe that it will be of interest to let this volume, which the march of events has somewhat outstripped, take its place in the Hbrary of those who seek precise data on the natural wealth of European nations in the first fifteen years of the twentieth century. ARTHUR RAFFALOVICH. Paris, May, 1918. i CONTENTS CHAP. I II III IV V VI VII VIII IX X XI XII XIII XIV XV XVI XVII Brief Geographical Sketch . Agriculture ..... Poultry Farming — Fodder Grass . Cultivation of Cotton, Flax, Hemp, Sugar, Beet, Tobacco, Wine, Hops, Fruit Forestry ..... Factories and Workshops Mining and Metallurgy Machine Industry .... Fisheries ..... Internal Transport, Russian Railways, and Inland Waterways Posts, Telegraphs, and Telephones Internal Trade of Russia Foreign Trade of Russia Public Finance Money and Credit Joint Stock Companies . The Drink Question in Russia Canals page I 43 54 88 105 165 200 217 230 261 268 298 329 352 418 429 IX RUSSIA : ITS TRADE AND COMMERCE CHAPTER I Brief Geographical Sketch Area — Boundaries — Rivers — Mountains — Geological Structure — Climate — Vegetation — Fauna — Population — Administrative Divisions. The Russian Empire occupies an area exceeding 22,000,000 square kilometres (8| million English miles), of which 5,740,000 square kilometres (2,200,000 English miles) form the European possessions of Russia (excluding the Caucasus) and 16,500,000 square kilometres (6,300,000 English miles) the Asiatic possessions and the Caucasus The territory of Russia occupies one-sixth of the total continental area of the globe, nearly two-thirds of the area of Europe and a third of the area of Asia. The length of the frontier line embracing the total area of the Empire is 70,000 kilometres (44,000 English miles), roughly divided into 50,000 kilometres (31,000 English miles) of maritime boundary and rather more than 20,000 kilometres (13,000 English miles) of land boundary. Of the maritime boundary 27,000 kilometres (17,000 English miles) belong to the eternally ice-bound Arctic Ocean, which washes the entire northern coast of Russia. Generally speaking, this ocean is accessible for navigation only on the coast-line of European Russia, where the basin of the White Sea cuts deeply into the land. This basin is open during the entire year, though the ice-flov.s which form in the estuary during the months of February and April prevent navigation by large ocean steamers. On the other hand, at the extreme west, where, through the influence of 1 B 2 RUSSIA: ITS TRADE AND COMMERCE. the Gulf Stream, the sea never freezes, the Murman coast, with its numerous natural harbours, affords Russia an outlet to the open sea. During the war a railway has been built from Petrograd in this direction. To the east the coast-line skirts the two polar seas — Bering and Okhotsk — and also for a short distance the Japan Sea, frozen only for about two weeks of the year, and on which lies Vladivostok, Russia's chief port in the Far East. Russia's maritime boundaries in Western Europe are more important. One of these, situated in the north-west of European Russia, belongs also to the Mediterranean basin of the Baltic Sea which cuts pretty deeply into the Russian con- tinent with the two gulfs — Riga and Finland — while the Gulf of Bothnia separates the Russian Empire from the Scandinavian peninsula. With its length of 6,750 kilo- metres, the Baltic coast-line has always been of very great importance for the international relations of Russia, affect- ing principally the ports of Petrograd, Riga, Libau and Windau. But this line has two substantial defects : egress from the Baltic can easily be stopped, and a large part of the coastal waters are covered with ice, at Petrograd for instance, for more than five months. Libau only can be regarded as practically an ice-free port. The Black Sea, which is contiguous to Russia in the south on a coast-line of 4,400 kilometres, freezes during part of the year, and only in that portion of it which most deeply penetrates inland, viz. the Sea of Azov and the Dniester estuary. Among a series of ice-free or almost ice-free ports in this region, Odessa occupies the chief place. Nevertheless, the Black Sea has a very ap- preciable drawback : it represents an almost entirely closed basin connected with European seas only by narrow straits which do not belong to Russia. Finally, the closed Caspian Sea forms part of the Persian boundary, but owing to the absence of the Persian flag it may be regarded wholly as a Russian sea. Forty-hve per cent, of the land boundaries of Russia — BRIEF GEOGRAPHICAL SKETCH. 3 i.e. 9,000 kilometres — are occupied by the Asiatic frontier between Russia and China and Mongolia ; this is the longest of all the international boundaries of the globe. The rest of the land frontier in Asia separates Russia from Afghanis- tan, Persia and Asiatic Turkey. Russia's West European land frontier which separates her from Prussia, Austria and Rumania is intersected, not only by the water routes of the Vistula and the Niemen, with which the entire upper Dnieper water system is con- nected, but also by railways of great international value. The shortest land frontier of Russia is that with the Scan- dinavian States, though in the present war these States play an exceedingly important role in Russia's foreign trade. A large part of the area of Russia is covered by plains which are among the most extensive in the world. They stretch from the Arctic Ocean, although in the southern regions of the Empire there are many lofty and gigantic mountain ranges. On the south-eastern frontier of European Russia, between the Black and Caspian Seas, the Caucasian Range, the highest in Europe, extends as an unbroken ridge for 1,100 versts from W.N.W. to E.S.E. Its crest for a length of 700 kilometres maintains an altitude of more than 3,000 metres, while individual peaks (Elburz, Dykh-Tau, Kazbek) attain a height of 5,630 to 5,045 metres, and feed extensive glaciers. The entire Russian Caucasus, which from its hi^ory and conformation belongs to Asia, is primarily a mountainous country, the principal ranges of which are linked not only with the Caucasus but with the Turkish Antitaurus mountains and the Persian Elborus. The most prominent of the trans-Caucasian mountain groups is the famous conical, volcanic Ararat, rising, far beyond the limits of perpetual snow, to a height of 5,155 metres. The Crimean Yaila, which separates the picturesque southern shore of the Crimea from its steppes, serves as a 'continuation of the Caucasian range beyond the Kertch Straits. Between Europe and Asia, rises the Ural Range, not 4 RUSSIA: ITS TRADE AND COMMERCE. very lofty, but abounding in mineral wealth. From the Arctic Ocean to the Aralo-Caspian depression in which its ramifications are lost, this range covers 1,500 kilometres. To the north it branches off into tWo chains, the Ural proper and Pai-khoi ; to the south into three almost parallel chains slightly diverging from one another. With a maximum altitude of from 1,536 to 1,688 metres (Iremel 1,536, Konchakovsky Stone 1,560, and Tol-pos 1,688 metres), the Urals do not represent any sharp dividing line either for climate, flora or fauna. All the remaining area of European Russia is represented by the great Euro-Russian plain, the highest points of which rarely exceed 350 metres, with an average height of 168 metres. This Euro-Russian plain is richly watered by the rivers which fall into four distinct maritime basins. Into the Caspian Sea falls the most important of European rivers, the Volga. It is 3,200 kilometres long and has a basin of 1,480,000 square kilometres. The Volga serves as the principal navigable artery of European Russia, and in this respect is remarkable for the fact that navigation proceeds for the most part up-stream, and, with the help of the Marinsk system of canals finds a convenient outlet to the sea at the mouth of the Neva. The Ural, which is the longest except one of the European Russian rivers, falls into the Caspian basin, but though 2,300 kilometres long, with a basin of 83,300 square kilometres, it is far more valuable for fishing than for naviga- tion. To the Black Sea basin belongs the Danube, only the delta and lower stream of which enter Russia. To the same basin belongs the third European Russian river, the Dnieper, which, with a length of 1,700 kilometres, possesses a spacious basin of 530,000 square kilometres. Cut off by the Dniester rapids from convenient communication with the Black Sea, the Dniester finds a more suitable outlet for navigation in the Baltic Sea by means of the system of canals connecting it with the Vistula and Niemen, two important Baltic rivers, the mouths of which are situated in Prussian terri- tory. The Don, with a length of 1,600 kilometres, falls into BRIEF GEOGRAPHICAL SKETCH. 5 the inland Sea of Azov and its navigable importance is very limited. Of the Baltic basin rivers, the Western Dvina, belonging wholly to Russia, with a length of 760 kilometres and a basin of less than 83,000 square kilometres, is of some import- ance to navigation, but incomparably less than the Neva, whose spacious basin occupies 183,000 square kilometres and comprises the extensive Lakes of Ladoga and Onega. Flowing out of these lakes, the Neva carries to the Baltic the entire navigation of the Volga system. Two very great water arteries of North Russia fall into the Arctic Ocean. Of these the Northern Dvina, with a length of 1,000 kilometres, has a basin of about 430,000 square kilometres, and with its tributaries served, until the recent construction of the railway to Archangel and Kotlas, as the principal commercial route of the Far North. The Pechora, which falls into the Arctic Ocean in the north-east corner of the Euro-Russian plain, with a length of 1,500 kilometres and a basin of 276,000 kilometres, pos- sesses only local importance for communication in an almost uninhabited region for which it affords an outlet only to the Polar Sea. Asiatic Russia also is bounded on the south and east by lofty mountain ranges. The central position is occupied by the huge system of the Altai-Sayan, the most northerly of the four ranges which have a latitudinal direction and form the backbone of the Asiatic Continent — ^the Altai- Sayan, Tien-shan, Kuen-lun and Himalayas. Over a great part of its length the Altai-Sayan system serves as a bound- ary between Russia, China and Mongolia. It begins in the west with the massive Altai, which is ten times as large as Switzerland. These mountains consist of many ridges which are divided by longitudinal and occasionally by transversal valleys. The ridges separate fanwise, so that the most south-westerly of them in Russian territory runs on a parallel ; the most north-easterly— the Kuznetsk Alatau — stretches almost on the meridian ; and the intermediate 6 RUSSIA: ITS TRADE AND COMMERCE. one— the Salairsk — rich in minerals, proceeds from south- east to north-west. Lake Teletskoe also has a meridional direction. In the pictm-esqueness of its steep shores this lake, although much larger, recalls that of the Four Cantons in Switzerland. The Altai Mountains attain their greatest altitude, 3,350 m.etres, in the Siberian Mont Blanc, Mt. Bielukha, which feeds the wide glaciers of the mountain group of the Katuna Pillars. East of the Altai and in unbroken connexion with the latter, between the meridians of the Teletskoe Lake and the southern extremity of Baikal, stretches the Sayan chain proper, forming over all this distance not only the boundary of Russia and Mongoha but also the outskirts of mountainous Asia. The Sayan range, for a considerable part of its length, consists of two parallel mountain chains, between which lies a very wide valley, the so-called Uriankhai region, strongly gravitating towards Russia and with a large Russian population. To the Sayan system belongs the pri-Baikal elevation with its wide and deep Baikal valley, 780 metres below sea level, and containing some of the greatest fresh water lakes. Mt. Munko-Sardyk, the highest point of the Sayan range, rises beyond the snow line to an altitude of 3,500 metres. East of the meridian of Baikal, the Altai-Sayan system, changing its direction to the north-east, takes the name of the Yablonovy or Stanovoi Range. Beyond the highest point of this range — Mt. Chokondo (2,450 metres) — the Stanovoi Range splits up and forms the trans-Baikal slopes and then extends in the shape of an almost unbroken crest for a distance of about 3,000 versts, serving as a watershed between rivers which flow, on the one hand, into the Sea of Okhotsk and generally into the Pacific, and on the other into the Arctic Ocean. The south-eastern slopes of the range descend rapidly and steeply to the Sea of Okhotsk, while the north-western slopes spread to the Aldan table- land. The summits of the Stanovoi range, altliough higher than the limits of forest vegetation, barely attain a maxi- mum altitude of 2,000 metres and nowhere exceed the snow BRIEF GEOGRAPHICAL SKETCH. 7 line. Opposite Okhotsk, from the other side of the Stanovoi range, the Verkhoyansk range branches off in a north- westerly direction to the Lena delta. East of the Stanovoi range two meridional ranges are deserving of mention. Along the Kamchatka peninsula lies a lofty range forming the backbone of the entire penin- sula. Both on the crest and the eastern slope of this range there are as many as thirty-eight partly extinct and partly active volcanoes, among which the Ichinsk attains a height of 5,160 metres, and the second in height, the Kliuchevsk, 4,810 metres, i.e. higher than Mt. Blanc. In the Utsuri region, along the coast of the Japan Sea, stretches the Sikhota-Alin range, a wide strip covered with rich forest vegetation ; its highest point is 1,500 metres. The western part of the Tienshan range penetrates the confines of Russia, south-west of the Altai-Sayan system. The space between these two magnificent mountain ranges is occupied by comparatively small groups of mountains, with intervening plains ; these have long served as gateways through which the great national migrations have travelled from mountainous Asia into the Kirghiz steppes, the Aralo- Caspian valley, and so to Europe. At the point at which the Tienshan range enters Russia, there is an impressive mountain group consisting of some twenty peaks covered with an unbroken layer of snow, among which towers in solitary splendour the loftiest mountain of the Russian Empire, Khan-Tengri, which attains the colossal height of 7,500 metres. This mountain group, the Tengri-taga, or Mus-taga, feeds numerous glaciers and rivers which flow down from its northern slopes and discharge into the locked lake basins of Central Asia ; such are Balkhash (Hi), Issyk-Kul the Aral Sea (Syr-Daria) and Lob-Nor (Sary-Dzhas). In the wide, longitudinal valley between Tienshan and the Trans-Ilian Alatau, lies Issyk-Kul, one of the most exquisite of mountain lakes, situated at a height of 1,615 metres. Tienshan, at its western extremity, displays a powerful inchnation to break up, partly into parallel, partly into fan-shaped ridges, penetrating far into the Turanian plain. 8 RUSSIA: ITS TRADE AND COMMERCE. South of the most southerly of the Tienshan ramifications, the Altai range, at the extreme west of Kuen-lun, invades Russian Turkestan ; its branches, meeting here the Tienshan Range, enclose the great plain of Chinese Turkestan and separate it from the Russian, so that communication between Chinese and Russian Turkestan is only by means of difficult paths over high mountain passes. At the western end of the Kuen-lun system, where it meets the branches of the Himalayas, one of the highest mountains of the Old World is situated. This is the celebrated Pamir (the Roof of the World is the Indian name), part of which belongs to Russia. The range, which first passes under the name of the Hindu Rush along the frontier of Afghanistan and Russian Bokhara, and afterwards under the name of Kopet-Dag, separates the Persian province of Khorasan from the Russian trans-Caspian province, serves as an extension of the Kuen- lun elevation, to the west of the Pamirs. Kopet-Dag, with a maximum height of 2,700 metres, nowhere reaches the snowline and its passes are easily traversed. To the west and north-west of Asiatic Russia great plains extend that are very little inferior to those of Euro- Russia, and adjoining these is the Aral-Caspian depression, a considerable portion of which lies below sea level. It contains two basins — the Caspian and Aral Seas — perhaps the largest lake basins of the world, and also the smaller, but very important Lake Balkhash. The Caspian Sea, lying 25I metres below sea level, and gradually drying up, is of vast importance to Russia, not merely as an internal basin, connecting the mouth of the Volga with the coast of the Caucasus, Persia and Turkestan, but also on account of the notable wealth of its fisheries in so comparatively limited an area. Into the Aral basin flow two rivers which have no ocean communication. The Amu-Daria (ancient Ox) and Syr-Daria (Yaksart) which rise in the Central Asian mountains. They do not possess much importance for navigation, but they fertilize the country, supplying it with material for artificial irrigation. Between the Caspian and Aral Seas, the small tableland Ust-Urta rises like an island out of the ocean. For the BRIEF GEOGEAPHICAL SKETCH. 9 most part, the Aral-Caspian valley is covered with sandy deserts, which closely resemble, not only in their climatic conditions and physical character, but also in their flora and fauna, the deserts of Arabia and the interior of Northern Africa. Wlierever the soil is firmer and the rivers afford any opportunities of irrigation, fertile oases appear in this desert and some well-watered country immediately at the foot of the mountains. The Kirgiz steppes, to the north- east of the Aral-Caspian valley, are no longer an absolute depression, but are diversified with low groups of mountains and ridges of granite, porphyry and other exuded rocks, and are really only called steppes on account of the almost entire absence of ligneous vegetation. East of the Ural Range extends the illimitable West Siberian plain. Its level scarcely exceeds 100 to 150 metres and no elevation whatever is met with in it. The West Siberian depression is included in the colossal basin of the Obi, and in this basin two vast component branches of the Obi system — the Obi proper and the Irtysh flow together. Whichever one of these rivers be deemed the main branch (accepting as its course either the Katun or the Black Irtysh) v/e get a length of 5,200 metres and a total area for the basin of more than 3,300,000 square kilometres. The well- watered Obi system is very important for navigation, because it represents a waterway which, although it forms a bend inclining to the north, is nevertheless unbroken from Tiumen, not only to Tobolsk but to Tomsk. The water network of the Obi basin communicates moreover with the Yenisei by a system of artificial canals. Outside the limits of the Obi system, the plain reaches the stream of the Yenisei, but beyond this there are low hills, spreading widely along the basins of the right tribu- taries of the Yenisei — the Angara, Podkamennaya and Nizhnaya Tunguska. These ridges are renowned for their wealth of placer gold. The river Yenisei, like the Obi, consists of twin branches — the Angara, which forms the outflow of the great Lake Baikal, and the Yenisei proper. The length of this river (taking either the upper Angara or Selenga as its source) is 5,100 kilometres ; its basin occupies 10 RUSSIA: ITS TRADE AND COMMERCE. an area of 3,000,000 square kilometres, but the upper portion of the basin is outside the boundaries of Russia. The navigable network of the Yenisei possesses almost as many great conveniences as the stream of the Obi, since nowadays in the autumn season vessels sailing via the Matochkin Shar on Novaj^a Zemlya or the Kara Gates, can reach the mouth of the Yenisei, where they take on freight previously prepared for them. The third great river of Siberia is the Lena, falling into the Arctic Ocean. It is 4,600 kilometres long and has a basin of 2,370,000 square kilometres. It also consists of two large branches — the Lena proper and the Allana, which branches in conjunction represent a very long navigable line ; but its mouth which, vmlike the Yenisei and Obi, forms a delta and not a gulf, is still more blocked with ice and inconvenient for maritime traihc than the mouths of the Obi and Yenisei. The fourth great Siberian river, the Amur, takes its origin beyond the Stanovoi Range and belongs to the basin of the Pacific Ocean. Like the other Siberian rivers the Amur consists of two almost equal branches, the Amur proper, which with its upper rivers, the Shilka and Argun, belongs to the Russian Trans-Baikal, and the Sungari, an exclusively Manchurian branch. With a length of 5,000 kilometres the Amur occupies a spacious basin, the greater part of which belongs to Russia. Unfortunately the Amur, like the other gigantic rivers of Siberia, does not possess a convenient outlet to the sea, since its mouth, which inclines far to the north (as much as 53° north latitude), falls into the forbidding Sea of Okhotsk, which is separated from the Japan Sea by the shallow Tatar Straits. The Amur, with its Sungari branch and tributary, the Ussuri, forms a valuable navigable network for Russia's Far East, being connected with Vladivostok by railway. The geological structure of the Russian Empire is very diversified. The entire Euro-Russian plain, in a geological sense, represents a dish-shaped valley, the edge of which is raised only on the border ranges, while the middle is filled for almost its entire length with horizontal layers of pre- BRIEF GEOGRAPHICAL SKETCH. il cipitate formation, stratified one upon the other, beginning from the most ancient, the Cambrian and Silurian, to the tertiary and newest post -tertiary strata. Protoplastic crystalline rocks (gneiss and granite) pene- trate the surface of the Euro-Russian plain in the north- west, in Finland, Russian Lapland, and part of the Olonetz Government, and to the south, in the granite zone which stretches from the Carpathian Mountains to the Donetz ridge and is intersected by the Dnieper at the celebrated Dnieper Rapids. There is considerable variety in the soils of the Euro- Russian plain, but they are principally characterized by the "black earth," so distinctive for its high fertility. Black earth soil girdles the south-eastern half of the Euro- Russian plain with a very wide belt which extends from the borders of Galicia and Rumania to the Southern Urals and comprises a large part of the South-western, Novo- Rossiisk, Little Russian, and Volga provinces and the southern portion of the Ural province. The climate of the northern regions, more especially of north-east Russia and Siberia, is very severe. Near Verkhoyansk in the Yakutsk province, an extreme of cold is reached, with a mean annual temperature of minus 17° and a mean temperature for January of minus 50°. The climate of the Crimea is mild, especially on its southern coast, where, beneath the protection of the mountains, there is hardly any winter. Rains fall here, principally in the winter and early spring, as on the Mediterranean coast. The Trans-Caucasus has an even warmer climate ; part of this region, the Colchis of the ancients, in point of climate greatly resembles the Genoese Riviera. Although the vegetation of the Russian Empire varies largely on account of the great expanse and consequent climatic variations, over extensive areas it is exceedingly uniform. Russia possesses a rich and varied fauna composed of very heterogeneous elements. It will suffice to remind the reader that it comprises, on the one hand, the waiius, Polar bear and reindeer, and on the other the tiger, 12 RUSSIA: ITS TRADE AND COMMERCE. leopard, hyena, bear (Mellivora), ibis, etc. Russia belongs to the four zoogeographical subdivisions of the pale-arctic domain : Euro-Siberian, Mediterranean-maritime, central Asian, and Sino-Himalayan, of which the latter also may be regarded as independent, i.e. a first-class zoogeographical domain, under the style of pale-arctic ; it must also be recognized that the extreme north-east of Siberia with Kamchatka, as regards fauna, constitutes a clearly-marked transition to the non-arctic domain of North America. The inland seas of Russia are not distinguished by any great variety of species, but their abundant supply of fish gives them great industrial importance. In the Baltic, owing to the large admixture of fresh water, the fauna shows a great poverty of type and contains nothing dis- tinctive ; in the gulfs especially the impoverished fauna of the North Sea, mixed with fresh-water forms, is found. The considerable depths of the Black Sea (more than 100 fathoms) are entirely devoid of organic life in conse- quence of fermentation of sulphuretted hydrogen — a catastrophe caused during the cutting of the Bosphorus. The modern fauna of this basin is composed of two elements : (i) forms which have remained intact since the end of the tertiary period, when the Black Sea was isolated from the Mediterranean and formed one basin with the Caspian and Aral Seas (the Sarmatian Sea), and later, an independent basin largely diluted with fresh water ; (2) the very im- poverished fauna of the Mediterranean which has penetrated hither since the formation of the Bosphorus. The Caspian Sea is a remnant of the Sarmatian basin, and forms of tertiary origin predominate in its fauna ; the latter at the same time present a palpable affinity with the Arctic Ocean, which argues in favour of a former geological, if not direct, connexion between these basins. The Aral Sea is a remnant of the same Sarmatian basin, not long separated from the Caspian, as is clearly seen from its fauna, which is even poorer than that of the Caspian. In the latter incidentally the presence of the seal {Phoca caspia) is very characteristic ; seals also breed in the inland waters BRIEF GEOGRAPHICAL SKETCH. 13 of Russia and in the Baltic {Phoca viUdina), Lake Ladoga (Phoca annellata and apparently only accidentally Phoca vitulina), and also in Lake Baikal {Phoca viUdina var). Naturally, with its numerous great rivers, Russia is very rich in fresh-water fish. Thus in European Russia (excluding the Caucasus) we find as many as ninety species merely of fresh-water fish, very unevenly distributed. The rivers of individual basins are characterized by species of fish which are either exclusively inherent to the said basin or predominate therein, according to the history of these basins. Thus the ichthyological fauna of the rivers falling into the Black and Caspian Seas have much in common between them, which is corroborated by the recent direct connexion of these basins. On the contrary, Lake Balkhash, with the rivers falling into it, among its ichthyological fauna does not possess a single form characteristic of the Aral basin ; the fauna of Lake Balkhash has all the characteristic features of the inland central- Asian basins and approximates rather to the basin of Tarim than of Aral ; whereas the fauna of the river Chu, especially its lower stream, has an Aral-Caspian shade. The basin of Lake Baikal contains a distinctive fauna, which testifies to its great antiquity. The wealth of Russia in sturgeon species is very marked : within her boundaries are encountered all species of the Acipenser (sturgeon), of which in Western Europe there is only one. These species in Russia are distributed as follows : the Baltic, one ; the Ponto-Caspian basin, six ; the waters of Siberia, four, of which two are met with in the rivers which fall into the Arctic Ocean and two in the basin of the Amur ; while in Lake Baikal and its tributaries is found one special variety. Over this illimitable expanse of the Russian Empire, described merely in the most general outline, is distributed a population approximately of 180,000,000. This distribu- tion has proceeded extremely unevenly, depending not only upon physical and climatic conditions, but also upon the entire course of historical development of the Russian tribe which is predominant in this population. 14 RUSSIA: ITS TRADE AND COMMERCE. Russia is inhabited by a multitude of tribes — Russians, Turco-Tatars, Poles, Finns, Jews, Lithuanians, Germans, Kartvels (?), Gortsi (?), Armenians, Mongols. Russians to the number of 114,000,000 constitute two- thirds of the population, while in individual geographical portions they form the largest percentage ; in West Siberia (887 per cent.) ; in European Russia proper (80 per cent.) ; in East Siberia (53 per cent.) ; they are in a minority in Central Asia (8-9 per cent.), the pri- Vistula region (Kingdom of Poland), 67 per cent ; and Finland (-2 per cent.). After the Russians come the Turco-Tatar tribes (about 18,500,000), constituting in all io-6 per cent, of the total population of the Empire. The Turco-Tatars are chiefly concentrated in the Central- Asian provinces ; here (in Turkestan and the Steppes provinces) dwell about nine milhon Turco-Tatars, or half their entire population in Russia ; after that they are most numerous in European Russia — seven millions — and in the Caucasus — more than two millions. After the Tatars come the Poles (about eleven millions), constituting 5-8 per cent, of the total population of the Empire. They dwell almost exclusively in European Russia, where they form about 7-5 per cent, of the popula- tion, and especially in the Kingdom of Poland, where they number nine millions, constituting 71 '8 of the total popula- tion. Poles are also encountered in almost all the govern- ments of European Russia, but in very inconsiderable numbers, only the governments of Grodno, Vilna, Kovno, and Volhynia possessing upwards of 5 per cent, of Poles. After the Poles come the Finns, who inhabit the north of European Russia and West Siberia. The Finns number almost eight millions and they form 4 '5 per cent, of the total population. Next in order follow the Jews, who number seven millions. In the pri-Vistula region they constitute about 13-5 per cent., and in all Russia about 3-9 per cent, of the population. In West Russia the percentage of Jews is greater than one- tenth, and at the present time they are met with in all parts of Russia. BRIEF GEOGRAPHICAL SKETCH. 15 After the Jews, the Lithuanian-Lettish tribe numbers more than four milhons ; this tribe inhabits exclusively the north-west of European Russia. In distributing the population of Russia (exclusive of Finland) according to classes, we find, to every thousand inhabitants, 771 peasants, 107 burgesses (mieshchanin) , 66 aliens [inorodets), 23 Cossacks, 15 nobles, 5 clergy, 5 honourable citizens. The Russian Empire is divided at the present time into the following administrative governments and provinces : — European Russia Archangel Kostroma Astrakhan Courland Bessarabia Kursk Vilna Lithuania Vitebsk Minsk Vladimir Mogilev Vologda Moscow Volhynia Nizhegorod Voronezh Novgorod Viatka Olonetz Grcdro Orenburg The Don Cossack Orlov Territory Penza Yckaterinosiav Perm Kazan Petrograd Kaluga Podolia Kiev Poltava Kovno Pskov Kingdom of Poland Warsaw Lublin Kalisz Piotrkow Kielce Plock Lomza Finland : Abo-Bjorneborg Kuopio Wasa Nyland Wiborg St. Michel Riazan Sam.ara Saratov Siml:)irsk Smolensk Tauris Tambov Tver Tula Ufa Kharkov Kherson Kholm Chernigov Esthonia Yaroslav Radom Suwalki Siedlice Tawasthus Uleaborg i6 RUSSIA: ITS TRADE AND COMMERCE. Baku Batum Dagestan Yelisavetpol Kars • Amur Yenisei Transbaikal Irkutsk Kamchatka Caucasus Kuban Kutais Suklium Stavropol Tersk Siberia : Primorsk Sakhalin Tobolsk Tomsk Yakutsk Tiflis Chernomor Erivan Zakatali Steppe provinces Akmolinsk Semipalatinsk Turgaisk Ural Turkestan : Samarkand i Suir-Daria i Trans-Caspian Semiriechie | Ferghana | The Russian Empire also includes the vassal Khans of Bokhara and Khiva in Central Asia. CHAPTER II Agriculture By J. J. Pelferoff In the course of the last ten years, Russian agriculture has displayed an active development of those intensive forms which guarantee lasting progress in this branch of industry. Such progress was facilitated to a great degree by the absence ol foreign and domestic complications, thus per- mitting the people to concentrate upon the organization of agriculture, while the harvests of 1909 and 1910, with resulting high prices in the international market, stimulated the realization of such changes. The reforms in land tenure, introduced since 1906, contributed also to the progress. The work demands still further persistence for its com- plete development ; it would therefore be premature to estimate results at the present time. Nevertheless, in individual regions and directions, the alteration in the forms of agriculture has become so evident and has afforded such appreciable successes, that it is possible to form some idea of the scope of the reorganization. Of special importance is the increase in value of foreign exports. In 1895 the exports of agricultural products amounted to 608 million roubles ; in 1905 to 947 million roubles, and in 1913 to 1,500 million roubles. In 1895 the total value of agricultural products amounted to about four milliards of roubles, while in 1913 the corresponding figures were twelve milliards of roubles. So great a progress, even when allowance is made for the natural growth of agricultural labour, constitutes an undoubted proof that agriculture is a far more profitable industry to-day than hitherto. 17 ' C i8 RUSSIA : ITS TRADE AND COMMERCE. The increase in the productivity of field husbandry which only partially depends upon a larger area under tillage, indicates more intensive culture and the increased use of agricultural implements and machinery. The domestic production and the importation of such machinety rose from 40 million roubles in 1906 to 130 million roubles in 1913. The production of mineral fertilizers increased from 13,500,000 poods in 1906 to 32 million poods in 1913. Nevertheless, domestic production cannot keep pace with the agricultural demands, and, in consequence, the imports of artificial fertilizers are also growing, from 9,400,000 poods in 1907 to 30 million poods in 1913. The forward movement in agriculture affects all classes of land-owners, from the large estate to the peasant's small holding. For the peasantry, the realization of this effort at betterment is facilitated by a growing co-operative movement, and the people are availing themselves of corresponding forms of activity for improving the technique of agriculture and organizing the economic and commercial side of life. The number of agricultural societies grew from 1,000 in 1905 to 4,000 in 1913. Up to 1909 there were about 100 agricultural associations organized principally for the joint sale of the products of husbandry, the acquisition of stock, and for the manufacture of agricultural products. In the past three and a half years 703 associations have been formed, while the increase of loan and savings and credit associations has been upon a still larger scale, viz., from 1,680 in 1905 to 8,000 in January, 1913. Together with small peasant organizations, the number of co-operative societies had, at the beginning of 1912, reached 22,000, while in 191 1 alone 4,200 co-operative societies were founded. With the formation of organizations for purely practical purposes, the essential knowledge for a further advance is also accumulating. Students in agricultural education increased from 9,300 in 1907 to 18,000 in 1913, and there are 2,000 graduates per annum. A still wider circle of persons acquire agricultural knowledge outside the schools at special courses and lectures organized for this purpose. AGRICULTURE. 19 In 1910 there were about 32,000 students attending these courses and 296,000 the lectures, while for the past two years the number of both has continued to grow. Government and the Zemstvo have largely come to the help of the movement and, as far as possible, supplement the efforts of the land workers. Measures of land organiza- tion are clearing away the obstacles in the path of progress ; some of the difficulties are being ameliorated by pecuniary aid, or, where there is lack of experience, by demonstration stations. The Government has developed a system of loans from a fund which exists for the purpose and the expansion of credit banks. The borrowers are principally peasants, who utilize the loans from the fund for the exten- sion of grass land, for irrigation, dairying, etc. Moreover, with the object of further extending credit for the agricul- tural industry, the Government proposes to reorganize the Peasants' Land Bank. The increase of productivity has also claimed attention. During the last five years the State has expended about 11 million roubles upon reclamation, irrigation, strengthening of sandy regions and other agrarian improvements. For a country in which the area of unprofitable land greatly exceeds that under tillage, this expenditure is merely the beginning of further disbursements. Up to the present the principal measures have been concentrated only in those localities (such as Turkestan and the Trans-Caucasus) where the rise of inten- sive culture is creating areas suitable for the cultivation of cotton, fruit and vines. The co-operation of the State is also extended to cottage industries which afford the peasant, in localities with a weakly developed manufactur- ing industry, an outlet for the productive utilization of their leisure. In close collaboration with the Zemstvo and other public organizations, the Government is adopting measures for the improvement of the technique of such industries, and there is sufficient data to show that the village handicrafts occupy no fewer than two million workers, with an annual turn-out of commodities amounting to over 500 million roubles. The problem of regulating the legal tenure of land by 20 RUSSIA: ITS TRADE AND COMMERCE. the peasant has demanded extraordinary efforts on the part of the State, but a solution of this problem is absolutely necessary to the success of the agricultural movement and of the small holdings of the peasants, which constitute the nucleus of agricultural Russia. Beginning in 1906, the land organization of the Govern- ment embraces, at the present time, an area of twenty million dessiatinas. By the end of 1913, the organization of more than a million individual agricultural holdings was effected on this area, and an opportunity thus afforded for the introduction of economic improvements formerly inaccessible under the systems of interspersion of allot- ments ^ and communal ownership. Altogether, in five years some 95 million roubles have been spent on land organization, and the staff of local workers, organizers and surveyors has been brought up to twelve thousand. The influence of this re-organized peasant proprietorship upon the general rise of economic productiveness of the country cannot as yet be estimated, but observations show that there is a definite movement towards special cultures and improvement in crop rotations, in stock, methods of manufacture and forms of land utilization. Finally, as the result of the migration of peasants from Euro- pean Russia, beyond the Urals, over a million dessiatinas of land has been set free and rendered available for the population remaining behind, the emigrants' labour being applied in new districts, with natural resources, hitherto untouched. In the remote Taiga (the Siberian Bush) and the waterless steppes such labour has added 20 million dessiatinas to productive agriculture. The State's total expenditure on emigration for the last five years amounts to 118,500,000 roubles. All these facts bear witness to the awakening of the country and the improvement of agricultural life, and it will be useful to consider some of the branches of agriculture in detail. ' When the fields are divided by strips of land belonging to other proprietors. AGRICULTURE. 21 Grain. — The following table shows the crop of .cereals in millions of poods for three quinquennial periods and the last three years, in 72 governments and provinces of the Empire, according to data supplied by the Central Statistical Bureau : — All cereals Wheat Winter rye Years Winter Spring Oats 1896-9 . 190 1-5 . 1906-10 . I9II-I3 . 3,287 3,857 3,988 3,952 224 343 333 324 470 633 713 682 1,219 1,318 1,223 1,195 700 781 849 790 Although the character of the quinquennial periods varies greatly owing to good or bad harvests, for any given period, these figures show considerable alteration in the size of the harvest of individual cereals, the increase being especially great in Spring wheat and oats — two of the principal exported products. Apparently, under the influence of the export demand, this evolution is also the cause of the redistribution of our grain cultures. There is observable an increase of the wheat area in Russia, at the expense of rye. Thus for the same quinquennial and triennial periods, as above, the fluctuations in the areas of culture of these cereals were as follows : — In thousands of dessiatinas Years All cereals Wheat Rye 1896-1900 1901-1905 . . . I906-1910 1911-1913 . . . 75,243 81,851 86,059 92,500 17,904 21,338 24,038 27,020 26,484 27,384 26,758 27,820 22 RUSSIA: ITS TRADE AND COMMERCE. The ratio of these cereals to the total area and crop of all cereals for the same period is as follows : — Years 1896-19OO 19OI-1905 1909-1910 1911-1913 Fluctuations in the export of cereals, reckoning the agricultural year from August i, were : — Agricultural years Million poods 1907-8 1908-9 1909-10 1910-II . 1911-12 1912-13 . 411-5 553-2 837-0 959-8 545-8 895-4 The reduced figure for 1911-12 was due to the bad harvest of 1911, which affected the figures for export of 1911-12 from the point of view of the agricultural year, but is not shown in the export figures for the calendar year. Fluctua- tions in the export of cereals for a more prolonged period are shown in the following figures for export of all cereals since 1900 : — AGRICULTURE. 23 Years I goo igoi 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 Million poods Million poods 418-8 304-7 466-0 344-1 579-1 432-2 650-4 477-6 647-6 495-3 695.7 566-9 588-9 470-5 467-1 428-1 399-6 375-6 760-7 748-3 847-1 746-1 821-1 735-2 548-5 547-1 647-8 589-9 In spite, however, of this absokite increase in cereal exports from Russia, these exports show, year by year, a relative decrease in comparison with home consumption, owing to the direct growth in the demand of the home consumption and demand, to the progressive industrialization of agriculture and to the relative reduction of the agricultural population. The extent of the benefit accruing to Russia's national economy in recent years from foreign utilization of its crops is evident from a comparison of the export prices for Russian grain in later years. This comparison shows that Russia has not only sold abroad an ever increasing quantity of grain, but has sold it at high prices. If the value of the foreign realization of the crop of 1907-11 be reckoned at the prices for 1900, we may conclude that Russia, thanks to the rise of prices, has received 100 to 150 million roubles more than she would have received for the same quantity of exports at the prices of 1900. This rise, of course, affected not only export prices but grain prices generally on the home markets, and is in the highest degree advantageous to Russian agriculture. If we omit several exceptional years, this favourable revolution in the market becomes evident. Calculating the total value of the harvest at average prices and reckon- 24 RUSSIA : ITS TRADE AND COMMERCE. ing the average years 1891-95 at 100, the growth of the harvest and its value for the later quinquennial periods works out as follows : — Years Crop Price per pood Total value of crop 1891-1895 . . . 100 100 100 1896-1900 109 98 106 1901-1905 . . . 129 105 135 I906-1910 129 133 171 1911-1913 . . . 129-4 138 189 Naturally, such successes in the realization of the harvest depend also upon a favourable state of the market ; but there are governmental measures facilitating the regulation of prices, chiefly export prices, with the object of maintain- ing them and preventing a realization detrimental to agri- culturists. These measures are connected, on the one hand, with continual extension of credit to merchants and agri- culturists on a security of grain, and, on the other hand, with the beginnings of the construction of a regular system of grain elevators. The Milling Industry. — It will scarcely be an exaggeration to say that not a single branch of manufacture is so widely spread in Russia as the milling industry. It is met with in all parts of the country. Modern milling technical knowledge, with the application of small, cheap and con- venient motors (kerosene or gas-generated) assists, to a large extent, in the spread of small mills in which grinding is carried on either for the consumption of large estates or for local requirements. The multiplication of mills of this type is the result of the demand for rapid and cheap milling. Russian milling had begun to acquire industrial importance in the first quarter of the nineteenth century, when perfected technical knowledge of the business began to penetrate into Russia ; but the absence of means of communication, the cost of transport and other conditions retarded its development, and only since the 'fifties, owing to the use of French mill-stone rolling machines, cheap fuel, AGRICULTURE. 25 and the development of means of communication, has the industry really begun to grow. Since the building of railways this growth has been rapid ; the market for the sale of flour, once extended, has created a big industry, and the transition to more intensive systems of agriculture has improved the quality of the grain and thus of the flour. A considerable quantity of capital is engaged in the milling industry, as may be seen from the following table (in thousands of roubles) : — 27 undertakings 1910 30 „ 1911 36 ,, 1912 Capital Resgr^g Stock reserve 30,314 35.678 38,190 1.704 1,666 1.959 Depre- ciation 5.378 5,938 8,421 Profits for j Divi- Distri- dend bution 2,260 4,184 4.003 844 1,339 1,241 Profits for distribution amounted to : in 1910, 7"4 per cent, on capital stock; in 1911 to 11*7 per cent., and in 1912 to I0"4 per cent. During the last three or four years, the excellent harvests and the improved home consumption, largely due to the increased purchasing power of the people, have greatly aided the development of both large and small milling industries. Statistical comparison of the quantity of flour carried by the railways for this period will give an approximate idea of the progress : — In thousands of poods Carried 1907 1908 1909 1910 1911 1912 Wheat flour . Rye flour Bran 145.930 67.054 46,663 259.647 146,547 74,097 43,814 264,458 156,615 81,486 49.399 167,125 76,894 48,557 180,084 75.761 63.657 192,300 80,215 65,800 Total milling freight . 287,500 292,576 319.502 338,315 26 RUSSIA : ITS TRADE AND COMMERCE. In spite, however, of the growth of the home consumption, some of the larger milUng concerns suffer from an over- production of flour in certain districts and a consequent glut in the market.' The manufacturers are not able to export on any extensive scale and are obliged to dispose of their goods in the home market. Here they meet with the serious competition of small mills of the artisan and agricultural type, which, placing their flour amongst the peasant population of the villages and estates close beside their mills, force the larger concerns to dispose of their products in the metropolitan markets and other large centres of population. In the event of the demand not keeping pace with the supply, reduction and occasional suspension of production is thus caused. Foreign trade in milling, as shown by the following table, is increasing : — EXPORTED FROM RUSSIA 1910 1911 1912 1913 Wheat flour .... Rye flour 6,819 5.497 7.352 9.491 6,368 5.996 8,166 6.876 Total wheat and rye flour 12,316 16,843 12,364 15.042 Generally speaking, in comparison with the exports of grain the exports of flour appear insignificant, especially of wheat flour, only about 25 per cent, of the exports of wheat grain. The exports of rye flour reach 17 per cent. Wheat flour is almost exclusively exported to Asiatic countries and to Finland ; its sale to the Western countries of Europe is impeded by the endeavour of these countries to develop their own milling and by the competition of such countries as have already secured part of the market. Rye flour is exported from Russia to Finland, although, until lately, German exporters competed with Russia in this market . AGRICULTURE. 27 In the milling industry, the bye-product, bran, plays a great part. In many mills it constitutes the sole profit, and the state of the flour market frequently depends on the state of the bran market. The entire output of Russian bran is divided between the home and foreign market, 66-5 per cent, being placed on the home market. Fifty- two per cent, of the mills of the Empire export to the foreign market and 48 per cent, distribute their entire output on the home market. Practically all the exported product is sold from European Russia (exclusive of the Ural region, i.e., the Perm and Viatka governments). Foreign countries and the Russian northern region of the butter and cheese manufacture- — the Petrograd, Vologda, Yaroslav, Moscow and other provinces — are wholesale consumers of bran ; here, with the development of dairy- farming, both by private owners and companies (artel), there is always a demand for good nutritious bran fodder for milch cattle. If we take mills with an annual production of bran of over 100,000 poods, of these 18 per cent, avail themselves exclu- sively of the home market, while 82 per cent, export their produce. The larg^est quantity of bran is exported by the southern regions — Novorossiisk, Little Russia, and the South-West — 60 per cent, of the entire exports. Next come the western regions — the Vistula, White Russia, and Lithuanian pro- vinces — 20 per cent. The Central agricultural region and the Middle and Lower Volga share in the total exports from European Russia to the amount of 17-1 per cent., and the Central, Northern, Lake, and Baltic provinces export 2-2 per cent, in the aggregate. Thus the exports of bran proceed almost exclusively from European Russia, and chiefly from the big firms. The intensity of exports decreases from South to North — i.e., from the black Earth grain-growing provinces to the Central and North- Western, and from West to East — in proportion to the distance from the German and Austrian frontiers and the sea. The share in the exports of the Ural region, Siberia, Central 28 RUSSIA: ITS TRADE AND COMMERCE. Asia and the Caucasus is merely about i per cent. The following table gives an idea of the distribution of the output of bran in European Russia in individual districts : — EXPORTS AND HOME SALES OF BRAN ACCORDING TO REGIONS OF EUROPEAN RUSSIA Regional exports in relation to exports of European Russia Export Home Sales Enterprises with produc- tion exceeding 100,000 No. of Mills Output No. of Mills Output No. of MiUs Output Regions Novorossiisk Little Russia South-West Vistula White Russia Lithuania Central- Agricultural Middle-Volga Lower-Volga Industrial Northern Lake Baltic 607% 20% 17-1% 2-2% 70% 64% 50% 29% 55% 71% 27% 15% 30% 36% 50% 71% 45% 29% 73% 85% 93% 70% 67% 67% 58-9% 74% 25% 10% Cattle-breeding. — Cattle-breeding in Russia has been pass- ing through a serious crisis. Confined for many years to primitive forms which were upheld by cheap pasturage, with little other object than the obtaining of manure and animal labour, this industry was formally reduced with the rise of mechanical power when the former abundance of pastur- age became a tradition of the past. Grain culture, under pressure of high prices for cereals, promoted the decrease of pasturage and hay fields, and the up-keep of cattle began to grow more costly and result in a quantitative decline. AGRICULTURE. 29 Years Total quantity of cattle 1901 1906 1908 1911 1912 1913 58,800,000 52,000,000 51,200,000 50,600,000 42,000,000 43,400,000 The reduction was wholly the outcome of the expansion of arable land to the detriment of meadow lands and pasturage, but of late there has been a return to the systems of pasture- grass and field rotation, with an already observable increase in productive cattle-breeding in certain districts. If a comparison be made of the value of cattle, the differ- ence will even be to the advantage of later years. Accord- ing to the Veterinary Department, the value of cattle during the last decade has risen by 25 per cent., while accord- ing to data of the Zemstvos, where the insurance of cattle has been practised, the rise is 35 to 45 per cent. This is confirmed by the revision of average prices by the Ministry of Trade and Industry for the principal markets (in per- centages) : — 1 90 1 1906 1908 191 1 1913 Steppe oxen Russian ,, Steppe cows Russian , , 100 100 100 100 108 89 113 98 125 105 119 105 138 107 125 100 144 no 130 100 The rise in value is an outcome of better breeds of cattle, the Steppe breeds, especially, commanding high prices. The Southern, Volga and Siberian undertakings, while continuing to keep considerable stocks, i.e., from 100 to 140 head per hundred inhabitants, are raising the prices for cattle in accordance with the increased demand in the centres 30 RUSSIA: ITS TRADE AND COMMERCE. of consumption and the reduction of slaughter cattle in the Central and South-Western zones of European Russia. Incidentally, the movement towards dairy-farming in the Russian cattle-breeding industry is fairly permanent, owing to an increased demand for dairy produce, butter in par- ticular, This movement, starting from West Siberia and the North, is steadily spreading westward and southward. The evolution of cattle-breeding materially helps in the develop- ment of agriculture, by extending the area under grass, the rotation of crops and the consumption of bye-products, chiefly bran and oil-cake. Sheep-breeding. — Sheep-breeding, although largely carried on for home consumption, adds much to the nation's wealth and flocks are increasing, in spite of conditions adverse to the breeding of these animals in many parts of Russia. Thus the growth of sheep-breeding for the past five years is as follows : — Number of sheep (in thousands) Years Coarse-wool Fine-wool 1908 1909 1910 1911 1912 1913 75,900 7,000 75,300 6,200 77,200 5,700 78,500 5,100 78,200 4,800 86,100 4,200 The increase of the coarse-wool breeds is, however, not keeping pace with the growth of the population and is thus, relatively, a decline. The decline in merino sheep, bred exclusively for their wool, is rapid and continuous ; it fell throughout European Russia from 15 million head, in 1881, to 2,200,000 head in 1911. In 1880 there were forty-five sheep to every hundred inhabitants of European Russia ; in 1913 there are about thirty per hundred^ — a ratio of one AGRICULTURE. 31 sheep per three persons. This explains the increased cost of sheep : in 1880, the annual revenue from a sheep was reckoned at R. i 17 cop. per capita, and in 1913 at R. i 20 cop. The largest relative decline is observable in regions breeding exclusively for mutton, where the sheep, with the growing cost of its maintenance, does not reimburse its cost ; whereas in regions which breed wholly for the market, or even where part of the produce is consumed by the owner and part goes to market, the revenue-earning capacity of the sheep increases by 25 to 50 per cent., because valuable products — meat and fat — are utilized. Consequently, sheep-breeding, while conjparatively on the decline in the northern and central districts of European Russia, in pro- portion as it moves southward and near to the big con- suming centres, not only maintains its comparatively high volume — from 80 to 100 head to every hundred inhabitants, but is developing in such regions as supply the Moscow, Kiev, and Odessa markets, in the Volga region, the Kirgiz steppes and Siberia, where the income per sheep is from R. i 40 cop. to R. 4 per annum. These districts, however, constitute only 12 per cent, of the total volume of sheep- breeding. Much of the decline may also be attributed to a lack of farming for the modern requirements of life. In Russia, the tendency to breed sheep for wool and tallow depreciates the principal product, mutton, while at the same time raising the cost of producing such tallow and wool. As a result, it appears more advantageous to utilize the pro- ducts of foreign sheep-breeding with a production from 40 to 60 per cent, cheaper than in Russia. Again the absence in Russia of any system of refrigerating or of special refrigerator-trains, deprives the sheep-breeding regions of the opportunity of exporting mutton to the consuming centres, while the high tariffs preclude the delivery of live sheep. As regards wool, the difficulties are got over by periodical auctions, on the model of those in England, Ger- many and Hungary, and their efficacy as a means for the regulation of the trade and the improvement of breeding is unquestionable. 32 RUSSIA: ITS TRADE AND COMMERCE. Swine. — Swine-breeding is an industry which shows no signs of declining, but rather of active development : — Years Total (in thousand head) 1908 1909 • • 1910 1911 1912 1913 11,500 11,900 12,600 13,200 12,900 13,100 These figures are due to a number of favourable conditions in animal breeding, such conditions in their turn being the outcome of the economic re-organization in agriculture. The revolution in dairying, which, as in Denmark and Belgium, is so closely connected with swine-breeding ; the demand for pork and bacon in foreign markets ; finally, the accumulation of residues of grain and oil in regions with an increasing intensive culture, are all factors in profitable swine-breeding. At the present time, there are whole districts in which swine are the chief animals bred, and the financial prosperity of the population points to the success of the industry. The Vistula, the South-West and North-West provinces are the principal purveyors of Russian pork for the Austrian and German markets, having developed an output of up to six million roubles ; the Voronezh, Tambov, and Siberian (Kurgan) provinces are successfully developing the bacon industry, which even in 1908 was entirely unknown in Russia. In 1908 only one Kurgan factory exported bacon, consigning to London 40,000 poods of this commodity ; whereas in 191 1 there were already four such factories registered, with a total output exceeding 500,000 poods to the value of four million roubles. The bacon industry has exerted great influence on local swine-breeding and generally on the economic position of the surrounding population. The highly unprofitable and simple peasant breed of pigs has given place to better AGRICULTURE. 33 breeds ; bran, oil-cake and grain, especially oats and barley, hitherto exported, began to be used for feeding pigs, at prices between 200 and 600 per cent, higher than those on the market. The peasantry, for instance, of the Kozlov region, where the bacon industry is growing as rapidly as that of Kurgan, have begun to grow potatoes and beetroot, thus passing to a more correct system of crop rotation. Special developments have taken place in dairy-farming, with its chief branch, butter making. The carriage of dairy produce on the Russian railways in 1901 amounted to 8,900,000 poods, and in 1915 to 16 million poods, having almost doubled in thirteen years. About half of this comes under the head of butter, principally made in Western Siberia, which is yearly increasing its output from 2,400,000 poods in 1901 to five millions of poods in 1913. In the present instance, the largest demand has come from foreign markets : in 1901, 26,400,000 roubles' worth of butter was exported, and in 1913 80 million roubles' worth. The increase has not only been in quantity but in value. In the course of a decade butter has risen 79 per cent, in quantity and 94 per cent, in value. Dairy-farming has also developed in the North-East region which produces as much as a million poods of dairy produce ; the North-West, Vistula and Baltic principally produce cheese. In the Central and Southern provinces there is also a beginning of dairy- farming, which is raising the quality of the cattle. The farmers who obtain a good sale for their dairy-produce arc beginning to breed improved milch cattle, to expand the area under grass, and to cultivate root-crops, which, by increasing the supply of nitrogenous fodder, raises the productivity of the soil and improves agriculture generally. Moreover, the demand for the more nutritive fodder must inevitably cause an increase of the home demand for bran and oil-cake, thus reducing exports of the same. If at the present time the exports of oil-cake and bran have reached the huge figure of 80 million poods, and latterly the southern and south-western sugar-beet factories and distilleries have begun to export bean-cake, this is only due to the small home consumption, under existing conditions. D 34 RUSSIA: ITS TRADE AND COMMERCE. Only with more intensive cattle breeding, with better organization of distribution and \\ith the introduction of refrigerating plant, can expansion of the home market for these intensive fodders be expected. As regards other branches of cattle-breeding, their success depends principally on the extensive introduction of re- frigerators. The first attempts to develop the trade in bacon testify to the vitalit}^ of this new industry and to the benefit of utilizing the residues in the shape of oil-cake and bran, as well as the more valuable products. Here we cannot help mentioning a highly significant fact, showing (i) the great influence of a firm market on the development of peasant agriculture, and (2) the growth of self-knowledge among the peasantry — a mighty fore- runner of independent action. Up to 1909 the Kozlov- Giiazy region (province of Tambov) represented the usual wilderness as regards cattle-breeding. As in the majority of Russian provinces, there was the same hybrid, " tos- kanka," incapable of yielding even 100 " krushki " ^ of milk per annum, the same hedgehog-like pigs wallowing in the village puddles. In 1909 a company was formed here for curing bacon for the London market. There was now a demand for young pigs of a certain weight. During the first year the business of curing bacon progressed very slowly, owing to the want of suitable pigs. But by 1912 there was already a complete change. Within a radius of from 40 to 60 versts round the bacon-curing factory, the neighbouring villages were completely transformed, both outwardly and economically, and some of them, like the village of Nikiforovka, for instance, had grown into regular towns. There is not a house that does not breed from four to ten swine of some well-known breed, thus earning some R. 100-200 a year ; in order to have better fodder for fattening pigs, many peasants now keep milch cows with a good yield of milk, and, while selling the milk to the nearest dairies at 60-70 cop. per vedro, get buttermilk for their pigs. ^ Twenty-seven gallons. AGRICULTURE. 35 Swine-breeding and dairy-farming are of no less import- ance to the economic well-being of the peasantry in districts where there are sugar works and distilleries. The abund- ance of cheap nitrogenous fodder has taught the peasants to fatten cattle, etc., for the market, and has developed this industry to such an extent that it plays an important part in their budget. Thus, according to the data of the Zemstvos of the south-western and north-western regions " swine-breeding provides for 10-15 per cent, of the peasants' requirements." At the same time mention must be made of the more profitable utilization of highly nutritious fodder for cattle in the southern provinces. Here tens of thousands of oxen, which have first done their work at the numerous farms, are fattened at distilleries and sugar works, and this in- dustry is remunerative not only to distillers and con- fectioners, who sell their waste products at a good price, to the cattle-dealers and middlemen for cattle fattening, but also to the local workers, who act as fatteners, labourers, carters, etc., and purvey fodder, hay, oats and litter. More- over, the peasants themselves have begun to fatten cattle, co-operating for the purpose. One such co-operative society in the village of Belki, Kharkov province, has attained such proportions, that it has begun- to appear quite independently in the Moscow market. The profit of fattening cattle for the market is so apparent that the peasants of that region have introduced other crop rotations, with a predominance of fodder plants. Exportation of Cattle and Meat. — The history of the Russian export trade in cattle and meat is the history of Russo- German barter of the products of cattle-breeding. Russian exporters have tried to make their way to other foreign markets, but in most cases their efforts were fruitless, with the exception of the export of pork to England, but until quite lately, just before the war, the Russian exports of meat were limited principally to Germany, and consisted only of pork. After the successful wars of the second half of the nine- teenth century, the economic prosperity of Germany in- 36 RUSSIA: ITS TRADE AND COMMERCE. creased very considerably, and there was a movement in favour of intensive culture, causing a considerable reduction of the area of land under pasture and hay crops. The demand for the products of cattle-breeding (principally meat) began to grow, considerably exceeding the increase in the available cattle. In short, a trade in cattle was equally desirable both for Russia, the exporter, and Ger- many, the importer, and at first the results of the trade were palpably successful. Russia began to flood the German (chiefly the Prussian) market with cheap but well- flavoured and nutritious meat, and found in this a new means of raising one of her ancient industries. Germany, on the other hand, being enabled to satisfy the growing demand for meat, could easily endure the friction inevitable in a transition from extensive to intensive culture, and thus to retard the rise in cost of the necessaries of life. However, such intercourse was very short-lived. On the one hand, there was the cattle plague which overwhelmed Russia in the 'seventies and 'eighties of last century, and the considerable spread of various kinds of cattle disease, encouraged by the absence of proper veterinary and sanitary organization ; on the other hand, there was the success attending the new trend of German cattle-breeding, enabling Germany to increase both the number and the quality of slaughter cattle. Both these factors caused an abrupt change in Russo-German trade in cattle, and after a series of partial restrictions in regard to the importation of Russian cattle into Germany, in February, 1888, Germany com- pletely closed her frontiers to Russian cattle and meat. In May, 1890, i.e., after two years and three months, the Prussian Government allowed swine to be again imported from Russia, the transports of swine having to be sent via Sosnovitsy and Modrzew, where Prussian frontier veterinary surgeons were to make a preliminary examination of the animals. In January, 1896, under the treaty of 1894, the German Government limited the number of swine imported into Germany to 1,800 per week, and several months after this the figure was reduced to 1,385, and it was required that 250 swine should be driven or carted by road through AGRICULTURE. 37 the borough of Modrzew, and the remainder brought by rail from Sosnovitsy. The growing demand for meat in the German provinces adjacent to the Russian frontier (principally Silesia and Posen) induced the German Government, in making the new treaty of July 15 (28), 1904, to increase the number of imported Russian swine to 2,500 per week, i.e., to 130,000 head per annum. However, not only were the restrictions concerning the importation of swine as severe as ever, but they were increased by a considerable rise in the con- ventional tariff. Under the commercial treaty in force until March i, 1906, Russian swine were liable to an import duty of Mks. 5 per head, irrespective of the weight of the animal. Under the treaty which came into force on March I, 1906, this duty was completely altered, and was fixed at Mks. 4 50 pf. per live hundredweight. Such a tariff formed a considerable charge per head imported, and moreover, the larger the animal, the higher the duty. As a result, the treaty in force before the war was hardly conducive to an increase of our exports, in spite of the increased number of swine allowed to be exported through Sosnovitsy, and the higher price of pork. Although, as regards the products of cattle-breeding, Russia's historical gravitation towards German markets was as considerable as before, it was not so inevitable as it had seemed ten years earlier. The tendency of Russian cattle-breeding towards more intensive forms, which urgently demanded new and capacious markets, and the want of slaughter cattle prevalent in Western Europe, could not but cause a regrouping of the commercial relations which had so naturally arisen. Ten or fifteen years ago the Russian agriculturalist had to reckon with the terms im- posed upon him by the home markets and German agrarians, but of late a way has been found to partial liberation from such thraldom. In spite of the comparatively small amount transported, the rapid development of bacon-curing for the English market has already affected our exports of swine to Germany. Further, if wc take into account the unlimited demand for Russian bacon in the English market, 38 RUSSIA: ITS TRADE AND COMMERCE. and the absence of those vexatious restrictions which have been carried to excess in Germany, it is not difficult to foresee the gravitation of Russian swine-breeders towards the Enghsh market, and the prospects opening up to Rus- sian agricultural industries. This is sliown by the following figures : — ANNUAL EXPORTS TO ENGLAND Years 1,000 poods 1,000 roubles 1902-1905 I906-1910 I911 1912 1913 119-8 204-9 419-0 524-2 718-0 800 1,600 3.800 3.900 5.100 Adding to the above the exports of fresh pork and lard the total exports through Baltic ports will reach 900,000 poods, to the value of about 10 million roubles. The permanency of the growth of our exports of pork is proved by the bacon-curing factories that are being started in the Central and Siberian regions. During three years (1910- 1912) such undertakings were started at Rtistchevo station, Kozlov, Griazy, and the town of Kurgan. The steadiness with which our bacon export trade with England is increas- ing is proved likewise by the output of the oldest bacon- curing concern, i.e., that at Libau, viz., in 1908, 2,421 swine slaughtered ; 1909, 36,061 ; 1910, 69,547 ; 1911, 68,628 ; 1912, 88,199 '> ^^^ 1913. 126,500 ; therefore in five years the output had increased almost five times. In any case, there is every reason to think that the English market will continue to deflect more and more Russian pork from the German market, the more so as the demand for foreign meat is increasing. The prices of pork bought for the English market are the same as those for the German, without the inevitable charges. According to a special Anglo-Russian Convention of AGRICULTURE. 39 1912, England has acknowledged the sufficiency of the Russian veterinary brand, and salt pork for England is allowed to pass without hindrance through Russian Custom houses, and without being examined a second time at British ports. The English market has always attracted the attention of our farmers and cattle-breeders, and many efforts were made by Prince A. G. Stcherbatoff and M. Mekk to start permanent relations with England in regard to the meat export trade. A series of irregularities in the Russian cattle trade, transport and storage, put an end to these attempts, but their failure in no way affected the conviction that, given certain favourable conditions, exports of Russian meat, beef and mutton might attain a colossal figure. In the opinion of Prince Stcherbatoff " the English market is, after all, the only one in the world on which all the attention of Russian farmers and cattle-breeders should be concentrated." He invited the English Professor, Mr. Knoop, to head an expedition to visit Russian cattle- breeding districts, and Mr. Knoop stated that " owing to natural conditions, Russia could attain considerably greater results in regard to meat exports to England, than could America and Australia taken together." These views of a Russian agricultural expert and of an Englishman well acquainted with the meat import trade, have been confirmed by the development of our pork exports to England. It will not, therefore, be surprising if in the near future Russia develops her export trade in beef and mutton. Mr. Soskiss, one of the shareholders of the Union Com- pany, gave it as his opinion that " the cheapness and abundance of these products in Russia, and the proximity of Russia to England, induce English importers to pay special attention to Russia. The conditions are very favourable to such intercourse, the first being the geo- graphical proximity of the two countries. The British Colonies, which at present supply the Mother Country with meat, butter, fruit, etc., are separated from the latter by a voyage of five or six weeks, whereas ships from the Baltic ports can reach England in some three or four days. Under such conditions, the freights will be considerably 40 RUSSIA: ITS TRADE AND COMMERCE. lower, while the produce will arrive in a fresher condition, having undergone cold storage for a shorter period." Mr. Soskiss brings statistical data to prove that Russia is able to produce the necessary quantity of foodstuffs for England. " In Russia, 75 per cent, of the population are engaged in agriculture ; in England, on the contrary, 75 per cent, live in towns, and only 25 per cent, in the country. This clearly shows that Russia can become the chief purveyor of foodstuffs to England, which will offer its manufactures and machinery for the further development of Russia's natural resources." Mr. Soskiss concludes his report by an appeal " to take up the work energetically, with a firm belief in its success, and to secure the enormous market in Russia." The experiments of the Kurgan and Libau export slaughterers in regard to the transportation of slightly salted mutton and fresh veal to the English market have been comparatively successful. Unfortunately, the absence of properly organized transport facilities retards the de- velopment of our export trade. But there is no doubt that, if the English company carries out its plan of the construction of slaughter-houses in the Trans-Volga and Siberian provinces, the gravitation of the Russian meat export trade will be toward England. Even now the South-Western provinces are getting more and more into the hands of the Libau pork slaughterers who provide the more important breeders with pedigree boars. Now that the bacon-curing industry has been started in the Central provinces, they, too, are forsaking the German market. Russian exports to the French meat market have been in existence for many years. In spite of the considerable expenditure on the transport of live sheep from Novoros- siysk to Marseilles, amounting to as much as 18 to 25 frs. per head, wethers yield a net profit of from R. 3 24 cop. to R. 17 38 cop., according to their weight.^ At Marseilles and Teulon Russian mutton came second (in price) after Algerian. * Kusheleff, P. N., " Breeding Sheep lor Mutton." AGRICULTURE. 41 Experience in the export of large cattle through Russian Southern ports (chiefly to the Balkan Peninsula and Malta), to the amount of 10,000 head, leads one to suppose that these exports might be increased to tens of thousands, by extending the trade to French and Italian markets, and already the French and Italian meat dealers have been trying to get into communication with the cattle-breeders of Southern Russia. Experiments have also been made in sending meat from Czenstohowo to Switzerland and the Swiss exporters are buying cattle in the Kharkoff province. All this shows that, as regards the cattle export trade, Russia is not quite so hopelessly tied to the German market as it is generally supposed. Horse-breeding. — In the horse-breeding industry there are no " tendencies to utilization " as in the breeding of sheep, cattle and swine, the aim of the breeder being con- centrated on one object, utilization of the animal's working power. In Russia, the three branches of breeding, racers, saddle-horses, and farm horses, are carried on ; farm horses form 56 per cent, of the total industry, saddle-horses 36 per cent., and racers 9 per cent. In comparison with the breeding in other countries, Russia takes the foremost place, as may be seen from the following statistics : — Russia United States Germany . Austria- Hungary France Great Britain 37,500,000 horses 23,400,000 4,500,000 4,000,000 ,, 3,300,000 2,000,000 Russia is thus almost the sole purveyor of horses to the European market, principally to Germany and England. For the quinquennial period of 1907-1911, the exports were as follows : — 42 RUSSIA : ITS TRADE AND COMMERCE. NUMBER OF HORSES Total Exports Exports to Germany Exports to England . 1907 1908 1909 I910 94,000 62,500 30,000 82,000 52.500 26,500 76,000 50,500 21,000 94,000 68,200 24,500 I9II 98,000 68,000 27,000 The value of these exports rose accordingly : in 1907 horses were exported to the value of R. 8,800,000, and in 191 1 to the value of R. 12,600,000. In spite of this, the general condition of Russian horse- breeding remained unsatisfactory. The successful develop- ment of agriculture, and especially the transition to intensive culture, by increasing the demand for draught animals of a lighter kind, caused a wholesale transition from the employment of oxen to that of horses, especially in districts where machinery was most in use. Mowing machines, reapers, horse-rakes, hoes, potato-sowers, root-extractors, etc., all these require horse traction. Now, the shortage of horses caused by these changes is not onlj^ not covered, but is actually increasing, in consequence of the growing exports of farm-horses to foreign countries. As a result, the prices of horses have risen considerably. For the period of five years, 1908-1912, they have risen 62 per cent., as compared with the prices for the preceding quinquennium. The almost stationary condition of horse-breeding is due to many causes which have arisen in Russia during the past twenty years. The hasty ploughing of free virgin and fallow land, which used to feed thousands of horses, has made it impossible to carry on horse-breeding on so extensive a scale, and has forced the breeders to resort to the more expensive stable-breeding. Subdivision of large estates formerly devoted to horse-breeding, and their increased liquidation of late years, seriously affect the industry. In the outskirts of the Empire, especially in the South-Eastern Khirghiz Steppes, Western Siberia and Turkestan, horse-breeding is also curtailed by the reorganiz- ation of landowning, so that, on all sides, the number of horses is steadily decreasing CHAPTER III Poultry Farming —Fodder Grass Poultry-farming. — As a new branch of agricultural in- dustry, commercial poultry-farming began to gain ground towards the end of the nineteenth century, when a demand for Russian poultry arose in foreign markets. The first experiments in exportation were successful, and since then Russian poultry-farming has become a flourishing agri- cultural industry in certain districts. The output of the different poultry-farming districts is distributed as follows : — Million Roubles. Districts Total output of poultry- farms Ratio of exports to Exports total out- put in per cent. Central (Tambov, Orel, Penza) Southern (Kursk, Kharkov, Voronezh) Little Russian (Poltava, Tchemigov) .... South-Western .... Volga (Kazan, Simbirsk, Nizhni-Novgorod) . Vistula White Russian and Lithu- anian Moscow 60 45 25 25 25 40 25 20 30 15 12 10 10 15 8 I 33 33 48 40 40 37-5 32 5 Other districts, such as the Baltic, Lake, Saratov, Samara, Ufa, Perm, Viatka, Northern, Black Sea and Crimean 43 44 RUSSIA: ITS TRADE AND COMMERCE. provinces, Don Territory, Ciscaucasia, Transcaucasia, etc., have an output ranging from 4 to 7 million roubles each, only a very small part of the produce being exported. The importance of poultry-farmmg in the finances of the popu- lation may be seen from the following figures : — Million roubles Years Total exports of animal produce to foreign countries Including poultry produce 1891-1895 1896-1900 I9OI-1905 I906-1910 1911 . 1912 . 1913 • 72-9 92-2 148-6 203-0 218-2 242-2 217-3 22-3 37-4 59-8 71-9 97-1 100-6 108-2 RATIO OF POULTRY-FARMING TO TOTAL EXPORTS OF ANIMAL PRODUCE Million roubles Years Total exports of animal produce to foreign countries Including poultry produce 1891-1895 I 896-1 900 1901-1905 1906-1910 1911 . 1912 . 1913 • 100 per cent. 100 100 100 100 100 100 31 per cent. 41 -. 40 „ 35 „ 40 37 45 ,. It is noteworthy that the poultry exports for this period show a proportionately greater inciease than the total exports of animal produce. Taking the total exports of animal and poultry produce for the quinquennium of POULTRY FARMING 45 1891-1895 at 100 per cent., the increase in poultry exports for 1896-1900 works out at 163 per cent., that for 1901- 1905 at 268 per cent., that for 1906-1910 at 322 per cent., and for 1913 at 440 per cent. The gradual change from the export of live, to that of killed, poultry, has two advantages. Local poultry fatten- ing is materially assisted by the using up of cheap and nutritious foodstuffs, and when the poultry is sold, its value is divided into the different constituents, flesh, feathers and giblets, thus raising its market value from 12 to 25 per cent. It is significant that, owing to the export of live geese from Russia, certain very profitable undertakings arose in Germany along the Russian frontiers and in some parts of Austria, simply for the purpose of grinding barley and bran for fattening the geese, for the utilization of the down and feathers and for albumen works. Thus Germany, while importing 10 million roubles' worth of live poultry per annum, developed a business with a turnover of nearly 50 million marks. In the localities where poultry-farming is not so widely developed the people are content to sell their produce at the local markets. In those districts, however, if the local markets absorb merely a part of the total output, the rest of the produce is bought up by middlemen — either local inhabitants or agents of large firms. Such districts form about 88 per cent, of the total number. As an importer of Russian poultry produce, Germany takes the first place, drawing imports from 87 per cent, of the provinces ; next comes England (56 per cent.), Austria- Hungary (38 per cent.), France (25 per cent.), Italy (7 per cent.) the United States (4 per cent.), Denmark and Bul- garia I per cent. each). Germany is supplied by nearly all the provinces of European Russia. England imports poultry produce chiefly from the Central Agricultural and Mid-Volga districts, from Little Russia and the South- Western provinces, and from Poland and the Caucasus. AustriaHungary imports from the Western, South- Western, Central Agricultural and Mid- Volga districts by rail, and from the Caucasus by sea. France imports from the 46 RUSSIA: ITS TRADE AND COMMERCE. Central Agricultural, Mid-Volga, in the East, and Little Russia, South-Western and Novorossiysk districts in the South- West. Eggs are exported from the Caucasus through the Black Sea ports. The exports to Italy come from the Novorossiysk districts and from .the Caucasus. Eggs are exported to the United States from the provinces of Tobolsk and Poltava. Denmark receives poultry produce directly from the Tobolsk province, and Bulgaria from Kielce. The total exports of poultry produce are shown below in thousands of roubles). Eggs Poultry- Feather and Years Total Live Dead down 1906. 56,300 7,900 3,600 1,500 69,300 1907. 53.300 6,800 3,800 1,800 65,700 1908. 54.900 6,800 7.500 1,600 67,800 1909. 62,300 7.500 5.200 1,500 76,500 1910. 63,700 8,500 6,200 1,600 80,000 1911. 80,800 7,600 6,800 1,900 97,100 1912. 84,600 9,100 5,100 1,800 100,600 1913. 90,600 9,600 6,600 1,900 108,200 As the above table shows, eggs are the principal exports. Russia's export trade in eggs is of comparatively recent origin. In 1894 our exports amounted to 954,900,000 eggs, whereas now they reach 3,396,859,000 eggs, showing, in ten years, an increase from R. 39,000,000 in 1902 to R. 90,600,000 in 1913. Russian eggs were exported principally to Germany until 1906, but, since 1907, England has taken the first place in our egg export trade. Russia lost her position in the German market owing to Austrian competition, but in 1913 she practically regained it, and now supplies two of the greatest markets for eggs in Europe. Russia also exports eggs to other countries, viz., France, Denmark, Holland, Hungary and Belgium. These countries themselves export large quantities of POULTRY FARMING 47 eggs to European markets, but they have to import foreign eggs for their home consumption. At first sight, this may seem strange, but the explanation is that the eggs exported by the above-mentioned countries, in which poultry-farming is on a very high level, are of prime quality and fetch far better prices than the imported Russian eggs, which are far inferior. EXPORTS OF EGGS (Millions) Years Austria- Hungary Belgium England Germany Holland Denmark 1906 . 6747 71-7 873-0 978-6 87-4 56-8 iq07 641-9 48-2 867-5 850-0 69-2 44-8 igo8 704-1 61-4 894-3 745-4 76-3 24-6 iqoQ 697-6 83-2 I.051-5 895-0 I15-2 36-3 1910 667-3 96-8 1,086-3 866-0 172-0 36-0 1911 793-2 113-4 1,308-2 1,118-7 192-8 78-2 1912 868-6 90-7 1,138-2 1,000-7 174-2 42-3 1913 . . . 910-5 II0-2 1,520-3 1,300-0 190-5 72-7 As regards their consumption of Russian eggs, the import- ing countries may be classed as follows : Great Britain 35 per cent., Germany 30-31 per cent., Austria-Hungary 23 percent., and the other countries 12 per cent. About 48 per cent, of the eggs imported into Germany are of Russian origin ; for Great Britain the figure is 44 per cent., and for Austria- Hungary 93 per cent. The prices of Russian eggs imported by Germany were somewhat higher than in Austria, averag- ing 280 copecks per hundred ; but the increased export of eggs from the centres of production directly to Germany was hampered by the periodical changes made by the German authorities in the railway routes for Russian egg freights, in order to equalize the profits of frontier railway lines. In the first place, this made it necessary to change the railway routes in the interior of Russia, thereby causing 48 RUSSIA: ITS TRADE AND COMMERCE. temporary delay in exportation, and secondly, a deviation from the established route caused an increase in freights, sometimes amounting to as much as R. 90 per railway car. The following table gives a comparison of the average market prices per 1,000 eggs (in roubles and copecks) for the quinquennial period of 1907-1912 : — Russian eggs 1912 1911 1910 1909 1908 1907 Riga, I quality . 30-33 28-89 26-02 26-74 27-20 26-44 „ II „ . . 26-28 24-54 21-05 22-14 23-23 23-30 „ III „ . . 22-54 20-37 17-79 17-65 21-18 21-14 Berlin (Russ.), I quality 31-40 28-61 28-48 31-18 29-02 27-85 London (Russ.), I quality 33-64 30-91 28-34 31-34 31-26 29-49 Danish eggs. 47-70 45-14 43-59 44-22 42-75 — Austrian eggs . 45-0 44-20 43-10 43-80 40-15 ~ Thus Danish and Austrian eggs fetched considerably higher prices than Russian, but it is necessary to bear in mind that about 52 per cent, of "Austrian eggs," and 21 per cent, of " Danish," are of Russian origin. On im- portation into these countries, Russian eggs are carefully sorted, the best being sent to the Enghsh and German markets, while the rejected eggs are sent to the albumen works. The chief importers of Russian poultry, both live and dead, are also England, Germany and, to a certain extent, France. It is observed that, w^hile England and France import only killed poultry, Germany, and to some extent Austria, import both live and killed poultry, preferring the former. Exports of live poultry fed for the market, and their distribution among importing countries, may be seen from the following table : — POULTRY FARMING. 49 Germany Austria-Hungary France Years Geese Other poultry Geese Other poultry ^ Other ^^^^'^ poultry 1906 . 1907 . 1908 . 1909 . 1910 . 1911 . 1912 . 1913 • 6,164 5,162 5,029 5,860 6,452 5,390 6,692 6,870 2,474 2,300 2,224 2,335 2,439 2,542 2,246 2,300 216 214 234 214 299 255 217 212 173 lOI 96 107 342 492 551 568 ■ — 229 — 113 — 70 — 76 — 59 — 38 Exports of killed poultry are distributed as follows Including : Years Total exports (poods) Austria- Great Hungary Britain Germany Den- mark Sweden Fin- land 19OI 476,785 14,262 254,944 173,080 19,712 4,321 8,023 1902 442.399 10,780 236,549 153,069 35,018 2,774 3,374 1903 . 621,337 14,207 330,932 222,231 26,727 4,061 19,802 1904 . 622,394 22,195 431,420 133,614 30,211 2,954 1,783 1905 . 422,766 18,323 ,269,765 108,570 19.585 2,315 1,266 1906 501,187 34,287 192,461 231,464 34,862 2,663 911 1907 . 507,921 28,741 252,998 191,801 25,563 4,320 1,316 1908 583,161 50,684 285,475 204,369 37,186 1,658 520 1909 . 741,342 19,816 ' 447,594 223,805 47,730 1,743 68 1910 733,557 51,739 361,852 263,254 51,095 1,159 276 1911 932,204 48,100 495.836 298,706 56.302 2,096 104 1912 763.382 29,131 347,096 335.977 40,277 1,357 47 1913 • 913,057 45,200 462,752 350,800 52,210 2,000 95 An increase in the demand for Russian poultry is remark- able in all the principal markets of consumption, the greatest proportionate increase being in Austria-Hungary, where imports of Russian poultry rose more than 300 per cent, for the period 1901-1913 ; next comes Denmark, 270 per E 50 RUSSIA: ITS TRADE AND COMMERCE. cent. ; Germany, 105 per cent. ; England, nearly 100 per cent. The increase in the quantity of Russian poultry exports was accompanied by an increase in value : whereas in 1900 the total amount of poultry exports was R. 8,500,000, of which live poultry accounted for R. 6,500,000, in 1913 the total was R. 16,000,000, of which R. 9,500,000 represent live poultry. Thus, in the course of fourteen years, our poultry exports increased by no per cent., the increase in live poultry being 50 per cent, and killed poultry 20 per cent. This latter circumstance may be considered as desirable, as the exporta- tion of live poultry entails considerable expenditure in transport, wholesale loss by death on the way, diminution in weight, losses in valuation in foreign markets, and deprives our country of the profitable industry of fattening poultry for sale, as well as the more profitable disposal of such valuable by-products as feathers and down. Such are the principal branches of industry from which Russian national economy obtains its strength and its resources for further development. These branches of agricultural industry are extending and are constantly producing new commodities. Fodder Grasses. — At present there is a considerable in- crease in sowing fodder grasses for seed, both for home consumption and for export. In 1912 the total area under fodder grass in the fifty provinces of European Russia was over two million dessiatinas, of which 54 per cent, were owned by landlords and 46 per cent, by peasants. In 1901 the total area was 1,600,000 dessiatinas, and the ratio was : landlords 67 per cent, and peasants 33 per cent., showing in twelve years an increase in the total area, an increase in the peasant culture of fodder grass and a decrease in the same proportion in the landlords' area. The demand for Russian fodder grass seeds is growing. There is a large area of land suitable for fodder grasses; the seeds are of good quality, as they are very hardy, adaptable to the soil and yield an abundant harvest. Germany is the chief importer of Russian fodder grass seed of all kinds, the figures given by the German Customs FODDER GRASS. 51 statistics being considerably higher than Russian, as may be seen from the following table (thousands of poods) : — IMPORTS OF SEED INTO GERMANY 1907 igoS 1909 I9IO ! I9II 1912 1913 Clover .... 750 372 540 580 610 630 695 Timothy grass . . | 18 13 10 14 22 25 28 Seradella .... 540 760 810 850 !l,050 1,130 I. .240 Lucerne .... 96 160 350 370 390 415 465 Other grasses 680 810 2,085 900 915 980 1,050 1,210 1 2,084 2,610 2,729 3,052 ! 3.250 3.638 Total fodder grass 1 seeds exported from 1 Russia (1,000 poods) 4,505 3,9^(^ 4451 5,108 5,196 4,362 3,591 Total imports of fodder grass seeds into Germany 3.300 3,100 3.840 3,600 4,000 4.320 ; 4.630 The above figures show how much Germany is interested in the development of Russian exports of fodder grass seeds and the dependence of the German market on Russian growers. There is no doubt that Germany re-sells the seed, principally to England, and chiefly the clover-seed. The country in which grass-sowing has reached its greatest developments is Great Britain, while the country which plays the most prominent part in supplying seed is Russia. Apparently, with the growth of the demand for seed in England, there should be a corresponding increase in Russian exports to the English market. Exports of Russian fodder grass seed to Great Britain are not shown, and the principal imports of fodder grass seed into the United Kingdom are from Germany. 52 RUSSIA : ITS TRADE AND COMMERCE. i,ooo poods 1909 Total imports of fodder ; grass seed into Great | Britain \ 1,850 Including imports into Ger-J many 275 465 | 690 1910 1,930 191 1 2,150 1912 2,410 1913 2,870 810 1,120 In five years Germany's exports to the English market alone had increased to 40 per cent, of the total imports of such commodities into the United Kingdom. According to Dr. Voigt, in German sea-ports the trade in seed has assumed, as it were, the character of a manu- facturing industry : before being sent to the markets of consumption, the imported seed is thoroughly sorted and cleaned in order to give it the appearance of first-class goods. Some firms, at Hamburg and Koenigsberg, whose speci- ality is the re-exportation of fodder grass seed, have attained a high state of perfection, as also in the art of substituting one quality for another ; at the same time, while they get the higher qualities of the best clover principally from Russia, these firms mix them with seeds of lower quality and thus introduce into the seed trade methods of adulteration which lead to the disappearance of the superior qualities. Besides direct business transactions, Germany plays an important part in Russia's seed trade as a country of transit, that is 1,000 Poods 1907 1908 1909 1910 1911 1912 1913 From Russia To Russia . 34-2 30-6 20*4 44-2 36-1 85-0 28-0 90-0 83-0 71-0 85-0 79-0 87-2 88-0 FODDER GRASS. 53 to saJ^ a considerable amount of fodder grass seed goes through Germany both from Russia and into Russia. The principal countries to which Russian seed is trans- ported through Germany are the United States, France and England. CHAPTER IV The Cultivation of Cotton, Flax, Hemp, Sugar, Beet, Tobacco, Wine, Hops, Fruit. By N. Malakhovsky and A. Isenberg Cotton Growing in Russia. — Russia is one of the most important cotton manufacturing countries of Europe, following immediately after England and Germany. About one milliard roubles are sunk in the cotton industry, which gives occupation to over 500,000 people. The difference between the Russian and the English and German industries lies in the fact that Russia herself pro- duces about half of the cotton required by her factories, that she has developed the export of manufactured cotton but very slightly, and that the home demand for these manufactures is still rather limited. It is clear that under these conditions, the cotton industry has every chance of developing. The ability to grow her own cotton not only places Russia in less dependence upon other countries, but, by increasing the purchasing powers of the southern regions of the Em- pire, creates a large home market for the distribution of textile manufactures and other products. Cotton is cultivated in two regions, in Russian Turkestan and Transcaucasia. The first of these two regions yields several times as much cotton as the latter. In Russian Turkestan, that which England and Germany are attempting to do in their colonies by the extension of cotton growing, has already been carried into practice, namely the creation of a market for the manufactures of the metropolis. Russian Turkestan forms the south-western part of the Asiatic possessions of the I2mpire, and is situate between 54 COTTON GROWING. 55 47° 2' and 35° 38' N. and 50° 20' and ^::;' 2c/ E. Its area is equal to that of Austria-Hungary, France, Germany, Holland and Denmark taken together. The surface of Turkestan forms a level plain fringed on the south by mountains which gradually grow higher towards the south- east, reaching their greatest height in the Pamir plateau. The nature of the country's surface facilitates irrigation by means of canals. Rivers rise in the mountains and flow down to the plain, where a large proportion of their water is collected. The irrigation of this region is rendered neces- sary, as the climate over the whole area suffers from a lack of moisture in the air. Cotton growing in Turkestan is not carried on as in the United States of America : there, the cotton is sown where atmospheric conditions may be counted upon for its irriga- tion, but in Russia the plant has to be irrigated by artificial means. Turkestan is, in this respect, much more like Egypt- It is very important that the rainfall should be so small for the time of gathering the cotton, but this circumstance necessitates artificial irrigation which at present limits the area under cultivation to about 4 per cent, of the whole area of Turkestan. The remaining 96 per cent, of the area is as yet desert land. This fact is not due to any poorness of the soil ; those parts which have been irrigated have shown themselves to be very fertile. The soil of Turkestan surpasses even the famous black soil of Russia, especially for the cultivation of lucerne (alfalfa). Owing to the dry climate the Turkestan cotton grower has penetrated farther north than has been the case in the United States. If an imaginary fine be drawn from the most northerly point of cotton cultivation in Central Asia to the United States of America, it will pass through Boston, i.e. 4I degrees above the line of cotton growing in America. On the other hand, as the Russian possessions extend a considerable distance to the south, the area under cotton cultivation in Central Asia is very extensive. In spite of a very hot summer, the winters in Turkestan are cold, so that only annual sub-tropical plants can be cul- 56 RUSSIA: ITS TRADE AND COMMERCE. tivated ; the summer of Turkestan, viewed from the number of cloudless days, closely approximates to that of Cairo. The cultivation of the cotton plant in Turkestan begins in March (old style) and terminates in May ; the harvesting of the cotton begins in August and finishes in Novem- ber During the period of growth of the cotton plant the climate of Central Asia shows the following mean tempera- tures (Celsius) : — Margelan Skobelev Samarkand Askabad April i6-o 13-8 l6'2 May . . 20-6 20-0 23-5 June . . 25-9 23-8 28-0 July . . 27-6 25-5 29-3 August 26-6 22-3 27-2 September 20-4 i8-6 22-4 October . 13-0 II-6 14-8 • The last spring and the first autumn frosts, according to the statistics of the local meteorological observatories, covering the five years 1888-1893. have been observed at the following periods : — Skobelev . March 19-22. Samarkand March 6-22. Askabad . February 17-March 23. October 14-November 11. October 9-November 20. October 13-November 18. Although the beginnings of cotton cultivation in Turkes- tan are lost in the distant past, the introduction there of the American cotton plant dates from the beginning of the nineties of last century. In 1884, after a series of prelimin- ary experiments, the first eight bales of Russian cotton from American seeds were delivered in Moscow. After that, the production and export of cotton gradually increased, until at the present moment it constitutes one-half of the total of Russian industry. During the last three seasons the supplies of Turkestan COTTON GROWING. 57 cotton for Russian cotton mills are expressed by the follow- ing figures (in thousands of poods) : — ■ 1913-14 1912-13 1911-12 Ferghana Territory Samarkand Territory .... Syr-Daria Territory without the Amu-Daria District .... Transcaspian Territory .... Bokhara Region Khiva Region 7,610 953 1,117 869 1,456 659 6,966 806 978 975 1,236 522 7.544 818 941 600 1,092 550 12,664 11,483 11,545 In addition to the above, a large quantity of cotton is used by the local population for their own requirements. The area of the various regions under cotton cultivation is shown by the following figures (in thousands of desia- tines) : — - igcg 1913 Ferghana Territory Samarkand Territory .... Transcaspian Territory .... Syr-Daria Territory 2o8-o 31-2 26-0 31-4 274-8 317 46-5 767 296-8 429-8 The other cotton growing region of Russia — Trans- caucasia — is of less importance, as may be seen from the quantities harvested. The yield of cotton during tJie last three seasons was (in thousands of poods) : — 58 RUSSIA: ITS TRADE AND COMMERCE. Province 1913-14 1912-13 1911-12 Kutais .... Tiflis Erivan .... Elisavetpol . Baku 10,039 59.352 685,783 654,880 171,371 13,402 58,601 690,504 665,680 143.432 17.834 64.654 741,882 731,584 225,881 Total .... 1.581,425 1,571.619 1,781,635 The area under cotton in Transcaucasia is shown in the following figures (in desiatines) : — 1909 1913 Erivan Prov. Elisavetpol Prov. 29,000 14,200 35,000 45,000 Tiflis Prov. Baku Prov. Kutais Prov. 520 5,000 5.600 20,000 850 2,000 Total 50.T70 107,000 The total quantity of cotton supplied to the Russian mills by Turkestan and Transcaucasia and the quantity imported from abroad are shown in the following table in poods :■ — Russian Foreign 1908-9 1909-10 .... I9I0-II .... I9II-I2 .... I9I2-I3 .... I9I3-I4 .... 8,764,015 11,311,546 13,925.532 13,420,394 13,101,092 14,245,000 11,035,000 11,878,000 11,945,000 12,293,000 10,840,000 13,525,000 Passing to the factors which have influenced the develop- ment of the cultivation of cotton in Russia the first is the Government customs duty on foreign cotton. As seen COTTON GROWING. 59 from the following table this customs duty was gradually increased : — Date of Publication of Law Customs Duty 40 cop. gold currency, per pood. 44 »» " >» " 45 >» »» '> » I r. and i r. 35 cop. gold currency, per pood. I r. 20 cop. and i r. 35 cop. gold currency, per pood. I r. 40 cop. and i r. 65 cop. gold currency, per pood. December 26,1892 ; 2 r. 10 cop. gold currency. December 20,1894 i 3 r. 15 cop. July 21, 1900 . I 4 r. 15 cop. per pood net. January 13, 1903 4 r. per pood gross weight. July 5, 1868. . December 22,1878 December 16,1880 June I, 1882. . November 7, 1887 June II, 1891 . Finally from 1915 5 r. 75 cop. per pood. The customs duty which has raised the prices of cotton on the home market has most favourably affected the profits of cotton growing in Central Asia. Another circumstance, tending to advance the cultivation of cotton in the country, was the improvement of com- munications between Central Asia and European Russia. When cotton growing in its present form was first intro- duced, the railway only went as far as Merva on the Caspian Sea, and cotton had to be carried by camels for the remain- ing distance between Merva and the towns of Ferghana. But afterwards the communications began to improve ; in 1899 the railway line to Andijan and Tashkent was opened, and in 1906 traffic was opened along another line — Oren- burg-Tashkent. At the present moment Central Asia is connected with European Russia by two lines : by direct railway (Orenburg-Tashkent) and by a mixed route via the Caspian Sea and the Transcaucasian railway ; a third line to Verny which joins the cotton region to the corn-growing district of the Steppes, is in course of construction. Finally, one of the most important factors, for increasing the interest in cotton cultivation amongst the local popula- 6o RUSSIA: ITS TRADE AND COMMERCE. tion, is the extension of agronomical assistance to the population. The Ministry of Land Organization and Agri- culture has spent large sums on this, and secured tangible results. From the State Treasury there have been assigned in 1915 803,250- roubles for agronomical assistance to the people exclusive of the expenditure on the upkeep of the official staff. A further sum of 280,000 roubles has been set aside by the Zemstvo funds for the same purpose. In addition to the influence of Government measures the effect of the general rise in cotton prices was very great. In Turkestan there are five experimental agricultural stations and five experimental fields. Several of the sta- tions have become well known, especially the Golodno- steppes (Hunger Steppes) Station, where at the present moment Russian emigrants are peopling the desert land of the Hunger Steppes, recently irrigated by a canal con- structed by the Government, and the Turkestan Station, 12 versts from Tashkent. Very important experiments are being made to fertilize the land with oil cakes from cotton seed residues. At the present time about five million poods of oil cakes are being distributed in the locality, and these are being turned into manure for the fer- tilization of the land. This quantity is equivalent to two- thirds of all the oil cakes obtained by the extraction of oil from the cotton seeds, one-third only being exported abroad via the Baltic ports and Batum. There are, in all, twenty seed plantations in the country, These are worked on the co-operative principle of partici- pation by the labourer in a share of the crop. Thus these plantations on State lands serve as schools for the native workers, who are trained to the use of those ploughs and cultivators which are used by the American cotton planter, and the land is not ploughed with the " Sokha " (native Russian plough). During the year 1914, the stations gave out eighteen thousand poods of improved seeds, chiefly the quick ripen- ing Upland " King," and the local kind known as " Kok- chisht." Agriculture is the principal factor in the prosperity of COTTON GROWING. 6i the extensive region of Turkestan where irrigation has been introduced. Possessing a rich and fruitful soil, never experiencing bad harvests for lack of rain, which the irri- gation replaces, Turkestan is thriving and becoming rich on the products of agriculture, or more correctly, of cotton growing, which is the alpha and omega of its life. Cotton growing is bringing money into the country. Other branches of industry have not yet been sufficiently developed. The exploitation of the mineral wealth of the country has as yet not been placed on a sufficiently broad founda- tion. Manufactures have been developed only in connex- ion with certain raw products native to the country, chiefly the extracting and refining of naptha. Generally speaking, the climatic and economic con- ditions and state of the soil of Central Asia have been the factors in developing cotton cultivation to its present dimensions. Nevertheless, the import of American cotton into Russia is not decreasing. The people's demand for cotton materials, though extremely moderate, is increas- ing, and there is no doubt that in time there will be a very much greater demand for cotton in Russia. The home consumption of cotton materials, leaving the small imports and exports out of our calculations, are shown in the following figures : — 1 90 1 Population (in millions) . . . 135 Consumption of cotton material in Russian pounds per head of population 3-6 1905 146 3-4 1910 . 1914 164 4-1 180 4-3 The consumption of 4*1 and 4*3 pounds, which is equiva- lent to 30-32 archines of cahco, is extremely small com- pared with the consumption in Western Europe, where at the end of the last century it was 12 to 13 pounds per head. It follows, therefore, that one of the most important questions for the Russian cotton industry is the fur- 62 RUSSIA: ITS TRADE AND COMMERCE. ther development of home cultivation. It is becoming more and more difficult to reckon on receiving cotton from abroad as the supply of the world's cotton mills wdth the raw material grows increasingly criti- cal. A further increase in production on the land already irrigated can hardly be expected. It is necessary to turn to the prospects which present themselves of irrigating new lands. At the present moment, only about 4 per cent, of the total area is irrigated and cultivated, the rest as yet remaining barren. Government investigations have shown that the area of land which can be irrigated in Turkestan by the existing supplies of water is not less than 4 million desiatines, of which 3 million desiatines are .situate in the cotton-growing regions, and up to one million desia- tines in a region of more northerly but valuable produce. This new Turkestan, the creation of which demands inten- sive labour for not less than twenty to twenty-five years, and the expenditure of more than a milHard roubles, may give the Russian cotton industry as much as 25 million poods of cotton, i.e. twice as much as is at present imported from abroad. The regions suitable for irrigation in the cotton-growing belt are in the basin of two large rivers, the Syr-Daria and the Amu-Daria. In spite of the fact that one of the most cultivated districts lies in the basin formed by the upper reaches of this river, the quantity of available water in the Syr-Daria is very large. The flow of this river could be regulated by building two or three reservoirs in its upper reaches with a total capacity of not less than 300 million cubic sagenes, and it would thus be. possible to water about i| million desiatines of new land. On the basis of actual profits per irrigated desiatine, the use of the water supplies ot the Syr-Daria would give, in the future, an annual net profit of 75 million roubles, which represents 5 per cent, on a capital of i| milliard roubles. In reality, the profit would be very much greater. It is proposed that only 300 thousand desiatines of the additional land under irrigation should be devoted to the cultivation of cotton, consequently COTTON GROWING. 63 the yield of cotton would be about 6 million poods. In the upper and middle courses of this river there is an area of about 900 thousand desiatines of land quite suitable for cotton growing. A still greater volume of water than that of the Syr-Daria is offered by the Amu-Daria, the largest river of Turkestan. By the construction of reservoirs and by reconstructing the irrigation plant in the Khivin oasis not less than 2| to 3 milKon desiatines of land might be watered by this river. The question of attracting private enterprise to the irri- gation of the waste land of Turkestan was raised long ago, but as yet no practical decision has been reached. With regard to the manner and funds by which these Central Asiatic wastes and Steppes should be developed, there are two opposing views. According to one the work of irrigation in this region should be undertaken by and at the expense of the State ; according to the other it is neces- sary to attract private initiative, and private capital. The more correct decision of this question would seem to lie in a wise co-operation of Government and private initiative. In such a tremendous field of enterprise there is room for the one and the other. During 191 2 and 191 3 a Bill was drawn up by the Ministry of Land Organization and Agriculture on the subject of private enterprise for the irrigation of Turkestan, and this Bill is now under examination by the Legislative Chambers, having already been approved by the Agricultural Com- mission of the Imperial Duma. The cultivation of the cotton plant opens out a future to a whole series of allied industries, such as cotton cleaning, oil pressing, etc. Manufactures from cotton seeds in Turkestan have grown very largely during the past fourteen years, though the pro- duction of oil, as a peasant industry, has been practised in the country from an early date. There are at present thirty-two works in the country con- suming 20 million poods of seed, and manufacturing 3 mil- lion poods of cotton oil. This oil is in continual demand and finds an assured sale on the Russian market a;., apart 64 RUSSIA: ITS TRADE AND COMMERCE. from its qualities as a food, it is used for soap-making, etc. A comparatively new use is the lintering of the cotton pod. The short fibre contained in the pod, representing about 20 per cent., and the particles of the inner skin and centre — about 10 per cent. — form an inseparable mass in the pod, which is sold at the same price as the pod itself. As it is, the valuable fibre covering the shell, not only loses in value itself, but makes the pod friable and bulky, lowering its value as fuel, and in this way renders the pod itself of no value. The valuable fibre, on the other hand, lowers its quality as a cattle food, as it has a harmful action on the digestive organs of the cattle, and consequently the pod is rendered valueless as a food. The separation of the pod into its component parts was first begun in the Turkestan region on March 5, 1911, when the ]\Iink lintern separator began working in the Murgab works. The above facts regarding the cultivation of cotton in Russia and the conditions of its development, based on thirty years' experience, show this branch of culture to be firmly established beyond all doubt, for it is founded on its profitableness to the population and its industrial necessity. But in spite of the extensive production of cotton in Russia the import of American cotton remains at its former high level. It is interesting to note that, while the production of cotton in Russia has increased from i,cco,ooo to 14,000,000 poods, the import of foreign cotton has remained at io,oco,g( o poods, and up to the present this quantity has not decreased. There is no need to speak now of the possibility, or desir- ability, of exporting cotton from Russia to the neighbour- ing countries of Europe, for this can only be discussed when Russia may have more cotton than her factories require. But the development of cotton growing to satisfy the demands of the Russian industry alone opens out very wide prospects. Flax Flax is one of the earhest forms of culture in which the FLAX. 65 Slavs were engaged. In the region now occupied by Russia in Europe flax was sown and cloth was made from the fibre as far back as the sixth century B.C. At the time of the founding of the Russian Empire flax was grown by all the tribes which had settled in the low- lands of Eastern Europe. It had not then become an article of barter, but served for home use : oil was made from the seed, and linen from the fibre. Amongst the Lithuanian Lettish tribes the cultivation of flax played an important part even in Pagan times ; but in the early period of Russian history, flax growing was more developed in the districts of Novgorod and Pskov, where it became a true industry and the cultivation was, as at the present time, for the export of fibre. The cultivation of flax is now spread over almost the whole surface of Russia, with this difference, that in the more northerly regions the flax is separated into fibre and seed, whereas in South Russia the seed only is used, the stalk being thrown away and the fibre lost. By grouping the governments of Russia according to the area in each given up to flax growing for the production of fibre we obtain the following list : — Viatka, Pskov, Smolensk, Tver, Lithuania, Perm, Vitebsk, Kostroma, Kovno, Yaroslav, Vladimir, Nijni-Novgorod, Vologda, Novgorod, Petrograd, Grodno, Archangel, Vilna, Kaluga, Courland, Minsk, Moghilev, Moscow, Olonetz, Tobolsk, Tomsk, and Esthonia. The regions of South Russia, in which flax is cultivated for the oil seeds, are excluded from the list, which clearly shows the great importance of flax to Russia. Flax constitute^ a large part of Russian exports, coming next in importance to grain and timber. In Western Europe and America, the linen factories are supplied principally with Russian flax. The total quantities of flax produced in Russia during the five years, I9<'r8-i9i2, were as follows : — 66 RUSSIA: ITS TRADE AND COMMERCE. Area cultivated (Thous. Desiatines) ' Seed Crop (Thous. Poods) Fibre Crop (Thous. Poods) 1908 1909 1910 I911 1912 1,369-2 1. 334-3 1,320-9 1,419-0 1,425-8 32,019-0 35-984-8 31,291-2 34.738-4 37.939-7 48,013-4 32,881-1 29,062-4 31.098-3 45.793-3 The exports of flax abroad during the same period were as follows : — Tinseed Flax Tow and Codilla Quantity (Thous. Poods) Value (Thous. Rbls.) Quantity (Th-us. Poods) Value (Thous. Rbls.) Quantity (Thous. Poods) Value (Thous. Rbls.) 1908 . 1909 . 1910 . 1911 . 1912 . 1913 • 9.383 6,020 8,733 9.831 10,217 6,488 13.915 10,543 19,279 21,270 20,392 9-859 14-513 14.354 13-501 11,897 19-313 16,664 58,157 60,761 67.653 63.844 107,539 86,848 2,360 2,438 2,265 1.883 2,257 1.994 7,109 7,161 6.758 6,549 8,519 7.371 The position occupied by Russia as regards the supply of flax to the markets of the world is similar to that of the United States as regards cotton. Both countries have the monopoly of certain branches of production, and other countries' attempts to defeat this position have not suc- ceeded. * The circumstances under which the cultivation of flax in Russia has been maintained and is being extended (as, for instance, in Siberia) are due to the abundance of undevel- oped land, which, when it is first cleared, is put luider flax. Even in districts which have long been under cultivation, flax cultivation is not readily abandoned, especially since the agricultural experts have found that by sowing clover, FLAX. 67 the reputation of flax for exhausting the soil may be suc- cessfully combated. The Government have latterly made large efforts to make flax growing both more profitable and thereby more inter- esting to the people. The parallel between Russian flax and American cotton cultivation is carried further in the proportion of exports to the quantity worked in the country. In Russia, for instance, only half as much is worked in the country as is exported abroad. The proportions are almost identical as regards American cotton ; but the Americans endeavour in every possible way to develop the manufactures from the raw material in the country, while in Russia the flax industry consumes but a quarter of the total quantity of raw material produced. Such a small development of the Russian flax industry not only excludes the possibility of its carrying any weight on the markets of the world, but even renders it incapable of preventing the imports of linen manufactures into Russia from abroad. According to official statistics the growth in the production during the three years 191G-1912 was the following : — Year Number of iMills Number of Workmen Spindles Jute Spindles (included in previous column) Automatic Looms I910 1911 1912 201 212 230 81,555 83,534 85,464 393,754 406,750 410,007 29,710 31,676 35,836 13,970 14,656 15-425 In this way Russia yields priority of place in the number of spindles both to the United Kingdom and to France. It would seem under these conditions that there are very good future prospects for the further development of the flax industry in Russia, for linen manufactures have a steady sale and will be in still greater demand as the prosperity of the people increases. 68 RUSSIA : ITS TRADE AND COMMERCE. In addition to the ordinary use of the fibre there exists in Russia the manufacture of short fibre — cottonization of flax, — and it has also been made possible to use the waste left from the dressed flax in the manufacture of paper. These branches of the industry are in their infancy, but the cheapness of the raw material which is employed pro- mises great possibilities. Both the Government and the people of Russia are inter- ested in the maintenance and development of flax cultiva- tion. Hemp Russia was the first country to supply hemp to the mar- kets of the world. The Crimean war, by restricting the export of Russian hemp, opened the international market to exotic vegetable fibres such as manilla, sisal, etc., and this fact greatly affected the hemp industry of Russia. In spite of this, hemp is still held to be the best fibre for twine and rope, and therefore continues to command a good market. The plant from which the fibre is obtained grows over a large part of Russia south of 55° N. The principal govern- ments in which hemp is grown are : Orel, Chernigov, Penza, Kursk, Tula, Volhynia, and several governments of Poland. Hemp is grown for its fibre and for the seeds from which oil is extracted. Both products are widely used in Russia, while the fibre is also exported abroad. The cultivation of hemp is practised on small peasant holdings, specially allotted for this purpose. The hemp is not all gathered at once. First the male plant is pulled, and afterwards the female plant when the seed has ripened. The stalk thus obtained is then retted. When dried, the fibre from the male and female plants is crushed, and this operation generally finishes the preparation of the hemp on the farm. The further operations, scutching, combing, etc., usually take place in special scutching yards. The average hemp crop may be reckoned at about 620 poods per desJatin, though under favourable conditions the yield may HEMP. 69 be as much as 1,500 poods. The quantity of fibre is con- siderably less, and is subject to considerable variations due to insuificient care. The extent of the cultivation of hemp in Russia may be seen from the following figures covering the years 1908- 1912 : — 1908 1909 1910 1911 1912 Area cultivated (Thous. Desiatins) 701-1 680-9 669-0 635-2 623-6 Seed Crop (Thous. Poods) 23,080-0 21,699-9 26,843-6 22,309-8 25.375-5 Fibre Crop (Thous. Poods) 28,536-8 18,937-1 18,376-6 16,500-4 24,468-7 The following table shows the exports of hemp, hemp seed, and tow : — Hemp Seed Hemp Hemj ) Tow Quantity Value Quantity Value Quantity Value (Thous. (Thous. (Thous. (Thous. (Thous. (Thous. Poods) Rbls. ) Poods) Rbls.) Poods) Rbls.) 1908 . 1,225 1478 2,952 12,044 903 2,013 1909 . 542 657 2,538 10,551 783 1,883 I9I0 . 329 451 2,217 9.727 727 1,807 I9II . 657 929 3.356 15,890 748 1,682 I9I2 . 703 929 3,166 17,400 774 2,069 I9I3 • 3,248 20,261 878 2,500 In addition to the export of hemp abroad, mention should be made of the very large quantity of hemp yarn, amounting to 5 milhon poods, which is made by the peasants. The peasant hemp-spinners have not had their goods displaced by the machine-made yarn. Machine yarn is produced in very small quantities, whereas hand-made yarn is suppHed 70 RUSSIA: ITS TRADE AND COMMERCE. to both large and small rope-works, and is also exported abroad. Of late experiments have been made in the manufacture of binder twine in Russia to replace the Manilla hemp which has been imported to the value of io,coo,ooo roubles. Satisfactory results have been obtained, and the develop- ment of this business has greatly increased the home demand for hemp. Beet Russia takes the first place among the European coun- tries cultivating sugar beet. In 1913-14, the area under beet cultivation was 647,730 desiatins. Germany comes next with 482,778 desiatins, then follow Austria-Hungary with 389,106 desiatins, and France with 190,022 desiatins. The cultivation in Russia is concentrated in five south- western governments (Kiev, Volhynia, Podolia, Bessarabia, and Kherson), in nine central black-soil governments (Kursk, Poltava, Kharkov, Chernigov, Boronej, Orel, Samara, Tambov, and Tula), and in Poland. Owing to an increased demand for sugar on the home market, the area of beet cultivation has been noticeably extended during the last two decades. The extension, however, has been far from regular : some years have brought a slight increase, even a decrease, in the area sown, other 37ears have been marked by an increase in area of more than 100,000 desia- tins. This increase during the last ten years is as follows : — in 1904-5, 430,297 desiatins ; in 1912-13, 609,443 desia- tins ; in 1913-14, 647,730 desiatins. There is little doubt that Russia could far surpass the sugar production of all the west European countries ; but unfortunately she is behind them in the matter of agri- cultural science. For instance, the beet crop per given area in Western Europe and in Russia is to the disadvan- tage of Russia. The average beet crop in Russia is irregular in character, and there has been no systematic improvement in this respect during the last decade. Quantity of beet in poods per dcsiatin : — BEET. n Russia. Germany . Austria-Hungary France Belgium . Holland . 1904-5 925 1,618 1,283 1,627 1.739 1,623 1912-13 1.139-9 2,023-4 1,891-6 1,946-4 2,009-3 1,952-3 1913-14 1,164-4 2,113-3 1,724-1 1,948-6 1,858-2 1,691-7 One of the reasons for the backwardness of Russian beet culture is to be found in the fact that the soil and climatic conditions of Russia are not so favourable as in Western Europe. This fact has largely tended towards poorer crops in Russia. The second reason is the gradual exhaustion of the soil and the insufficient use of chemical fertihzers. Again, in the Russian methods of beet cultivation, insufficient care in the preparation of the soil, the use of wrong kinds of fertilizer, bad seeds, and many other mistakes must be noted. Much of the decrease in the size of the beet crops in Russia is caused by an increase in the number of peasant planta- tions with a corresponding diminution in the number of plantations belonging to sugar factories. The beet crop from peasant lands is much less than from factory planta- tions, due both to a poorer preparation of the soil and the smallness of these plantations. It is to be hoped that these defects will be removed in course of time by the efforts now being made by the Govern- ment, agricultural institutions and the Russian sugar manufacturers. The Russian sugar manufacturers have done much to improve the cultivation of beet. For many years a series of experimental fields have been in use in Poland and in the south-western region of Russia for the purpose of studying the growth of the beet and methods of cultivation. There are also well-equipped laboratories in Warsaw and Kiev where thorough and systematic investi- gations are made both of the beet and the fertihzer neces- sary for its successful cultivation, and of all products and materials of the sugar industry. In addition to this the All-Russian Society of Sugar Manufacturers have formed an 72 RUSSIA: ITS TRADE AND COMMERCE. entomological station to study methods for the destruction of insects which attack the beet crops. Through such efforts very real and lasting results have been obtained : the quality of the Russian beet has steadily improved during the last twenty years, and is now equal to the level obtaining in Western Europe. The percentage of sugar in the beet in 1890-91 averaged 1372 per cent, throughout the Empire ; by a gradual increase it reached 16 per cent, in 1900-01, and 18-93 per cent, in 1910-11. The same continuous improvement is to be seen in the quality of the beet and in its technical merits ; the former was placed at 80 per cent, in 1890-91, and increased to 83 per cent, in 19C0-01, and to 86-52 per cent, in 1901-11 ; the technical merits were calculated to be 11 per cent, in 1890-91, 14 per cent, in 1900-01, and 16-38 per cent, in 1910-11. It may therefore be concluded that the weak side of the Russian beet industry is the thin crop of beet. This ques- tion is so important that it has left its mark on the Russian sugar industry, for the thin crop of beet per desiatin has to a very great extent depreciated the quality of the beet. Consequently Russia cannot compare with other countries of Europe in the quantity of sugar obtained from a given area by which the quality and qnantity of the crop is regu- lated. During the last ten years the increase in the quan- tity of refined sugar obtained from one desiatin in Russia and in the chief countries of production in Western Europe is shown (in poods of refined sugar per desiatin) in the following table : — Russia. Germany , Austria-Hungary France Belgium . Holland . . . 1904-5 1912-13 1913-14 I2I-3 92-91 146-1 233-4 295-6 301-0 164-0 254-3 238-2 192-8 252-2 225-6 223-6 271-3 247-5 228-4 274-7 223-5 1 The quantity of sugar produced is very small owing to the loss of a considerable percentage of the crop through bad weather. BEET. 73 Whereas the science of beet cultivation is developed poorly the technical part of the sugar manufacture in Russia has been brought to a high degree of perfection, and is but httle behind that of Western Europe. This is seen in the excellent results obtained in Russia as regards the percentage of refined sugar extracted from the beet. The average results secured in Russia as compared with the corresponding data from the chief countries of pro- duction in Western Europe are as follows (in percentages) : — 1913-14 Russia. Germany . Austria- Hungai y France Belgium . Holland , By their successful manufacture, the Russian factories have largely increased the percentage of sugar extracted from the beet during the past twenty to twenty-five years, and have nearly reached the results obtained in Western Europe. Obstacles to a more rapid progress are the small crop per desiatin, or in other words, backwardness in agri- cultural science, and a comparatively small number of manufacturers with higher technical knowledge engaged in the sugar industry. West European works produce sugar very much more cheaply than Russian. This is partly owing to greater technical knowledge, partly to the fact that foreign beet is cheaper than Russian owing to the average crop being heavier. Foreign sugar industries also require considerably less capital than the Russian as they do not require to store in advance all the materials necessary for the manufacture of sugar, these being conveyed to the factories while the manufacture of the sugar is in progress. In Russia, on the other hand, the distance of the factories from railway sta- 74 RUSSIA : ITS TRADE AND COMMERCE. tions, and their dispersion over so vast a territory, makes it necessary to collect all the required materials long before the manufacture of sugar is commenced. Owing to these conditions the factories are obliged to construct all kinds of engineering shops, fully equipped and having large staffs of highly paid engineers and workmen. Before the sugar is obtained the Russian sugar manufacturers are obliged to advance sums to planters, for sowing, digging and carting the crops on their own lands. All this requires a consider- able working capital, which is lent by the banks at dearer rates than in Western Europe. Russian sugar works may be divided into three classes : granulating works, producing white granulated sugar ; granulating and refining works, which produce refined as well as granulated sugar, and refineries only. The works producing white granulated sugar in 1 913-14 numbered 294. Of these 47 had refineries attached. The number of refineries, pure and simple, numbered 20. The quantity of beet used in the production of sugar during the past decade is expressed in poods in the following table : — Total Crop of Beet. 1904-5 394.518,671 I912-13 .... 692,912,900 I913-I4 .... 752,838,100 Quantity used for Sugar. 393,107,881 635,605,800 746,574,400 In all the beet-producing countries of Europe 3,387,983,300 poods of beet were used in 1 913-14 ; the quantity used in France was 350,290,700 poods, in Austria-Hungary 670,853,600 poods, in Germany 1,020,500,000 poods. In this respect Russia occupies second place amongst European countries. As regards the production of white sugar in 1913-14 Russia likewise took second place ; in certain less favourable years Austria-Hungary has come second. Dur- ing the last ten years the growth in the production of white BEET. 75 sugar in Russia, as compared with the production in the principal west European countries, has been as follows (in poods) : — Russia. Germany . Austria-Hungary France Belgium . Holland . 1904-5 51,091,840 88,673,876 48,394.350 33,752,520 9.377,523 7,499.340 1912-13 1913-14 75,400,942 148,280,100 104,398,700 52,753,400 16,392,200 17.358,100 93,510,861 145.303,800 92,687,700 42,878,000 12,418,400 12,478,800 The total stock of sugar (in poods) in Russia, counting the quantity produced from the beet and the unused surplus from the preceding year, has been in recent years : — 1904-5 1912-13 1913-14 Surplus from the pre- ceding year 26,632,298 39,016,301 21,982,641 Production of sugar from beet 51,091,840 75,400,942 93,510,861 Total quantity of sugar. 77,724,133 144,417,243 ^15.693.502 Sold on the home market 51,771,996 82,156,306 84.474.345 Destroyed for various reasons .... 109,651 — 143.549 Exported abroad 11,430,173 10,278,296 8,511,510 Stock in hand at the end of the year 14,412,318 21,982,641 22,263,298 By the laws of November 20, 1895, and May 12, 1903, the annual production of sugar in Russia is regulated. The Ministry of Finance determines the normal production for each year, which embraces (i) the quantity of sugar required to meet the demand of the home market, (2) the maximum market prices, (3) a stated quantity of sugar in reserve which may be put on the market only by permission of the Ministry of Finance when the market prices exceed the 76 RUSSIA: ITS TRADE AND COMMERCE. maximum fixed by the Ministry of Finance, (4) the amount of the average export to Finland and Persia. All sugar produced in excess of this " normal production " is classified under the heading of so-called free reserves which the sugar manufacturers may export abroad if they wish. In spite of the fact that these free reserves are sometimes very con- siderable, exports of Russian sugar to the markets of the world, especially to the British market, are very limited, chiefly under the influence and to the advantage of the German sugar manufacturers : by the international Brus- sels Sugar Convention a limit was determined above which Russian sugar was not allowed to be exported to foreign markets.^ How low was this hmit, as compared with the total production, may be seen from the following figures representing the exports while Russia was a signatory to the Convention : — ■ Total Exports. By European Frontiers By Asiatic Frontiers 1907-8 1908-9 1909-10 I9I0-II I9II-I2 I9I2-I3 . . . . •. 17,768,312 16,233,949 5.397.872 19,952,377 31,652,787 10,278,296 13,694,006 12,319,843 1,715,695 14.831,339 26,022,302 4.593,144 4.074,306 3,914,106 3,682,177 5,121,038 5,630,485 5,685,152 Tobacco Growing Amongst the tobacco-growing countries, Russia is third in importance, following the United States and the West ^ Article 2" of the Brussels Convention granted to Russia for the four annual periods between i September, 1909, and 23 August, 1913, the right to export 200,000 tons; this right was maintained for the five periods between i September, I913, and August, 1918. The contracting po\vers, owing to exceptional cir- cumstances, a shortage of sugar and a considerable rise in price in the world's markets, agreed to Russia exporting an extra amo-..nt : 1911-12, 150,000 tons ; 1612-13,50,000 tons; 191 3-14, 50,000 tons. TOBACCO GROWING. n Indies. Owing to the varied climatic conditions of the vast Empire, high-grade tobaccos are grown from both Turkish seed (yellow and cigarette) and from American seed (dark and cigar), as well as low-grade tobaccos, so- called " bakoun," " makhorka " and shvitsent." The land sown with high-grade tobacco during the last few years has been about 45-55 per cent, of the total area of the tobacco plantations. Statistics of tobacco growing in Russia during recent years are given in the following table : — Number of Planta- tions Total Area in Desiatins Tobacco Crop (in Poods) High Grade Low Grade Total 1903 . 1911 . 1912 . 489.265 365.634 317,604 65,088 74,208 65,826 2,349,772 2,428,172 1.835,965 3.819.370 5.288,754 5,535.282 6,169,142 7,716,926 7.371.247 Transcaucasia and the southern part of Russia are the principal regions where high-grade tobaccos are grown. Of the districts engaged in the cultivation on a large scale of the lower-grade tobaccos — " bakoun," makhorka " and " shvitsent " — mention should be made of the districts of Little Russia and the neighbouring nine governments of the central black-soil region. " Makhorka " is the most widely used low-grade tobacco in Russia. It has a comparatively good flavour and this, with its cheapness, has made it popular with the poorer classes. Russian "makhorka" has a well-deserved reputa- tion, not only on the Russian market but outside Russia as well. It is exported to Egypt and comes back to Russia as foreign cigars. The weak part of its cultivation is the insufficient capital invested in the business. Most of the tobacco produced in Russia is manufactured in Russian factories ; but a very considerable and increas- ing proportion is exported abroad. Some of the Russian tobacco factories arc very large. 78 RUSSIA : ITS TRADE AND COMMERCE. chiefly those belonging to joint-stock companies. The average output is not very high ; in 191 1 the production was but 11,000 poods of manufactured tobacco from the ordinary factories, and 38,600 poods from the " makhorka " factories. The total number of work-people engaged in the tobacco industry in 1911 was 30,886, or an average of 131 to each factory. The technical equipment of the factories leaves much to be desired, although considerable improve- ments have been made during the last few years in replacing hand labour by machinery. For example, during the last ten years the number of mechanically driven machines in the ordinary factories has increased from 50 to 106, while the number of hand-power machines has diminished from 463 to 224, or by more than half ; in the " makhorka " factories and in the " makhorka " sections of the ordinary factories the number of hand-power mortars, grind-stones, and other apparatus has decreased in ten years from 399 to 385, while horse and steam-driven grinding machines and other apparatus have increased during the same period from 522 to 766. From 9 to 10 per cent, of the tobacco produced in Russia is exported abroad. Tobacco is usually exported in the leaf. Cut tobacco and snuff are exported in very small quantities. Tobacco in leaf form is exported principally to Finland ; France, which is a ready buyer on account of the tobacco monopoly ; Austria-Hungary, which imports it for the same purpose ; and Germany. More than 75 per cent, of the total exports of leaf tobacco in 1911 were sent to these countries. The total export of leaf tobacco in 1 91 1 was 636,000 poods, valued at 4,268,000 roubles, of which 27 per cent, was sent to Finland, 20 per cent, to Ger- many, 23 per cent, to France, and 7 per cent, to Austria- Hungary. The balance was exported to other countries. Attention has recently been called to the growing export of Sukhum leaf tobacco to Egypt and Turkey in Asia. The tobacco sent to these two places is chiefly high-grade from Turkish seed — -Samsun and Trapizond. The increased export of Russian tobacco is the result of a good quahty product which has been well sorted and selected, whereby FRUIT GROWING. 79 it is well able to compete wich Turkish and Greek tobaccos The export of Batum leaf tobacco — Trapizond — to Egypt has also increased for the same reasons. Sukhum mer- chants are arranging for the export of leaf tobacco to America, but are meeting with difficulties from the Ameri- can Tobacco Trust. Cut tobacco is chiefly exported to China, Finland, Persia, Germany and Austria-Hungary. In addition to leaf and cut tobacco Russian cigarettes and cigars, which well merit their excellent reputation, are also exported abroad. The export of tobacco manufacturers during the quin- quennial 1906-1910, expressed in poods, includes about 40,000 poods of cigarettes and 1,000 poods of cigars. The principal markets for the sale of cigarettes are : Finland, Holland, Germany, England, and China. Of the total export of 640 million poods (?) (40,000 poods?) of cigarettes in 1911, 41 per cent, were exported to China, 27 per cent, to Finland, 12 per cent, to Holland, 11 per cent, to Germany, and about 2 per cent, to England. The export of cigars is subject to considerable fluctuation, and is of no general importance ; the principal demand for cigars comes from Germany. Fruit Growing The nature of fruit cultivation and degree of its develop- ment in Russia is directly dependent upon the varied soils, climatic conditions, means of communication, proximity to railway centres, etc. Favourable conditions over a wide belt of country along the western frontier of Russia have rendered this region particularly prominent for fruit cul- tivation and a very high perfection has been attained. The district is made up of the Baltic Provinces, the Vistula region and the South-Western, or Trans-Dnieper, region. In the Baltic district the fruits chiefly grown are apples and cherries ; pears and plums are of somewhat secondary importance. In this region there are also many kinds of fruit of foreign origin. In the Vistula region apples and pears predominate, though the cultivation of the best kinds 8o RUSSIA: ITS TRADE AND COMMERCE of foreign cherries and plums is carried on in certain parts. Amongst the apples, the English Pippin, Calvilles and many foreign kinds of Rennets are widely grown. The South- Western, or Trans-Dnieper, region is one of the richest parts of European Russia for fruit growing. Here, especially in the governments of Bessarabia and Podolia, the best kinds of foreign fruit are successfully cul- tivated. Among apples these include the white wintei Calville, Rosemarie, Napoleon, London Pippin, golden Pearmains, etc. Of pears there are the Duchess of An- gouleme, the winter Dekanka, the Royal, William, etc. Plums include various varieties of the Reine Claude, while peaches, apricots, and cherries are also grown. The art of fruit cultivation in this region has been brought to a very high level of perfection ; many proprietors here have given themselves seriously to fruit farming and look after their orchards in exemplary fashion. Gardeners take advantage of the numerous foreign varieties and cultivate them through- out the district. In many parts, this region might be called the kingdom of stone fruit, especially plums, and might well supply the foreign market with fine big Hungarians, both fresh and preserved. The export of preserved apri- cots might likewise be organized. To the east of this wide belt of the fruit region there is a large area with soil which is unsui-ted for fruit growing. This is followed by the immense Moscow region, the centre of the northern fruit belt, which covers seven governments. The apple is the principal fruit of this region, though certain kinds of pears and cherries are also grown. Vladimir and Maloyaroslav cherries enjoy wide popularity throughout Russia. Further, along the whole course of the central Volga from Nijni-Novgorod, and, in places, as far down as Astrachan, fruit growing is extensively practised on the narrow up- lands on the right bank. Local kinds of dessert apples, pears and cherries are cultivated, and occasionally, large strawberry plantations are met with. From the Crimea, the principal Russian markets are sup- plied with the best apples and pears. Crimean fruit growers FRUIT GROWING. 8i have also sent a few experimental lots of apples to the Lon- don and other foreign markets with entirely satisfactory results. There is no doubt that the export of Crimean fruit, especially apples, has a wide future before it, for this fruit, both in quahty and appearance, can satisfy the most exact- ing and varied tastes of foreign consumers. The principal firms of Moscow and Petrograd compete against each other in the purchase of large quantities of apples, pears, nuts, and dessert grapes, while the large demand for Crimean fruit is further strengthened by the increasing output of the preserving factories. In the Crimea the following are the chief kinds of apples grown : Sary-sinap, Candille-sinap, Orleans Rennet, Golden Pearmains, English Rennet, red and white Cal- ville, Canadian Rennet, Champagne Rennet, white and red Rosmarie ; William, Marie Louise, Duchesse, Beurre, autumn Dekanka, Cure, Ferdinand, Saint-Germain, and several other kinds of pears. Peaches, apricots, and plums are also successfully grown in the Crimean orchards, but are of minor importance. The Crimea also supplies the home markets with large quantities of almonds and walnuts which might be exported successfully, if a little more enterprise were shown. In the Caucasus, fruit cultivation is not at all uniform, owing to the fact that natural conditions vary very much in the different localities. The cultivation of fruit is par- ticularly developed in the Black Sea region, where varied and valuable fruit trees and shrubs grow in profusion — ■ apples, the choicest kinds of pears, cherries, peaches, apri- cots, almonds, plums, oranges, lemons, walnuts, chestnuts, pomegranates, etc. Fruit growing is also widely practised in many parts of the Caspian region. Transcaucasia is able to produce the best kinds of foreign fruit with great success, such as the following kinds of apples : white winter Cal- ville, yellow and red autumn Calville, Canadian Rennet, the grey Muscat, and saffron Rennets, the Golden Pearmain, and many others. Pears include the winter Dekanka, Duchesse, Woodland Beauty, Beurre, and others. Euro- pean apples and pears when grown here attain to a great size and are of excellent flavour. G 83 RUSSIA: ITS TRADE AND COMMERCE. During the last decade Turkestan has come to the front amongst Russian fruit-growing centres by reason of the excellence of its fruit. With its exceptional climatic con- ditions, Turkestan may safely be called the home of the fruit tree, so rapid is the growth of all kinds of plants. Young cuttings begin to yield fruit by the third and fourth year, and by the fifth and sixth years good crops are obtained. Pear trees in Turkestan yield from three to six poods of fruit, and apple trees from four to ten and even twelve poods. When Turkestan became a Russian possession, amateur gardeners took up the question of fruit growing and placed its cultivation on a rational foundation. They began to grow the very best kinds of southern fruit. The construc- tion of the Tashkent Railway gave the cultivation a further incentive. Turkestan now possesses such favourable con- ditions for growing the best kinds of fruit, that it is able to compete not only with other parts of Russia, but with foreign countries. First amongst the commercial kinds of Turkestan fruit are the following apples : white Calville, white Rosemarie, yellow Belle Fleur, Candille-sinap. In addition the following kinds of \vinter-apples are cultivated: red Calville, Rennet; of autumn apples there are the Golden Pearmain and Napoleon ; of summer Rennets there are the Landsberger and Golden Grime ; and of spring apples — the Baumann Rennet. The best kinds of pears are : sum- mer — Marie Louise, William, Josephine ; autumn — bonne Louise d'Avranche, Passe Colmar ; autumn and winter — Duchesse Imperiale, Duchcsse d'Angouleme, Beurre, Dill. More than fifty different kinds of apples and pears are grown in Turkestan. Turkestan fruit has become well known throughout Russia, during the last few years its fame has gone abroad ; at one of the last international exhibitions of fruit growing, the exhibits of Oberdik Rennet, Beurre Dille, Aport, tliC Vernen and Kattakourgan gra])e " Bomba " attracted the attention of fruit specialists by their size, weight and beautiful colouring. Hop Growing The cultivation of hops began to assume large propor- HOP GROWING. 83 tions in Russia about twenty-five years ago, and has now become an important part of agriculture in Poland, in Vol- hynia, and in the so-called " Guslits " region. In all there are about 9,000 desiatins in Russia under hop cultivation from which, on an average, 400,000 poods of hops are ob- tained. There are two kinds of hop cultivation in Russia : the old non-cultivated Russian hops, and the new cultivated kinds of Western Europe, which are used in up-to-date breweries. The cultivation of hops is distributed through the various regions in the following manner (in thousands of poods) : — Best Foreign Hops Inferior Russian Hops District District Volhynia . Podolia .... Guslits .... Central .... 250 40 20 5 315 Kostroma . Guslits. Kazan. Viatka. . . . Belostock . Souzdal 30 15 15 15 5 5 85 Volhynia is the most important hop-growing district. The hop was introduced into Volhynia by the Czech colon- ists, who had cuttings from the Bohemian plants sent to them from their native country. The principal kinds now grown are red Saaz, from Bohemia and Bavaria, and Goldings from England. The oldest hop-growing region where the cultivation of Russian plants has been practised since early times is the so-called " Guslits," comprising the governments of Mos- cow, Vladimir, and Riazan. A large proportion of the hops grown in Russia are used in Russian breweries. The best kinds are exported abroad, whence a certain proportion return to Russia, marked as being of foreign origin, 84 RUSSIA: ITS TRADE AND COMMERCE. The Russian brewing industry consumes about i3,cco poods of Russian hops, and about 40,000 poods of imported hops. The annual export of the best Russian hops amounts to about 30,000 poods. Vine Growing and the Manufacture of Wine The cultivation of grapes and the manufacture of wine are on a low level in Russia, and, in spite of their importance to the agricultural status of the southern districts, they are far from commanding the whole of the home market. During the quinquennial period of 1906-1910, 542,000 poods of foreign wines, valued at 10,784,000 roubles, were imported into Russia. The wine comes chiefly from France and Germany, and large quantities of grapes and raisins are also imported into Russia. Russian wine export is very small, both in quantity and value ; during the five years, 1906-1910, the average export was 23,000 poods, valued at 443,000 roubles. The total area of land in Russia devoted to the cultivation of the vine is about 230,000 desiatins, while, according to the statistics for 1913, 100,890 desiatins are situated in the southern governments, 25,600 desiatins in the Northern Caucasus, 8o,6co desiatins in Transcaucasia, and about 20,000 desiatins in Turkestan. Amongst the southern governments with a well-established vine-growing industry, Bessarabia with its 6i,oco desiatins of vines, the govern- ment of Taurida with 11,720 desiatins, the government of Kherson with 16,230 desiatins, and the Don Cossack Terri- tory with 10,080 desiatins, stand out prominently. In Transcaucasia the principal wine-manufacturing centres are the government of Kutais with 18,190 desiatins of vines, and the government of Tiflis with 21, coo desiatins. The most important vine-growing and wine-producing regions of Russia are the government of Taurida (Crimea), Transcaucasia and Bessarabia ; of secondary importance are the Don Cossack Territory, the government of Astrachan, the Northern Caucasus, and the Transcaspian region. In the Crimea the cultivation of the best foreign grapes has been brought to a high state of perfection ; the principal VINE GROWING AND WINE MAKING. 85 kinds are the Muscat, then follow Cabernet, petit Verdot and Merlot, S'Emilion, pedro-ximenes, pinot blanc, gris, pinot franc, Lourvede, Sercial di Madeira ; during the last ten years the Grenache, Mausac noir, and Kachetinsk, have been widely cultivated for red wine as they bear large quantities of fruit rich in colour and tannin. The kinds more usually grown in the orchards of the colonists are : Concours, Alicante, S'Emilion, Pinot, Chasselas, and Muscats. South coast wines are considered the best of the Crimean wines ; they possess all those qualities which constitute a good wine, i.e. strength, body, quantity of alcohol, aroma, improve with keeping, and can be trans- ported without losing in quality. The liqueur wines of the south coast are held to be the best of their kind, and have attracted the attention of experts at international exhibi- tions in London, Paris, Vienna, and in the United States. The white table-wines of the south coast are noted for their strength and powerful aroma. Red wines are of very high quality, but are somewhat over harsh, contain rather too much alcohol, and not sufficient acid. In addition to the numerous kinds of dessert and local grapes of Bessarabia, foreign grapes for making wine are also cultivated, chiefly in Southern Bessarabia, such as malbec, cabernet-sauvignon, merlot, St. Emilion, sauvignon blanc, enassalar, Riesling, etc. There is great variation in the Bessarabian wines, but the majority of them belong to a class of table-wine similar in taste to the French, while in some parts they approximate to the Rhine wines. In some of the southern parts of Bessarabia where the soil is sandy a light agreeable wine is produced which, by keeping, be- comes slightly aromatic and fairly strong. Most of the wine of the large wine-growers, having their own cellars, contains from 10 to 12, and in some years as much as 14" 5 degrees of alcohol ; the peasant-made wine contains from 7*5 to 10 degrees of alcohol. It may be said that Bessarabian wine, both in view of the percentage of alcohol, acidity, the quantity of volatile acids and the amount of glycerine and extractives, has every chance of becoming a valuable pro- duct of high quality. 86 RUSSIA : ITS TRADE AND COMMERCE. • Vine cultivation in the Caucasian region may be divided into two main divisions — the Northern Caucasus and Trans- caucasia, in which there is a great difference both as regards the methods and extent of cultivation, and its importance to the inhabitants. In both these cases priority belongs to Transcaucasia. The methods of vine cultivation and wine manufacture are, however, still rather primitive even in Transcaucasia, and this fact is reflected in low produc- tiveness and the comparative dearness of manufacture. The numerous kinds of grapes, the close proximity of the plantations, the absence of any sorting of the grapes and maturing, all tend to prevent the manufacture of definite kinds of local wines. Although in places wine of high quality is produced, most of the Caucasian wines satisfy tastes that are not too exacting. The best of the Trans- caucasian wines are the Kakhatinsk ; they are agreeable in taste, with a good bouquet, but are rough and of insufficient acidity. Imeretinsk wines are of a different kind : they contain a comparatively small quantity of sugar, are very sharp, but not rough. When prepared according to Euro- pean methods they produce a light wine. The home of the finer Caucasian wines is the Western Caucasus, or more correctly, a small district at the western end of the Black Sea coast or the districts around Novorossiisk and Gelend- jik. Of the wines grown here the best known is Riesling. A competitive wine is St. Emilion. Mention should also be made of Aligonte, which is an excellent kind of table-wine, Kaberne, Portugalka, which is known by the name of " Bur- gundy." Kaberne and Portugalka are the characteristic wines of the neighbourhood. In the district of Novorossiisk is the Crown estate of Abrau, well known for its excellently equipped wine-manufacturing establishment. Its fame is due to the preparation there of the finest dry wines and " Abrau-Durseau " champagne, equal to some of the good makes of French champagne. A very large quantity of the wine produced in the Cau- casus is consumed by the growers themselves, a con- siderable amount is placed on the home markets, while part of the grapes and must, and also the bad wines, are VINE GROWING AND WINE MAKING. 87 used in some districts (Transcaucasia) for the production of spirit. The manufacture of wine is not equally important for all the wine-producing districts of Transcaucasia ; in those districts where the sale of wine is difficult owing to distances from the market centres and the absence of suitable communication, distillation of spirit forms the chief outlet for the vine growers ; in other parts this is but a side issue for utilizing the refuse of wine-making. • CHAPTER V Forestry By H. Kasperowicz The forests of the vast expanses of Russia are of the most varied description, both as to the number of species of tree which they contain and as to their value and importance to the district population. Up to the present, no exact esti- mate of the area covered by forests has been made, but about the year 1912, the extent of forest land in European Russia, Asiatic Russia and the Caucasus was estimated at 305 millions, of desiatins. The State is the principal owner of forests and such forests are administered by the Forest Department. In the area described above as forest land, enormous stretches of " Tun- dras," bogs, lakes and rivers are comprised, as well as the actual woodland. Properly speaking, the extent of true forest land is, according to the Forest Administration, only about 170 millions of desiatins. It is distributed as follows (in desia- tins : — Region European Russia European Russia minus the five northern Go- vernments The five northern Governments . The kingdom of Poland The Caucasus Asiatic Russia . General Surface 1911 105,809,720 13.502,313 70,675,273 612,960 4.379.847 228,540,062 1912 105,947,192 13.545.303 70,769,659 614,872 4.746,934 194,409,293 88 Net Forest Land 1911 85.638,300 10,804,188 58,248,120 564.474 2,962,102 86,112,107 1912 84.249.234 10,827,675 57,835,661 561,936 2,962,724 91,910,292 FORESTRY. 89 The highest percentage of productive forest land is in European Russia, where it occupies an area of 80 per cent, of the total ; Poland is particularly remarkable in this respect. The five northern Governments are less favoured, as are also the Caucasus and Siberia. The area of these regions is about 30 per cent, of the total. All the forests fall into two characteristic groups. The forests of the north and north-east of European Russia, those of Siberia and the mountains of the Caucasus belong to the first group. These are forests, more or less dense, interspersed occa- sionally by cultivated tracts of land. Usually, however, they form expanses of what might almost be called virgin forest, with bogs and lakes, where cultivation is practically unknown. This kind of forest is rarely met with in other parts of Europe. The forests of the second group are "already consider- ably diminished, and the clearing is rapidly continuing in' order to supply the ever-increasing needs of the home market and foreign exportation. The forests of the Russian Empire abound particularly in conifers, though in certain districts, and under certain climatic conditions, groupings of conifers and leaf-bearing trees are to be found. There are about forty known kinds of conifers in a wild state growing to a considerable height, of which the most common in Russia is the fir-tree. Whole plantations in which no tree of any other species is met with are of common occurrence. It flourishes particularly in the north, forests of fir-trees being practically non-existent in the southern half of Russia. There the fir is only met with among other kinds of trees. Siberia and the Caucasus have special kinds of fir-trees. Next in importance, as to the surface which it occupies, but taking first place in forest economy, is the common pine. It grows farther south than the fir-tree. In some regions, in Siberia for instance, and in certain parts of the Urals, a particular kind of pine known as the Siberian cedar is found, remarkable not so much for its wood as for its fruit, which is called the cedar-nut. The existence of 90 RUSSIA: ITS TRADE AND COMMERCE. these trees in the forests of Siberia forms one of the most important branches of local industry, and is the source of considerable revenues to the population. In the Crimea, in addition to the common pine, there is a species called the Crimean pine. In the Caucasus the pine has no economic importance ; the species found here is the maritime pine [Pinus maritimus). Among the pine and other species the birch, one of the most common of leaf-bearing trees in the forests of Russia and Siberia, is to be found. Some neighbourhoods show whole plantations of this species without the admixture of any other. The aspen is also very common and is met with in separate groups or growing among other kinds. During the last few decades, the space covered by the aspen has greatly increased. Birch and aspen very often grow on the ground formerly occupied by ancient forests, which have either been cut down or destroyed by fire. They flourish on the sites of fir forests in the north, of oak forests in the south and on ground formerly occupied by pine forests, etc. The oak, on the contrary, is much less common, and occurs more frequently in the south of Russia, where it forms forests in conjunction with other species. In European Russia the common oak predominates • but special kinds of oak grow in the Crimea, the Caucasus and in Siberia. Among the other trees found in Russia are the larch, generally growing in company with the fir, the beech, the alder, the linden, the elm, the witch elm, the ash, the maple, the plane, the birch bark, etc. In the Caucasus grows the Caucasian palm, known as the " Samshita," which is greatly valued ; there also is found the walnut, on which knots, or excrescences, attaining some- times a diameter of from two to three archines, are often formed. Similar excrescences commonly occur on the birch ; the wood of which these are composed is of a parti- cular texture and is extremely pliable. It is used in the manufacture of many articles of joinery, which are known in Russia and abroad as articles of Carelian birchwood. FORESTRY. 91 The following table shows the distribution of the forests of European Russia according to their ownership. The table is given in desiatins and on the percentage of the general forest surface. The proportion of forests in Euro- pean Russia is 337 per cent, of the total, and the forests are chiefly situated in the northern parts, such as the North Baltic, the Ural mining district and the Upper Volga. General Appanage State of Private Peasant Various Region Forest Surface Forests Imperial Family Owners Owners Others Northern 61,974.045 57. 499.3532. 151. 871 954.827 1,280,561 87.433 district 100 92-8 3-5 1-5 2-1 o-i North 13.065,838 5,466,562 859,608 4.934.959 1.496,697 308,012 Baltic 100 41-8 6-6 37-8 II-4 2-4 South Baltic 5,102,897 722,007 8,211 4,106,250 182,431 83,968 River 2,191.195 712,172 115.843 1.328,799 24,747 9.634 Niemen 100 32-5 5-3 60-7 I-I 0-4 Rivers Dnieper 9,065,482 1,444,949 73.448 6,618,334 571.676 357.075 and 100 i6-o 0-8 73-0 6-3 3-9 Dniester Kingdom of Po- 2.I77.152 722,296 203 1,122,340 211,778 120,535 land 100 33-19 o-oi 5i'i6 9-7 5-5 Ural mining district 22,294,745 10,730,420 171,989 6,995,680 3,277,044 1,119,612 ICO 48-1 0-8 31-4 147 5-9 Upper 11,526.195 5,499,884 668,823 3.781,334 1,457.709 98,445 Volga 100 45-8 4-9 38-1 9-6 1-9 Middle 4.631.859 2,122,883 225,894 1.765.275 444.035 73.722 Volga 100 47-7 1 6-0 32-8 12-6 0-9 Lower 3.675.704 742,820 918,385 1,157.055 770.013 68,840 Volga 100 20-2 25-0 31-5 20-9 2-4 Central Pro- 6,015,704 1.460,733! 72.582 3.187.718 1.101,736 192,935 vinces 100 24-3 1-2 53-0 i8-3 3-2 Total . 141,720,225 87,124,079 5.286,857 35,952,571 10,818.427 253.829 From the table it will be seen that about two-thirds of the European Russian forests belong to the State, which is also the principal owner in other forest districts. Forests under private ownership form about a quarter of the total and pre- dominate in the districts of the Southern Baltic, the rivers Dnieper and Dniester, the river Niemen and in Poland. 92 RUSSIA: ITS TRADE AND COMMERCE. The State forests, on account of their numerical superi- ority, are very important in regard to the export timber trade, which is substantially increasing. From the northern provinces, timber is exported through the ports of the White Sea, principally to Great Britain. In 1912, the general area under forest and the area suitable for timber growth was, in thousands of desiatins : — Provinces „ , . ; Suitable for Timber General Area ! ^^^^^^ Archangel .... Vologda .... 43,157 29,018 30,385 27,024 72,175 75,409 The rich country of Setchera lies in this area. It has so far been very little explored, and must certainly possess other sources of wealth than those already known and developed. The principal kinds of trees in this part of the country arc the pine and the fir. In the east, the larch, the fir and the cedar may be found, and in certain neighbourhoods the birch, the aspen and the alder flourish. Conifers of large dimen- sions, however, are diminishing in number as the forests are thinned. In this district, the forests suffer greatly from fires, whicirare diificult to cope with owing to the sparse number of the inhabitants. The small population consti- tutes an obstacle to the fuller development of the forest riches in these northern districts. The delivery of timber from this area is very limited ; every year immense quanti- ties of wood remain which are put to no use whatever. The following table indicates in cubic sagencs the amount of unfelled timber (the principal article of trade) which was marked out for sale in 191 2, and the amount which was actually sold : — FORESTRY. 93 Governments Designated for Export Actually Exported Archangel. Vologda .... 1,706,751 731,960 526,903 406,443 One of the reasons why so Httle timber is exported from North Russia is the absence of roads and means of transport. The Government of Olonetz belongs also to the northern area, for all the timber from this Government is exported through the ports of the White Sea, except a small propor- tion which is sent through the new port of Petrograd. In the regions of the Ural (Governments of Perm, Oufa, and Orenburg) forests of pine and fir are the most common. In certain districts the Epica, or white fir, grows with the common fir ; there are also forests of cedars. The oak flourishes in the Government of Oufa and in part of the Government of Orenburg. In spite of the continuous fell- ing of the last few years, this area still possesses vast ex- panses of practically virgin forest, up to the present very little explored. In 1912, the State forests in the mining district of the Urals were distributed as follows : — Governments Total Area Area Suitable for Forest Growth Perm Oufa Orenburg .... 9,027,128 416,336 208,244 8,112,548 379.265 254.942 The timber from these forests which is destined for ex- port is sent partly through the ports of the White Sea and partly through the new port of Petrograd. The forests of the Caucasus are chiefly disposed, in groups, between the mountains, in the central districts, and partly in small tracts on the borders of the Caspian Sea. The Middle Kura is wooded along the whole length of its banks. 94 RUSSIA: ITS TRADE AND COMMERCE. In the locality which is called the Little Caucasus, the Armenian heights, etc., forests of considerable importance occur round the base of the mountains and in the passes. Farther on is the great forest to the north of Lake Concha, and to the east that of the province of Elizabethpol. These present the characteristics of mountain forests. In the west of the Caucasus the forests are disposed in uninterrupted stretches which extend to the seashore. In general, the forests of the Caucasus have in area of 67 millions of desiatins. The extent of the State forests in 1912 was 4,746,934 desiatins, including 2,962,724 desiatins suitable for the growth of timber for commercial purposes. The following provinces of the Caucasus are the richest in forests : — Favourable Irovinces and Districts Total Area for Com- merce Province of Batum 570.305 258,900 Province of Elizabethpol 637.214 403.238 Province of Cuban 569,266 322,758 Province of Kutais . 318,976 181,197 District of Soukhoum 324.203 166,744 District of Terskaya . 346.679 281,874 District of Tiflis and Zakatalski 823,078 548,814 District of the Black Sea . 418,831 345.315 Among the mountain trees of the Caucasus the most common is the beech : it occupies 25 per cent, of the total forest area. These forests contain a great quantity of wood suitable for joinery. The oak, which ranks second in importance, occupies in the Caucasus 167 per cent, of the total area. The local oak can be used for building material as for carpentry, irrespective of special kinds. Next to the oak ranks the wych-elm. It occupies 12-8 per cent, of the total area. The wood of this tree is suitable FORESTRY 95 for carpentry, but locally it is used principally as firewood. The pine covers 8-i per cent, of the total area ; the fir 6-6 per cent., and other kinds of fir 6 per cent. In addition to the above species, juniper, birch, elm, alder, maple, ash, lime, poplar, willow, chestnut, hazel, box, Hgnum vitae, mountain ash, pear, apple, etc., are found. All these kinds have a household importance. Altogether the total amount of timber from the State forests in the Caucasus destined for sale was 640,362 cubic sagenes, and of this amount only 159,674 cubic sagenes was actually delivered, representing 24-8 per cent, of the quantity marked. The timber of the Caucasian forests is chiefly used for local needs, although a certain amount is exported through Batum, Novorossisk and other ports. Large quantities of wood, however, owing to the absence of roads and to transport difficulties, are never utilized at all. Siberia is very rich in forests. The approximate area at the disposition of the Government is 194,409,293 desia- tins, including 91,910,292 desiatins of specially favourable land. The four provinces of Siberia, Tobolsk, Tomsk, Yenis- siesk, Irkutsk, and the eastern districts beyond Lake Baikal, Yakoutsk, Amursk and Primorsk, are the richest in forests, and present an immense reserve of standing timber. The forests of Siberia are noted for the number of species which they contain. Conifers are represented by the pine, larch, cedar, fir, and white fir ; leaf-bearing trees, by the birch, aspen, alder, linden and poplar. Farther on, in the forests of Amur, new kinds appear, such as the Mongolian oak, different varieties of the maple, linden and ash, the walmit and the cork tree. The area of the forests may be estimated as follows (in desiatins) : — 96 RUSSIA: ITS TRADE AND COMMERCE Provinces and Districts Total Area Favourable for Forestry District of the Amur .... 34,841,000 11,992,500 Province of Yenissiesk . 8,956,265 7,987,080 District of Trans-Baikal 17,999,000 2,102,000 Province of Irkutsk. 8,812,987 6,367,138 Province of Primorsk . 34,454,620 21,967,550 Province of Tobolsk 63,036,505 16,780,808 Province of Tomsk . 11,518.499 4,457.487 The administration of the Siberian and other forests in Asiatic Russia is very imperfect, even in those which have been explored and partly organized. Accumulations of vegetable detritus, which has lain there for centuries, give to a Siberian forest a decayed and wild aspect, and add much to the danger of forest fires. The supply of wood from Siberia is therefore proportionately diminished and great quantities remain unutilized. Here again, difficulties of transport, added to lack of initiative on the part of the tim- ber merchants, shortage of capital, etc., are factors which prevent the development of the trade to its full extent. In 1 912, the Government had marked out for sale in Siberia 4,705,695 cubic sagenes of standing timber — not a large amount if the extent of the forests be considered. The amount actually sold was only 500,339 cubic sagenes, about II -12 per cent, of the amount originally intended for sale. Forest industries and the timber trade in Russia arc, on the whole, very little developed in comparison with those of other countries. The report for 191 3 of the Ministry of Trade, which is concerned with the activity of about 80 per cent, of the number of workmen employed, and with the same percent- age of commercial value gives an idea of the condition of the trade. Sav/mills and factories engaged in woodwork in European Russia sold, in 1912 , as follows (in thousands of roubles) : — FORESTRY. 97 Industries Sawmills Veneer (cut and stuck) Articles in veneer .... Carpentry, joinery and furniture Flooring and carpentered wood for building purposes Carving and joinery Wooden pins for shoemaking Matches and match boxes. Tubs and barrels Boxes Objects in cork .... Religious images and figures Pianos, organs, harmoniums, etc. Birch brooms, bast, laths, scant lings, soaked bast, etc. . Wheels and other articles . Milled bark Other varieties of articles igio 93,205 3,938 2,185 6,124 3,772 1,225 138 • 456 1,070 2,533 7,518 56 2,425 209 126 7 269 191 1 Total 125,962 107,545 4,795 2,396 8,048 5,374 1,331 119 445 1,583 2,629 8,383 90 2,851 192 154 II 392 1912 126,108 7,085 2,473 8,798 6,720 1395 133 553 1,959 2,952 8,527 58 3,130 159 170 12 417 150 ,300 174,643 The real production, however, of the veneering works is double the amount indicated by the figures in the table, sawing and veneering works forming a highly developed part of Russian industry. Capital to the amount of 40 million roubles is engaged in the sawing industry alone and only from 10 to 12 millions in other trades. Carpentry and joinery are important industries ; they have made great progress during the last few years and have absorbed a considerable amount of capital. In the Russian timber trade the predominant type of enterprise is that of the single individual with a small capital. This is especially the case in the production of articles of wood, known as " Kustarny work," a branch of industry which is highly developed. It consists of the manufacture of wooden cups, bowls, spoons, etc., and supplies merchandise throughout Russia, of the value of at least 100 million roubles. H 98 RUSSIA: ITS TRADE AND COMMERCE. Timber working has made great progress during the last ten years, but is not, in general, fully developed. The in- dustry is of the greatest importance in European Russia, where the most recent figures show : — ■ Year Number of Factories Number of Workmen 19II 1912 2,196 2,358 112-5 (thousands) 124-2 This number is distributed between tl:e districts of tie north and that of the Ural mining district, as follows : — Northern district : — 191 1 1912 .... Ural mining district :- 1911 .... 1912 .... Sawmills and Veneering Industry Other Industries Number of Factories 48 53 49 44 Number of Workmen 15,006 17,920 3,084 2,060 Number of Factories Number of Workmen 57 lOI 193 226 Forest industries have developed in a more marked man- ner in the northern district, particularly in the province of Arkangelsk. In this region the annual production of the sawmills is as high as 30 millions of roubles, but such figures are insignificant when the total area of the forests is considered. Such factories as exist in this district produce for the most part planks, boards, rods, pegs, bungs and rivets, principally for the export trade. The production of cellulose and wood pulp is represented in the north of Russia by a unique but flourishing enterprise, named the " Sokol." The further development of the industry would p. obably have great chances of success. FORESTRY. 99 The manufacture of tar from vegetable substances is little developed. In the mining district of the Urals forest industries are relatively less developed. Those which work at preparing wood have made progress only during the last few years, progress which is due to the affluence of capital from abroad. In spite of the superabundance of the necessary raw material in this region only a limited amount of wood pulp is produced. Part of the forest products of this district are consumed locally ; the rest are dispatched to the mar- kets of Siberia, Turkestan and Boukhara. During the last few years the export of forest produce has augmented, particularly large timber, which is dispatched through the seaports to foreign markets. Industries for the preparation of wood are little developed in the Caucasus ; wood here is generally used for heating, and it is only during the last few years that a greater pro- portion has been adapted to other purposes. Planks from the different kinds of conifers are even brought here from European Russia. Wood-working industries are better developed in the pro- vince of Tifiis, where there are over twenty factories pre- paring different materials for building. Flooring, veneer, and planks are also prepared in other places, particularly in the province of Kutais, but these industries exist only to supply local needs. The beech, grown locally, is much more used now than formerly for the production of pegs, bungs and rivets, and also in a lesser degree for railway sleepers ; these are generally made of oak and are ex- ported. In Siberia, where small industries abound, the riches of the forests are still less turned to profit. The growth of the towns and other inhabited neighbourhoods near the railways have caused an augmented demand for forest pro- duce. Latterly many great commerical enterprises, based on the profitable working of forests, are constantly appear- ing ; their chief production is building materials, pegs, bungs, rivets, box wood and other merchandise necessary for the local mining and fishing industries. 100 RUSSIA: ITS TRADE AND COMMERCE. At the same time the timber industry is increasing for the purpose of exportation, and veneer and flooring are made of the more valuable kinds of wood. Siberian commercial enterprises have, until lately, been but insignificant, both with regard to the capital engaged and the number of factories, and those which have adapted themselves to the necessities of the export trade have shown the greatest development. In this respect the district of the Amur deserves special notice. In general, trade with foreign countries holds a very im- portant place in the total forest industry of Russia, and is still on the increase. In the total wood trade of Russia, which amounts to 650 to 700 millions of roubles, export trade was, in 191 3, according to official reports, valued at 165 millions of roubles, and according to private reports much greater, not less, in fact, than 200 millions of roubles. One may judge of the export of wood from Russia by the following table : — Years Amount in Thousands of Poods Value in Thousands of Roubles 1891-1895. . . . 19OI-1905. . . . I906-191O. 1911 1912 1913 242,368 379.149 416,914 428,045 468,812 42,532 65,865 116,412 142,368 153,380 164,930 The demand for Russian wood products has greatly augmented during the last ten years, and this augmentation comprises the export of tree trunks as well as of wood which has undergone a process of levelhng and preparing. During the last few years the principal buyers of wood from Russia have been Great Britain and Germany. They have taken 70 to 75 per cent, of the total export. A great quantity of wood is also exported to Holland, France and Belgium, but the export trade which has shown the greatest development is that from Russia to Great Britain. In 1913 it was more than four times as great as FORESTRY. 10 I in 1891, and this increase was made at the expense of Ger- many. The distribution of the exports from the various districts of Russia are shown below (in thousands of poods) : — Total exports In this number : On the European fron- tier of Russia. The district of the White Sea The region of the Baltic Sea The Russo-Prussian re- gion The Austro-Russian re- gion Asia — Black Sea Commerce with Finland Asiatic frontier . Green Wood 1912 1913 190-8 188-5 I7-I 69-1 94-0 7-4 1-3 o-i 2-3 223-9 220-8 20-6 95-9 96-6 6-9 ,0-6 0-2 3-1 Prepared Wood 1912 1913 237-3 239-9 2352 237-5 55-9 67-5 139-2 I28-I 29-4 29-2 4-3 5-3 0-4 2-1 3-4 9-2 0-3 2-3 Total of Foiest Produce Amount in per cent of Total Exports 428-1 428-7 73-0 208-3 123-4 II-7 6-6 0-5 4-4 99-0 17-6 48-6 28-8 2-7 1-2 o-i I-O Amount in per cent, of Total Exports 468-3 458-3 88-1 224-0 125-8 10-3 9-8 0-5 5-4 988 19-0 48-3 27-1 2-2 2-1 O-I 1-2 Besides timber from the sawmills Russia exports, up to the present, great quantities of green wood, the destination of which is generally the different countries of the Russo- Prussian districts and the Baltic Sea. In 1913, the export of green wood from the district of the Baltic increased con- siderably, and was specially noticeable in the wood used for the fabrication of matches and paper, principally exported to Germany. In 191 3, as well as in the preceding years, great quantities of different kinds of beams and traverses of high quality were exported to that country. The exports to Great Britain which have shown the greatest increase during the last ten years are those of wooden cylinders, rollers, beams and supports for use in mines. The export of fire- wood has also greatly increased during the last few years. The export of tree trunks from Russia to Great Britain and Germany during the last five years is shown by the following figures : — 102 RUSSIA: ITS TRADE AND COMMERCE. Total in Thousands of Roubles Export of Green Wood (trunks) Year To Great Britain To Germany (In per cent, of the total export) 1891-1895 . . I9OI-1905 . . I906-I910 . 1911 .... 1912 .... 1913 .... 8,801 16,659 34.557 40.833 42.443 52,859 II-3 9-8 14-2 20-4 25-4 17-1 77-4 697 59-2 487 55-9 467 It is only during the last few years that the export of tree-trunks to Great Britain has shown any increase, and comparing the amount exported to Great Britain between the years 1891 to 1895, we find that it has diminished. In the export trade of Russia, however, planks and boards occupy the first place ; they constitute 45 per cent, of ex- ported forest produce, and 60 per cent, of the total value. The greatest amount of prepared wood, above all, of planks, is dispatched from the districts of the Baltic and the White Sea. Most of it goes to Great Britain. The following table (in thousands of roubles) will give an idea of the importance to Russia of the two countries, Great Britain and Germany, with regard to the export trade in planks and boards : — Years Total To Great Britain To Germany (Per cent, of total exports) 1891-1895 . . 26,527 54-8 20-3 1901-1905 . . 1906-1910 . 1911 .... 40,086 67.685 86749 59-0 52-1 56-8 14-3 i8-4 17-6 1912 .... 1913 .... 93,979 96,434 55-9 537 i6-8 13-5 FORESTRY. 103 The considerable development of the exportation from Russia of wooden rivets, pegs, bungs, and matchwood must also be noted. Great quantities of these articles of merchandise are dispatched to Great Britain. Russia supplies England with whole timber, levelled and prepared wood, and above all with planks and boards. With regard to whole timber and prepared wood, however, Russia has a serious rival in German}/, which also exports timber of Russian origin to England. In the matter of planks and boards, Russia furnishes as much as all other countries taken together. English statistics for foreign trade furnish ample information on this subject. In the market for chemically prepared wood pulp Russia's export trade is almost exclusively confined to Finland. Wood pulp and cellulose are chiefly exported to Great Britain by the Scandinavian countries, which, as is well known, import the wood for the manufacture of cellulose from Russia. In Norway a group of trading companies exist using almost exclusively raw material from Russia. Germany also, and in a far greater degree, employs raw material from Russia, which she exports in the form of wood pulp to England. The participation of Russia in the production of wood pulp is, for the time being, insignificant. Russia exports to England a small quantity of furniture and various articles of woodwork. But the importation by England of these articles from Norway and Sweden, and particularly from Germany, has continuously increased during the last few years. The future of the timber trade in Russia may be summed up as follows. In certain circum- stances, for example the construction of railways for the transport of timber, and means of transport in general, timber may obtain access not only to the interior of Russia, but to foreign markets, where it is so much in demand. To this end a considerable amount of capital is needed, and the increase of such capital as has been invested in the develop- ment of forestry in Russia during the last few years, is a proof of the many advantages of this commerce. The profitable use of the virgin forests of Russia is 104 RUSSIA : ITS TRADE AND COMMERCE. particularly interesting insomuch as it comprises the development of other sources of wealth, hitherto untouched. It is almost unnecessary to say that wood, in itself, forms the basis of many industries which are little developed in Russia. Among such industries there is the manufacture of all kinds of wooden articles which, up to the present, have been made by Germany for exportation abroad, chiefly to Great Britain. The possibility of obtaining a sufficiently large quantity of wood pulp and cellulose for the making of paper, etc., has an equally great importance for foreign manufacturers. The veneering industry, which has so rapidly developed in Russia, owing to the participation in Russian enterprises of foreign capital, in particular of British capital, leads us to believe that other timber industries will attract the atten- tion of foreign capitalists. It is above all in the production of wood pulp and cellu- lose that an augmentation of enterprise is particularly desirable in view of the fact that these industries have a great future before them. From all countries there comes an incessant and ever-growing demand for paper, and the supply of this demand, in its turn, calls for more and more capital. Apart from the north of European Russia, atten- tion is particularly directed to Siberia, which is so rich in conifers and other species necessary for the fabrication of wood pulp. This is most important at the present time, when the American demand for cellulose and wood pulp is becoming more and more pressing. CHAPTER VI Factories and Workshops By V. Varzar Russia entered upon the development of her industries later than the other countries of Europe, as a result of many conditions pecuhar to the country. Such are the com- parative isolation of the majority of the population in dis- tricts far removed from one another because of unsatis- factory communications and the modest requirements of a people for the most part engaged in agriculture, who are satisfied with articles of their own manufacture for their household and farm requirements. The home market for manufactured goods contributed very little to the develop- ment of industry on any large scale. Each household pre- pared the necessary flax and woollen stuffs for articles of apparel, made ropes and agricultural implements, sent their leather and sheepskins to be tanned at the nearest available places, and tried to cut down purchases to a mini- mum and restrict requirements to those which could be satisfied by household labour. Under such conditions Russia of the seventeenth and even eighteenth centuries was a country of widely developed handicrafts and agri- culture. The activities of the big landowners (noblemen) differed very httle from those of the peasants. Each, in so far as his means would permit, endeavoured to have his own workshops, blacksmiths', carpenters' and weaving shops and distilleries, preparing various articles of food (preserves, cordials), clothes, household goods, furniture, vehicles, tools and building materials, and thus to create a self- supporting homestead. Foreign goods, which were expen- sive and out of the reach of most of the people, were re- garded in the light of a luxury. Buying and selHng, o\ving to the poor means of communi- 105 ]o6 RUSSIA: ITS TRADE AND COMMERCE. cation, were very difficult, and did not yield sufficiently good results to warrant the establishment of large factories requiring much labour, machinery and fuel. Again, the recruitment of labour, at that period, would have been very difficult owing to the system of serfdom. Later on, during the eighteenth century and the beginning of the nineteenth, with improvements in the conditions of transport and widen- ing of selling powers, these landowners' workshops fre- quently grew into large works and became the pioneers in the development of industries. An exception to the general rule was provided by those branches of manufacture which supply Government require- ments, that is, equip the Army and Navy. The Govern- ment, by means of protective measures, created its own factories for the working of metals, manufacture of arma- ments, or, by granting concessions, as in the Urals, in every way assured and simplified the creation and development of large enterprises for mining of iron ore, the working of metals, the manufacture of cloth, sails, cables, etc. These institutions served as a basis for the later development of such branches of industry. In the second half of the nineteenth century, the condi- tions throughout the country suffered a great change : the emancipation of the peasants, in 1861, resulted in a plentiful supply of labour, especially in central Russia, where farming on a small scale yielded but meagre profits. The construc- tion of railways and the improving of steam transport on the waterways, linking up the outlying districts with the centre of the country, so drawing together raw materials, fuel and labour, made it possible to build factories to meet the country's needs. Finally, the protective system of import duties firmly established in the nineties, the rapid increase in the output of fuel (coal and naphtha) — this basic requirement of industry — taken together with the quick growth of the railway system, all gave a powerful impetus to factories and workshops. The following table shows in figures the activities of fac- tories and workshops from the beginning of the second half of the nineteenth century. Here we have set forth in FACTORIES AND WORKSHOPS. 107 approximate periods of ten years the number of duly regis- tered factories, the number of men employed and their output according to the cost of the products and articles on the spot, after deduction of excise on those goods liable thereto : — Year Number of Factories and Workshops Workmen in Thousands Annual Output in Millions of Ivoubles. 1850 9483 3177 1 66-0 1863 16,659 419-6 351-8 1870 26,377 745-8 500-1 1879 34-774 861 -0 1,290-3 1890 32,254 1,424-8 1,502-6 I goo 38,141 2,373-4 3,438-9 1908 39.866 2,679-6 4,908-6 1912 . . . 29,965 2,931-3 5.738-1 To appreciate properly the figures in this table we must bear in mind that the information here given is far from covering all enterprises of an industrial nature ; it com- prises only factories, workshops and mines, in the narrow sense in which Russian legislature and statistics understand these words, that is, factories employing about fifteen men or less, enterprises equipped with engines or special chemical apparatus, such as distilleries, dyeing and chemical works, etc., which distinguish them from artisans' workshops and shops exclusively employing hand labour. In order to illustrate this question further, take the figures for 1908, when the Imperial Taxing Authorities assessed for the trading tax ^ in all 450,017 different industrial enter- prises having an annual turnover of 8,993 million roubles ; if we take the number of factories and workshops existing in 1908, it appears that they represented only 8 per cent, of the whole number, but were responsible for more than half of the trading turnover of the country and were Hable for the State trade tax. From the figures set forth in the above table, it appears * Small artisan and peasant shops are not assessed for this tax. io8 RUSSIA: ITS TRADE AND COMMERCE that during the first twenty years from 1850, there was but insignificant progress in the development of industry. This is undoubtedly connected with the slow development of the railway system (about 2,oco versts up to 1862) and the insignificant supply of mineral fuel (about 20 milhon poods). During the ensuing twenty years, 1870-1890, a marked development is recorded, and in 1890, there were already twenty-five thousand versts of railway being worked, the coal output had risen to 400 million and that of naphtha to 250 million poods. An especially notable increase in the figures is shown in the last two decades — 1890— 1912 ; whilst the growth in the total number of enterprises was unimportant, the increase in the number of workmen em- ployed and the value of the goods manufactured was almost doubled during each of the mentioned periods. This rapid rate of growth is undoubtedly to be explained by the strictly protective duties and the trade conventions concluded during that time, the rapid increase in the length of railways working ^ and the great increase in mineral fuel under- takings. 2 The concentration and growing productiveness of labour is further illustrated in the figures given below and drawn from Russian Industrial Statistics. Average Number Average Annual Year of Workmen per Output of each Workshop Workman in Roubles 1850 51 320 1863 25 838 1870 28 670 1879 25 1.498 1890 44 1,006 1 900 62 1,831 1908 67 1,830 I912 . 98 1.957 1 In 1890, 27 thousand versts ; in 1900, 49 thousand versts ; in 1 91 3, 65 thousand versts. ^ In 1890, about a milliard poods of coal and 300 million poods of naphtha were produced, and in 1912, more than 1,900 milliard poods of coal and 565 million poods of naphtha. FACTORIES AND WORKSHOPS. 109 Thus, during the sixty years, the average number of work- men has almost doubled and the individual output per workman has grown sixfold. It should, however, be re- marked that with the emancipation of peasants in 1850— 1863, the number of workers in each shop was reduced by half, whilst the productiveness of their labour, thanks to technical innovations, was doubled. The rapid growth in manufacture was nevertheless far from sufficient for the growing demands of the country. In spite of high duties, side by side with growth of home pro- ducts, an increase is to be noted in the foreign imports, chiefly of finished articles and of some raw materials of which the home supply was deficient, cotton, metals, wool, etc. The figures are : — 1890 1900 1908 1912 In millions of Roubles Goods manufactured with- in the country . Imported from abroad . 1,502-6 453-0 3.438-9 626-3 4,908-6 912-6 5.738-1 1,171-7 High prices ruled and created favourable conditions for the development of industry. To a certain extent, Russia was isolated from the influence of the world's markets, and the movements in prices of some manufactured articles and metals often changed within the country independently of quotations abroad. A good harvest or a drought had greater influence on prices and the conditions of the textile industry than a crisis in the world's cotton markets ; an increase or decrease in orders for the Government or the railways had more influence on the prices and activities of the metallurgical industry than a crisis in the American or German metal trade. For the contemporary condition of Russian industry, we may quote iigures for 1912, though these are far from being no RUSSIA: ITS TRADE AND COMMERCE. (s^Iqno^I jo spuEsnoq^ ui) "013 'aouBjnsui 's30UBA\oiic SinSpoi CO yt- M o^ f^' o O O M 01 0\ 0\ M Q Q Q M CO ■^- o o Cx 'pTB [BOTpam — ii3m>iJo^ ;o jnoAC J III sjiiauiABj (sajqnoy jo sptiBsnoqi in) -oja 'sjiBdaj Tt- ^- ro ■+ O CO 0\ N M 00 M '^uamaSBUBiu 'd33>i-dn o ob ■+ '^1 00 o >0 00 00 lO o. 'sasimajd — 9jnpEjniiBj\[ (^ rl M ■o VO f) o JO sasuadxg [Bjauaf) -laqjo O op M ro ^> o O^.OO ro M M (s3[qnoy JO spuBsnoqj ui) C\ ro^O "Jn G^ -t CO M CO V CO jnoqBi joj sju9UiXbj ib}o'x O <^ >-i t\ ON lO M CO On M Hi M M r-i M o "+■ 00 p M ;^ 9 o (saiqnoy jo N CO M ro w MD ^ -t- CO CO ^ spuBsnoqj ui) pn j; jo ;so3 CO -1- r| U-) lO M 00 t^ M a\ op txop w op ir, (saiqnoa Jo spiiBsnoqj iii) S[bu3;bi\[ a\bh jo jso3 CO l>v r) ro vO ob o On o vb ^-00 M O 01 0< . 01 b CO CO O M ro i-O C^ tx Y": 01 CO o 0) ('d'H JO spuBsnoq} ui) J9MO(J 3Ul§U3 CO 0^ IT) M ON O On f-. tv l-l CO 01 01 CO b 0\ CO 00 t>, -1- (V-, CO tx yf-

(jO;V\ 0) ON CO O O M -^ ro ON CO CO CI 00 00 LT! c.| I'o -r O, 01 CO 0) M M in >0 t^ i_0 CO lO O tx ON M -^ 9^ (saiqnoH jo spuBsnoqj CO M !>, V 01 'O -f CO On u"^ 00 O "^ V M CO M Tf tX vO ui) indjno Jo aniBA On in CO ^ ^1 IX O tx tx lo -1- ON M vO txO O co CO tx tx CO lO lO.CO M ix CO sauojoBj; jo jaquin>i O-. 0__ ri »-< be =^ • • • -^^ • !» rking :- cture plant ical in( attac worksh 5 "^ • • • ^rtJ2 ■Ji 3 b o otton . "ool . Ik . lax, her ibrous materia "3 etal wo: Manufa tools, etallurg actories Dept. aihvay ■ otal for prises U> (f^U-tlM hi 1 ^ ^fe « ^•^ FACTORIES AND WORKSHOPS. Ill ^ ^^o "?■ M O ""; -f O lO N 7+- 0\ 1 1 O IN b r^i M O M O ^ l-l b O b ' 9 ^°P O Tf t>s CO r^ t^ Ti- ON c, '!"■. rovO IX r-v un ^ 00 ^1 n- CO O 1 hH CO 1 1 1 Tf ON w N w M M r<-) -t- 1 1 vC In, >o ' ' 1 i vo "pO 00 ro M T"" ip 9^ T" ■^ 00 On "0 c en b IN \o a\ o tH On lo 'O 00 CI 00 in 'T -^ -t M fO in 1^1 IN r-l M W M CI '1-1 O w tx M lO rnoo r>i rn XT) IT) ^ IN 00 00 M O f^/00 M •o -1- CO 1 "^' M m '^ M 04 o CI 1 Cl O ro ^- 00 o\ IN "P 1^ 'r' "T^ ts. o ^ ro ir; IN 00 r^ -1- 'c ''x -r fx b O ^- 1 1 1 vo N On tx IT) tx M (N 0\ 00 u": IX lO ro C\ ■ 'l- o_ CI* 1 1 1 N M 00 M O t-N lO 00 t-v M CI yl- If) 0\ T> o b b tX io O --fob ri ro 00 O yb ir; 1 CI O\00 M 00 CO tX ■+ M U-J M in 1- tx 00 m M M lO o__ M ' CI Cl" CO ro lO oo O t\ vr-.co CO O ^^ -r 'O 00 If. i^i iri b o CO ^ lO IN ^ f.-l •^ Cl ■^- IX IX On CO r<-. CX) CO C\ "-, vO o -1- ON "i CO C-) tx r-l ro M -1- CI cf m cT ^1 01"/ 0\ U-) ?' V^ T*" ^ " °? ro OO o O On IN CN V O M (V-) OC N 00 M ro CA CI b ""' 00 OO '^ •:}- ^- "•; M C-. O tx w CI CI >o CI CO vO "O rO u~. ►-1 M hH '-> .^l ON CI fO m 0) 00 on CI i-H (V-, O r^ lO m o O vO Tl-O -1- *i- rr; q rl lO tX r] O Jx M 11-, \o O T) ro a. ■1 C. '9 '^^ "f" 1^' i~^ o_ cc_ 1 00 rn -T- ^ ■ 6 ■ 'rt ■ ■ ■ 'o * o "rt ■ § ;; 00 -^.^o • — rt 1-1 n3 o ^ 1 . .^ anufacture of paper, po graphic products, etc. 'ood-finishing and manuf; ture of articles from wood reparing articles from mine products reparing animal products . Iiemical products . roduction and purifying naphtha ther miscellaneous manuf; o ^ al a arrie ions r . limentary substances :- Not liable to excise Paying excise . overnment spirit depo otal for group prepay, nieutary substances . 03 O • 03 ■ . s . Total viauufactures takci the State Registration , In addition to the abov (i) Production of co gold, mines and qu (2) Technical institut the Ministry of Wa 00 < O 1 H 1 g '^ Pm Pl^oPh o h^ h ,112 RUSSIA: ITS TRADE AND COMMERCE. complete. Making all necessary corrections and deductions we find, for the year 1912 : — Number of factories .... 30,000 Number of workmen (in thousands) . 2,931-0 Total output (millions of roubles) . . 5,738-0 In order to examine still more closely the conditions un- der which Russian industry has developed, we must turn to the industrial census of 1908, from which the general totals for the Empire (excluding Finland) are represented by the table given (pages no and in). In this classification of manufactures, only thirteen groups of industries show the nature of raw materials used, which are arranged under four divisions : fibrous articles, metals, articles of food and miscellaneous ; as a matter of fact, it is doubtful whether all branches of manufactures are included in the 320 subdivisions of the classification adopted in the Official Statistics. In view of the variety of requirements of an enormous country, there are but few raw materials or branches of manufacture which do not exist in Russia. For her textile industry, Russia needs only juts and some grades of cotton and wool to supplement the raw home products. As regards metals, there are a few of secondary importance, aluminium, nickel, etc., which cannot be sup- plied ; some of these are not produced in sufficient quantity in Russia ; some, such as mercury and zinc, are not suffi- ciently protected by the import duties ; some, such as lead, tin, etc., are imported because the districts in which ores and mineral deposits are located have as yet no convenient rail- way or other communications. There are also a series of special alloys, protected sometimes by special patents (chromic, etc.), which are not manufactured in Russia, probably on account of the small demand for them. For her food supply, Russia's imports are restricted to such products as tea, coffee and cocoa, while under other heads there are only a few high quality articles, manufac- tured from paper, glass and chemicals, which are not made in the country. Russia now imports only those special FACTORIES AND WORKSHOPS. 113 tanning extracts which have just been so widely introduced abroad and some dyeing materials which are not manu- factured in Russia in sufficient quantities. Her weakness in these directions has been sharply emphasized during the present war, which has made of Russia an almost isolated market of consumption unable to export its goods and only with great difficulty receiving the raw materials absolutely necessary for her factories ; but the requirements which cannot be satisfied at home are small in number, and the absence of such articles did not result in disorder in the working of her factories. The imports chiefly represent articles required in light industry (various categories of plant, automobiles, guns, etc.), but in this direction it is lack of foresight with which we have to reproach ourselves, there being no difficulty as regards supplies of the necessary raw materials. The m^anufacture of some special articles, as for instance, spinning machines, paper-making machines, me- chanical instruments, etc., have not yet been taken in hand by Russia for the reason that her markets did not offer sufficient possibiHties for sales. There is plenty of room in the country, however, for the manufacturers of automobiles, locomobiles and agricultural machinery. This may well be seen by the organization and development of railway machinery, harvesters and sewing machines, almost all demands for which are met by home production. It may cause surprise that the manufacture of Navy requirements is still behindhand ; and that, with the largest army in the world and a comparatively powerful fleet, Russia has not yet been able to make herself independent of foreign manufac- turers. The whole situation, however, points to a wide extension of almost all the existing branches of Russian manufacture, while the diversities in climate and soils, the great extent of territory, the large population and the country's riches in animal, vegetable and mineral resources are valuable assets for the future prosperity of her industries. Russian branches of manufacture may be grouped as follows : — 114 RUSSIA : ITS TRADE AND COMMERCE. Denomination of Group Num- ber of Work- shops Value of Manu- factures in thousands of Roubles Work- men in thousands 823-3 551-9 386-4 2,254-5 H.P. of Machines in thou- sands 549-7 590-2 387-1 549-4 Cost of Production in thousands of Roubles Raw Tj Ma- Fuel Wages ^^'^^ terials P«"5«^ Textile industry- Metallurgical . Articles of food Miscellaneous : Paper, wood, animals, chemical products. 2,959 2,330 7.948 6.773 1,384-6 761-9 1.576-5 929-3 - 4.652-7 908-8 330-5 978-8 456-6 46-0 84-6 48-3 64-4 174-0 193- 1 59-8 128-8 162-9 117-1 161-5 167-7 Total . . 20,010 2,076-2 2,674-3 243-4 555-9 609-4 The relations between the different categories of industry, and the importance of each branch in the general industrial turnover of the country, can best be expressed by the table (page 115), showing the groups split up into thirteen different divisions of industry, and the figures under the four chief headings characterizing each group in percen- tage to their total participation in the industry of the country : — The characteristic differences, the peculiarities of each group, and the variety of conditions under which the pro- cess of manufacture of each is carried on, are still more apparent when we examine the figures under each heading in respect to the number of workshops under a given group. At the same time, although, at the time of registration, the workshops are considered a basic unity to which all other figures are subservient, they arc themselves a very unstable factor liable to great fluctuation. For instance, the number of workmen in any factory for the manufacture of the same article varies from ten to tens of thousands, and the value of such manufactures from tens of thousands to millions of roubles. Still, even with such wide fluctations, the average figures for the various branches of industry do not lose their significance because of the generality of condi- tions in similar factories. Taking the total number of workshops and factories FACTORIES AND WORKSHOPS. 115 Group of Manufacture Cotton Wool Silk Flax, hemp . . . . Blended materials Totals for textile industry . Ratio to the General Totals for 1908 Work- shops 4-93 5-i8 1-38 1-37 1-92 Value of Manu- facture 1476 20 -60 5*20 o-8i 2-03 I-I3 2977 Work- men H.P. of Machines 2275 6-65 1-50 4-01 I -61 18-50 453 0-40 2-47 0-57 36-52 I 26-47 The working of metals . Railway workshops . Metallurgical works . Naval Dept.'s works 9-75 0-88 0-93 o-o8 9-26 1-54 4-64 0-94 11-03 3-79 8-67 0-99 9-95 1-30 15-37 1-80 Totals for metal factories . 11-64 16-38 24-48 28-42 The preparing of articles of food not liable to excise Paying excise. Government spirit depots 15-21 22 -80 I -71 14-65 11-81 -741 4-12 11-68 1-35 9-45 8-67 0-52 Totals for factories pre- paring articles of food . 39-72 33-88 17-15 18-64 Manufacture of paper . Wood working Working of minerals Working of animal pro- ducts Chemical manufactures . Naphtha industry Electrical stations, hydrau- lic stations, etc. . 6-66 9-51 7-60 5-76 2-38 I -61 0-32 2-83 2-66 2-10 3-50 3-83 4-55 0-50 3-90 4-16 6-01 279 2-88 1-89 0-21 4-12 3-70 2-15 0-88 2-54 5-45 7-62 Total for miscellaneous manufactures . 33-84 19-97 21-84 1 26-46 ii6 RUSSIA: ITS TRADE AND COMMERCE. included in the registration of 1906 (20,010), the average output of each factory was as follows : — Annual output in thousands of roubles . 232-5 Work-people of both sexes . . .112-6 H.P. of the machinery .... 113-7 The metallurgical industry is remarkable for its large output and the number of workmen employed, especially in mining, metal works and the few shipbuilding yards of the Naval Department, where the average output exceeds a million roubles, the number of workmen exceeds one thousand, and the application of mechanical energy attains to two thousand h.p. These figures are somewhat reduced for the first group, covering articles manufactured from metals, machine construction and the manufacture of various small articles, such as knives, nails, locks and black- smith's tools, in which hand labour is much used. Hand labour is also applied to a great extent in the repairing of the rolling stock of railways, mechanical energy being comparatively neglected in the railway workshops. In general, the whole group covering the working of metals is characterized by the great quantity of machine energy utilized — on an average more than 253 h.p. for each workshop and more than i h.p. per workman — ^due to the difficulty of working and smelting hard and heavy metals. The conditions under which articles of food are prepared are still more varied. Here we have very large outputs, but the number of workmen engaged in each factory is only one-half the average nimiber, and the h.p. required in the operations, although equal to the number of workmen, averages less by one-half than the general figures for indus- try as a whole. This is due, on the one hand, to the signifi- cant application of hand labour in the manufacture of some articles coming under this group, tobacco, confectionery, etc., and, on the other, is explained by the nature of the processes adopted in distilleries, breweries, sugar refineries, where rnore chemicals are required than mechanical energy. FACTORIES AND WORKSHOPS. 117 However, it must be remarked that for works which do not pay excise on their products, and where flour mills (eleva- tors) predominate, there is required for each workman more . than 2*7 h.p., whilst in connexion with the goods paying excise, the workmen have less than i. h.p. at their disposal. In the fourth group, miscellaneous manufactures, there are marked differences in the figures for each class of factory. The biggest workshops are those engaged in the production and refining of naphtha ,also certain chemical works with large capacities for production which employ much labour and are well equipped ; paper and wood mills, with less output and a smaller number of workmen, nevertheless require, on an average, a mechanical energy corresponding to the number of workmen. On the contrary, in workshops in which mineral and animal products are worked, with increased hand labour and the use of chemicals when the raw materials have to be baked, the amount of mechanical energy is less though the number of workmen exceeds that in the former group. Finally, we find quite by itself, a group including electric power and hydrauHc stations, which are of less importance on account of their work- people, as for the production of energy itself. With labour as the basic factor in production, the char- acteristic conditions of different branches of industry are still more apparent. It is necessary to determine the average production of each workman together with the power consumed and the wages earned. In the cost of a product, there must be included, in addition to the labour, the cost of the raw materials, fuel, and other general ex- penses of manufacture. For this reason, in the table which will be found below, we give not only the average gross output per workman, but also the cost in roubles of the article manufactured after deducting materials and fuel, or putting it in another way, the net production of labour, supported by machinery and capital, in the form of buildings, constructions and other expenses of manu- facture. ti8 RUSSIA: ITS TRADE AND COMMERCE. Per Workman Group of Manufactiire Cotton .... Wool .... Silk Flax, hemp, jute Blended materials Total for textile industry Gross Output Average Annual Wage per Workman H.P. to each Workman In Roubles 1,868 i-6i3 1,112 1,042 1-444 1,682 525 212 572 226 406 183 422 169 665 267 522 211 075 0-63 0-24 0-57 0-33 0-67 The working of metals Railway workshops . Metallurgical works . Naval Department's works 1.731 836 1,105 1,961 788 464 486 727 377 400 265 595 0-83 0-32 1-63 1-67 Total for establishments working, metals 1-381 628 The preparing of articles of food : — Not liable to excise . Paying excise . Government spirit depots 7>344 2,086 11,293 1,150 730 8.195 350 222 123 217 1-07 2-II 0-68 0-35 Total for establishments preparing articles of food Manufacture of paper Wood working Working of minerals Working of animal pro ducts , . , . Chemical products Production and refining of naphtha .... Electrical and hydraulic stations 4,076 1,420 1,500 1.318 722 2,590 2,744 4.971 4,875 745 510 457 597 1. 165 2,415 3,657 Total for miscellaneous manufactures 1,887 829 154' 299 266 217 243 245 431 509 262 I -00 0-97 0-82 0-33 0-29 0-81 2-65 33-12 I-I2 ^ For a great number of manufactures where active work is con- fined to certain seasons of the year (distilleries, sugar refineries, flour mills, etc.), the wages cited are those for six months. FACTORIES AND WORKSHOPS. 119 In comparing the date given above, we must adopt the average figures for ah branches of industry, which, calculated per labourer, give : — Average annual gross output . 2,064 roubles Average annual net output (with- out raw materials and fuel) , 769 ,, Average annual earnings . . 247 Horse power . . . .0-92 h.p. Looking over this table, we cannot but remark the very- high average gross output of labour employed in the Govern- ment spirit-refining depots, the naphtha fields, electrical stations and factories for the production of foods and sub- stances not liable to excise. The processes here differ materially from those in other branches of industry. The work of bottling spirits and wine, pumping naphtha from wells, converting fuel into electrical energy, and the supply of water to hydraulic stations, does not correspond to that of an ordinary factory, and the products are sold under exceptional conditions, e.g., vodka, electrical energy and water. In such cases, there is no conception of prices of goods, " loco-factory," such as have been given for the remaining manufactures, and only consumption prices could be given, which would result in the exaggerated value of these products, because in the prices of spirits, electrical energy and water, the cost of delivery must perforce be included. In connexion with non-excisable articles of food, the high gross production can be explained by quite other reasons. The predominating factors here are the flour mills, utiHzing up to 4 h.p. of mechanical energy per work- man, and rendering labour of secondary importance and the workman's average output small. If we discard such products from the exaggerated pro- ductiveness, the fluctuation of the average figures is reduced from 27*44 to 7-20 roubles per workman, and this fluctuation is clearly dependent upon the cost of raw materials. Where these are cheap, clay, wood and crude minerals, the produc- tiveness of the workman falls ; where they are more ex- 120 RUSSIA: ITS TRADE AND COMMERCE. pensive, leather, animal and chemical products, the work- man's productiveness rises. Further, extensive applica- tion of hand labour and small utihzation of mechanical equipment, as in railway workshops and factories for silk, glass, bricks, blended materials and fibrous articles, results in a great reduction of the gross productiveness ; while a large utilization of mechanical energy, even with cheap raw materials, as in machine-making, metallurgical works and shipbuilding yards, flour and paper mills, increases the productiveness of labour. If the net productiveness of a workman be considered with- out raw materials and fuel, the movement in the average figures is even more limited than in the first column of figures. Excluding the exaggerated productiveness of the spirit depots, naphtha fields and electrical stations, which does not depend on the ordinary factors of production, we see that hand labour reduces its average productiveness in silk factories, railway workshops, the working of mineral compounds and animal products, while the application of machinery in flour, paper, cotton and woollen mills, and in the manufacture of various metal articles, tends to maintain the amount of the workman's productiveness. Comparing the average wages paid with the columns of figures showing gross and net productiveness of a workman, we note that the annual wage grows with the increase of productiveness, and that, on the other hand, in the produc- tion of most of the articles of food, which are dependent on particular seasons of the year (flour, sugar, beer, etc.), the wages really represent the remuneration for six months. The increase in wage does not affect the Government refin- eries, in which, in spite of their great turnover, labour processes are restricted to bottling, corking and other simple operations. Let us continue our general review of the economic con- ditions of Russian industry by examining the characteristics of the economical construction of the various forins of pro- duction, determining the importance of raw materials, fuel, wages and other general expenses under each particular group. But first it must be noted that in the registration FACTORIES AND WORKSHOPS. 121 of 1908, for factories manufacturing from other people's raw materials, the total production comprised only the total receipts from such manufacture, without the cost of raw materials, and for all factories working on their own account, the products were valued on the spot (loco-factory) without including either excise or cost of transport, whilst " other expenses " in addition to cost of fuel, raw materials and wages, included management, upkeep, heating, lighting, repairs, inventory, amortization of capital, insurance, taxes, and the various allowances to workmen's institutions, such as medical aid, accident insurance, payments for edu- cation, housing, etc. If therefore we adopt general totals for 1908 from the first table, the total cost of manufacture is divided into component parts as follows : — In thousands of Roubles Ratio to the Total Expenses of Pro- duction Raw materials. Fuel Wages Other expenses Difference between cost of production and the ex- penses of production . 2,674,831 274,412 555,915 609,553 568,990 57-49 5-23 11-95 13-10 12-23 Total 4,652,703 100% The difference between the cost of production and the total general expenses represents the profits of the manu- facturer, and the errors of registration arose when the manu- facturers either exaggerated the value of products (giving values of consumption), or reduced the expenses by not disclosing expenses of management, amortization, taxes, etc. Bearing in mind that the component parts of production in each branch ol industry and ' for each comitry must differ, as a result uf fiscal duties and cost of transport, and that these differences are very characteristic of Russian 122 RUSSIA: ITS TRADE AND COMMERCE. industry, we give a table (page 123) showing the distribu- tion of expenses of production for various groups of manufactured goods : — This table shows that the different items of expense of production do not bear the same proportion in the cost of every industrial product. Raw materials have the greatest significance in the textile group, being 65 per cent, of the cost of production, in the production of articles of food they are 62 per cent., are of least importance in the metallurgical industry. The metallurgical industry has the largest expenses for fuel ; especially in mining works, where it is 25 per cent, of the total. In the working of glass, clay and cement, fuel plays a very important part and also in the generation of electrical energy, where it must, how- ever, be regarded as a raw material. Fuel is least important in the group of productions requiring hand labour, such as tanning of hides, wood working, manufacture of clothes. The significance of wages in the cost of a product is most evident in the working of metals, where it is 25 per cent, of the cost, especially in railway repair shops and in the Navy shipbuilding yards. It has least significance in the prepara- tion of food-stuffs, only 3-8 per cent. A great amount of labour, with resulting high wages, is required in the manu- facture of glass, tiles, bricks, the working of wood, paper and printing trades, etc. ; but is considerably lessened in such groups of products in which chemistry is used, such as naphtha refining works, soap factories, chemical works, tallow and stearinc factories, etc. Among the different factors which ensure the future development of industry and indeed have placed it in its present strong position, fuel is the most conspicuous. In the past, Russia's fuel supply, which was entirely wood, could not but retard the industrial development of the country. Factories and workshops were then either established in districts where there are large forests (the Urals, Upper Volga regions, etc.), or along rivers down which timber could be floated, or near the frontier, in Poland and the Baltic FACTORIES AND WORKSHOPS. 123 Group of Manufacture Cotton .... Wool .... Silk Hemp, flax, jute Blended materials Total for textile industry . Ratio to tlie Total Cost of Production of Expenses for — Raw Materials 68-6 6i-i 60 -6 56-3 51-3 Fuel 65-3 3-3 3-4 2-9 3-2 2-6 3-3 T- Other Earninsrs t- ° Expenses II-3 14-0 16-4 l6-2 i8-5 12-5 ii-i 12-4 12-2 14-1 16-9 II-8 Working of metals . Railway workshops . Metallurgical workshops . Naval Department's ship- building yards . Totals foi metal industry Food products : — Not liable to excise . Government spirit depots 48-9 40-3 30-9 55-1 43-3 5-5 4-2 251 77 21-8 47-8 24-0 30-3 ii-i 25-3 Total for factories prepar- ing articles of food 82-5 26-8 62*1 1-8 0-6 3-2 1-9 3-0 3-8 16-4 8-5 14-9 i8-8 15-4 6-4 5-3 10-3 Paper production. 43-9 6-4 19-9 20-1 Wood working 60 -I 1-2 lyi 12-5 Manufacture of mineral products .... 19-9 i6-6 30-0 20-2 Preparation of animal products .... 75-0 1-9 9-4 8-0 Chemical factories 52-8 4-9 8-9 20-1 Production and refining of naphtha 41-5 9'9 8-6 23-6 Electrical stations, etc. . 3-0 217 10-4 30-9 Total for miscellaneous manufactures 49-1 6-9 13-8 i8-i 124 RUSSIA: ITS TRADE AND COMMERCE. Provinces, whence fuel could be obtained either at home or from neighbouring countries. With the disappearance of the forests, fuel grew more expensive, and it was only the rapid growth of coal-mining and naphtha production in the middle of last century which enabled Russian industry to expand so quickly. In 1880, the coal mined in Russia and Poland barely attained 2C0 million poods, and naphtha was represented by the modest figure of 21 million poods per annum. From 1880 to igco, these figures had grown for coal to i milliard poods and for naphtha to 630 milhon poods. Later, the coal output in- creased still more rapidly, and in 1913 it had attained to more than two milliard poods, and while naphtha had fallen, it still stood at the very significant figure of 561 million poods. With the appearance of new forms of cheap fuel, industry began to prosper. We can gain an idea of the changes brought about from the following table showing consumption of the chief forms of fuel by factories and work- shops not subject to excise payments : — Nature of Fuel Hard mineral fuel (coal, coke), thousands of poods .... Liquid mineral fuel (naphtha, re- siduals, etc.), thousands of poods Wood, thousands of cubic sajenes Consumption 1887 133.651 622 4>36i 1900 1908 333.794 I 351.075 85,715 1,582 60,106 1,813 Between 1887 and 1900 the replacing of wood by mineral fuel was particularly rapid. During this period the wood consumption was three times less and was replaced by double the quantity of mineral fuel. The total consumption of various kinds of fuel in all branches of industry during 1908, including metallurgical works and industries subject to excise payments, will be seen from the following table in which quantity and value of the fuel are shown : — FACTORIES AND WORKSHOPS. 125 Peat Refuse 567 7.283 5.856 Kinds of Fuel Amount consumed in 1908, thousands of poods Value of Fuel in thousand of roubles Ratio to the Total Cost Coal Coke 602,608 175.934 89,919 29,076 36-9 II-9 Total for hard mineral fuel . 778.542 118,995 48-9 Naphtha, residuals . Kerosene, benzine, etc. . 169,348 2.645 51,080 1,249 21-0 0-5 Total liquid fuels 171.995 52,329 21-5 Charcoal Wood of various sorts (cubic sajenes) • 58.959 3.333 9.719 49.227 4-0 20-2 Total wood fuel .... — 58,946 24-2 3-0 2-4 At the present time, the usual fuel for factories is hard, mineral fuel. For most factories in which special forms of fuel are not a necessity, we find various forms used, chiefly depending upon local prices, the proximity of railroads, seaports and rivers. Naturally the consumer takes into consideration not only the prices but the heat-giving qualities of the fuel ; in this manner, the average prices (for igc 8) of various forms of heat-furnishing fuel were determined by the general conditions of Russian industry, that is, the methods of 126 RUSSIA: ITS TRADE AND COMMERCE. heating, the quaHties of the fuel, the competing prices, special technical requirements of different manufacturers, the proximity of sources of supply, the cost of delivery of the fuel, etc. It is further possible to determine in the average the general prices, as also the practical heat-giving qualities of the various forms of fuel which are expressed in weight or size equivalents of the chief forms of fuel, equal in value, let us say, to the cost of one hundred poods of coal, which figure is adopted as a unity for purposes of comparison. Average Price Weight and in roubles Space Equivalents 100 poods of coal .... 14-92 100 poods 100 poods of coke 16-53 90-3 .. 100 poods of charcoal 1 6 -49 90-9 .. 100 poods of liquid fuel . 30-16 49-5 .. I cubic sajene of wood . 14-77 I -01 cubic saj. I cubic sajene of peat 12-83 i'i6 „ The mechanical engines working in Russian factories, according to data for 1908, are distributed in the following manner as regards number and type of engines, average horse-power of each group of machines, and the indicated horse-power generated : — The average size of engine used in industry, for 1908, was equal to 55-7 h.p., and the average cost of fuel for I h.p. was Rs. 1 1 7-2. The most powerful engines are those used in factories for the working of cotton, wool and flax, in metallurgical works and shipbuilding yards. En- gines of small capacity predominate in those factories work- ing silk-blended materials, thread, clothes, etc., in printers' shops, sawmills, railway workshops, tile works, and in the preparation of animal products or articles of food. As regards cost of working the engines, slight divergencies from the average cost are sometimes caused by the influence of temporary conditions. An idea of the use of engines during the years 1900 and FACTORIES AND WORKSHOPS. 127 Ratio of HP. of Ratio of Different Total Indicated Average Particular Classes of Type of Engine Number HP, in Power of Engines to Machines of Engines thousands Engines General Total to H.P. generated by all Engines Stationary steam engines . 21,988 1,621-1 74-1 59-0 78-5 Locomobiles 2,515 55-9 22-2 6-7 2-7 Steam turbines 243 115-0 473-6 0-7 5-5 Total for steam engines . — — — 66-4 4-6 86-7 Naphtha engines 1,724 64-3 37-4 3-1 Kerosene-ben- zme . 916 8-3 9-1 2-5 0-4 Gas engines 1,050 577 55-0 2-8 2-8 Total for internal combustion en- engtnes . — — — ■ 9-9 6-3 Water wheels . 1463 17-8 12-2 3-9 0-9 Water turbines 1,391 89-6 64-5 37 4-3 — 77 5-2 Electrical en- gines from foreign gener- ators . 4.334 35-1 8-1 11-6 17 1908 may be gained from the following figures. For pur- poses of comparison, articles liable for payment of excise are excluded, that is, the productions of metallurgical works, railway shops, naval shipyards, naphtha fields and electrical stations. 128 RUSSIA: ITS TRADE AND COMMERCE. Number of engines . Horse-power . Average horse- power engines 1887 of 6,384 166,249 24-4 1900 1908 16,726 21,166 853.914 i 1,230.800 5I-I 53-3 From this we see that the number of engines significantly increased during the period from 1887 to 1900, with an especially noticeable growth in the power of plant, resulting of course in an economy in fuel, which had grown more costly. From igoo to 1908 both the number of machines and capacity of the engines increased, and there was even an average increase in the power of separate plant. The evolution in this direction for the period 1900 to 1908, when the registration jnelded detailed information, can be seen from the following figures : — Type of Engines Number of Engines Horse Power 1900 1908 1900 1908 Steam engines (station- ary engines, locomo- biles and turbines) . Internal combustion en- 10,327 11,357 781,746 1,046,835. gines (naphtha, kero- sene, gas) Water engines (wheels, and turbines) Electro-motors (from 1.355 2,415 2,905 2,213 10,702 61,269 87.856 76,225 foreign generators) . 644 3,460 9.366 18,274 From the figures of this table the greatest increase, as regards number of engines and their total capacity, was recorded for internal combustion engines and electro- motors. As regards steam engines, there is at present a continuous improvement in quality ; the number of such FACTORIES AND WORKSHOPS. 129 engines has grown but slightly, but the power generated by the new plant has increased quite considerably. Water engines during eight years have not shown any change as regards number or power generated. Especially remark- able is the rapid growth in the employment of internal combustion engines, the number of which during eight years has approximately doubled and the energy generated been increased eightfold. Electro-motors have been largely introduced in towns and their number has been increased about sixfold, but the energy which they develop has only been doubled, that is, the new plant was not of a powerful nature The geographical distribution of industrial factories and workshops throughout the territory of the Empire presents a very interesting picture. In the table (page 130), we give figures for the several regions. The figures just cited indicate that the extent to which industry has been developed throughout Russia varies con- siderably for different regions. Governments with especi- ally developed manufactures are grouped together in differ- ent sections of Russia, viz. in the North-West section, in the Baltic Province region (Petrograd, Lifland, Estland), in Central European Russia (Moscow, Vladimir, Kostroma Governments), in the West (Petrokoff, Warsaw Govern- ments), in the South (Ekaterinoslav, Cherson, Charkott, Kieff Governments), and in the Caucasus (Baku region, etc.).^ Over the whole remaining extent of the Empire industry has not grown so rapidly with the exception of the Govern- ments of Perm, Yaroslav, Saratoff and the Don region, and in the majority of Governments it is quite insignificant. Taking the total number of inhabitants of Russia in 19c 9, we find the value of the annual output of labour per inhabi- tant represented by Rs. 30 and the number of workmen in factories and workshops was 1-43 per cent, of the total population. 1 The Government of Baku participates in these figures to the extent of 48-9 thousands as regards workmen, the value of the manufactures being 218,250 thousands of roubles. K 130 RUSSIA: ITS TRADE AND COMMERCE. Regions Number oi Workmen (thou- sands) Value of Manufac- tures (in thousands of Roubles) Value of Manu- factures per In- habitant (Roubles) Workmen employed per 1,000 Inhabi- tants Northern (5 Govern- ments • — Archangel, etc.) Eastern (7 Govern- 44-0 57.562 18-8 0-8 ments — Perm, Viatka, etc.) Baltic (4 Governments 188-4 286,924 15 i-o — Petrograd, Lifland, etc.) Central industrial (8 2647 698,383 130 4-9 Governments — Mos- cow, Vladimir, Yaro- slav, etc.) 718-8 1,210,921 82 4-8 Central Black Soil (12 Governments — Char- koff, Riazan, Sara- toff, etc.) . . . North-Western (6 242-8 563,962 17 0-7 no, Vilna, etc.) . South-Western (3 56-4 99,017 8 0-4 Governments ^Kieff, etc.) Southern (11 Govern- 117-7 239,204 20 I-O slav, Cherson, Don District, etc.) Vistula (10 Govern- 163-9 502.041 24 0-8 ments — Petrokoff, Warsaw, etc.) Trans-Caucasus (9 270-2 523.585 46 2-3 Governments and dis- tricts — Baku,^ etc.) . 64-2 i 1 238,467' 40-6 i-i In making comparison on the basis of the average figures given in the table, we cannot but note the small industrial 1 The Government of Baku participates in these figures to the extent of 489 thousands as regards workmen, the value of the manufactures being 218,250 thousands of roubles. FACTORIES AND WORKSHOPS. 131 activity of the population and insignificant development of industry in the majority of the Governments of the country. For most of these regions and Governments, the figures for annual production and the percentage of work- men are far below the average figure for the whole of the Empire. Only in the Baltic Province region, the central industrial region and in the neighbourhood of the Vistula are the average figures of output and number of work- men above those for the Empire in general. The pre- dominance in a given Government or district of definite branches of industry depends on several fundamental conditions, such as the proximity of raw materials, fuel, abundance of labour, the habits and skill acquired by the local inhabitants, and the capital expended on the equipment and factories. Thus the development of a definite branch of industry in a given area bears a more or less permanent character. All kinds of textile industry are concentrated in three regions : — Moscow and the neighbour- ing Governments (Vladimir, Yaroslav, Kostroma), the Baltic Provinces (Petrograd, Riga), and the Kingdom of Poland (Lodz and Warsaw) ; in the neighbourhood of these centres, there were established, partly for the supply of this exten- sively developed textile industry, factories and workshops for machine building, working of metals, manufacture of chemicals, etc. The proximity and abundance of ore and fuel created three centres of metallurgical industry, Ekaterinoslav and the neighbouring Governments, the Kingdom of Poland and the Urals. Kieff and the surrounding Governments arc the centre of the sugar industry, and the south of Russia and Volga regions are remarkable for the great number of flour mills. The other forms of industry, wood working, paper manufacture, mining, preparation of articles of food, are met with in almost every Government, and are distri- buted more or less equally all over Russia. The cotton industry, which supplies the most important requirements of the country, is the largest ; its develop- ment during recent years has been very satisfactory, as may be seen from the figures below : — 132 RUSSIA: ITS TRADE AND COMMERCE. Number of spindles (in thousands) .... Number of weaving ma- chines (in thousands) . Cotton treated (in thou- sands of poods) IS90 1900 1 9 10 1912 3.457 6,646 8,306 8,800 87 151 213 224 8,328 16,007 22,086 25.713 The number of workmen has sHghtly increased, cost of production has grown, chiefly owing to increased cost of raw materials, as compared with 1900 ; the number of spindles working has changed but slightly since 1908, and it is only in the direction of weaving machines that mechani- cal methods have displaced ha^id labour. The improve- ment in this branch of industry and the increase in output to make it correspond with the needs and dimensions of the Russian market, can only come about with the proper development of fine wool sheep-breeding on the meadows of Siberia and in Mongolia, which could furnish Russian producers with cheap and abundant raw material. The chief centres of the wool trade in 1912 were the Governments of Petrokov (Lodz) and Moscow which account for more than half of the whole productions of woollen mills. The industry is less developed in the Governments of Simbirsk, Grodno (Bielostock), Tchernigov (Klintzy), Saratoff, Petrograd and others. The manufacture of coarse cloth for the army is one of the most important articles produced by the factories principally situated in the Moscow and the Volga regions ; the manufacture of materials from fine wool is principally concentrated in the Western Governments (Lodz, Bielostock). The condition of the wool trade in Russia is somewhat obscured by the fact that a significant quantity of coarse wool has, up to the present, been woven by hand into peasant cloth, which satisfies the modest demands of the lower classes of the population. The least important of the branches of the textile industry FACTORIES AND WORKSHOPS. 133 as fa.r as the great majority of the inhabitants are con- cerned, is the manufacture of silk, this article finding its way into the hands of a restricted class, and often being manufactured in a small way by the peasants. The manner in which this industry has been developed during the last few years can be seen from the following figures : — 1900 309 Number of factories Number of workmen em- ployed (in thousands) Value of products (in thou- j sands of roubles) . . : 31,005 31-9 1908 189 29-9 35.054 1912 220 36-1 53.175 Comparing these figures with foreign countries, as regards the number of spindles, Russia occupies the fourth place, following England, America and Germany. In making the comparison, v/e must hear in mind that Russian spinning machines work longer hoiurs than European or American ones. Russian spinning factories frequently work in two nine-hour shifts, the spindles are utilized for eighteen hours per day, whilst in European factories they generally work nine or ten hours. The cotton industry is concentrated for the most part in three districts — the Central Industrial Region, the Baltic Provinces and the Kingdom of Poland. Notwithstanding that, at the present time, the manufac- ture of cotton in Russia is the most important branch of industry, occupying about one-fifth of the total factory operatives (as many as 6co,oco) and representing about one-fifth of the total manufactures (one milHard roubles), there is every prospect of its being still more successfully developed in the future. The working of cotton by the peasants has now almost disappeared ; the industry is generally concentrated in large enterprises, frequently joint-stock companies, employing thousands of workmen and with turnovers running into millions of roubles. 134 RUSSIA: ITS TRADE AND COMMERCE. These factories show a tendency to carry on the whole process of manufacture through all its stages from the raw material to the manufactured article, and not to devote their energies to one phase of manufacture as is so often the case in Western Europe. The wool trade in Russia has recently suffered a set-back which has greatly influenced the number of workmen, weav- ing machines and output. The following figures will be of interest in this connexion : — • Workmen (in thousands) . Production (in thousands of roubles) Number of spinning machines (in thousands) Weaving machines (in thousands) : Mechanical Hand Spindles in thousands (with waste) Self-weaving plant Hand machines 1900 1908 1277 140-5 i8o-3 240-1 1,017 1,326 24-8 32-0 i8-3 ii-i 228-6 204-4 3,209 5,227 10,060 4,923 I9I2 139-2 285-8 1,424 50-6 6-9 261-0 7,909 6,858 Here, as will be seen, progress has been slow ; the increase in the value of the output is a result of the increase in the cost of materials ; the growth in machine, as against hand- weaving is especially noteworthy. The chief centres of silk manufacture are the Governments of Moscow and Vladimir. Raw silk is chiefly manufactured in the Caucasus (Elisavet- pol Government). Further development in the working of flax and hemp would be of more importance to the country, both because there is a plentiful supply of raw materials, considerable quantities being exported abroad, and the manufactures therefrom are very popular with the people at large and could be, as was the case some time ago, advantageously disposed of on foreign markets. Unfortunately, the growth of this industry far from corresponds with the possibilities for its development. FACTORIES AND WORKSHOPS. 135 It is being neglected partly on account of the excessive cost of the necessary machinery, which has to be imported from England and France, and partly on account of the great cost of mechanical energy necessary to the working of these materials, which are so much coarser than other fibrous matters. Figures illustrating the movements in this branch of in- dustry during the last few years are given in the following table (including jute) : — 1900 1912 Number of workshops .... 403 275 , 230 Number of workmen (in thousands) 79-4 877 85-4 Value of products (in thousands of roubles) 66-9 93-6 115,972 Number of spindles (in thousands) 349'i ! 362-8 410-0 Number of self- weaving machines 10,743 12,968 15,425 From this it is seen that the basic factors of production (workmen, spindles and plant) do not indicate any rapid growth in the output. The chief centres of the flax and hemp-working industry are the Governments of Vladimir, Kostroma and Yaroslav, and to some extent, in Poland (Jirardov), flax being grown within easy reach of these places. Jute manufacture has taken a firm hold in the Petrokoff Government and in the large cities on the seacoast (Riga, Petrograd and Odessa). No special mention need be made of the group of manu- factures from blended materials and thread, such as lace, carpets, buttons, hats, dresses, linen, umbrellas etc., other than to remark that in this branch the most important articles are knitted and woven goods. A group presenting more interest is that covering the manufacture of paper, paper pulp, cardboard and articles manufactured there- from. In considering this group, we must discard poly- graphic establishments, such as printers' shops. Otherwise these workshops, on account of their number, the technical 136 RUSSIA : ITS TRADE AND COMMERCE. conditions and character of the work, setting up type and printing, which have nothing in common with the rest of this group, would obscure the conclusions to be made. The growth of the polygraphical industry during the last few years — to some extent connected v/ith the increase in education — is illustrated by the following figures : — Number of workshops . . . .' Number of workmen (in thousands) Value of output (in thousands of roubles) 1900 1908 618 26-4 835 36-5 24-5 40-8 I9I2 704 26-9 35-3 These figures would seem to indicate a falling off, but the apparent drop is explained by the incomplete investigations made in 191 2. Small workshops, which were not under the control of the Inspectors, were not taken into account. Presumably, most of the figures for 1908 are more trust- worthy and include the large and small typographies of the Empire. These are concentrated, naturally, in populated centres, Petrograd and Moscow having two-thirds of the whole branch of this industry. In the manufacture of various kinds of paper, as also the necessary bye-products, cellulose and paper pulp, Russia presents excellent conditions for the development of this trade. Vast forests and cheap timber, at present the chief raw material in paper manufacture, would seem very promising for the industr}^ but expectations have not been fulfilled. During the last few years the manufacture of writing- paper would seem to have attained to the limits of its development, and the pressing requirements of our home markets for paper are satisfied by imports, chiefly from Finland. The figures given below, covering the last ten years, give an idea of the movements in the number of factories, workmen and their production, also the output of FACTORIES AND WORKSHOPS. 137 paper, cellulose and pulp. Side by side, we give an estimate of the value of the manufactured product in roubles. Number of paper, paper-pulp, and cellulose factories j 451 Number of workmen (in thousands) 45-5 Value of output in thousands of roubles j 55,442 Output of cellulose (in thousands of roubles) i 1,800 Output of paper-pulp (thousands of roubles) j 960 Output of all kinds of paper (in thousands of roubles) ... 38,194 The quantity of bye-products manufactured is growing, but the number of works, workmen, and the figures as to the total output have changed but little. This can easily be understood if we consider the following figures of manu- facture and imports of writing-paper into Russia for the years mentioned (according to unofficial data of the Union of Manufacturers) : — Year Manufacture of Paper and Imports Cardboard Imports from Finland Annual Con- sumption 1900 . 1908 . 1910 . 1912 . 1913 . 10,800 15,000 17.535 21,025 2-529 4-975 6-374 7.58c 8-954 2,340 4.556 6,060 7,202 8,494 13-300 19975 23,909 28,605 29,000 From these figures, it will be seen that the consumption of paper within the country is growing. In 1897 the con- sumption was three pounds per head, in 1908 over five * More than a million poods of cellulose were exported abroad. 138 RUSSIA: ITS TRADE AND COMMERCE. pounds, and in 191 2 over six pounds. The growth in con- sumption is practically covered by the imports from Fin- land ; from other countries, Russia receives only high-class paper, in small quantities. Home manufactures are growing in the direction of larger outputs of the cheaper sorts of paper and cardboard ; and the exports abroad of wood materials — used in the manufacture of paper — are growing to an alarming extent, Russia having sent the following quantities abroad in milliards of poods (or cubic feet) : — Years . . 1902 1905 1908 1910 1912 1913 Exports 3 5 28 36 57 91 The cause of the abnormal delay in the development of the paper industry must be sought in the present conditions of the manufacture in Russia. In the opinion of competent persons, these reasons may be summed up as follows : — the factories making paper are nearly all situated in those parts of Central and Northern Russia which have large forests, but are not always well served by ways of com- munication, whilst, in addition to the fundamental paper- pulp, the manufacturing process requires a great quantity of auxiliary materials. Sulphur, or sulphur pyrites, used in the manufacture of cellulose is generally received from abroad and only found in Russia in the far outlying dis- tricts (Urals and Caucasus). Kaolin, brought from the deposits in the South of Russia, rosin, imported from America and only withdrawn in small quantities from our abietic species of trees, can only be purchased on unfavour- able conditions. In addition to these drawbacks, there is the high cost of equipping factories and the difficulty of competing with foreign, and especially Finnish, makers. As regards wood working, the chief place is occupied by sawmills and veneering shops, which supply the necessary bye-products. Such articles as pieces of furniture, flooring, barrels, boxes, musical instruments are very largely made by hand by the peasants, and, in consequence, the informa- tion given in official statistics which do not take into account small enterprises is extremely meagre. In general, how- ever, the growth in the working of wood during the last few FACTORIES AND WORKSHOPS. 139 years has been extensive and rapid, which is quite natural in view of the richness of the country in practically every species of tree. The following data will give some idea of the success attained in this direction : — Number of workshops .... Number of workmen (thousands) . Value of output (thousands of roubles) 174.643 We see therefore that the value of the products, partly in consequence of increase in price of raw materials, represent- ing more than 70 per cent, of the cost, has almost doubled during twelve years, and this has been accompanied by a remarkable increase in the numbers of workshops and workmen. In these general figures for the whole of wood- working enterprises, sawmills and veneering shops turning out planks, beams, sleepers, etc., etc., are represented to the following extent : — 1900 igo8 1912 Number oj Number 0I Value of roubles) sawmills .... workmen (thousands) . output (thousands of 956 42-2 71-0 1.366 61 -2 89-8 1.555 66-8 126*1 In the group comprising the working of mineral pro- ducts, we find great variety in the character of the articles turned out by the factories, as for instance, glass, porphyry, cement, bricks, lime and fire- resisting materials, etc. In the majority of cases the manufacture of the articles has been going on for a long time and has been adapted to the requirements of the home markets. Statistics for the whole group show : — 140 RUSSIA : ITS TRADE AND COMMERCE. 1900 Number of workshops .... 1,591 Number of workmen (thousands) . 127-2 Value of output (thousands of roubles) 1 80,585 1908 1.479 132-6 96,096 1912 1,711 173-0 174.643 As regards the nature of the chief branches of industry included in this group, the following data will show the present position : — Manufacture of glass, crystal, etc. Manufacture of porphyry, faience Manufacture of various kinds of cement . 42 Manufacture of bricks, potteries, and fire-resisting articles . . 1,127 Number Number of Work- of Fac- men tories (thou- sands) 225 47-5 1 37 24-8 Value ot Output (thou- sands of Roubles) Cement factories merit special attention in this group. The manufacture of cement was begun comparatively recently ; it developed under favourable conditions, there being an abundance of the necessary cement stone (marl) in the Caucasus (Novorossiysk) and on the Volga (Volsk), and in other parts of Central Russia and Poland ; the growth of the manufacture of cement, in view of large and steady demands of the home markets, was extraordinarily rapid. For instance, according to official information and data collected by the Association of Cement Makers, the following quantities of cement (Portland and other kinds) were manu- factured and imported : — FACTORIES AND WORKSHOPS. 141 Manufactured in Sold (value) in Imported from Year Millions of Millions of Abroad in Poods Roubles Millions of Poods 1897 . . . 28 9-0 2-3 1899 50 12-0 27 1900 54 13-6 17 1908 69 i6-i 0-8 I91O 66 22-0 3-3 I91I 90 27-2 9-0 I912 104 33-0 II-O Under the heading of animal products must be Hsted leather factories, soap works, tallow and stearine factories, boot-making, furriers' trades, and concerns working bones, hair, hide, wax, etc. The following figures show the present position of these trades : — igro 1908 1912 Number of workshops . . . 1,254 Number of workmen (thousands), 50-9 Value of output (thousands of roubles) in -8 1,015 60 -8 158-6 723 45-6 174-1 These figures would at first sight seem to indicate a falhng off in these industries during 1912, as the growth in the output can be explained by the undoubted increase in prices of raw materials. The correct explanation, however, is to be found in the errors of the industrial census of 191 2, when the workshops of Siberia, Turkestan and Trans- Caucasus were not taken into consideration, whereas, as a matter of fact, those regions have a significant number of such workshops, and also in the difficulties and defects of the registration in general. As to the importance of the various kinds of manufacture, the following table will fur- nish some interesting statistics. The table is drawn up in accordance with data for 1908 covering the whole Empire : — 142 RUSSIA: ITS TRADE AND COMMERCE. Tanning of skins (various methods) Articles prepared from leather (boots) Manufacture of tallow and soap . Manufacture of stearine and candles Productions from bones Number of Work shops Number of Work- men (in thou- sands) Value of Output (MilHons of Roubles) 74-4 21-3 i8-8 19-6 6-3 All the remaining manufactures, occupying about eight thousand workmen and mounting to nine millions in value have a secondary importance. Such are the manufacture of paste, glue, albumen, and articles made of horn, hair and wax. Leaving out stearine works, which, though not numerous, are important on account of their large output and up-to-date technical equipment, we find the tanneries and leather factories are the most important in this group. Stearine works are concentrated in a few populated centres, Petrograd, Kazan and Moscow, as are also many soap and bone works. Other small tallow-melting and bone works are scattered throughout the whole country, but the leather factories form 70 per cent, of the whole group. It is difficult to form a judgment as to the position of this industry, on the available statistics. Russia has large enter- prises concentrated in the more important towns (Petro- grad, Warsaw, Riga, Tiflis, Kazan, Odessa, etc.) and small workshops in the hands of the peasants and artisans through- out the whole of the Empire — these are especially numerous in the Governments of Viatka, Tver, Orel, Perm, Grodno, etc. As a result, the question of the number of workshops and their output depends upon the thoroughness of the investigations made in this direction. So at various times there have been found to exist ;— FACTORIES AND WORKSHOPS. 143 Number of Output (in \ear Workshops 2,899 Workmen (in thousands) 14-8 thousands of Roubles) 1870 . . . 24-9 1880 . . . 3-563 207 42-0 1889 . . . 2,300 21-5 38-0 1897 . . . 2.154 28-0 57-4 1908 . . . 671 25-1 74-4 1912^ . 444 19-3 109-8 It is not, therefore, surprising that the investigations of the Association of Leather-dealers showed that in 1914 there were 850 enterprises, employing 50,000 workmen, and turning out goods to a value of 150 million roubles. The manufacture of leather goods (boots, travelling bags, harness, etc.) grows just as rapidly. In 1897 such articles were manufactured to the value of 127 millions and in sub- sequent years the figures were as follows : — Year Number of \^■orkshops Number of Workmen (thousands) Annual Value of Manufactures (millions) 1900 . 1908 . . . I912 . . . 146 60 73 4-2 187 14-9 4-8 21-3 37-4 Of course the above figures cover only large machine boot factories which were set up quite recently, and the large workshops in towns. No account has been taken of the small peasant workshops in villages and hamlets. The leather industry is one of the oldest in Russia ; as far back as the middle of the past century, " Russia leather " was renowned for its qualities and found a ready market all over the world. Gradually, however, the industry has Only for European Russia. 144 RUSSIA : ITS TRADE AND COMMERCE. fallen behind that of Western Europe, which is technically better organized ; the introduction of new and more rapid methods of tanning, the application of new preparations in the tanning process, the utilization of machinery in the preparation of the goods, and other new methods have been but little adopted in Russia. This conservatism on the part of Russian factories, when considered Avith the small Russian market, naturally retarded the development of this very important industry. We can but express the hope that in the not far- distant future, with an increase in the prosperity of the population and a growing demand for boots, especially for the Army, new life will be infused into the leather industry. As to the last group of manufactures, chemical products, this branch of industry might be developed to supply all the Russian market, owing to the country's abundance of chemical raw materials; but, owing to the lack of some pre- parations (potassium salts) and the small supplies of others (pyrites, sulphur), Russia is obliged to import some products, for instance, Chilian saltpetre, aniline dyes, sulphur and pyrites. The development of the chemical industry during the last ten years is shown by the following figures : — Number of factories .... Number of workmen (in thousands) Value of product (millions of roubles) 1900^ 1908 1912 477 48-1 472 64-8 510 627 97-2 177*9 238-3 Therefore we can see that during the last ten years the chemical industry has developed, and has been properly organized. The great variety in the products manufactured is shown by the following figures for 191 2 : — * Excluding the preparation of matches. FACTORIES AND WORKSHOPS. 145 Number Value of Number of Work- Products of Fac- men (millions tories (thou- of sands) Roubles) Factories producing chemical preparations, acids, lixiviums, salts, etc 164 10-8 6l-I Mineral and organic dyes, ex- tracts, etc 115 5-4 8-8 Manufactures of : — Gas 23 17 7-6 Cosmetics and apothecary goods 41 3-6 10-2 Rubber articles 9 i6-8 91-8 Matches 98 17-9 8-1 Treatment of naphtha . 29 2-2 8-8 Explosives 7 1-8 8-8 Artificial manure .... . 8 07 4-2 Silk 2 0-8 1-2 The most important, both on account of output and number of workmen employed, are the india-rubber works, principally manufacturing goloshes. These, though small in number, are very well equipped. No general review of the conditions of Russian industry would be complete without a short reference to the position of the workmen and factory legislation . Up to the 'eighties of last century, relations between employer and workman were governed by the general pro- visions of the civil law and no special enactments for the protection of labour existed. This created unsatisfac- tory conditions ; excessively long working days, fre- quently of fifteen or sixteen hours ; unrestricted employment of women and children, undermining the health of the people ; large and arbitrary fines and deductions from wages, exploitation by providing workmen with necessaries from factory shops, payment by truck, unhealthy conditions in the workshops, and so forth. As the number of factories and work-people grew, the disagreements between the men and their employers developed into strikes. The Govern- L 146 RUSSIA: ITS TRADE AND COMMERCE. ment was forced to interfere, and this resulted in the passing of laws to define the relations between employer and workman. In 1882, appeared the first general Act restricting the labour of children in factories. This was quickly followed by others, defining the position of the workmen in varied branches of labour. In 1885 night work for women and children, in textile factories, was absolutely forbidden ; in 1886, a law was passed covering the relations of employer and workmen in regard to conditions of employ- ment ; in 1897, the length of the working day for all cate- gories of workmen was fixed. Later followed laws as to workmen's compensation for accidents, (1903) for the appointment of official overseers, for regulating strikes and workmen's associations (1905) and for protecting workmen in case sickness, providing medical aid, establishing hospital clubs, and for the insurance of workmen against accident (June 23, 1 912). The supervision of the observance of these laws was, in 1881, entrusted to a specially established corps of Factory Inspectors, whose activities later on were regu- lated by special local State and other official institutions, established in each Government, and in the central Depart- ment, which was in the beginning the Ministry of Finance, and later on the Ministry of Trade and Industry. The number of Inspectors was at first very small, and their control was restricted to those Governments with very im- portant industries. With the development in labour legis- lation their number increased, Inspectors being appointed first of all for the various Governments of Europein Russia, and subsequently for the whole Empire. At present there are 285 such Inspectors. According to the existing law of July i, 1882,' children under the age of twelve are not, under any circumstances, allowed to work in factories ; minors, from twelve to fifteen years of age, are not allowed to work more than eight hours a day, and even such work may not continue more than four and a half hours at a time without interruption. It is only where there are two shifts of nine hours each that they are ' Statutes Industrial Labour, Vol. XI, Part 2. Edition 19 13. Arts. 72-86. FACTORIES AND WORKSHOPS. 147 allowed (and this is important for textile factories which have adopted this distribution of work) to work nine hours in two uninterrupted stretches of four and a half hours each ; further, it is forbidden to employ minors, children and women between the hours of 10 p.m. and 4 a.m. Children and women may not be employed on Sundays and holidays, nor in manufactures where the work is so exhausting as to be recognized as injurious, according to the factory regula- tions. Such are mining, manufacture of explosives, baking and pastry-making, manufacture of sheep-skin coats, print- ing shops, etc. With regard to the provisions concerning minors, the control of the Inspectors, together with the heavy penalties for violation of the law, imprisonment for one month or a fine of Rs. ico, have resulted in the proper application of these regulations, and very few violations have been regis- tered during the last few years. The employment of children of twelve to fifteen years of age is most frequently met wdth in the textile industry, which contains more than 38 per cent, of the child workers. A large number of children are also employed in the prepara- tion of mineral products, in printing shops, and in machine factories. Of still greater importance is the law of i8go in regard to the working hours of minors (all persons from fifteen to seventeen years of age) and of women in textile factories. This law, which was passed as a result of the injurious affects of night work upon minors and women, restricts their hours of labour in textile factories as from 9 p.m. to 5 a.m.; in factories working on the two-shift system covering eigh- teen hours, the restriction is as from 10 p.m. to 4 a.m. The law thus creates favourable conditions for adopting the eighteen hours labour day in textile factories, and this system at the present time is almost universally practised in the textile industry. Russian laws absolutely prohibit women's labour in under- ground mines (1892) ; women are not permitted to work at night under any circumstances, and are not permitted to return to work for four weeks after confinement (1912). 146 RUSSIA: ITS TRADE AND COMMERCE. The promulgation of the above laws has convinced both the employers and workmen that is possible and advan- tageous to protect such forms of labour by legislative measures. The manufacturers were convinced that the shortening of the working day, followed by the disappear- ance of fatigue through excessive labour, is compensated by an increase in productiveness ; the workmen by a series of strikes showed their desire for the reduction of the ex- cessively long working day (13I-14I hours). Varying conditions and lack of labour in different parts of the country, with resulting unfair conditions of competition for the manufacturer, prepared the way for the general law of June 2, 1897, " as to the duration and distri- bution of time of labour in factories, workshops, mines, and metallurgical enterprises," which fixed the hours of labour for all categories of workmen in all branches of in- dustry. The principle of the law was very simple. Taking into consideration that overfatigue has a dire effect on the health of the workmen, and the lengthening of the working hours does not conduce to increase of production, the law fixed the hours of labour for the workmen only without putting any restrictions on the hours during which the factory itself might work. A factory may work without restriction in the number of hours, but the workmen must not labour more than ii| hours in the day-time or more than 10 hours at night. The " night " was fixed as fol- lows : for one shift, from 9 p.m. to 5 a.m. and where work is carried on in two or more shifts, from 10 p.m to 4 a.m. According to the law, the order of working in each factory must be regulated by Rules of Internal Management con- firmed by the Factory Inspectors, after they have satisfied themselves that all the legal provisions have been observed. Under the restrictions placed on factories by the laws limiting hours of labour, there remained but three possible ways of distributing work in factories, (i) The one-shift ii^hour day, generally from six in the morning to seven in the evening, with a break for dinner of i| hours, per- mitting the eniployniont of nicn, women and minors (for children a special 8- hour day must be observed) ; (2) FACTORIES AND WORKSHOPS. 149 the two-shift work day of 18 hours, from 4 o'clock in the morning to ten in the evening, during which each workman may work only nine hours, the shifts being from 4 a.m. to I p.m. in the morning and from i p.m. to 10 p.m. This permits the employment of workmen of all categories, not excluding children — provided some adult relation is present; and (3) two-shift work-day of 2i| hours, the day covering ii| hours during which men, women and children can be employed, and a night-shift of 10 hours, during which only adult men are allowed to Vv'ork. The third method is naturally in favour in such branches of industry which largely employ women and minors, for instance the textile factories, and is, in general, only met with in the form of an expedient to meet abnormal tem- porary conditions in such factories as exclusively employ adult men. In addition to this, the law allows the com- bination of three shifts of eight hours each during the work- ing of twenty-four hours. The law of 1897 also provided that in factories working on the one-shift method of ten hours, work must finish not later than twelve o'clock on the eve of Sundays, holidays and Christmastide, and that Sundays and other specified holidays (seventeen during the year) shall be days of rest. Further, work-people of other races or holding other tha.n the Christian faith may keep other hohdays or observe other working days in accordance with the practices of their faith. Naturally, the variety of conditions of work in some branches of industry and absolute necessity, resulting from technical conditions in others, required that some latitude be given in the appUcation of the law of 1897. Amongst the exceptions, which generally would seem to be justified, some doubt may be expressed in regard to permitting overtime work. There might seem here a possibility of completely defeat- ing the aims of the law of 1897, but such is not the case. Overtime may be of two kinds : obligatory, that is, necessi- tated by the technical conditions of manufacture when an interruption in the process (dyeing, etc.) would result in 150 RUSSIA: ITS TRADE AND COMMERCE. spoiling of goods or materials manufactured, or exceptional conditions (break-down of engines, fire, etc.) when the manufacturer has the right to demand that the workmen work overtime at a wage previously agreed upon. To meet such possibilities, provisions are made in the contract of hire and the payment for such work may be decided upon beforehand. Another form of overtime is voluntary work which is only allowed by the law on special separate agree- ments with each workman ; practice has shown that it is almost impossible to make private agreements where the work requires the employment of a definite number of workmen, that is, the entire staff of a factory or depart- ment : for work of an individual character (putting up type and various forms of hand labour) such agreements can be arranged, but they are hardly ever of a general character, as there are no means of enforcing them. Overtime work on the part of a whole factory requires the preliminary notification of the reasons therefor to the Factory Inspectors and its authorization by them. The most influential of labour laws in bringing harmony into the relations of employers and workmen was that of June 3, 1886, which covers the rules as to hire of labour and the mutual relations of employers and workmen. This law was passed to prevent abuses and arbitrary actions on the part of the manufacturers in the conditions of labour contracts, imposing fines, making deductions and withhold- ing part of the wages, payments in goods, etc., all forms of undesirable exploitation of labour. The provisions of the law will be seen from the following points : — (i) Article 103, by which the rules of internal management of a factory are confirmed by the Factory Inspectors. These rules, which are obligatory for every factory, set forth the chief conditions of hire which must be made known when engaging labour, and are : length of working day, time when work begins and ends, breaks in the day, date of hire and date when wages become due, behaviour of workmen in the carrying out of the work, rights and obligations of the factory management and workmen, etc. ; their confirma- FACTORIES AND WORKSHOPS. 151 tion by the Factory Inspector enforces in such cases the appHcation of the law and represents a guarantee against misunderstandings or violations of the rights of the work- men. Every reservation restricting the workmen's right to legal protection, which is included in the contract between the employer and the workman, is disregarded and cannot serve as basis upon which to refuse the just demands of the workman. All violations of the rules, on the part of the employer, are punishable by corresponding fines, imposed by the Factory Courts on the reports of the Inspectors. (2) Contracts covering hire of labour must be in writing and take the form of a booklet delivered to the workman, who is hired within a term of seven days from the date on which he began work ; all conditions of employment must be exactly shown in this booklet in order to avoid possible misunderstandings ; there must be shown the rate of pay- ment, manner of calculating same, date when payments are made, conditions on which the workman has the right to use lodgings or baths attached to the factory, the term for which he has been engaged, and must also contain a memoranda of all payments made, fines paid and reasons for which such fines were imposed. No supplementary contracts apart from the workman's booklet are valid. The rules of internal management, con- firmed by the Inspectors, must be contained in the work- man's booklet as they are the basis of the employment con- tract. (3) Workmen can be employed in factories for indefinite terms (this is the customary way of employing labour), definite terms and for the execution of a given job. When employment is for indefinite periods, the employer and workman are bound by the conditions of contract during a period of two weeks from the date of declaration by one of the parties of his desire to cancel the contract. During the two-week period, the parties have not the right to change the conditions of employment in so far as terms of payment, working hours, etc., are concerned. (4) The contract of employment loses its validity only on mutual agreement between the parties thereto, or after 152 RUSSIA: ITS TRADE AND COMMERCE. the expiration of the two weeks from the date of declaration of desire to cancel the contract where workmen have been employed for an indefinite period, and if circumstances arise which make it impossible to fulfil the contract (sen- tences of imprisonment, banishment by the authorities, military service, etc.) the contract can be cancelled by one of the parties thereto only in such cases as are definitely provided for by law, viz. by the non-appearance of the employee during three consecutive days, or two weeks on there being shown proper cause (illness) ; on the workman being charged with some misdemeanour, on his misbehaving himself, threatening the person or the property of the em- ployer, or if the fines imposed upon him exceed one-third of the wages due, and in case of infectious or other illnesses. The workman can cancel the contracts should his wages not be properly paid, in cases of ill-treatment (corporal punishment, or insults), if the food or lodgings are bad, and in cases where the work is injurious to health, etc. (5) The establishing of factory shops with a view to fur- nishing the employees with articles which are cheap and of good quality — a necessary measure where the factories are situated in out-of-the-way places — is only permitted on the authorization of the Factory Inspectors, who also con- firm the prices or rates at which goods may be sold. The rates are shown in a prominent place in the shop, and the goods taken by the workmen are paid for either in cash or by retaining their value from the wages due. (6) Payments for the goods by coupons, bread and other kinds of receipts is forbidden and is severely punished ; deductions from wages, on demand of the law courts, fiscal authorities or for debts are clearly defined ; for a single man, not more than one-third of the wages payable to him and one-fourth for family men ; these amounts, however, do not include debts on account of goods taken from the factory shop. It is also forbidden to collect payments or make deductions for medical aid, light, and for the use of the machines and tools by which the articles are manufac- tured. (7) Whilst the right of the employer to impose fines in FACTORIES AND WORKSHOPS. 153 the interests of order and proper discipline is not questioned, the law allows such procedure only in three cases, viz. bad work, inexcusable absence and disorderly conduct, bad work being defined as when inferior articles are turned out as a result of negligence on the part of the workman, the damaging of materials or tools ; the non-appearance of a workman during half-days is considered as tantamount to absenting himself ; and his being late or arbitrarily absent- ing himself from work, or his disregard of the established rules against fire, abusive language, disobedience, drunken- ness during working hours, etc., are looked upon as disorderly conduct. For absenting himself the fine must not exceed one rouble per day, or three roubles in all ; for improper work, the fine is imposed in accordance with the nature of same, but in no case may all fines imposed on a workman exceed one-third of his wages. Should they amount to more than this, the employer has the right to cancel the contract with him. Each violation which is the subject of a fine must be recorded on special forms kept in the factories which must also show the amount of the fine. These records must be confirmed by the Factory Inspectors. The fines are not appropriated by the employer, but go to form a special fund for each factory under the jurisdiction of the Factory Management. This fund may be expended under the control of the Factory Inspectors exclusively by way of allowances to the workmen themselves and in accordance with special rules. Down to 1906 participants in strikes with the object of forcing an increase in wages or change in other conditions, were punished by imprisonment for a period of from two months to a year and four months. When this archaic law was superseded in 1905, the pro- vision as to punishing participants in strikes when the strike affected the turning out of products required by the general public was retained, and in the general criminal code, ring- leaders and agitators are liable to such punishment, being regarded in the fight of a menace to public order. In the case of individual workmen arbitrarily quitting work before the expiration of the term for which they were engaged, 154 RUSSIA: ITS TRADE AND COMMERCE. Russian law as recently as 191 2 punished the guilty party by imprisonment for one month. This law, based on the consideration that the workman is irresponsible in case of loss being incurred by the employer as a result of the prema- ture cancellation of the contract, whereas the employer, who cancels a contract, is responsible for all the losses ex- perienced by the workman, was rescinded, as far as factory workers are concerned, but retained in connexion with agricultural labourers. The law, however, long ago lost its significance as a threat, as the employers were unwilHng to have recourse to its protection and, since the bringing of such actions by employers (1901) has been placed under the control of the Factory Inspectors, their number has been reduced to a fev/ hundred for all Russia. In connexion with strikes in Russian factories, it must be noted that no threats of severe punishment can restrain the workmen from going on strike — a statement which, by the way, is true of workmen in all countries. They all understand that it would be absurd to imprison thousands of participants and, as a result, strikes break out without any attention being paid to the possible reprisals provided for by law. The only difference was that, up to the appear- ance of the law in 1906, Russian strikes were of a peculiar nature in so far as they were unexpected and very bitter ; dissatisfaction had grown and, not finding an outlet, secret plotting and scheming began and culminated in disorderly outbreaks, for which it was difiicult to ascribe any reason. These being often of a disorganized and anarchical character, were frequently accompanied with violence, the destruction of property and even murder,. Complete information as to strikes which preceded the introduction of the law of 1886 is not to be had, but more detailed information as to Russian strikes has been taken since 1895, when the Factory In- spectors began to collect definite data as to strike move- ments. We give the following table of strikes in Russia since 1895, showing the extent of these movements during the several years, and the number of working days lost : — FACTORIES AND WORKSHOPS. 155 Number of Strikes Number of Workmen Participating Number of Working Year Actual Ratio to Total Number of Factories Actual Ratio to Total Number of Workmen Days Lost (in thou- sands) 1895 1900 1905 I91O 1911 1912 1913 68 125 13995 222 466 2,032 2404 0-3 0-7 93-2 1-4 2-8 II-7 13-4 3I-I 29-3 2,863-1 46-6 105-1 725-5 887-0 2-0 1-7 163-8 2-4 5-1 33-7 38-3 156-8 119-5 23,609-3 256-3 791-0 2,375-6 3.863-2 Russian strikes resemble in many respects those of Wes- tern Europe, but have also special characteristics. Observations show that strikes are more frequent in the warm months of the year, which must be put down to the increased demand for agricultural labour during that period. Workmen in town factories are more inclined to strike than workmen in factories in rural districts. The larger the factory, and the greater the number of workmen occupied, the greater the probability of the breaking out of strikes. In Russia, as in other countries, the tendency to strike is especially among the workmen in textile and metallurgical establishments. This is, of course, connected with the fact that textile factories and metal-working shops are often situated in towns and employ large numbers of workmen, and is perhaps also to some extent due to the conditions under which work is carried on (piece-work, etc.), and the violent changes recorded in these trades, both of which are very dependent upon the conditions of the market for their products. As regards duration, Russian strikes at first sight would seem to be spasmodic outbreaks, which are soon over in view of the small material resources and lack of organization of the workmen, and, up to the year 1905, when strikes were recognized as not liable to punishment, under pressure of 156 RUSSIA : ITS TRADE AND COMMERCE. outside causes. Figures, however, refute these presump- tions. In years when the strikes were especially numerous and when the majority were of a demonstrative, political character, the greater part of the strikes lasted but a few days — some only two. In normal years and in years of depression, when most of the strikes were of an economic nature, many lasted quite a long while, in every case more than two days. The explanation of this is in the very nature of political strikes, which do not aim at any definite reforms, as is the case with economic strikes, and are more in the nature of demonstrations in connexion with events which call forth protests on the part of workmen. Provision for workmen disabled while employed in fac- tories was for a long time in an extremely unsatisfactory condition, and there was great need of some legislative measures. On June 1905, a law was passed providing for compensation to employees disabled by accidents in factories and workshops. This law provides also for com- pensation to members of the workman's family. Later on the law was amended to include mines and Government factories. The chief provisions may be summed up in the following paragraphs. A workman may receive compensation for disablement when such disablement deprives him of the possibility of working during more than three consecutive days ; in case of death ensuing, the compensation is paid to members of his family. The compensation takes the form of an allow- ance until such time as the workman is convalescent, in case of temporary disablement, to the extent of one-half of the wages which he would have earned, or a pension amount- ing to as much as two-thirds of his annual earnings if he is disabled for life. If the disablement is not of such a nature as completely to deprive him of the capacity to work, the pension corresponds to the degree to which the workman has lost such capacity. In case of death, the employers are obliged to pay the family a fixed sum to cover burial expenses (Rs. 30 for adults, and Rs. 15 for minors) and to pay the members of his family pensions ; one-third to the widow, one sixth to each child, not aged more than fifteen FACTORIES AND WORKSHOPS. 157 years. The total sum of the pension may not exceed two- thirds of the annual earnings of the deceased workman. By agreement between the interested parties, the annual pension can be replaced by the payment of a lump sum in an amount equal to ten times the pension payable. In order that proper evidence be forthcoming, whenever there is an accident it is obhgatory that a report be drawn up in presence of the police, the doctor and witnesses, and in this report there must be clearly set forth all the circum- stances of the accident, the character of the disablement, etc. All such accidents are recorded by factories in special books kept for this purpose, to which are added documents which are of interest. Agreements between the interested parties in connexion with accidents where workmen are disabled, and an amount of remuneration to be paid in consequence, must be drawn up in writing and attested to by the Factory Inspector, whose duty it is to see that all the requirements of the law are observed, and to refuse certification if the standing rules have been plainly and materially violated. Agreements drawn up in this manner are final and have the validity of legal amicable arrangements, which serve to protect the further rights of the interested parties. Should both parties, or either one of them reject the preliminary ami- cable settlement, or should the Inspector refuse to confirm it, the Inspector draws up a report on the accident showing to what extent the workman has been incapacitated, the de- mands and proposals of the interested parties, and his con- clusions as to the rights of the workman and the extent of compensation payable. This report is presented by the dissatisfied party to the Court and serves as basis for coming to a decision when the case is tried. All this procedure ensures correct evidence and simplifies and hastens the decision of the Court without forcing the workman to prove his case legally. Practical application of the law shows that many workmen prefer compensation by means of the payment of a lumpsum, and about 80 percent, of the cases are settled in this way. It is only in case of death and total incapacitation that we find a large number of regular pension payments, 158 RUSSIA: ITS TRADE AND COMMERCE. The law of June 3, 1903, will shortly lose some of its exceptional significance by the enforcement of a law of June 23, 1912, providing for the obligatory insurance of workmen against accidents. This new law only ' covers industrial enterprises employing not less than thirty workmen, or, in the case of a factory being equipped with engines, not less than twenty. The material provisions of the new law cor-. respond to those of the Act of June 3, 1903 (pensions, rights of the disabled workman, etc.) ; the payment of a lump sum is only allowed in cases where the pension is very small (up to Rs. 36) ; the matter of determining the amount of the pension and its payment is vested with the Insurance Societies, which are being formed on the same lines as such institutions have been established in Austria and Germany. The payment of the pension is made from a Pension-Insur- ance Fund formed by the payments of the members of the Society and will correspond in the beginning (ten years) to the capitalized amount of the pension multiplied by ten. Without referring at length to other phases of this law, we must call attention to the valuable protection which it affords to the workmen who are in receipt of pensions ; the individual responsibility of the employer disappears and is replaced by a guarantee of payment by the collective respon- sibility of the Insurance Societies covering a special area, or in some cases, a whole branch of industry. This law is now being introduced ; the Societies are being organized, and information is being gathered as to the practical working of the scheme ; so far there is no actual data as to the" influ- ence of the law on the working classes and industry. The law which was simultaneously passed in regard to the protection of workmen in cases of illness is of still greater interest in so far ;.s his interests is concerned. This law, which has passed the Legislature in a form much re- sembling its German counterpart, covers the same class of industrial enterprises (thirty workmen, and as few as twenty where there are engines). Allowances are made : in the case of sickness, childbirth, and death. The extent of the allowance granted in case of illness or disablement is fixed at from one-quarter to one-half of the earnings of a single FACTORIES AND WORKSHOPS. 159 man, and up to two-thirds of a married man, full wages of a woman who is enceinte, and thirty days' pay for the burial expenses. The disabled workman who is insured by the law as to the insurance of workmen, receives his allowance during thirteen weeks, sick workmen during the period of illness, women who are enceinte during the two weeks before childbirth and up to four weeks after confinement The allowances are made from the funds at the disposal of the Sick " Kassa," formed by the subscriptions from the workmen and grants from the owners of the factories. The extent of subscriptions are fixed by general meeting of the members of the " Kassa" within the limits of from one to two per cent, of their earnings ; the grants from the owners are fixed at an amount equal to two-thirds of the payments made by the participants in the " Kassa." Medical aid to the workmen is at the expense of the owner of the factory. The affairs of the "Kassa" are managed by the general meeting of its members and the Board of Direction, the members of which are elected. Owners of factories have the right to participate through representatives and mem- bers, appointed by them, both in the meetings and in the management of the "Kassa." The principle adopted is that of self-administration and the Statutes of the " Kassa " are subject to confirmation by the proper local Government institutions, granting wide powers to the Board of Direction of the " Kassa " in the matter of conducting its affairs. Besides supplying the acute needs of the working people in cases of illness, childbirth or death, this law has introduced the principles of self-administration and the rudiments of organization amongst the workers. It is now in course of introduction throughout the whole of the Empire ; the Statutes of almost all the " Kassas " have been drawn up and confirmed, the officials elected, and in the majority of cases, the collecting of subscriptions and granting of allow- ances has already begun. In conclusion some indication must be given of the wages earned. Wages, generally speaking, are not high, especially in connexion with unskilled labour. Skilled workmen are able often to command excellent remunera- i6o RUSSIA: ITS TRADE AND COMMERCE. tion in consequence of the great demand for their labour. According to the reports of the Inspectors for former years (1892), the average annual wage of the workman in industrial concerns was placed at Rs. 187-60 ; after the lapse of twenty years, we find the earnings in 1913 aggregating Rs. 26-]. The cost of living, however, has grown to a far greater extent, and the net earnings have hardly increased during that period. According to the same information, in 1892, housing accommodation cost a workman from 50 Copecks to Rs. 3 per month, and in Moscow the cost of food was estimated to be from Rs. 4 to Rs. 5 per month. To-day these figures are, of course, out of the question. It is true that in many factories situated outside the towns and in the outlying districts (the Urals and South of Russia), the owners were forced to make housing provision for the work- men and supply them with food, and it is only fair to state that in many cases the results were quite excellent. These cases, however, were exceptional, and the position to-day of the housing and feeding of the working classes cannot be considered satisfactory. As regards rates of pay, even at that time the pay for a woman's labour was, on an average, only one-half that of a man, and minors only earned one- third of a man's pay. This circumstance, as will be shown below, was advantageously exploited by the employers. Again, the geographical element has an influence upon wages ; it is well known that wages in towns are higher than in villages ; in the outlying districts — ^Poland, the Baltic Provinces and the south of Russia — wages are higher than in the central industrial district, which has an excessive supply of labour. During 1913, for instance, the Inspector report that the average earnings in the various districts were as follows : — Petrograd District .... Rs. 339 Warsaw ...... 202 Charkoff . . . . „ 286 Volga . . . . „ 231 Moscow ....,, 219 Kielf 196^ * In consequence of the predominating position occupied by FACTORIES AND WORKSHOPS. i6i For a comparatively long period, such as from 1892 to 1908, we have the following figures : — Average Earni ngs ia Ruubles in the following Districts: Production of Central (Mos- cow, etc.) Baltic (Petro- grad, etc.) Poland (Petro- kovGovt., etc.) - 1892 1908 1892 1908 1892 1908 Cotton .... Wool Machine building . 166 160 250 170-4 184-3 358-5 205 216 362 282-8 203-9 469-2 187 188 243 330-3 357-8 481-1 We see from this how comparatively low were the wages paid in the Central Region and how slowly the}^ have grown during the last fifteen years ; whilst the wages in Poland during 1892 were approximately equal to those paid in the Central Governments, they have almost doubled since. Reference must also be made to the wages in the Baltic Provinces, where workmen earn more than in the Moscow District. In regard to the growth in wages in factories and v^■o^k- shops during the last few years, we have comparatively complete data of the General Russian Commissions of In- quiry (1900 and 1908), and also the information collected annually by the Factory Inspectors, as to the earnings of those workmen who were fined, and who, as we have stated above, cover more than 70 per cent, of the total. The average annual earnings were as follows : — sugar refineries and wine distilleries, where annual earnings corre- spond to the seasons during which the work is carried on, the wages are really equal to the earnings of a half-year. i62 RUSSIA: ITS TRADE AND COMMERCE. 1900 1901 1902 1903 1904 1905 1906 1907 Rs. 214 201 202 208 213 2051 231 241 1908 1909 1910 1911 1912 1913 Rs. 242 (246-8 according to the Commission of In- Inqiiiry). 236 242 251 255 264 As these average payments have been arrived at by dividing the total earnings by the total number of workmen, the figures which are, so to speak, the coefficient of the growth in remuneration of labour during the last thirteen years, show an undoubted increase in the wages, which, however, has not been too rapid and does not correspond to the increased prices of the necessaries of life. The set-back in the growth of the earnings during certain years is wholly due to the fact that the employers had paralysed such growth by replacing the more expensive labour of adult men by the cheaper labour of women and children. As a matter of fact the number of women workers during the last few years has grown out of all proportion, as will be seen from the following figures : — 1901. 1908. 1909. 1910. 453-3 thousands 1911, 494-1 „ 1912, 565-0 M 19^3 ■ 606-5 638-2 thousands 667-3 723-9 If we compare 1901 and 1909, we see that during that period the number of women workers increased by 11,743, that is, 24-6 per cent., whilst the growth in total number of workers for the same period represents only 8-3 per cent. The position occupied by women in the general number of workers can be seen from the following figures : — 1901 1909 1913 26-8 per cent. 30-8 31-2 1 The influence of long strikes reduced the total amount during this year. FACTORIES AND WORKSHOPS. 163 At the same time, the extent to which women's labour is employed in the different branches of industry fluctuates to a certain extent, although the proportion of women and men engaged in the same class of factories has decreased from year to year, evidently on account of the technical character of the work. During 1908 (according to informa- tion collected by the Commissions of Inquiry) and 1913 (according to information collected by the Inspectors), the actual number of women occupied in different branches of industry was as follows (in thousands) : — Ratio for 1908 i Average I 1 Earnings Manufactures In 1912 In 1908 To Number To Total Number for 1908 in of of Roubles 1 Workmen Employed Women Cotton . . . '< 318-1 251-0 51-0 44-6 217-3 Wool . . . 67-1 53-3 37-6 9-5 230-3 Silk .... 23-1 i6-6 59-1 3-0 196-3 Hemp, flax, and jute ... 57-6 46-3 52-9 8-2 171 -7 Blended mate- rials . 27-9 i8-6 55-0 3-3 68-7% 271-7 Paper and arti- cles from pa- per 27-2 22-1 25-2 3-9 299-2 Wood working. 147 8-6 9-5 1-5 226-9 Metallurgical works 22-8 13-5 24-8 2-5 381-5 Working of minerals . 39-5 23-5 17-5 4-2 216-2 Animal products 9-1 8-5 15-9 1-5 261-8 Alimentary sub- ! stances . 83-0 79-3 20-7 14-1 154-9 Chemical pro- ducts 33-1 \ 20-2 1 33-9 3-6 261-2 i64 RUSSIA: ITS TRADE AND COMMERCE. From the figures of this table it will be seen that the pro- portionate number of women occupied in different lines of industry increases from year to year ; that more than two- thirds of the number of women are engaged in the textile industry (687 per cent.) ; that the number of women ex- ceeds that of men in all the factories of this category with the exception of those working woollen stuffs. Further, it is to be noted that in the metallurgical industry, women's labour is very restricted, as they are only employed in cleaning and packing. The largest number of women are employed in the textile factories and in the production of alimentary substances (sugar refineries. Government spirit depots). In other branches of industry, women's labour takes more or less the form of help (up to 14-8 per cent, of their number), excepting in a few cases, for instance, in the manufacture of paper (articles prepared from paper, packing, sorting), china-ware (packing), and in chemical works (the making of rubber articles and matches). We see further from the above table that the larger the number of women employed in any given manufacture, the lower are their average annual earnings ; the average earnings in the working of metals and preparing of animal products, in which little recourse is had to women's labour, are especially high. CHAPTER VII Mining and Metallurgy By I. A. KoRZUKHiN, Mining Engineer Legal Position of Mining Free mining rights are granted in Russia to the land belonging to the State. Private owners of land are con- sidered the proprietors of the minerals beneath it, and these may only be worked by consent of the landowner. When such private estates are those belonging to the Apanages or H.I.M. the Emperor's Cabinet, the right of mining is granted by a concession to suitable applicants. If the land belongs to one of the four Cossack Voiskos or communities (Transbaikal, Ural, Don, Kuban), the right of mining falls either to the highest bidder or is made the sub- ject of a special agreement. Greater difficulty is often experienced in acquiring mining rights from private owners, and peculiar to Russia are the mineral rights possessed by the peasantry. On their emancipation the peasants had land allotted to them, redeemable by means of annual instalments. Until this land-redemption was completed, the mineral rights did not belong to the peasant owner of the land. By law the peasants were united into communities, owing to which the exploiters of the mineral wealth of the land were obliged to conclude their agreements, not with separate individuals, but with a corporate body, i.e., the community. At the present time, the bulk of peasant land in Russia has been redeemed, and individual peasant landowners are permitted (since 1910) to withdraw from their com- mune, but the area of land available for mining has been reduced. i65 1 66 RUSSIA : ITS TRADE AND COMMERCE. Realizing this, the Russian Government is attempting to find a legal solution of the problem. The supervision of mining is entrusted to the Mining Department of the Ministry of Commerce and Industries. Its jurisdiction does not, however, extend to mining on the land belonging to H.I.M. Cabinet, or on that of Cossack communities, which possess a special mining inspection. The Mining Department exercises its powers through Mining Boards, viz., the Western, South Russian, South- eastern, Caucasian, Ural, Tomsk, and Irkutsk Mining Boards. Mining in the Transcaspian-Turkestan territory is in the jurisdiction of the governor of the territory. The Mining Boards have under them district engineers and their assistants, who are the direct superintendents of the mines. The number of district engineers is about sixty, but ex- perience has proved that these are far from being enough for the vast area of Russia, and, of late years, the IMining Depart- ment has increased the number of inspectors by appointing district engineers to act independently. Russian Geological Committee The investigation of Russia's natural resources has been undertaken by the Russian Geological Committee, a Govern- ment institution availing itself of outside scientific assis- tance. Founded in 1882, the Committee was originally intended to make a geological survey of European Russia, on the scale of 10 versts to the inch. Gradually, with the development of Russian industries, the Committee found itself faced with more concrete problems. It was required to make a detailed survey of the Donetz coal-field — a work of great labour, still unfinished ; it has had to survey the Krivoi Rog beds of iron-ore ; to make a geological examination of the area adjacent to the Siberian Railway during its construction. It has surveyed the gold-fields of Siberia, the oil-fields, etc. At the present time the Committee has been completely reorganized. The lack of a permanent trained staff and MINING AND METALLURGY. 167 of adequate cartographical material prevent the develop- ment of the work which is really urgent, but the Committee during its brief existence has rendered innumerable ser- vices to science in Russia. The Mineral Wealth of Russia Russia is exceedingly rich in minerals. Abundant beds of almost every known useful mineral are to be found. Here, it seems to us, British enterprise could well work use- fully in the interest of both countries. The principal mineral is niangar.esc ore, the chief mining centre is situated in Transcaucasia, in the Sharopan district of the province of Kutais, on the river Kviril. The output here amounts to over 6o,cgo,cgo poods per annum, almost the whole of the ore being exported abroad in a crude state. Projects for smelting the ore on the spot (especially by electricity), so as to export ferromanganese instead of crude ore are on foot. The Caucasian ore has a world-wide reputation both for richness and purity. In the South of Russia, in the Nikopol-Mariupol district, there are. large manganese mines, w^hich chiefly supply the South-Russian metallurgical industries. The ore is some- what poorer than in the Caucasus, but, geographically, the mines are better situated in regard to the southern works. Quicksilver ores are extracted in the South of Russia, near Nikitovka, where there is an important mine. Quick- silver is known to exist in the Caucasus, the Urals, Trans- baikal, and in Eastern Siberia, but there is no exact informa- tion in regard to these beds. Tin is known to exist in the Transbaikal, on the river Onon, but, in spite of the good situation (near a railway station) and the reliability of the beds, the latter are not worked. Besides these, there is reason to think that tin may be discovered on the Altai. Antimony is known to exist in many places in the Cauca- sus. There arc large beds of it on the river Amur, but as yet no antimony is mined in Russia. Nickel and cobalt are likewise not yet produced, notwith- standing that the ores are known to exist in the Urals (nickel) i68 RUSSIA : ITS TRADE AND COMMERCE. and the Caucasus (cobalt). There are apparently many rich beds of wolfram in the Transbaikal ; unfortunately, they are still untouched. Molybdena, bismuth, vanadium, and suchlike rare metals, have been discovered in Russia in a variety of localities, but have not been worked. The Urals are especially rich in cliromium ; excellent works have been quite recently started there for the pro- duction of ferrochromium. Unfortunately the output (50,000 poods per annum) of these works — which likewise produce ferrosilica — is quite inadequate to the home de- mand for the former product, in spite of the fact that the supplies of chrome-ores in the Urals are very great. Iron pyrites is found in many places in the Urals. There is undoubted information in regard to rich beds of pyrites in the Olonetz region, but as yet no one has paid any atten- tion to them. Chief among the non-metallic minerals is salt. The supply of salt in Russia is inexhaustible. The principal producing districts are the following : the Southern Urals, where the Iletsk ridge forms a colossal bed of excellent rock-salt. In the Bakhmut district of the Yekaterinoslav province (in the South of Russia) there is a similar enormous salt mine. The extensive salt-beds in the Caucasus are not worked to any considerable extent. The largest bed of solar salt in Russia is the Baskuntchak lake, in the province of Astrakhan. Besides this, solar salt is obtained on the Black Sea coast, in the Crimea, and near Odessa. Salt is also obtained by boiling brine in the pro- vince of Perm, on the river Kama, and in the South of Russia, at Slaviansk. The general output of salt in Russia amounts to some 1 10-130 million poods per annum, and fully supplies the home demand. The future of the Russian salt trade is con- nected with the development of our chemical industry. As regards salt, Siberia occupies a peculiar position. Western Siberia is freely supplied by the Ural and Iletsk mines, but Eastern Siberia, with all its abundance of fish, has, as yet, been inadequately provided for. The necessary MINING AND METALLURGY. 169 suppl}' is at present brought from Ussolie, in the neighbour- hood of the town of Irkutsk, where a Hmited quantity is produced at the Government works by boihng the brine obtained from bores, and the greater part of the salt used is brought to Vladivostok from abroad, principally from Ger- many. In the future there must, undoubtedly, be a change in this state of affairs. Apart from the possibility of discover- ing salt mines in Eastern Siberia, there are enormous rock- salt mines on the river Vilui, in the Yakutsk territory. Their geographical situation is such that it would be com- paratively easy to organize the production and transport of salt from there to the Pacific coast. It would also be desir- able to organize the transport to the Far East of salt from the South of Russia. Sulphate of soda is found in the Batalpashinsk district of the Kuban territory, but the exploitation is not yet on a large scale. The beds of sulphate of soda in the Karabu- gaza Bay of the Caspian Sea are enormous, but have not been worked at all. Sulphur is found in the Caucasus, both north and south, and in Turkestan, but has not yet been exploited. Graphite is found in many places. The most celebrated mines are the Sliber, in the province of Irkutsk, but they are not worked. Graphite of the best quality has been dis- covered on the Tchukotsk peninsula. Beds of very good graphite found on the river Tunguska, province of Yenesei, have been surveyed to a certain extent, but nowhere have graphite beds been worked, and only recently has a graphite factory been started at Mariupol, where the local graphite mines have yielded good results. Russia possesses great wealth in precious stones. The centre of production is in the Urals, which have a world- wide reputation. LTral beryls, topazes, aquamarines, alexan- drites, are known to ever}/ connoisseur. Unfortunately the production of all these stones is still carried on in an almost primitive fashion, and we can mention only one undertaking, the Denisoff-Uralsky, whose methods are worthy of the material. 170 RUSSIA: ITS TRADE AND COMMERCE. The Transbaikal territory (the Adun-Tchilon and Borst- chovotchnoi ranges) is hardly less rich in precious stones than the Urals, but so far nothing has been done to exploit them. The Altai is enormously rich in various valuable stones, such as jasper, etc., but here also the exploitation is on a very low level. There are extensive beds of asphalt, those in the provinces of Samara and Ufa being known and exploited to a certain extent. The centre of the industry is near the town of Syzran, on the river Volga ; here, however, only hard asphalt is obtained, liquid bitumen being either imported from abroad (Trinidad asphalt) or from the Caucasus, where it is obtained as a by-product of the petroleum industry. Beds of excellent bitumen (noticed long ago byD. I. Mendeleyeff) are found on the Black Sea coast of the Caucasus, but they have not been worked. Asbestos is known to exist in many localities in Siberia, but hitherto not a single undertaking has been formed for working it, and it is only obtained on the Urals, princi- pally near Yekaterinburg, the annual output being about 1,500,000 poods per annum. It is worth mentioning that asbestos was obtained and worked in the Urals two hun- dred years ago. Mica has only just begun to be mined in Russia, on Lake Baikal, with its tributary river Sliudianka, where the famous beds of mica have been rediscovered. In speaking of the mineral wealth of Russia, the colossal beds of cement on the Black Sea coast of the Northern Cau- casus must not be omitted. In this region the production of cement is already enormous (about 14 milhon poods per annum), but it is nothing in comparison with the untouched supply. In this brief account of the mineral wealth of Russia we cannot dwell on the question of the beds of clay, fireproof clay, slate, lithographic stone, etc. The number of places in Russia where these minerals are found is enormous, and some of them are remarkably rich. The exploitation is inconsiderable. Mineral springs are abundant especially in the Caucasus and Transbaikal, but up to the present nothing has been MINING AND METALLURGY. . 171 done to utilize them. It may be said that in Russia the number of mineral springs is proportionate to its area. It is to be hoped that after the war attention will be directed to the better management of these springs. In- stead of going to Germany and Austria, Russian people should be attracted to their own watering-places. Russia is able to provide good and skilful ph^'sicians and nurses. Iron Ores The chief iron-mining districts in Russia are in the south, Donetz Basin, the Urals, and, to a lesser extent, Poland and the central industrial region, chiefly the province of Tula. Both in this region and in Poland the iron is brown hematite, found in layers and pockets of different sizes. Owing to the manner in which the ore is distributed there is scope only for small mines not requiring a large amount of capital. In a great man}/ of the provinces of Central and Southern Russia similar beds of iron ore are met with, but they are not worked. The centre of iron-mining in Southern Russia is the region of Krivoi-Rog, on the river Ingults, and is divided into two districts, Krivoi-Rog proper and Zhel- taia Reka (Yellow River), which is, geologically, the northern part of the Krivoi-Rog ore-bed, removed to the west. The Krivoi-Rog ores are oligist and red hematite, and are remark- able for their high quality, containing an average of at least 60 per cent, of metallic iron. Up to the present the amount of reserves of iron in the Krivoi-Rog region is an open question, but there is every reason to think that these reserves will, for a great many years, fully satisfy the demand of the South Russian siderur- gic works. 1 Near the town of Kertch, in the Crimea, there are extensive iron beds which have been prospected, but contain only some 30 or 40 per cent, of iron, and are phos- phoric in character. The ore is in many respects similar to that found in Lorraine (Minettes), and, being situated right at the coast, these mines have undoubtedly a brilliant future before them. ' Besides the rich ores now prochiccd in the Krivoi-Rog, there is a very large quantity of poor ores, in the form of ferriferous quartzite. 172 RUSSIA : ITS TRADE AND COMMERCE. The Urals are one of the most famous places in the world for iron, It is enough to mention Mount Magnet, Visokaia, Blagodat, etc. The extent of the Ural iron industry is limited by the want of fuel, and in no way corresponds to the mineral wealth. Of special interest at the present time are the enormous beds of brown hematite in the Southern Urals (Zigazinskoe, Komarovskoe, etc.), which, together with Mount Magnet, only require a railway to be built in order to be exploited. In Siberia, mention should be made of the Kuznetsky coal beds, where vast mines of magnetic iron will shortly be opened up (at Telbes). There are also extensive beds of iron ore near Irkutsk (on the river Angara, on the eastern shore of Lake Baikal) and in the Coast Territory (at the bays of St. Olga and St. Vladimir). These beds, being situated on the sea coast, in immediate proximity to the island of Sag- halien (where coke can be obtained), will, in the near future, serve for extensive smelting operations. Coal Russia possesses extensive coal-fields. Some of them are exceptionally rich, but it has only lately been possible to work them with any thoroughness. For instance, the extensive Kuznetsky basin, occupying the southern part of the province of Tomsk, is only just awakening to industrial life : several mines have been started, at which coking furnaces are being erected, for the purpose of supplying coke to the Ural blast-furnaces. In the same way, the excellent coal-beds on the island of Sag- halien are hardly worked at all, though the coal and coke might be disposed of in the region of the Pacific Ocean basin. It would lead us too far to enumerate the other as yet unexploited districts of Russia, but with the exception of the north-west of European Russia (the Baltic provinces, Finland, the provinces of Archangel and Vologda), the whole colossal area of the Russian Empire may practically consider itself fully provided with coal. It is true that in some cases the coal is not always up to the present indus- trial standard. Thus, for instance, the metallurgic dis- MINING AND METALLURGY. 173 tricts of the Urals, as well as Poland, for all their extensive coal beds, do not possess the materials for producing coke, and are obliged to import it. The question of supplying the Baltic provinces with coal, in view of the exceptionally great development of all kinds of industries in that region, is of great importance to Russia, and the solution of the question is occupying the serious attention both of the Government and of commercial and industrial circles. There is real foundation for the view that the Baltic provinces, owing to their geographical position, should be supplied with foreign coal (chiefly Enghsh), pro- vided, of course, that every facility — within the bounds of economic possibility— should be afforded to the importation of Russian coal (chiefly from the Donetz colHeries). For this purpose, the construction of special colliery railways, of a Baltic and Black Sea canal, the development of the sea-borne coal trade between the Black Sea and the Baltic, etc., have been suggested. Output of Coal in Russia The output of mineral coal in Russia, which in 1885 amounted to only 260,600,000 poods, increased very rapidly : in 1895 it was as high as 555,500,000 poods, and in 1905 it reached 1,140,900,000 poods. In 1908 the output was 1,609,700,000 poods; in 1911,1,739,100,000 poods; in 1912, 1,903,600,000 poods; and in 1913, 2,213,800,000 poods. For the separate coal-fields the figures are as follows (in million poods) : — Donetz 114-9 Dom- Urals Moscow Cau- Turke- Vv^est East brovo region casus 0-2 stan Siberia Siberia 1885 109-3 10-9 21-3 0-4 2-4 0-6 1895 298-3 224-8 17-6 10-3 I-I 0-5 1-4 1-2 1905 785-3 287-0 30-1 I3-I 1-8 2-4 18-9 41-2 1908 11x4-9 344-3 45-1 20-0 3-2 21 36-4 41-9 I9II 1217-6 360-4 42-4 10-9 3-4 6-4 32-4 b5-5 I9I2 1304-6 394-5 57-5 12-9 4-3 6-0 43-2 80-6 I9I3 1506-9 426-3 73-5 171 4-3 8-4 53-6 69-7 174 RUSSIA: ITS TRADE AND COMMERCE. Increase of production was greatest in the Donetz coal- fields (which at the present time supply three-fourths of the coal mined in Russia) and in Siberia, where the construction of the Great Siberian railway led to rapid economic de- velopments. A considerable increase took place in other Russian coal-fields, with the exception of the Moscow region. The Donetz Coal-fields. — The Donetz coal-fields, situated in the southern provinces of Russia, occupy an area of over 3,000 square versts, and contain coal of the most varied character, the distribution of the different kinds being very unequal. Investigations by the Geological Committee, extending over many years, show that the most prevalent is anthracite, and a non-bituminous coal, approaching in type to true anthracite. These form about two-thirds of the total in the Donetz coal-fields. In the development of the Donetz collieries this, however, has not been duly taken into account, and the above output was made almost entirely by the increased output of true coal — the so-called " kurny," bituminous coal. As far back as 1905, only 95,100,000 poods of the total Donetz output of 785,300,000 poods come under the head of anthracite. Latterly, with the development of technical science, which is gradually teaching us the value of anthra- cite, the output of the latter in the Donetz coal-fields is per- ceptibly increasing. In 191 1 it had reached 184,200,000 poods ; in 1912, 218,000,000 poods ; and in 1913, 292,600,000 poods; and it is estimated that in 1918 over 600,000,000 poods of anthracite may be obtained from these coal-fields, whereas the output of ordinary coal will onl}^ amount to about 1,900,000,000 poods. These estimates have only a comparative value, for it is impossible to foresee the inten- sity of growth of our fuel-consuming industries. As regards anthracite, the output has, if anything, been underestimated Donetz anthracite, lying in immediate proximity to the coast of the Sea of Azov, must easily and naturally become one of our important exports to the Mediterranean, for instance, to Italy, where this kind of fuel is specially in demand. MINING AND METALLURGY. 175 Hitherto the Donetz coal industry has had no opportunity of considering such exports : it was wholly absorbed in meeting the home demand for mineral fuel. Neither were the resources of the Azov ports nor the condition of the Black Sea mercantile shipping conducive to the develop- ment of the export of anthracite. During the present war the Donetz coal-fields have had the task of supplying Russia, not only with the fuel hitherto provided, but also with the amount of coal which, under normal conditions, was imported from England through the Baltic ports, as well as that obtained from Poland. The collieries have performed their task with undoubted success, and the conditions of their future proper develop- ment are now being determined. The construction of a series of new railways for their use may now be considered finally decided. There is further a marked tendency to utilize the Donetz collieries for the requirements of chemical industries, i.e., to use the by-products of coking. Hitherto the coking opera- tions at the Donetz collieries were performed in a very primitive manner, without collecting the gases emitted during the process. Some two or three years before the war, it is true, the recovery of by-products of coking was being introduced, and in 1913 the number of such coke furnaces in the south of Russia was about 17 per cent, of the total number of coking furnaces, about 29 per cent, of all the coke in the Donetz coal-fields being obtained in that way. The war with Germany shows Russia (as it did Eng- land) the enormxous value of recuperation in the production of coke, and the success already attained by Russian indus- try is noteworthy. To the west of the Donetz coal-fields, approximately in the provinces of Kherson and Podolia, there are apparently very extensive beds of brown coal, which are not worked at present, but which may undoubtedly be of great industrial importance later on. The Domhfovo Coal-fields, situated in Poland are, geologi- cally, a part of the coal-fields under exploitation by Austria and Prussian Silesia, but, from a practical point of view, they differ from the Silesian coal-fields in not containing 176 RUSSIA: ITS TRADE AND COMMERCE. any beds of coke-coal whatever. All the Dombrovo coal is of the fire-coal type. Therefore, in spite of its high quality as fire coal, the Dombrovo coal is entirely unsuitable for many purposes. It is, however, of vast importance to the highly developed industries of Poland, and is almost entirely con- sumed within the limits of that kingdom. A very small portion is exported to more distant localities. Brown coal is also obtained from Poland, about eight or nine million poods per annum. ^ In the future, with the extension of railway communica- tion in Western Russia, and the industrial development of this district, Dembrovo coal will undoubtedly play a large part there. The Moscow Region.— From, a geological point of view, Moscow coal is true coal. From a practical point of view this is of little value, as its friability and the amount of ash it gives make this fuel unsuitable for local industries. These industries, being able to get first-class fuel from theDonetz basin (coal and anthracite) and petroleum from the river Volga, are hardly interested in the coal-beds of Tula, Riazan, and adjacent provinces. Thus the stagnation in the output of the Moscow coal-fields may be attributed to competition by other kinds of fuel, and not to the inaccessibility of the coal. With the development of the use of solid mineral fuel, a change will undoubtedly take place in favour of the Moscow coal-beds, which both by their amount of coal and by their geographical situation deserve serious attention. The Urals.- — In the Urals the principal colHeries are in the region to the north of the Perm-Yekaterinburg mining railway, while the Luniovka station may be considered the centre of the coal-fields. Next in importance is the Tche- liabinsk district. Coal in these regions varies a good deal in quality, ranging from typical coal to brown coal, but, on the whole, it cannot be considered as high-class, though quite suitable for ordinary use. On the eastern slopes of the Urals, in the neighbourhood of the village of Yegorshino, surveys have been made of extensive beds of excellent ^ In the figures given above, the output of the Dombrovo col- lieries includes the output of browa coal. MINING AND METALLURGY. 177 anthracite, which will begin to find its way into the market on the completion of the East-Ural Railway, now in the com-se of construction. To the south of Tcheliabinsk, beds of anthracite have likewise been discovered, but have not yet been worked. The Caucasus. — Owing to the abundance of oil fuel, the coal-mining industry in the Caucasus had no chance of developing to any considerable extent until lately, the more so as the great majority of the Caucasian coal-fields hitherto discovered are comparatively poor as to the quality of the coal. In consequence of this, the Nakhshiro-Tkvibulsk coal- mines in Transcaucasia are almost the only locality where coal is mined. Owing to the absence of railway communi- cation, the extensive coal fields along the upper reaches of the river Kuban and its tributaries have not yet been ex- ploited. This is also the case in the Caucasus, with other localities known to contain coal. Perhaps the most unfor- tunate case of non-exploitation is that of the Tkvartchelsk Government lot on the river Galizgi, not far from the town of Sukhum, where coal beds of excellent quality have been discovered and prospected. Turkestan.- — Many coal-fields are known to exist in Turke- stan, principally containing brown coal, but the majoritv have not been opened up, notwithstanding the considerable demand for fuel. This is principally owing to inadequate ways of communication, also to the absence of capital re- quired to start coal-mining on a large scale. The comple- tion of the Arys-Verninsky Railway, now being constructed, will give a great impulse to the development of Turkestan coal-mining, as it passes through several coal-fields. Siberia. — Before the construction of the Great Siberian Railway, coal-mining practically did not exist in Siberia. On the island of Saghalien coal-mining on a small scale was carried on by convict labour. The Siberian Railway wrought a radical change. In West Siberia, in the province of Tomsk, two large concerns, one Government and one private, were started for the exploitation of the beds of splendid coal. These coal-fields are named the Sudjensk coal-mines. 178 RUSSIA: ITS TRADE AND COMMERCE. Almost at the same time collieries were started near the town of Irkutsk, in the Tcheremnovo coal-fields. The out- put of these collieries reached a very high figure during the Russo-Japanese War (up to 40,000,000 poods). In Eastern Siberia, numerous coal-beds were discovered in the Pri- movsk territory. On one of these the large Government Sutchansk collieries were started, and now yield both coal and excellent fuel akin to anthracite. The private collieries of the Coast Territory chiefly produce coal similar in quality to brown coal. In the Transbaikal, during the past decade, several collieries have likewise been opened, producing, in most cases, brown coal. Others have been discovered in Siberia. Those in the Yenisei province and in the Minussinsk region are, appar- ently, the most promising, also the coal-fields of Zei-Burei, on the Amu Railway now being built. On the whole, it may be said that the Siberian coal-fields, with those of the Kuznetsky basin on the Altai at their head, contain reserves of coal far in excess of the present demand for mineral fuel in Siberia, and therefore the industrial development of that country, in so far as it depends on fuel, may be considered as fully assured. The Petroleum Industry Historical Review. — The Russian petroleum industry be- gan towards the end of the 'sixties of the nineteenth century in the Baku district, famed of old for its unquenchable fires. During the first ten years of its existence the industry developed rapidly, and already in 1901 Baku, together with Grozny, produced 50-6 per cent, of the world's total output. From that year, however, Russia's share in the world's out- put of petroleum began to decline abruptly : in 1906 she produced only 2873 per cent, of the total output ; m 1910, 11-87 per cent. ; in 1912, 19-67 per cent. ; and in 1913, only 18-20 per cent. In order to understand the full significance of these figures, it must be borne in mind that they are hardly char- acteristic of the actual condition of the Russian petroleum MINING AND METALLURGY. 179 industry. Although in 190 1 the output in Russia had reached its highest level, viz., 706,300,000 poods, for three years after there was a shght decrease, the output for 1904 being 656,400,000 poods. In 1905 it was abruptly lowered to 455,900,000 poods. The raid on the Baku oil-wells in August, 1905, sufficiently accounts for the immediate diminution of the output. In the succeeding years, up to the present time, the output of petroleum in Russia has been growing, though not as rapidly as might be hoped, and at the present time our output of petroleum is 560 to 570 million poods per annum. After 1905, we notice an increased production of Russian petroleum outside the four Baku oil-fields (Balakhany, Sabuntchi, Romany, and Bibi-Eibat). Every oil-field, however rich, becomes exhausted very rapidly, as compared with other beds of useful minerals. The history of the petroleum industry all over the world shows that a powerful and rapid development of the world's petroleum output is founded chiefly on the successive opening up of new oil- fields. The development of our petroleum industry must take this course, but the unusual richness of the Baku oil- fields, and their exceptionally favourable economic condi- tions (for Russia) during a long period of years caused enterprise and capital to take but little interest in the dis- covery of any oil-fields outside Baku. Newly discovered oil-fields were required to be equal to Baku, both as regards productivity and favourable economic conditions. The catastrophe of August, 1905, was necessary to point out the danger to Russian petroleum industry of concentrating production in one geographical spot. Moreover, the ac- quisition of the new Baku oil-fields by private OM'ners had to be abolished, before enterprise and capital turned their attention to the possibility of petroleum production outside Baku ; good results have been obtained. The Grozny oil-fields, which for many years had remained stationary, and had yielded up to 40,000,000 poods of oil per annum, showed an output in 1914 of 98,000,000 poods. The new Ural (Emba) oil-fields were discovered ; by 1914 their output had already reached 17,000,000 poods, and i8o RUSSIA : ITS TRADE AND COMMERCE. they are now opening out new prospects to our petroleum industry. The Surakhany oil-fields have also been opened up, and attained an output of 45,000,000 poods. Developments in the new oil-fields have been so recent that there has hardly been time to organize the new districts properly. Baku Oil-fields.- — The name "Baku," or rather "old Baku," oil-fields is applied to the four oil-fields (Balakhany, Sabuntchi, Romany, and Bibi-Eibat) covering an area of a little over 1,000 dessiatinas. The work of the Geological Committee has shown that, in reality, the above-mentioned oil-fields are not limited to that area, and might be considerably enlarged, but owing to the difficulties arising from the system of leasing the un- exploited parts of the old Baku oil-fields belonging to the State (also estimated at about i,cco dessiatinas), Baku petroleum enterprises have been restricted to the existing oil-fields. A gradual exhaustion of the upper petroleum levels obliges the works to keep up their output by constantly boring deeper and deeper, thus naturally increasing the cost of production. It has not of late been uncommon to find borings in Baku 300 or 400 sagenes deep, although even now the average productivity of the wells cannot be con- sidered as great. In 1912 the average depth was only 1847 sagenes, as against 145-8 sagenes in igoi. It is the opinion of competent geologists that the Baku oil fields still contain large quantities of petroleum at a very con- siderable depth, so that the generally accepted view of the exhaustion of the old Baku oil-fields may be taken to be correct only in the upper levels of the fields. If in spite of increased deep borings and the larger number of wells, the output of the old oil-fields should still fall, there is, of course, no denying that the old Baku oil-fields are becoming exhausted. How much petroleum, and at what cost, can be obtained at the greater depth must remain an open question. Figures for the output of the Baku oil-fields are as follows: in 1910, 481,000,000 poods; in 1911, 431,000,000 poods; MINING AND METALLURGY. i8i in 1912, 434,oco,coo poods ; in 1913, 407,800,000 poods. The maximum output was that of 1901, when 671,000,000 poods were raised. The productivity of the wells in the old Baku oil-fields differed in the various areas. In 1913 the average annual output per well was as follows : Bibi Eibat oil-fields, 209,000 poods ; Romany, 176,000 poods ; Sabuntchi, 104,000 poods ; and Balakhany, 571,000 poods. The average productivity for 1913 in all the four oil-fields was 109,000 poods, whereas in 1901 it amounted to 294,000 poods. The depths of paying wells also varied in different oil- fields, thus for 1912 : Bibi-Eibat, 289-0 sagenes ; Romany, 227-0 sagenes; Sabuntchi, 179-0 sagenes; and Balakhany, 135-5 sagenes. The Grozny Petroleum Industry. — Petroleum was obtained in Grozny considerably later than in Baku ; it was only in 1896 that the first 17,200,000 poods were raised. At that time it was asserted that Grozny petroleum, as com- pared with Baku, was too inflammiable, owing to its large percentage of benzine and volatile hydrocarbons. In spite of this, the production of petroleum was organized in Grozny ; many favourable conditions, such as ease of boring, good geographical position, in the Northern Caucasus, close to the Caspian Sea and comparatively near the Black Sea, encouraged the pioneers of the industry. It is only right to mention, however, Grozny was not con- nected with the Caspian by pipe-lines (as far as Petrovsk) until 1914 ; the plan of pipe-lines to the Black Sea has yet to be carried out. During the first years of its existence the output was very small in the Grozny industry, and it was under the influence of Baku, which fixed the market prices. But later, owing to the rapid growth of the demand for ben- zine in the international market, as well as shortage in the home market caused by reduced output of petroleum in Baku, the Grozny petroleum industry has been able to ex- tend its operations. Grozny has begun to supply benzine to the home market, and for export in very large quantities (about 6 million poods per annum), while Grozny mazout is now an important item in the Russian home market. i82 RUSSIA: ITS TRADE AND COMMERCE. The area of the Grozny oil-fields steadily increases, and at present the area under working is over 2,400 dessiatinas. The borings are very deep compared with those at Baku, and wells of 400 and 5C0 sagenes are not at all unusual. The Surakhany Oil-fields have long been known to con- tain considerable reserves of petroleum. Situated in close proximity to the old Baku oil-fields, they were for a long time considered to be an instance of the presence of gas without petroliferousness. It was only in 1907-1908 that, by the advice of one of the geologists (the engineer Golubi- atnikoff) a very deep well was sunk (to about 4C0 sagenes) and brilliant results obtained. The success of the pioneers attracted others, and the production of oil at Surakhany rapidly grew. At Surakhany onl}^ naphtha gas is found in the upper layers. Lower down we find so-called white naphtha (which may be described as a natural product akin to kerosene), and only at a very great depth do we begin to come across real petroleum. The Surakhany petroleum industry undoubtedly has a great future before it, especially when certain questions relating to the ownership of land have been settled. The Ural {Emba) Oil-fields. — These oil-fields have at- tracted universal attention, justified by the swift develop- ment of the production of petroleum. Independently of this, however, the Ural oil-fields cover a very large area, extending, to the east, as far as the Orcnburg- Tashkend railway. Their geological structure has, as yet, hardly been examined, and general physical conditions under which the work has to be performed make it difficult to estimate the real value of the Emba oil-fields. They are barren and treeless steppes, where not only practical boring but even scientific geological research requires an exceptional amount of preparatory work and installations. The Emba region itself is also very difficult of access, the best route being through the town of Gurieff (at the mouth of the river Ural), where the Caspian coast is particularly shallow. But owing to the important industrial undertakings which have already sprung up in this region, the economic MINING AND METALLURGY. 183 conditions of this territory are improving almost daily. Near Gurieff two petroleum works have been erected and are at work, and measures are being taken to improve the conditions of loading and unloading, etc. Turkestan and the Transcaspian Territory. — Almost along the whole length of the east coast of the Caspian there are numerous signs of the presence of commercial petroleum, especially abundant in the neighbourhood of the so-called Nefte-Dag, or Naphtha Hill, to the north of Krasnovodsk. Here, in the opinion of many authorities, there are un- doubtedly very considerable reserves of petroleum. East of the Caspian Sea, in the Ferghana territory, petro- leum has been found in several places in paying quantities. General economic conditions, however, and the want of pecuniary resources, are retarding the output, which has kept almost at the same level, about 2 million poods per annum. South of Lake Balkash there are signs of an ex- tensive oil-lield, which, unfortunately, has hitherto not been prospected. Other Russian Oil-JicJds. — In Baku there is the Binagadin oil-field, where until lately the oil was obtained from the very top layers, not by boring but from wells. Geological surveys, as well as several boring operations, point to the undoubted presence of petroleum, and at a very great depth. There is no doubt that the oil-field has a future before it. The annual output is about from 14 to 15 million poods. In the Maikop oil-fields, which have acquired such a poor reputation in the English market, the output has been falling off lately. Nevertheless, there is hardly any doubt that they are petroliferous. The question is whether the resources of the oil-fields have not been over-estimated by capitalists, and whether the region has been sufficiently investigated. The islands Sviatoi and Tcheleken, in the Caspian, are undoubtedly petrohferous, and of late have yielded an aggregate output of about 13 to 15 million poods of oil per annum. Production is not carried on with sufiicient regu- larit}' to enable anything deiinite to be said about it. i84 RUSSIA: ITS TRADE AND COMMERCE. Besides the oil-fields above mentioned, there are man}^ other localities in Russia where petroleum has been found. Much attention was at one time paid to the Ukhtensky oil-field, on the borders of the provinces of Vologda and Archangel. Government prospecting has so far shown that this oil-field is comparatively poor as regards the pos- sible value to be obtained by borings and, until the necessary means of communication have been constructed, is hardly likely to be exploited. The question of the existence of petroleum on Saghalien, which was discussed for many years, is still very doubtful, because up to the present hardly any really serious work has been done in regard to prospecting. It is hardly likely that these oil-fields contain all Russia's stock of petroleum. It is more than likely that oil may be struck in many localities of Transcaucasia, but that is a question for the future. Copper The copper industry of Russia, which began in the Urals, dates from the reign of Peter the Great. It is true that copper was produced in Russia even earlier, in the north of the province of Archangel, but there were no practical results of this, whereas the Ural industry developed steadily, and is at present still the largest producer of copper in Russia. In the seventeenth century, a copper industry was started in the x\ltai Mountains, but never attained an}' great develop- ment. The growth of the copper industry in the Caucasus, which the Russians found developed as an extensive peasant industry when they conquered this territory, is very im- portant. There is an unusual abundance of copper ores in the Caucasus, and with the development of railways the industry here now occupies the second place in the Empire as regards output. The newest copper-producing region in Russia is West Siberia. It is true that here, especially in the Semipala- tinsk, Akmolinsk, and Turgai territory, copper was mined as early as the 'thirties and 'forties of the eighteenth century, MINING AND METALLURGY. 185 but the output was quite insignificant. The industry began to develop enormously after the formation of the English " Spassky Copper Company," which has managed to exploit the unusual wealth of its concession very thoroughly. A great deal was done for tlic development of the Siberian copper industry by another English company — the Jenissey Copper Co., in the province of Yenisei. Unfortunately, of late years this undertaking has been in somewhat embar- rassed circumstances, but its physical foundation (i.e., the presence of ores) may be considered as perfectly sound. It will be seen that the Russian copper industry has been always steadily developing. In 1885 the total output of copper in Russia amounted to 288,000 poods, while by 1907 it had already reached 571,000 poods. The increase in pro- duction, however, fell considerably short of the increase in consumption of copper in Russia, and in consequence vast quantities of this metal were imported from abroad. To develop the home copper industry, and in view of the un- doubted abundance of copper ore in Russia, the Russian Government in 1906 raised the existing Customs duty on copper by R. 5 per pood. The results of this measure were not slow to appear : the output of Russian copper began to rise rapidly, viz., in 1908 it was 875,000 poods; in 1909, 1,033,000 poods ; 1910, 1,376,000 poods ; 1911, 1,564,000 poods; 1912, 2,062,000 poods; and in 1913, 2,048,000 poods. There was naturally a decrease in the imports of foreign copper, the figures for the last few years being only about 300,000 to 400,000 poods per annum. This reduction in imports was especially due to the fact that, with the forma- tion of the " Mied " syndicate in 1907, the production of electrolytic copper was greatly developed, this metal being previously obtained from abroad. The Enghsh Kyshtim Corporation has especially assisted the development of the Russian electrolytic copper industry, by founding a truly enormous undertaking in the Urals for the production of copper. The Present Condition of the Russian Copper Industry. — The following figrrcs ''in thousands of poods) show the out- i86 RUSSIA: ITS TRADE AND COMMERCE. put of Russian copper during the last few years, distributed according to separate mining districts : — Output of Copper 1907 1910 191 2 1913 Urals . Caucasus Siberia . . 458 • 307 . 52 653 471 ig6 1,082 595 310 997 619 347 The output of copper in the Altai, as well as that of various chemical works, is of no essential importance. Prospects of the Russian Copper Inditstry. — The fact that Russia is still unable to avoid the importation of foreign copper points to the greatly increased consumption of that metal in Russia. The growth of consumption goes on, in spite of the fact that, owing to the formerly existing con- ventions, Oermany literally flooded Russia with copper and brass manufactures of all kinds, thus preventing the founda- tion of Russian copper factories. Upwards of ten million roubles' worth of German copper manufactures of various kinds were imported into Russia annually. At present, with the radical change in the state of affairs in this respect, we may expect a very great increase in the consumption of copper in Russia. The natural wealth of Russia in copper is such that it can undoubtedly satisfy the demand for copper to any extent. An example of this is to be found in the Urals, the oldest centre of Russian copper production. In this region, with a comparatively dense population, and long ago exploited by miners, the reserves of copper should, apparently, be well known ; at any rate, the principal mines have been con- sidered as comparatively hardly capable of any further serious evolution. The Kyshtim Corporation, however, discovered completely new and important beds of copper ore (copper pyrites; in what would seem to be the best-known central district of the Urals, and rapidly raised the output to about half a million poods a year. There can hardly be any doubt that in the Urals (especially in the comparatively MINING AND METALLURGY. 187 unknown southern part) new copper mines will be discovered, wliich may unexpectedly yield a very large quantity of copper. The Caucasus is exceedingly rich in copper ore, and has as yet comparatively few mines at w^ork. The principal retarding factor is the absence of convenient and cheap ways of communication. For instance, the Zangezur dis- trict of the Elizavetpol province is wonderfully rich in copper, but hitherto the only means of conveying freights to central districts is by pack-horses. West Siberia, especiall}' the Semipalatinsk and the Ak- molinsk territory, known in Russia under the common appellation of the Kirghiz Steppes, is also very rich in copper ores, but any serious development of the industry is pre- vented by lack of ways of communication. The Altai, too, when its railway is completed, will become a large centre of copper production. Lead and Zinc General Conditions. — The following figures indicate the condition of the lead and zinc industries in Russia during the last few years : — Home output Imports per annum per annum Lead . 100,000 poods 3,500,000 poods Zinc . 700,000 ,, from 1,200,000 to 1,500,000 poods Up to the present, the lead industry practically does not exist in Russia, while Russian zinc only supplies one-third. Naturally the reasons for this state of affairs are numerous, but it is again chiefly due to the absence of proper ways of communication and the inadequacy of the existing Customs duties. The latter obstacle is practically removed, now that our treaty with Germany is cancelled, as the duties on lead and zinc will be raised. The removal of the other diificulty will naturally require some time. It is necessary to state, however, that a large lead-produc- ing undertaking in the North Caucasus (the former Elborus i88 RUSSIA: ITS TRADE AND COMMERCE. Co.) has been founded. This company will also shortly undertake the production of zinc. At the same time the well-known Alagir zinc works in the North Caucasus have everything requisite for the immediate development of their output, and, on the completion of the Altai railway system and with the influx of English capital into the district, the development of the production of both lead and zinc may be expected on a large scale. It is to be hoped that the undertakings now being organ- ized in the Altai will at their outset pay sufficient attention to the exceptionally complex composition of the Altai ores, which present technical difficulties hitherto unknown in mechanical and metallurgic operations. A very promising concern in the Far East is the important lead and zinc works (Tetiukhe) on the shores of the Tartar Straits. Besides the districts mentioned, the so-called Kirghiz Steppes (the territories of Semipalatinsk, Akmo- linsk and Turgai) possess many lead and zinc mines, but, as usual, owing to lack of railways, these mines have not been worked. Probably the construction of the South Siberian trunk Une and several other Hues, already planned by the Govern- ment, will make this district important in the production of lead and zinc. In Poland, where the annual output of zinc (from cala- mine) is igo,ooo to 320,000 poods, the ores, being (geolo- gically) a continuation of the Silesian mines, are unfortu- nately very poor : it is only the great industrial development of the region that enables these mines to be worked with some measure of success. Platinum Platinum may be considered an exclusively Russian metal, as only a few poods of it are obtained outside of Russia, viz., in Columbia and Queensland. In the Urals, 300 to 4(;o poods are produced per annum, but Rus.sia's position in the platinum market has not been in accordance with this monopoly. All the platinum produced in Russia used to be exported MINING AND METALLURGY. 189 abroad in a crude state, and there refined. In 1913-14 the Government took measures to control the platinum industry. There was reason to suspect that, besides the officially registered output of platinum, a very considerable amount of the latter was obtained secretly, and evaded all control ; the Government therefore abolished the free circulation of platinum, and surrounded not only the production but also the sale of the metal with a whole series of formalities, for the purpose of stricter registration of output. The Government also undertook the organization of platinum refineries in Russia, the immediate working being undertaken by the Nikolae-Pavdino Company, formed with the assistance of the Anglo-Russian Bank. Finally, the Government intends to impose an export duty on crude platinum. The results of these measures must naturally appear in the near future. Most of the known platinum mines have already been thoroughly surveyed by the Geological Committee. Be- sides this, the above-mentioned Nikolae-Pavdino Company has thoroughly surveyed its own mines, and has discovered considerable reserves of platinum.^ Production Export Average price of a pood containing 83 per cent. Poods platinum. ! roubles. 1907 306 175 15.729 1909 313 493 19.797 I9I0 335 518 23,700 I9II 352 420 36,365 I9I2 337 422 37>939 I9I3 299 381 36,939 I9I4 298 p p ' A great part of the platinum produced is controlled by a French company. Seventy per cent, of the Russian platinum is exported to I'rance, where there are several affining works. The Russian Government is building a new refinery at Ekaterine- burg — this will bring their number to four in Russia I90 RUSSIA: ITS TRADE AND COMMERCE In 1914 the export was prohibited. The State Bank, to help the producers, makes advances on platinuni. The price abroad has risen immensely. Gold Historical Review. — Gold-mining was started in the Urals in the beginning of the eighteenth century. The brilliant results obtained by working placer mines induced enter- prising persons to seek for gold farther on, and exceedingly rich gold-mines were discovered in the Tobolsk territory and the province of Yenisei. This territory, the so-called Yenisei Taiga, was long famous for its gold-mines ; but the wave of gold-mining did not stop there, but flowed on and on towards the East, until it reached the shores of the Pacific Ocean. The discovery of deep mines in the Lena basin is of special interest. For a long time Russian gold-miners turned their atten- tion almost exclusively to placer-mining, but as the richer placers exhausted, they began to work quartz gold, this form of mining having been first started in the Urals, where it began almost as early as placer-mining. At the present time Russian gold miners apply all the modern methods of mining, but much of the work is still done in a very primitive way, so that the tailings will, in many cases, be of considerable value to future miners. The Gold Reserves of Rftssia. — The gold-mines of Russia are dispersed over so great an area that the whole of the sur- face has not been sufficiently examined from a geological point of view, in spite of the time and labour devoted by the Geological Committee to this object. Particular mention may be made of the special investiga- tions of the gold-fields of Siberia. The survey of almost all the known Siberian gold-fields (Yenisei, Lena, Amur) is nearly completed, but the survey, so far, is general and not detailed. The results of this work are enormous : exten- sive cartographical data, hitherto unkno\Mi, have been col- lected, and a number of geological problems cleared up. The final summarizing of all these materials will require MINING AND METALLURGY. 191 time for clerical work and for the extension of the geological survey to adjacent districts. In spite of this, the educated miner will find necessary and valuable information in the mass of matter already published. Production of Gold in Russia. — Of late years the output of the Russian gold-fields was as follows :■ — 1910 1912 1913 Urals . . 641 poods 34 lbs. 671 poods yi^ poods West Siberia 415 ,, 34 ,, 203 ,, 200 East Siberia 2,827 " 35 " 2,681 ,, 2,859 Total 3,885 poods 23 lbs. 3,555 poods 3,774 poods General Conditions of Gold-mining in Russia. — At the present time there is no doubt that the industrially available gold-fields of Siberia (including the Urals) are enormous. It is possible, and indeed highly probable, that among these gold-fields none are as rich as the Transvaal mines, but there is unlimited scope in Siberia for industrial energy and capital to be apphed to gold-mining. As the above figures show, the increase in the output of gold in Russia is slow. The well-known imperfections of the mining laws is only one of many causes ; the retarded development of Siberian gold-mining is far more due to want of capital to overcome the difficult conditions caused by the absence of means of transport. What is wanted is industrial enterprise on a large scale, in order to over- come all such obstacles. Such enterprise would meet with extensive co-operation on the part of the Government, as has been proved in I()T5-^ ^ The Japanese war and the interior agitation reduced the gold production, which increased again. The vahie of pure gold obtained wa.s (in millions K.) — 1904 47-() 1909 ()-:-8 1905 43-4 1910 69-2 1906 47-5 1911 67-1 1907 48-7 1912 61-7 1908 54-6 1913 63-6 1914 . . 66-9 In 191 2. there was a long protracted strike of the workers at the Lena Goldfields. The Ministry of Commerce ordered an incjuest into the conditions 192 RUSSIA: ITS TRADE AND COMMERCE. Iron Industry The Development of the Russian Iron Industry. — The Rus- sian iron industi'}^ began in the second half of the seven- teenth century, in the reign of the Tsar Alexis Mikhailovitch, when ironworks were started in the province of Tula. The great Reformer of Russia, Peter the Great, correctly gauged the unfavourable economic conditions of Tula as a centre, introduced the iron industry in the Urals by a number of special measures. In this district, the abundance of ores and of forests led to the success of the iron industry. The Urals became the sole purveyors of pig-iron and iron in Russia during the whole of the eighteenth and first half of the nineteenth centuries. The iron industry certainly existed likewise in the pro- vince of Tula and the Olonetz region, where the Government mined and smelted the bog and lake ores, of which there was a great abundance. But as compared with the Urals, the output of these districts was almost negligible, so that practically the Urals monopolized the iron industry of Russia. Since the 'seventies of the nineteenth ceatury an abrupt change has taken place : at Krivoi Rog, in the South of Russia, rich beds of iron ore were discovered, and in 1870-71 the first South Russian foundry was erected for working them. The founder was an Englishman, John Hughes. Until about 1889 the production of pig-iron and iron in the South of Russia made but slow progress, amount- ing to 8,500,000 poods per annum. In 1890 the output of the smelting furnaces rose to 13,400,000 poods ; in 1895 to 34,000,000 poods ; in 1900 to 91,900,000 poods ; 1905, 103,100,000 poods ; 1910, 126,400,000 poods ; 1911, of the gold industry in Siberia and in the Oural (in June, 1915). One of the great wants is the building of better communications (roads) in the taiga of Marinsk and in the northern part of the taiga of Jenessei. The use of prisoners of war to establish these roads, a reduction of the land tax, the free import of cyanure of potassium, of zinc sheets, of machines, the prohibition of gold export, the intro- duction of a premium on the gold delivered to the State, a per- manent committee to investigate the questions connected with the gold industry are among the measures already taken. MINING AND METALLURGY. 193 147,700,000 poods; 1912, 173,400,000 poods; and in 1913, 189,700,000 poods. This rapid development of the South Russian industry was due partly to natural conditions (the proximity of ores and of beds of coke- coal) and partly to the geographical position of the South of Russia with more thickly populated and industrial regions. Since the 'nineties of the nineteenth century the Govern- ment has done a great deal for South Russian industry ; and there is now an extensive railway system in the South of Russia, which enables the ironworks to develop freely. But the Urals, with all their wealth of iron ore, have no mineral fuel, and possess only a limited amount of charcoal. For this reason the development here could not be as rapid as in Southern Russia. Owing to the geographical position of the Urals, on the borders of European Russia, far from the centres of consumption, and without adequate means of communication by rail, Ural iron was heavily handicapped in its competition with South Russian iron. The Ural iron industry, with a history of more than two centuries, was hampered by old customs and methods which are real retarding factors in modern industry. Among these relics of the past, we may mention the so- called " possession " rights, and the complicated relations between the ironworks and the local population. Under the " possession " rights, created by Peter the Great and his immediate successors, the owner of the works raises the ore and smelts it, using the wood fuel cut down by himself without owning these materials, as both the ore and the fuel are the property of the Government, which, however, cannot prevent the ironmaster from using them, so long as he carries on his business. It is easy to imagine the com- plications which such relations create in a modern industry. The Government is fully aware of the awkwardness of such a state of affairs and is seeking to liquidate " possession " rights, but the end of such liquidation is not yet in view. Fortunately, " possession " works occupy' only part of the extensive area of the Urals, and there is another large area open to industrial enterprise and capital. The second sur- o 194 RUSSIA: ITS TRADE AND COMMERCE. vival of the past (now, in most cases, done away with) was that the ironmasters were obliged, without reference to their industrial interests, to provide work for the permanent mining population ; this, naturally, was a heavy burden on the operations of the mines and works. This has now been done away with, and the local miners have had allot- ments of land given to them, while the ironmasters are freed from their obligation to employ the local popula- tion. This measure has had the immediate effect of reducing the output ^ and raising the price of charcoal in the Urals ; but there can hardly be any doubt that, when coke is brought to the Urals from the Kuznetsky basin, the timber of the Ural forests will be more advantageously used to pro- vide pulp for paper. We already see the birth of such an industry on the Nikolae-Pavdin allotment. The Government has lately begun to construct a series of railways, both in the Urals proper and to connect the latter with centres of consumption. It may conlidently be affirmed that at the present moment the Urals stand on the threshold of a mighty and rapid development, and that the output (55,800,000 poods of pig-iron smelted in 1913) will reach an incomparably higher level. Smelting Iron. — The Urals and the South of Russia are the natural centres of the Russian pig-iron industry. But in the district of Kertch, on the very shores of the Black Sea, there is an enormous quantity of iron ore, which, with favourable geological conditions, can be worked very cheaply. Even now, with coke brought from the Donetz collieries, there is nothing to prevent th(? development of large smelting operations. With the exploitation of the Tkvartchel coal-mines in the Caucasus, there is reason to think that the Kertch pig-iron industry will attain a very high state of development. A very interesting question is that of blast-furnace operations in Poland, where there are large supplies (milliards of poods) of bog-ore and siderite, ' Owing to ownership of part of the forests being transferred t<) the peasants. MINING AND METALLURGY. 195 extending over a considerable area. These ores, by them- selves, are not fit for smelting in blast furnaces, but form excellent material when mixed with richer ores, which are brought to Poland from the South of Russia. The coke for the Polish blast furnaces is imported from Silesia, and has to pay Customs duty. In spite of these difficulties, pig-iron can be produced in Poland, and is of great impor- tance in local industries. Of late years the output of pig- iron in Poland was as follows: 1910, 16,300,000 poods; 1911, 21,200,000 poods; 1912, 23,900,000 poods; 1913, 25,600,000 poods. Such an increase in output must be attributed to the ex- cessive growth of the demand for iron in Russia of late 3'ears. According to official calculations, in 1910, the consumption of iron in Russia was about 205,000,000 poods, and by 1913 it had risen to 280,000,000 poods. The Russian furnaces could not keep pace with this rapidly increasing demand, and there was a great rise in the price of pig-iron, in spite of the Government having granted special facihties for its import from abroad. The high price of pig-iron and the inadequate supply naturally created conditions favourable to the increase in the output of Polish pig-iron, but the output will always be comparatively small, just as in the province of Tula, where the presence of very large quantities of poor ore makes smelting operations desirable, if only as a source of employment for the people. With regard to Siberia, in speaking of iron ores we have already mentioned the existing possibilities. In the ab- sence of local production, Siberia is supplied with imported iron, chiefly from the Urals. Production of Iron and Steel. — Although the production of pig-iron is confined to strictly defined localities by the pre- sence of ores and fuel, the production of the finished metal in Russia is not thus restricted. For instance, in the Volga region, which had no local pig-iron, the imported raw material is worked with imported fuel (partly petroleum). The metallurgic industry of Poland finds its local supplies of raw material insufficient, and imports it from the South igO RUSSIA : ITS TRADE AND COMMERCE. of Russia for manufacturing purposes. The Northern and Baltic provinces, which produce no pig-iron to speak of, nevertheless manufacture iron on a large scale from im- ported raw material. This state of affairs arises from general economic as well as historical conditions, the principal factor being the enormous distances to be traversed in Russia, and the con- ditions of life in different localities. The greater the amount of labour expended on the manufacture of some siderurgical product, the less its price is affected by the cost of the raw material — pig-iron. Therefore in localities where, for some reason, labour is very productive and therefore profitable, it is only reasonable that the corresponding manufacturing industry should be started if the consumers of the articles in question are at hand. For this reason we see the considerable development of manufacturing industries in the Northern and Baltic provinces, in Poland and the Vis- tula provinces, and likewise in the Moscow region, while in the South of Russia the pig-iron is chiefly manufactured into the heavier products, such as rails, girders, angle iron, etc.^ For a long time this was hardly taken into consideration in Russian industrial circles ; quite recently, for instance, heavy rails were being manufacture"d in Petrograd, Poland, etc. The following figures show how great is the amount of pig-iron transported from the two chief centres of its pro- duction to other districts, in order to be manufactured : — ^ The production was — Girders Heavy rails . Assorted metal Sheet iron and steel, thick thin Koof iron , , , 1913 millions 17-2 35-9 85-5 23-1 4-6 25-3 1914 poods 15-9 39-9 767 26-1 51 23-9 MINING AND METALLURfxY. 197 Million poods 1904 1910 1913 Output of pig- iron South Russia. Urals . . . . Moscow region Volga region . Northern and Bal- tic provinces . Poland II0-6 409 5-7 0-8 22-8 O^^P"*, Output I of manu- factured P ° iron iron 72-8 29-5 7-4 9-3 12-0 21-6 126-4 449 47 o-i 153 ^"^P* Output of of manu- factured iron Pig- iron 98-9 1897 37-0 55-8 8-9 II-8 8-4 i — 10-5 20-5 o-i 25-6 Output of manu- factured iron 14IO 40-8 III 100 164 27-0 The various kinds of iron manufactured at present and the percentage of each kind to the total output of manu- factured metal in Russia are shown below : — Girders and angle iron .... Heavy rails Assorted metal Rolled wire Sheet iron and steel — Thick Thin Roof iron Universal metal 1911 8-2 153 361 7 4 7-9 1-3 10-2 21 1913 7-0 146 347 7-4 9-3 1-9 103 21 Consumption of Iron in Russia. — We have already men- tioned that of recent years there has been a great increase in the demand for iron and steel in Russia, which has even caused a shortage of the raw material, but the consumption is still inconsiderable. 198 RUSSIA: ITS TRADE AND COMMERCE. In 1912 it was only 28 kilograms per head of the popula- tion, whereas in Germany the consumption was 156 kilo- grams per capita, but a large increase may be expected with the growth of Russia's railway system. At present the home supply is inadequate ; large quantities of metal have to be imported. The following iigures show these imports (in million poods) : — 1911 1913 Iron and steel, assorted and bar . 1-3 2-4 Cast-iron and steel over \ mm. thick 0-8 1-3 under \ mm. thick 07 II Iron and steel manufactures 1-5 2-3 Cast-iron, wrought-iron and steel machinery and apparatus 17-8 19-1 That our imports are rapidly increasing, notwithstanding the present high Customs duties, is owing to the fact that the Russian iron industry, being comparatively new, has hitherto chiefly developed the so-called heavy siderurgy, paying less attention to the production of metal of higher quality. This is shown by the imports of assorted iron and steel, chiefly steel for different kinds of tools, and therefore very valuable. Very few attempts have been made to prevent these imports, although the conditions for the production of high-class tool-steel in Russia (especially in the Urals) are exceptionally good. Excellent charcoal pig-iron is found there, and the inhabitants of the region have been accus- tomed to work metals for generations. One would like to beUeve that in the near future en- terprise, energy, and capital will be found to start this important branch of industry. In many cases it would be quite possible to stop the present imports of machinery and apparatus, as well as of metal manufactures. The technical level of manufacture in Western Europe is high, and many of the imports are pro- MINING AND METALLURGY. 199 tected by patents, but it would undoubtedly be possible in a very short time to create industries for the production of various metal articles. It is sufficient to mention that ex- cellent results have been attained in those branches of siderurgy to which Russian industrialists have turned their attention. For instance, the manufacture of Diesel motors and internal-combustion engines of all kinds has reached an exceptionally high level in Russia. The same may be said of the production of various pneumatic tools, of ship- building (chiefly river-steamers), etc.^ ^ In 1915, the production of pig iron was 224-9 million poods against 264-1 millions in 1914. Of this total, the South oi Russia produced 167-5 against 186-2 millions, the Oural 50-3 millions against 52-1, Moscow 70 against 10-5, Poland o against 14-9. The half-worked iron and steel produced was 251-4 millions against 294-0 miUions in 1914 : South Russia 151-7 against 171-4, Oural 57-6 against 56-7, Moscow 12-8 against 14-3, Volga 11-9 against 13-2, North and Baltic 17-2 against 16-7, Poland o against 21-6 millions. The production of manufactured iron and steel was 199-3 against 240-0 millions: South of Russia 125-6 millions against 144-2, Oural 40-3 against 40-6, Moscow 11-8 against ii-o, Volga 9-3 against 10-2. North and Baltic 12-9 against 12-9, Poland 10,000 poods instead of 17,332,000 in 1915. CHAPTER VIII The Machine Industry By N. N. Savin, Professor at the Peter the Great Polytechnical Institute in Petrograd. Statistical Data and Elistorical Review — Production — Importation — Dimensions and Value of the Russian Market — Reasons why the Machine Industry is slow in developing — Machines which could be successfully Manufactured in Russia. The machine industry of Russia began in the sixties of the nineteenth century. It was directly connected with the great emancipation reforms, the construction of rail- ways and large orders placed by the Army and Navy Depart- ments. The customs tariff of 1868 afforded the manufac- turers of machines but little protection ; textile machines, the demand for which was comparatively large, were imported free of duty and so" was agricultural machinery ; other machinery, excepting^locomotives and machines made of copper, paid a duty of 30 copecks per pood, the rate for cast iron was 35, for sheet iron, 50, and for steel, 80 copecks. Machines were manufactured slowly. The demand, at that time, was met by foreign makers, chiefly English and French, and to some extent, German. In the eighties, measures were taken to stimulate Russia's metallurgy ; a duty of 45 copecks was put on cast iron, and the rates for machines were also increased. The protective tariff of 1891 caused a considerable spurt in the development of Russian machine building. Accord- ing to the data of the Ministry of Finances, during 1900, the factories of all Russia (Government and private) only turned out machines to a value of 52 million roubles, giving employment to 49,039 workmen. Prompt measures, however, were taken by the Ministry of Finances to protect the home industries by placing Govem- 200 THE MACHINE INDUSTRY. 201 ment orders with Russian manufacturers — this contributed to the rapid growth of machine manufacture. Unfortunately after 1890, the general set-back in Russian trade had its influence upon the industry. Russian machines found further protection in the tariff of 1903, and the commercial treaty of 1904 with Germany. All .machines with a value of Rs. 5-7 per pood, and all machines for which there is a limited demand, were assessed for a duty of Rs. 2.55 (Rs. according to the 1904 treaty with Germany) ; machines at Rs. 7-10 per pood, such as engines, paid a duty of Rs. 3.65 (Rs. 3.20 in the treaty with Germany) and finally, more expensive machines — costing from Rs. 10 to Rs. 12 per pood and more — were assessed for a duty of Rs. 4.65 (Rs. 4.20 in the treaty with Germany). On copper machines (viz., those containing more than 25 per cent, of that metal) the duty was increased to Rs. 9 (German Convention Tariff Rs. 8), and on dynamos, up to Rs. 8.50 the pood. No change was made in the duty of 45 copecks per pood on cast iron, 75 copecks on pig iron, flat iron, and rails and 97I copecks on worked and refined iron and steel ; on copper and other alloys the duty was fixed at Rs. 5 per pood. Statistics collected by the Ministry of Trade and Com- merce show that the machines turned out in Russia during the year 1907-1908 represented a value of more than 140 million roubles ; the number of workmen employed in their manufacture exceeded 110,000. These figures show that during the seven years (1900-1907) the value of the pro- duction of machines increased by 173 per cent, and the individual workman's output by 13 per cent. There are no complete statistics as to the development of Russian machine manufacture during the last few years, but the information published as regards 126 machine building enterprises in Factories and Works of the Ri{ssian Empire, 1909 edition, giving data for the years 1908-09, and the 1914 edition for 1912-13, may serve to indicate the dimensions which this industry has reached.^ In four years the value of the machines and parts manufactured 1 Government factories and metallurgical works are not included. 2C2 RUSSIA: ITS TRADE AND COMMERCE. increased by 57-6 per cent, and the number of workmen by 41-2 per cent., the indicated horse power of the engines by 83-4 per cent., and the producing capacity per workman rose from Rs. 1800 to Rs. 2000, that is, ii-i per cent. The signiiiLcance of these figures is detracted from by incom- plete information as to metallurgical works and by the fact that for the period 190 8-1 91 2, the price of raw materials and labour considerably augmented. Consequently the rise in general output by 57-6 per cent, is, to a certain extent,^ to be ascribed not so much to the machine shops themselves as to the raw materials. Applying the sta- tistics concerning 126 machine factories to the entire machine building output of .Russia, that is, assuming that for the period 1908-12 their producing capacity grew approximately by 50 per cent., we fi.nd that the aggregate output of machin- ery, tools and plant in Russia for 191 2 was of a value of 200 to 210 million roubles. Turning to p. 211, which shows the imports of machines, tools and parts, we see that for the past twenty years the value of our imports of all categories of machines has increased five times — and agricultural machinery, taken separately seven and a half times. Deliveries have been especially heavy during the last three years, 1911-13. German machines have long found a good market in Russia, supplanting in many cases English and American goods. For the last ten years the greater part of imported machinery has come from Germany. With regard to the value of the imported machines, agricultural machinery heads the list, exceeding 50 million roubles ; next come thermal engines, about 30 millions, automobiles, 17 millions, and lower down (see p. 212) machines for working metals, sewing machines, pumps, etc. Germany, in especial, supplies all these machines, excepting agricultural machinery. The comparatively large imports in 191 1 of so-called special and unclassified machines, calls for notice ; imports of these in 1911 attained to 21-4 million roubles, for 1912 to 26 milhon roubles, and for 1913 to 36-1 milhon roubles. ^ According to my calculations it should be 10 per cent. THE MACHINE INDUSTRY. 20^ The nature of these machines is extremely diverse, but the Russian Customs classification is not sufficiently wide ; many machines have recently made their appearance and have, as yet, no individual classification on the Customs Registers. All such machines go down as " Special- Unclassified." But even in the breaking up of our imports into categories, the Customs returns give a far from true picture of the situation. For instance, the actual imports of textile machines were five or ten times larger than those represented by the figures in the Review of Russia's Foreign Trade. This will be seen from Table IV and from information as to export of such machines to Russia taken from English and German statistics. The difference is explained by the fact that the Russian importer, without in any way prejudicing the interests of our fiscal duties, disregards the statistical nomenclature, and includes in the category of " Special — Unclassified," which calls for low duties, many machines which would have paid the same low rates. Special attention should also be directed to the informa- tion given in the same Table as to the significant value of imported separate parts which pay under the existing tariffs the same duties as complete machines which call for high duties (Rs. 4-65 and Rs. 4-20). For the period 1907-13 the imports of such parts have grown from 5-1 million roubles to 15-5 million roubles. Dealers often import into Russia foreign machines minus their heavier parts (for instance, engines without fly-wheels, machines without, foundation, etc.). Machines are also imported in parts, especially the more complex and valuable parts for small workshops and factories which occupy themselves with mounting. The dimensions and value of the Russian machine market are as follows — In I 91 2-1 91 3. Home output . . . 200-210 million roubles. Imports .... 150-160 350-370 million roubles. The manufacture of agricultural machinery within the 204 RUSSIA: ITS TRADE AND COMMERCE. Empire is constantly growing. In 191 2 the output was approximately valued at 50 million roubles, the imports amounting to 587 million roubles (including locomobiles and parts) ; in this manner the Russian market represented a value of 1087 million roubles. Imports in 1911 were 4-3 million roubles less, and the home output about 2 million roubles smaller. In 1913, according to statistics com- piled by the Ministry of Agriculture and Land Organization, and to private data, the manufacture in Russia grew still further ; probably we may place the 1913 output at about Rs. 60 millions. Consequently, the value of the Russian market, as regards agricultural machinery during the last few years, has been equal to more than 100 million roubles, and probably ^was as much as no million roubles. Russian production satisfies half the demand. Statistics of the imports of agricultural machinery, according to categories, is given in Table V. Under this heading, America plays the chief role, more than 40 per cent, of all the agricultural machines coming from that country. Table V gives information regarding the home manufac- ture of thermal engines, and Table VI of their general use. From these tables it will be noted that, in 1910-12, there were required for commercial purposes, steam en- gines, turbines and locomobiles to the value of 8-5 to 10 million roubles, of which the share of locomobiles was one- third of the total. For agriculture, the demand for loco- mobiles was- valued at 8 to 9 million roubles, one quarter of these being for agricultural purposes. During the same years, commerce and agriculture also absorbed internal combustion engines to the value of 18, 22-5 and 26-5 million roubles. The total purchases of thermal engines equalled 35-5, 42-5 and 44 milhon roubles, the sales of Russian motors increased from 9-2 to 14-5 million roubles. On the basis of value the Russian output covered 26-33 P^^" cent, of the whole supply, and including value of Russian spare parts for foreign machines, was 31 to 38 per cent. The demands of the Russian market in different districts THE MACHINE INDUSTRY. 205 vary very much. In districts where fuel is cheap (Siberia, the northern region and Baku) cheap motors are required ; in Central Russia, where fuel is dear — modern and econom- ical machines, chiefly imported from abroad. In Poland, the north west and Petrograd districts, the principal demand is for steam engines, many of which are home-made, in the south-west, steam discharge engines (for the sugar industry), gas generators and quite recently, crude oil engines. South Russia, with big mining and industrial enterprises, requires machines worked by steam, and for small workshops, locomobiles and internal combustion engines of various sizes and power. In agricultural machinery, the demand is generally for crude oil engines of Russian origin. The Volga region requires principally naphtha engines ; steam-boats here are almost invariably titted with Russian engines. In the Ural, there has recently been a demand for mining steam engines, gas engines, turbines, etc. r The North Caucasian region is very much similar to the South-Western district in its requirements. In the Caucasus and Baku, crude oil engines are required, of British and Russian origin. For Siberia, locomobiles, steam, crude oil and gas engines ; for Turkestan, foreign locomobiles and internal combustion engines. The imports of machines for working metals grew from 4-6 million roubles in 1910 to 127 million roubles in 1913. The latter figures must be regarded as preliminary. The actual imports were larger. The home production is centred in a few works — Herlach and Pulst, of Warsaw ; Felzer, in Riga ; Phoenix, in Petrograd and Kramatorovka ; Bromley, in Moscow ; and a few other sm^all factories. In- formation, which, however, is not of an official character, shows that the production of these works increased from 3*4 million roubles in 1910 to 5-5 million roubles in 191 3. It will, therefore, be seen that the market for machinery and tools for working metals attained in 191 3 a figure as high as 17-18 million roubles. The output of machines and tools, for their own require- ments, of the larger factories, cannot be discounted. Imports 2o6 RUSSIA: ITS TRADE AND COMMERCE. of automobiles into Russia (see Table VII, p. 216) increased very rapidly in 1907. In 1901 there were imported auto- mobiles to the value of 42-6 thousand roubles ; in 1906 the imports were 245 machines for 945 thousand roubles ; in 1907, 563 for 1924 thousand roubles ; in 1910, 1844 machines for 4,600 thousand roubles ; and in 1913, 5,150 for 12,600 thousand roubles. According to Customs statistics about one-third were from Germany, but these statistics do not permit of a correct grouping of automobiles accord- ing to value and country of origin, as the requirements of the Customs give no information in regard to country of origin, or value. The result is that many American auto- mobiles are registered as coming from Germany simply because they arrived via Hamburg. The value of the Russian automobile market is equal to 19 to 20 million roubles. The manufacture of automobiles in Russia is in the hands of the Russian Baltic Works in Riga, and the output of this company for the period 191 1 and 1912 was about 50 machines, in 1912-1913, 127 and in 1913-1914, about 300. The Pouzireff Works during this whole period have not turned out more than 10 ; there are also a few workshops that build and mount single automobiles from time to time. In considering the reasons for the slow development of machine building in Russia, we may remark that this branch of industry requires, more than any other, suitable conditions for its development. It cannot be developed as rapidly as, for instance, metal lurgical enterprises, as the success of the latter is deter- mined on the one hand by the natural wealth of the country, and on the other by the demand for raw materials and partly manufactured products. The organization of a new machine building enterprise is far more complicated than the starting of any other factory, because in the turning out of machines the workmen themselves are always active and important agents in the production. The manufacture of machines not only demands absolutely complete plant and highly trained specialists for the management of the enterprise, but skilled kibour. Favourable conditions in THE MACHINE INDUSTRY. 207 the machine industry generally precede a development of the trade of any country, and a flourishing machine industry is probably the most striking, and in any case the most reliable, symptom of its economic and commercial standing. General and special reasons affecting the Russian machine industry are the following — 1. Small dimensions of the market, which is exclusively internal, often limited, and, as a consequence, less to be relied upon. The variety of economic and cultural condi- tions met with in such a large country as Russia naturally have an unfavourable influence on the dimensions of the market. 2. Lack of specialization. The machine building works in Russia are compelled by the limitations of the home- market to produce at one and the same time various machines and tools ; they cannot introduce special machines, expensive tools and appliances, which could only be justified by a large output of a special line of machines. The present system of preparing several categories of machines in one and the same shop is due to old methods which have been handed down. The great majority of works have not yet taken up the matter of regulating details in machinery and tools. Finally, the managerial and technical organization of the manufacture of machines is, in the great majority of cases, inefiicient and has the inevitable result of a decrease in the output. 3. General outlay. The capital required for building purposes and equipment is from 75 to 100 per cent, more than required under Western European conditions owing to customs duties, tariff conditions, etc. 4. The great amount of working capital required, thanks to the slowness of turn-over and the necessity for large reserves of raw materials, and partly manufactured parts. 5. High cost of raw materials — 50 to 100 per cent, and even 150 per cent, more than in foreign countries, irregu- larity of delivery, absence of required materials, difficulties in receiving partly manufactured goods as a result of the general commercial conditions, and the special customs tariff regulations. 2o8 RUSSIA: ITS TRADE AND COMMERCE. 6. Excessive cost of production as a result of high prices of fuel, remuneration to technical staff, and lack of organiza- tion. 7. Reduction of the annual working days by 5 to 10 per cent., smaller production of the workmen, and less regularity and care in work. To these we must add the difficulties in obtaining skilled labour and its comparatively high cost. 8. Difficulties in obtaining special technical personnel of all grades ; and the necessity of laying out money on the training of such personnel. 9. Severe credit conditions ; long credit, for the sale of agricultural machines and internal combustion engines, combined with comparative risk as to- eventual payment. 10. Necessity for continually making concessions to buyers who by force of habit place a higher value on foreign machines. The influence of foreign competition, for the most part in consequence of the customs rates not having been properly fixed, and also as a result of the reduced prices asked for machines exported abroad. The Russian machine industry owes its present position to tariff protection. It is beyond doubt that the Tariff of 1903 (which is apphed at the present moment) not only aided in developing existing factories, but created new branches of machine building. The same tariff was instru- mental in calling forth the specialization now met with in many of our workshops. Recently, however, in consequence of the fast advancing prices in Russia for raw materials and fuel, and the simult- aneous reduction in prices of machinery on the foreign market, especially in Germany, the Russian machine industry has felt acutely the sharp competition from abroad, and has suffered greatly. The importers take full advantages of the omissions and oversights in the tariff. The existing Russian tariff only discriminates between machines as far as the work which they have to accomplish is concerned. No attention is paid to the weight of the machines, and many foreign manufacturers have directed their endeavours to reducing the weight of the machines, THE MACHINE INDUSTRY. 209 often to the detriment of their quahty and durabiht}'. The entry of incompleted machines at a similar rate of duty to that upon complete machines, together with the above-mentioned absence of any differentiation as to their weight, has caused importers very frequently to introduce into Russia foreign machines without their heavy parts, which parts are prepared on the spot. Such action, of course, is an evasion, if not of the letter at least of the spirit, of the Tariff Law. If, for instance, an internal combustion engine is imported without the fly-wheel, which represents 25 to 30 per cent, of the total weight, the tariff receipts from same will not be Rs. 3-20, but Rs. i less. The enormous imports into Russia (up to 15 million roubles) of separate parts of machines at one and the same rate, as also many machine tools, creates a condition of protection afforded to workshops occupied with mounting machines. The growing imports of parts M^as due in some degree to the well-planned policy for protecting home industries carried through by the Industrial Department, which demanded that Government, public works and factories should purchase Russian machines. The increasing of duties on separate parts in comparison with complete machines may serve to reduce the imports of such parts, but the existing duties on machines can hardly be regarded as highly protective. In consequence of its unfavourable circumstances, the Russian machine industry cannot produce the cheap machines which are manufactured abroad. It is true that ten years of protection by the Customs Tariff is a fair period and during that time many firm positions have already been won, but the present moment is not suitable for a reduction of the customs duties. During these ten years, the cost of living has increased at least twenty-five per cent., while the money value of the rouble has fallen. Raw materials and fuel have almost doubled in price. The protection afforded the machine industry at the present moment is unsatisfactory. The tariff assessments should be renewed, not so much P 210 RUSSIA: ITS TRADE AND COMMERCE. by way of general increase in the rates, as by bringing order into separate duties in accordance with the actual cost of production of various categories of machines, and this by means of differential rates according to weight and power, and further, by widening the nomenclature. It goes without saying that the machine industry requires, above all, reductions in the price of raw materials and consequently a lowering in the rates of metals, partly manufactured goods and fuel. Machines which could probably be successfully manufacHired in Russia. — i. In the first place, agricultural machines and tools, not excluding agricultural engines (locomobiles and naphtha). Evidently some difficulty was met in the past and is felt even at the present time in turning out complex and harvesting machines. 2. Simple steam machines, motors, internal combustion engines (Diesel and naphtha engines), Centrifugal steam pumps, piston engines and water-gas engines. 3. Iron constructions, cranes, shafting and ordinary armature. 4. Machines of heavy and medium weight of all kinds. Light machines for dressing metals, which machines must be of the simple type (turning, drilling and planing machines). Wood- dressing machines. 5. The most simple kinds of textile machines and machines used in the manufacture of sugar and for distilleries. There are fewer chances of successfully developing in Russia the manufacture of autom.obiles during the next ten years. This also holds good in regard to stationary turbines (apart from electric accumulators), complex and complete steam engines, complex and si)ecial textile machines, light and special types of machines for dressing metals and wood.^ ' This chapter has been written before the war. The consequences of the war will be greatly felt in Russia. THE MACHINE INDUSTRY. TABLE I 211 - Year H.P. of Engines (in thou- Number of Work- men (in Total Produc- tion in millions sands) sands) of Roubles In the whole Empire) 1908-9 13-2 30-3 54-5 (126 factories) j 1912-13 24-2 42-8 85-9 Of these : Moscow District (22 fac-| 1908-9 3-0 7-9 12-5 tories) j 1912-13 7-6 12-5 24-9 Petrograd (9 factories) . • 1908-9 1912-13 1-9 3-5 2-4 4-3 8-4 12-4 Riga District (17 fac-) 1908-9 2-5 4-8 90 tories) J 1912-13 4-0 5-9 14-0 Tzarskoe Selo (26 fac-) 1908-9 1-5 5-5 10-2 tories) ) 1912-13 3-9 7.7 15-6 Other parts of the Em-) 1908-9 4-2 4-5 13-4 pire (52 factories) j 1 1912-13 5-3 12-8 19-0 TABLE II Import of M.\chines, all kinds of Appll\nces and their Parts into Russia for the Period 1891-1913 Import of ;^,Iachines of all kinds Of these Years In millions of Roubles P^rom England Per- cent- age All kinds excepting Agricul- tural Agricul- tural Machines 1891-1895 (5) 1896-1900 (5) 1901-1905 (5) 1906-1910 (5) 191I 1912 I913 34-4 75-3 56-6 • 82-2 147-2 149-2 163-7 1,610 23.427 13,321 18,274 27,030 22,628 27.113 40 31 23 19 19 15 16 28-4 63-6 37-0 55-5 93-6 97-5 118-7 1 6-0 9-7 19-6 28-7 53-6 51-7 45-0 212 RUSSIA : ITS TRADE AND COMMERCE. TABLE III Imports of Machines and Plant prepared from Cast Iron, Iron and Steel by Categories for the Period 1906-1913 From Fron. From From Eng- Eng- Eng- Eng- Total land Per- Total land Total land Total Import land Im- mil- cent- Im- mil- Im- mil- mil- port lions age port lions port lions lions Rou- Rou- Rou- Rou- bles bles bles bles Aggregate im- ports of ma- chines, plants and parts in cast iron, iron and steel with the exception of agricul- tural and some other machines 45-" 75-3 85-0 — • 105-4 Including : Gas and naph- tha engines . 3-8 1,109 28 8-5 1.935 2,351 3.004 Steam engines. 2-4 501 20 4-2 570 473 454 Pumps . 1-9 239 12 3-3 297 282 483 Sewing machines S-3 3,774 48 9-2 2,178 1,301 1,767 Machines for dressing me- tals with the exception of steam ham- mers, rolling mills . 3-0 305 10 7-4 773 1,018 • — ■ 1,206 Machines for working fi- brous mat- ters and paper manu- facture . 3-(' 1,686 55 2-9 1.893 692 1,111 Machines for dressing tim- ber 0-8 4-2 2-8 1-6 15 — ■ 5-1 Special un- classified ma- i chines lyi 3.050 17 30-9 6.735 3.871 5.083 Separate parts imported (cast iron, iron and steel) 6-1 1.333 187 IO-5 2,056 — 1,696 1,928 THE MACHINE INDUSTRY. 213 TABLE IV Dimensions of the Russian Market (Agricultural Machines AND Tools) 1910 191 1 19 12 1913 Total Total Total Total mil- lions of Rou- mil- lions nf From Eng- mil- lions of From Eng- mil- lions of From Eng- 01 Rou- land Rou- land Rou- land bles bles bles bles I. Agricultural ma- chines of all kinds imported from abroad 38-9 53-6 9.259 517 9.774 — 10,296 From America . — — 16% — 22% 2. Total value of output of agri- cultural ma- chines in Russia 45-0 48-0 — 50-0 — — — 3. Dimensions of Russian market 83-9 I0I-6 — IOI7 — — — 4. Imports of agri- cultural ma- chines and tools by categories : — Ploughs 5-5 4-6 — 6-1 — — — Sowing machines. 07 2-0 — 3-2 — — — Harvesters 14-3 24-4 — 254 — — — Thrashers . . 4-4 5-8 — 6-2 — — — Harrows . 0-9 i-o — i-i — — — Scythes, mowers and cutters 0-3 0-4 — 0-6 — — — Other agricultural machines . 12-8 15-4 — 8-1 " ^ 214 RUSSIA: ITS TRADE AND COMMERCE. TABLE IVa Imports into Russia of Textile Machines for the Period 1 908-1913 according to Russian and Foreign Statistics Years Total import into Russia (according to Russian statistics) Export from England into Russia (according to English statistics) In millions of Roubles. 1908 .... 1911 .... 1912 .... 1913 .... 4-0 2-8 1-2 1-5 5-8 8-2 9-9 TABLE V Russian Production of Thermal Engines for the Period 1900-1912 Weight in thousands 1 Value in thousands of | of Poods Roubles Internal Internal ^ Combus- Combustion Years tn tn tion Total _ tn . "> Engines Total r75 Engines 5 s-^ r\ y j3 Q -1 Gas & Naphtha Diesel 1900 366 45 6 3.283 384 84 1908 112 100 277 160 437 ! 1.157 683 2,241 2,000 4,241 1910 132 7« 464 302 766 i 1,078 588 3,984 3,555 7,539 I911 145 126 602 379 981 1,164 991 5,289 4,117 9,406 I912 137 153 833 43^ 1,269 1.189 1,237 7.092 4,985 12,077 THE MACHINE INDUSTRY. 215 The manufacture of big internal combustion engines for 1908 is not shown in goods but according to number ; in view of the fact that a great many of these machines have been included under Diesel engines, the valuation of the weight has been taken at 12-5 roubles per pood. The value of the production of Diesel and marine engines has been taken approximately. TABLE VI Engines in Use in Russia for the Years 1910-1912 I? 10 19 II 1912 Mil- Mil- Mil- lions Per- lions Per- lions Per- of cent- of cent- of cent- Rou- age Rou- age Rou- age bles bles bles Total value of foreign imports . 18-36 51-5 21-27 49-8 20-01 45-3 Customs duties. 4-o8 II-5 4-98 II-7 4-86 II-O Trading expenses . 2-19 6-1 2-58 6-0 2-45 5-5 Russian parts . 179 5-0 2-30 5-4 2 37 5-5 Total imports . 26-42 74-1 3113 729 26-69 67-2 Russian output of engines not less than .... 9-20 25-9 11-56 27-1 14-51 32-8 Total in use 35-62 100 42-69 TOO 44-20 100 Total Russian out- put of engines and parts .... 10-99 309 — 32-5 i6-88 J 38-2 2i6 RUSSIA: ITS TRADE AND COMMERCE. TABLE VII Dimensions of the Russian Automobile Market 1906 lyio 19 1 1 19 12 Total in mil- lions of Rou- bles From Eng- land Total in mil- lions of Rou- bles From Eng- land Total in mil- lions of Rou- bles From Eng- land I mports from abroad Manufactured in the country . 4-6 3-4 248 7-4 3-8 746 828 1. 61 5 Total .... 8-0 248 II-2 746 828 1,615 CHAPTER IX Fisheries By I. Pelferoff In the past century Russia occupied a prominent position as regards the extent of her fisheries. In 1893, from a table compiled for the Chicago Exhibition, the value of the Russian fisheries was shown to be only exceeded by that of the United States fisheries, Great Britain occup^dng the third place. United States of America . 40-1 million dollars European Russia • 327 Great Britain . • 31-4 France .... i6-oi Canada .... • 15-9 Holland .... • 3-3 Nevertheless, at the beginning of this century there was a distinct falling off in the fish industry of European Russia. This found expression in a shrinkage in the quantities taken during the period from 1893 to 1902, the resulting increase in the price of fish, in the larger imports of fish from abroad, and in the energetic efforts to locate new grounds for fishing, principally in Asiatic Russia, to which region many fish dealers transferred their activities. It is probable that the catches of 1893 include fish taken from small internal lakes, to the extent of 25 m.ilhon poods, and, if these hauls be excluded, the amount of fish taken in the waters of European Russia was 42 milhon poods of a value of Rbls. 64-5 milHon (taking the average price for one pood of fish as Rs. 1-50). Comparing the figures as to the amount of fish caught in seas and rivers (excluding lakes and small rivers) in 1893 and 1900-02, we find that at the beginning of the twentieth century the quantity of 217 2i8 RUSSIA: ITS TRADE AND COMMERCE. fish taken had decreased two-fold in comparison with 1893, and, in spite of the increase in prices, the value of the products obtained dropped also, so that Russia fell from the second place to the third. The value of fish products exported from various countries in 1900 was as follows — Great Britain . 28-2 million roubles Norway .... 23-5 )) >> Holland .... 14-8 United States of America II-4 Russia .... 5-0 , Portugal. 3-2 Japan .... 2-2 , ,, Sweden .... 1-6 1 )> During the same year, Russia also imported fish, chiefly herrings, to the amount of 10-5 million roubles. Latterly, the fall in the Russian fishing industry would seem to have been stayed, as may be judged by the following table showing the relative importance of catches in various countries — United States of America Great Britain . Russia Japan Canada France Norway Millions of Poods 191 1 1912 60 68 55 48 45 12 62 72 60 50 42 15 1913 55 70 64 45 40 14 Value in millions of Roubles 1911 1912 150 160 115 124 135 ' 150 60 I 64 60 60 32 18 30 19 1913 146 118 168 63 58 26 21 From this table it appears that Russia continues to hold the third place, yielding precedence as regards extent of catches only to those countries which apply the most up-to-date methods in fishing, viz., the United States of America and Great Britain. FISHERIES. 219 The position of the sea animal industry in Russia is quite different. Notwithstanding their great numbers the capture of these in Russia is insignificant, and lags a long way behind that of other countries. Great Britain Germany . Japan Russia 1903-1907 I 1Q08-1912 1913 In millions of Roubles 4-5 4-2 3-8 0-4 4-3 4-0 4-5 0-5 4.9 4-3 5-0 0-5 In general, the catch of fish in Russian waters is far from sufficient to satisfy the demand of the home market, and this creates the necessity of foreign fish imiports which are growing steadily from year to year. For instance, from 1902 to 1907 the average annual imports were valued at 20 milhon roubles, and in 1908-12 at 22-8 million roubles The extent of the hauls at the present time (taking the average for last five years) will be seen from the following figures — I. European Russia Catch in millions of Poods For an amount of millions of Roubles Caspian Basin Baltic Azov-Black Sea Arctic-White Sea Several areas not included in the above 227 2-2 2-3 1-5 O-I 47-6 8-2 4-0 1-5 0-3 28-8 61 -6 or in round figures 62-0 220 RUSSIA: ITS TRADE AND COMMERCE. II. Asiatic Russia Produce in millions of Poods Value in millions of Roubles Arctic Ocean Pacific Ocean Sea of Aral Steppe Area I-I 2-2 0-7 0-2 3-5 2-8 i-o 0-4 Total 4-2 77 The above shows that the fisheries of European Russia yielded 29 million poods of a value of 62 million roubles, and Asiatic Russia 43 million poods of a value of ']•'] million roubles, that is, for the whole of Russia 33-3 million poods for a sum exceeding 70 million roubles, which gives about 9I lb. of fish per inhabitant. The chief fisheries are those of the Caspian-Volga basin, which annually yield fish aggregating 19 million poods in weight, and having a market value of 45 million roubles. Of this quantity caviare accounts for 54 thousand poods with a value of 6 million roubles. The most important of the fish, from the point of view of requirements of central inhabited districts, is certainly the herring, of which the annual catch in the Caspian- Volga region is as much as 10 million poods. In the eighties, the catch of herring (river) amounted to 7-7-5 poods annually. They were taken almost exclusively in the River Volga, and the catch represented 300 million fish. At the present time, the number caught annually is about 70 to 80 million, and despite the location of new fishing grounds along the Caucasian coast of the Caspian Sea, the total catch of herrings only reached 4-8 million poods. At the same time, the character and quality of the fish have radically changed. In place of large herrings, the hauls at present consist principally of small " puzanka."^ As many as 454 million ' Popular expression for small, inflated fish. FISHERIES. 221 were caught, but the actual edible fish received was onl}^ 34 million poods. In view of the supply falling short of the demand, the prices for better sorts of herrings have risen five times, and for the inferior sorts twice as high, as formerly. In this connexion, the cost of " vobla," ^ which to some extent replaces the herring, has soared upwards. In 1890, this fish could be had for 65 copecks the pood, but now the price rarely falls below Rs. 1-40 (salted). Dried " vobla," which is a popular article of food, and was formerly sold at one copeck per fish, now sells at from 5 to 10 copecks for the smaller fish, and 20 copecks for the larger. The reduction in the catch was not, however, confined to one species, or to special regions of European Russia only ; the decrease has been noted in connexion with all species and in all fisheries. The only exceptions to the general rule are white sturgeon, salmon and to some extent " vobla." As regards the first two the quantity taken has actually increased ; this is explained by the new system known as " English line " being used for catching white sturgeon, whilst in the case of salmon, general observations show that these catches have grown in importance. The slight increase in the number of " vobla " caught shows no actual increase in the weight of the catch, as the size of this fish has decreased very significantly. The appearance of a great quantity of small fish in the nets has become during recent years an event of such fre- quent recurrence, and has taken such alarming dimensions as to attract the attention of fish dealers who recognize the dangerous consequences for the future of the fishing industr3^ They have been persistent in their demands that the law should prohibit the catching and sale of under-sized fish. In the Caspian-Kuran region still greater reduction in the amount of fish and caviare obtained has been noticed. Here, for instance, no increase in the number of fish of the various species has been recorded, except in the Caspian- Ural region. In this area, judging by the quantity of fish ^ An inferior species of herring. 222 RUSSIA: ITS TRADE AND COMMERCE. exports, there has been no special reduction in the total catch of fish, although the amount of sturgeon caviare has significantly fallen. The number of red fish taken in this region has even increased as a result of deep sea fishing which, from 1895 to 1907, was not permitted or was only carried on surreptitiously. The yield of sturgeon caviare has decreased almost three times. The falling off in the fisheries of the Azov basin is even greater. Here the quantity of separate sorts of fish fell two, three and, for caviare, even eight times in comparison with the 1892 harvest. The falling off in the amount of fish caught is especially marked, as several extremely important species of fish which can be remembered by people living to-day have entirely disappeared ; such are the cyprinus, vimba, a delicate species of salmon known as " semga," and the razor fish only five or six years ago. Only a remembrance has remained of the red fish which formerly frequented the River Don, and the Sea of Azov itself is at present very poor in this species. For the Baltic Basin, which includes the Psov, Ladoga and Onega Lakes and the coast of the Baltic Sea, no such marked decrease has been recorded as in the Caspian, Black Sea, and Azov Basins. For the Baltic there are no statistics covering the past few years, but fishing operations in this region are chiefly directed to catching pilchards, and the hauls of these steadily increase. In the Psov Lake, where smelts prevail, as m.uch as 200,000 poods have been taken, and a tendency to increase has been noted. As regards the Ladoga and Onega Lakes, an increase in the air.ount of'gang fi,sh and its caviare has been noted. This is due to. the fact that fishing is now carried on in the deeper waters of these lakes. Here the falling off has been in the salmon species. The northern shores of the Kolsk Peninsular, more widely known as the Murman Coast, has for many years past attracted attention owing to the great number of fish which frequent those parts. In the waters of this Sea tre- mendous shoals of cod, dorse and herrings, the three kinds of wolf-fish, sea perch and several kinds of flounders find FISHERIES. 223 each year a feeding place. Ordinary turbot and sea flounders are most in evidence. The fish migrate to these waters from the north of Norway attracted by the great quantities of various kinds of animal life on which they subsist. They arrive towards the end of March or the first days of April, and leave Russian waters at the end of October or the beginning of November. The presence of cod along the Murman Coast, and in the other waters immediately to the north, during the winter season, from November to r\Iarch, was recorded by the Murman Scientific Trading Expedition, but the importance of the shoals wintering in our waters and their value have not yet been ascertained. It has been estab- lished beyond doubt that the chief shoals of cod, " fukshi " and flounders remain in the northern waters during a period of seven months : from the middle of March to the end of October. In order to obtain an idea of the number of fish frequent- ing this area of 6000 square versts we may say that there have been cases where an absolutely new trawling net has not withstood the weight of the fish entering it ; it has broken under the water and the whole catch has escaped again to the sea. This tremendous shoal of edible fish occupying an area of 90 versts in length and 70 versts in width, gradually proceed south and south-west, spreading out over the waters of the Western Murman in its lower depths, in which the various species find the conditions most suitable for existence. Having fed themselves in the comparatively warm Vv^aters washing the West Murman, the shoals of turbot, wolf-fish'^and sea perch partly dis- perse in separate shoals spreading out over the waters of the Western Murman, whilst others migrate far east to the coast line of the Eastern Murman. In consequence of the above-described migration of fish to the Murman Coast, a large industry sprang up here many years ago occupying the Russian inhabitants, who supply the neighbouring parts of Norway with fish, but with the steady development of Finmarken in the immediate neigh- bourhood, the Russian industry began to fall away rapidly 224 RUSSIA : ITS TRADE AND COMMERCE. and during the last fifteen years, in spite of all measures taken to revive it, the produce of the fisheries has been very sensibly reduced. For instance, the catch of cod, the most important of the Murman fish, has been reduced one and a half times in ten years. As a contrast, it is interesting to note that in the White Sea, where the herring, spurling and dorse predominate, the catch has increased by 60 per cent. The most characteristic indication of the general falhng off in the fish industry is to be found in the fact that efforts are now, for the most part, directed to catching of newly hatched, or very young fish. As a result, the shallow waters of the home governments have been absolutely denuded of fish, and if there rem.ain some small quantities (as, for instance, in the Polish Governments), it is thanks to artificial breeding. Quite recently, in consequence of the excessive cost of fish — Rs. 10 to 12 per pood of living carp, perch and pike — many of the agricultural governments such as Smolensk, Kursk and others, have begun experi- ments to see whether certain fish can be raised in ponds. All these experiments are hampered by the difficulty of obtaining fish for breeding purposes, as there are no nurseries to supply the necessary quantities at moderate prices. The fisheries of the Far East, although they have only recently begun to be extensively worked, have already acquired an ever growing significance, not only in the trade of Russia, but in that of the world. The Nikolaevsk and West Kamtchatka fishing grounds are the most important. In the Nikolaevsk region are situated those fisheries of the Far East which have been exploited during the last twenty years or so, and in which the fishing operations are carried on very energetically and along rational lines. Forty years ago the fishing industry suffered from lack of railways, the fish from the Amur could only be disposed of in the local markets situated in sparsely populated centres of the Amur province such as Haborovsk, Blagoviestchensk, Srietensk, Nikolaevsk, Vladivostok, etc. The chief pur- chaser was the War Department, the fish being supplied to the local military depots. With the opening up of the FISHERIES. 225 Great Siberian Railway and an increase in the demand •for fish on the part of Japan, the fisheries of the Xikolaevsk region entered upon a new era in their development . Thanks to the ever increasing demands for fresh fish by the Japanese immigrants to the shores of the Amur, the industry was developed on a large scale by them and by the peasant population. In a very short time big fish dealers appeared on the scene who began to work on a commercial basis giving employment, in accordance with the local laws, to Russian workmen. At the present time there are a great many fish dealers with large capital established on the Amur, who, being no longer satisfied with the profits to be derived by delivering fish to the Japanese for salting, have turned their attention to the markets in Western Siberia, European Russia, and even those of foreign countries. The principal fish taken in the Nikolaevsk region are the summer and autumn dog salmon and salmon gibbosus. The whole of local industry is engaged in the catching of these species of salmonidae. During the summer months when the fishing operations are in full swing, fish-dealers, merchants, and workmen arrive in Nikolaevsk from all parts of the Anuir province and even Siberia and European Russia, and the town becomes the centre of animated activities. In addition to the above two species, some sturgeon (known here as red fish) and white sturgeon are caught in the River Amur, and both of these fish have acquired commercial importance. The yield of these fish, however, is greatly inferior to that of dog salmon and salmon gibbosus. Fishing for white sturgeon is almost exclusively in the hands of the local peasants and immigrants. Of the many other species of fish which are to be found in the Amur the following have some commercial significance, although at the present moment it is very small, viz., carp, gang fish, caranx, crucian carp, salmo thymallus, umbra, trout and other species of the salmon family. In the estuary such fish as smelt, dorse and herrings are caught. Part of the catches are disposed of in the local markets in a fresh state, the balance being sold after having been frozen, salted or smoked. Of the fish inhabiting the waters of the 226 RUSSIA: ITS TRADE AND COMMERCE. Amur, the catching of which has not yet been taken in hand, mention must be made of the lamprey, from which very vahiable products could be prepared. On the Amur below the town of Nikolaevsk and over a distance of 50 versts, as also in the estuary of the Amur, there are various areas given up to fishing operations and the salting of the fish caught. These grounds are leased out by the Government to the fish-dealers. They number 21 large fisheries and 40 areas where fishing is not allowed, but where the salting of the fish is done. During the year 1910, the Public Treasury received as rent for these sites 205,319 roubles. The fishing is almost exclu- sively carried on by extensive stationary nets of the so- called Japanese type.^ Sometimes small, Ghilyak fishing nets are erected between them, a net used by the members of the tribe of that name who immigrated to these parts many years ago. The net itself differs from the Japanese type only in so far that the latter is technically more com- plete. All the sites which have been taken on the Amur on long lease have been equipped with good buildings. In all directions wharves, dwelling houses, sheds, and extensive ice cellars, are to be met with. Recently the Astrakhan type of ice cellar has come into great favour. It is fitted with vats and tubs for salting of fish. There are two refrigerators on the shore. In general, the whole equip- ment of the fishing enterprises in the lower waters of the Amur shows in its construction that a large turn-over has been confidently counted upon. In the Nikolaevsk region, in addition to dried salted fish which are intended almost exclusively for export to Japan, a whole series of products for the markets of Russia and Western Europe are prepared from the dog salmon and salmon gibbosus, as, " plast," or strongly salted fish, " kolodka," which signifies the meat of fish which has not been subjected to a very thorough treatment, " semga," 1 These nets run out into the river a great distance and consist of an arrangement of large poles driven into the river bed with nets connecting them, FISHERIES. 227 which is sahnon after it has been salted for some time, then washed and finally placed in brine, frozen ftsh, " balyk " (the back of a fish salted, dried, and smoked), " pupki," certain parts of the interior of the fish, and canned fish and caviare. Some of the best dog salmon is frozen, and put on the European markets ; this salmon is yearly winning more favour with consumers, and has now firmly established its position on these markets. Canned fish, for hors d'ceuvres, have not yet succeeded in winning any recognition for themselves in spite of the fact that two well equipped Russian works have been erected on the shores of the Amur for their preparation. On the other hand, two other primitive factories, leased by Japanese, turn out, by the American method, quite a lot of canned dog salmon, which finds a ready sale as convenient food for travellers on the road. During recent years there has been an extraordinarily rapid development on the Amur in the preparation of slightly salted fish and pressed dog salmon caviare. As recently as 1907, great quantities of caviare were thrown away, together with the other uneatable parts of the fish, only a small portion being prepared in some parts by so- called caviare-masters for the Russian market. However, in 1908 the demand for dog salmon caviare had grown to such an extent that on every fishing ground in the lower Amur and on the shores of Sakhalin, experts in the prepara- tion of caviare appeared, having been commissioned by large Moscow and Petrograd firms. Some idea of the extent of the catches in the Nikolaevsk region may be obtained from the following figures for 1913— Salmon gibbosus Summer dog salmon Autumn 'dog salmon By enterprisers .... Peasant population . 5,000,000 2,700,000 12,000,000 9,00.0,000 6,000,000 4,000,000 Total 7,700,000 21,000,000 10,000,000 228 RUSSL\: ITS TRADE AND COMMERCE. Out of these total catches in the Nikolaevsk region more than a million poods of various fish products were prepared for the home market and the markets of Western Europe. In addition to the salmon species there is an average annual capture of 15,909 poods of sturgeon and 15,500 of other fish. The Western Kamtchatka region has acquired a great commercial significance during the last few years ; the principal catches made are of dog salmon and salmon gibbosus ; in 191 2 the catches were 28 million dog salmon and 18 million salmon gibbosus. As regards the foreign trade in fish products, Russia is to some extent dependent on foreign countries, and the actual trade balance against her under this head is equal to several millions of roubles. For instance, in 1900 the imports of fish produce amounted to only 5 million roubles, whereas to-day they have reached 25 million roubles (figures for 1913). The chief imports are herrings, of which in 1913 the country took from abroad 17-2 millions for a sum of 24-1 million roubles, and the chief source of supply in this connexion are Norway 42 per cent., England 31 per cent., Holland 18 per cent., and Germany 8 per cent. The chief fish produce exported from Russia in 191 2-1 3 was salted fish and black caviare, and the principal markets were those of the Balkan States, principally Roumania, and Germany, and for Far Eastern Trade — Japan. The aggre- gate exports of Russian fish may be seen from the following figures — rgia 19 [3 % Thousands of Poods Roubles Thousands of Poods Roubles Caviare : Red . Black All kinds of fisir . . . tal . . . . 105 33 817 649 2,536 2,769 166 33 883 1,092 3.125 3.125 To 955 5.953 1,082 7.343 FISHERIES. 229 A favourable sign in the Russian fish industry is to be found in the gradual improvement in the technical side of fishing which guarantees a steady if slow development in the value of the industry. In the chief basin, the Volga- Caspian region, we now find cold stores, barges fitted with re- frigerating machinery and mechanical fish freezing machines. The application of these methods is gradually replacing the " heavy salting," which in the past reduced the value of fish products, and further, makes it impossible to freeze a large part of the catch on the spot in special cellars built for this purpose. In Baku several machines for mechanically freezing the fish have been put up. In Astrakhan the fish is still frozen by means of ice and salt. In Moscow the freshly frozen fish from Astrakhan is kept in mechanical freezing cellars. In the Murman fisheries an important advance has been made in the organization of distributing the hauls of fish amongst the neighbouring inhabited districts, thus removing one of the greatest drawbacks to the Russian fishing industry in those parts. If Russian fisheries continue to record fallings off in the catches, this is only in consequence of insufficient organiza- tion of the industry as a whole and in disposing of the fish caught, and is in no way due to any exhaustion of the fisheries themselves. Russia has absolutely untouched basins in which there can be no doubt of the extreme density of fish. The Far East, Sea of Aral and the Murman regions are still waiting for proper and sufficient exploitation, and will, of course, not only satisfy the requirem.ents of the home markets, but will furnish a great surplus of fish for the markets of the world, and will thereby change the present position by which Russia is to some extent dependent upon foreign countries. CHAPTER X Internal Transport. Russian Railways, Canals AND Inland Waterways By K. Zahorsky and E. Geidanov Russian Railways The first Russian railway from Petrograd to Tzarskoe Selo and Pavlovsk, a distance of 25 versts, was opened for traffic in 1838. It was built by private enterprise and the capital was subscribed by private individuals. From 1838 to 1853, construction of railways in Russia was undertaken and financed by the Government. It was slow and spas- modic, only 954 versts being opened for traffic at this period. The following fourteen years show very little extension of the railway system ; from 1854 to 1867, 3,733 versts were completed, an average of 266 per annum. In other words, during the thirty years period from the date of opening the first line only 4,990 versts were laid down, that is, an average of 156 per annum. Such dilatory development was quite out of keeping with the growing requirements of the country, which, on the conclusion of the Crimean war, directed its energies to economic and social reorganization. The depletions of the Government funds largely prohibited the construction of anything like a sufiicient number of State railway lines, and many obstacles stood in the way of private railway con- struction, such as the novelty of the undertaking, insuffi- cient capital, and the distrust, by foreign investors, of the possible profits to be earned in Russian railway cc>nstruction. Such measures of development as were warranted by the need for railway connnunications were onl}' taken about 1868-69 when the (jovcrnmcnt slunved an almost exclusive 230 INTERNAL TRANSPORT. 231 preference for private ownership of railways, both as regards their construction and working. Efforts w^ere now made to attract private enterprise and capital to railway construc- tion, and, during this period, the trunk lines of the Russian system were completed. The system of organizing private railway building which was in favour at that time became known as the " Concession " policy. It led to great abuses with highly unsatisfactory results to the finances of the Empire and the quality of the railways actually constructed. Condemned by public opinion and the Government itself, this policy gave place for a time to one of State ownership, but even this did not meet with any brilliant success and the latter eighties show the development of a combined system of railroad construction which remains to the present day. The guiding principle of this system is a recognition that it is only by means of a joint application of State and private railway management that it is possible to satisfy, with the minimum of sacrifice, the legitimate demands of such a country as Russia. The results of this policy were shown during the period 1 891-1902, by the construction of new railroads in European Russia carried out chiefly by private enterprise. The Government concentrated its efforts on Siberia, Central Asia and the Caucasus, where roads of strategical and general State importance were laid down. As to European Russia, the Government although it built during the said period some 4000 versts of new railways, was in general content to extend the network of railways be- longing to the State by purchasing privately owned roads. Generally speaking this period in the history of Russian railways yielded by far the best results ; railway con- struction had not before been undertaken on so large a scale, nor has it ever since attained these dimensions. The next few years, 1 903-1 91 2, are characterized by an extraordinary break in the progress of railway construc- tion, especially applicable to private railway companies. The Government continued to build lines, but in the majority of cases they were of a strategical and political nature and of little importance commercially. It is only N\'ith the 232 RUSSIA: ITS TRADE AND COMMERCE. beginning ol 1912 that we have to record an energetic revival in railway construction on a large scale. The progress made during the above-mentioned periods is seen from the following figures : — During the period Total constructed Yearly average I 865-1 878 . . . 1879-1890 . 1891-1902 . I902-1912 . 17,615 versts 7-793 - 24-934 .. 9.855 - 1,258 versts 641 ,. 2,077 985 ,. The aggregate length of the Russian railway system at the end of 191 2 was 63,563 versts. Of this total the Govern- ment had built for its own account 23,153 versts, or 36-4 per cent, and private companies had constructed 40,410, or 63-6 per cent. As regards the working of the railways, the length of the system under Government management and in the hands of joint stock companies shows the reverse, the Government working 43,036 versts, or 67-7 per cent., and private companies 20,527 versts, or 32-3 per cent, of the total length. On January i, 1915, there were 64,547 versts of railways, to which must be added some local lines covering 2,257 versts, the railways of the Grand Duchy of Finland, 3,812 versts, and the East China railroad, 1,618 versts. At that date, 14,532 versts were under construction, 3,074 for the Government and 11,458 for private companies and individuals. Furthermore, the construction of 9,968 versts of new roads had been begun of which 1,515 versts were to be built with funds supplied by the Treasury and 8,353 with capital subscribed by private companies and individuals. The prominent position of private enterprise in the matter of Russian railway construction is not so much to be ex- plained by the comparative merits of Government and private management as by financial conditions. The rapid development of the Empire made such claims upon the Rus- sian Treasury that it was impossible for it to take in hand the necessary construction of railways entirely out of its INTERNAL TRANSPORT. 233 own resouixes. Over a period of more than sixty years various Russian Ministers of Finance — such prominent men as Reutern, Bunge, Vyshnegradskiy and Witte — have fre- quently expressed themselves to the effect that the position of the finances of the State, more especially its 'credit, and the necessity of adequately protecting the latter, makes it absolutely impossible to find the necessary money to meet the cost of a properly developed railway system. The present European War has delayed for the time being the process of further energetic development of Rus- sian railways. It is beyond doubt, however, that with the conclusion of the war, activities in this direction will be renewed on a much greater scale than in the past. The existing railways are far from satisfying the growing needs of the population and the State. Russian railways handle a tremendous amount of traffic : in 1 91 1 they had 60 million and in 191 2, 64 million pood- versts per verst of permanent way. It is worth noting that the increase in the density of the system in no way tends to reduce the traffic. For example, in 1880 the system covered 21,126 versts ; in 1913 there were 52,510 versts, that is, it had more than doubled. Nevertheless the number of pood-versts per verst did not fall off during that period but increased from 21-7 in 1880 to 73-4 millions in 1913, that is, the total number of pood-versts for the whole network grew from 457 milliards in 1880 to 3,856 milliards in 1 91 3, increasing eight-fold. The following table shows the amount expended on the construction and improvement of Russian railways, gross receipts, working expenses and net income for the live years 1908 to 191 2. Ratio of Capital Gross Working Nett Nett Ill- Invested. Income. Expenses. Income. Capital ! Invested. J 908 Rs. 6,534,427,047 827,250,454 658,028,736 169,221,718 2-59 1909 Rs. 6,723,780,998 902,036,696 650,168,925 251,867,771 3-74 I9I0 Rs. 6,784,239,397 968,025,923 644,314,434 323,711,489 4-77 I9I1 Rs. 7,093,043,045 1,052,523,467 : 649,998,899 402,524,568 5-67 I9I2 Rs. 7,334,469,226 1,132,806,134 682,960,226 449,845,908 6.13 2J4 RUSSIA: ITS TRADE AND COMMERCE. The same data for 191 2, for Government and private rail- ways, is given in the following table : Government Railways (43,036 versts) Private Railways (20,527 versts) Capital Invested : — Total 5,389.093,195 Per verst 125,223 Gross Income : — Total 821,966,641 Per verst 19,181 Working Expenses. : — Total 511,246,805 Per verst 11,930 Nett Income :■ — Total 310,719,836 Per verst 7.251 Ratio of Nett Income to Capital invested 5-77 1.945,376,031 94.771 310,839,493 15,453 171,713,421 8,537 139,126,072 6,916 7-15 The above table shows that the cost of Government rail- ways is higher than that of private roads by Rs. 30,452 per verst, but the Government roads are usually better equipped than private tracks and have a greater capacity for dealing with traffic. The Government construction of railways does not call for greater expenditure than the con- struction of such roads by private enterprise ; the average cost of I verst of the whole network of railways equalled at the end of 1912 Rs. 115,389. In the same manner the net income of private roads (7-15 per cent.) is higher than that of the Government railways (5-77 per cent.) by 1-38 per cent., which, however, cannot be taken to mean that the working of private roads is more competently managed than that of Government roads, but must be ascribed to various reasons which do not concern the actual working of the lines. The table also shows for the period 190 8-1 91 2 a continu- ous growth in the net income of the whole of the Russian railway system. It increased from 2-59 per cent, to 6-13 per cent, and was due to the much greater amount of traffic INTERNAL TRANSPORT. 235 owing to the excellent harvests during these years and the general flourishing economic conditions of the country. At the same time, measures were also taken to improve the capacities of the roads by increasing the weight of trains and making better use of the rolling-stock. Sanction for the building of new railways depends upon whether they are to be directly constructed by and for the Government, or by private contractors. Under the existing laws (Art. 31 of the Institution of the State Duma, Collection of Laws, Vol. I part 2) questions of railway construction come within the jurisdiction of the State Duma. The construc- tion of private railways, where no grant of funds from the Treasury is required, is referred for sanction by Art. 69 of the Institution of the State Council to the Second Department of said Council, representing one of the organs of the Higher Administration of the Empire. The laying down of private railways where the contract- ors are directly subsidized from the State Treasury, must be sanctioned — as is the case with all Government grants— by general legislative procedure. There is no direct indica- tion in the law as to building of railways by joint stock com- panies even where there is no question of direct loan or sub- sidy from the Treasury, but a Government guarantee of payments falling due on the expended capital. Such ques- tions, just as in the casie of building private railways without grants or privileges from the Government, are subject to decision by the Higher Administration of the Empire, i.e. the second Department of the State Council. In making this ruling, the Council had in mind that the granting of the Government guarantee does not call for immediate outlay from the Treasury, that perhaps the necessity for making payment will never arise and in any case such payments might be refunded. In 1 909, the State Duma expressed the opinion that this order of sanctioning the construction of private railways with the Government guarantee does not sufftciently ensure the plans being subjected to a thorough examination and desired the Government to bring in a Bill for changing such order of procedure. The Government submitted a Bill in 236 RUSSIA : ITS TRADE AND COMMERCE. 1 910, but as yet it has not come up for discussion, and the decision of questions of private railway construction is still by a ruling of the Second Department of the Council of State. This manner of issuing concessions is typical for private enterprises ; private roads are built in Russia, in most cases, after the grant of a Government guarantee of payment of interest on bonds and their redemption. Only in a few cases have private contractors built railways with capital not guaranteed by the Government, and there has hardly been a single instance of loans being granted from the Treasury to newly formed railway companies. The pressing need of developing the railway systems led the Government, at the beginning of the twentieth century, again to invite the participation of private enterprise in this work, but on a wider basis. On June 10, 1905, a special law was promulgated " as to measures for attracting private capital for railway building in Russia." The most signifi- cant measure was the renewal of the Government's guarantee for payment of interest on the bonds of newly formed rail- way enterprises. Other measures of importance were — I Adding to the building capital of newly constructed roads by fixing an interest not exceeding 3 per cent, on the shares, until the completion of the road. 2. Proportional distribution of the net receipts between the shares and bonds, tantamount to a partial guarantee of tlie share capital. 3. Participation by the Government in the net profits only after these have attained 8 per cent, of the share capital. 4. The Government not to have the right to purchase new private roads before the expiration of twenty-five years from day of opening the line to regular traffic. 5. Supi)lementary payment by the Government for trans- port of freight at reduced rates. 6. Reimbursement of cost of such buildings and equip- ment as are required by various Government Departments, as also the cost of transport of mails, military, etc. etc. 7. Relief of the expenses for maintenance of officials for inspection and control, and railway police. INTERNAL TRANSPORT. 237 All these privileges aimed at increasing the income of newly built roads, that is, are calculated to attract private contractors and their capital b}^ increasing the chances of profits from the working of the lines for which they have received concessions. Not one of the privileges affords the contractor any immediate advantages from operations in connexion with the formation of. the company and con- struction of the new road, as the results of working have to be awaited. Practical application of the law, however, entirely failed to justify expectations. The privileges were not successful in attracting private capital, and it was deemed necessary to grant to newly formed companies— in addition to the guarantee of bonds and other privileges of the law of 1905 — some very material concessions, viz. — 1. Right of the shareholders to receive half the savings on building capital as calculated in the valuation estimates. 2. The sale price of the debentures to be fixed at a few points lower than the price of the money market at the given moment. 3. Reduction of proportion of share capital to one-tenth of total foundation capital at time of original formation of the company, and, later on, with the further extension of the system and improving of the lines in existence, to one- twentieth and even lower. 4. Guarantee of that part of share capital not redeemed at the time of the Government taking over the railway, that is, obligation of the Government to pay when redeeming the road, notwithstanding that it may not be earning profits, a remuneration price not less than the bond capital ex- pended and 5. Allowing the company to pay for land appropriated or the needs of the road in shares of the company itself. Contractors invariably prefer to assume preliminary ex- penses in order to avoid delay in receiving a decision. As regards the guarantee of integrity of the share capital, it was soon discovered that this is dangerous to the normal and steady development of private railway building. The above-mentioned privileges are included in the Statutes of newly formed railway companies. Other more 238 RUSSIA: ITS TRADE AND COMMERCE. material provisions of the Statutes — which represent in themselves the concession contract of the company with the Government covering all the conditions of building and working the new railways — are the following : — The term for which the enterprise remains in possession of the company is fixed at 81 years from date of opening the railway for regular traffic. At the expiration of this term the railway, with all its inventory and buildings, becomes the property of the Government without payment of any nature whatsoever. The company enjoys the right of expropriation of real estate with right of occupation after drawing up inventory of same ; at the same time the company undertakes to purchase all land that is necessary for the railway and its buildings. The company does not, however, acquire the right to work the bowels of the earth expropriated for the railway ; this right is retained by the former owners. The assets of the company — real estate and other pro- perty belonging to it — cannot be assigned or mortgaged without special authorization from the Government. The rails, fish plates, rolling stock, and machinery re- quired for the construction and working of the road, and in general all parts and appurtenances of the rolling stock, railway buildings, telegraph system and telephones must be manufactured in Russian factories and from materials of Russian origin. The import of such articles is only per- mitted under exceptional circumstances and on mutual agreement in each case between the Ministers of Finance, Ways of Communication, Trade and Commerce. The co-relation of the share capital to the bonds or de- bentures must not be lower than i : 9. Not later than one year from the date of Imperial ratification of the Statutes the founders of the company are obliged to pay in 50 per cent, of the original amount of the share capital, after which the company is recognized as being duly constituted and may take up the placing of the bond capital. The bonds arc guaranteed by all the assets of the com- pany. In addition to this the bonds of the company from day of issue to expiration of concession carry the (lovern- INTERNAL TRANSPORT. 239 merit's guarantee as to payment of 4I per cent, interest and total redemption within the mentioned period. The whole bond capital must be redeemed by payment of its nominal value within the established term of the concession. In case of possible extension of the enterprise by laying down new lines, the company, in order to obtain the neces- sary funds, may issue shares and bonds guaranteed by the Government, the relation of the first to the second not to be less than one to nineteen. Any sums remaining over from the gross receipts of work- ing, and after all expenses and losses of the enterprise have been met, represent the net income of the company which, after deduction of 2 per cent, for the formation of a Reserve Capital, is divided proportionately to the extent of the annual payments of interest on the bonds issued of the com- pany and the redemp1;ion of part of same, and the income on the shares, calculated at the same rate as to interest and redemption, as in the case of the bonds. The first part is destined to pay interest on the bonds and to meet the de- mands of redemption, whilst the second part, with the addi- tion to it of any balance which may remain from the first part represent the net profits which, in the absence of any debt of the company to the Treasury under the guarantee of the bonds, is paid to the shareholders in an amount not exceeding 8 per cent, of the share capital. Any surplus of profits exceeding the 8 per cent, limit is divided into two parts, of which one is paid to the Govern- ment as its profits from the other, half of an amount not exceeding 2 per cent, of the share capital is paid to the share- holders. Of any surplus which may then remain undis- posed of, 75 per cent, goes to the Government, and the balance of 25 per cent, is distributed to the shareholders. If there is a debt against the company under the guarantee of the bond capital, the shareholders only participate in the net profits to an amount not exceeding 6 per cent, of the share capital. The surplus over and above the 6 per cent, is divided into two equal parts — one going to cover the debt under the guarantee and the other as further payment to the shareholders, but this payment must not exceed 2 per 240 RUSSIA : ITS TRADE AND COMMERCE. cent. If after this there remains a balance it is divided between the Government and the shareholders as in the case where there is no debt under the guarantee. After twenty-five years from the date of opening the line for regular traffic the Government has the right at any time to redeem the road for which a concession was granted, and to enter into possession of the Company's property, assuming, of course, all its rights and obligations. In fix- ing the redemption price the combined net income of the whole enterprise is taken for the five most profitable years of the seven years directly preceding redemption. The average net annual income of these five years is assumed to represent the normal net income of the company. lu'om the net income arrived at in this manner the annual pay- ments of interest on bonds and cost of redemption of same are deducted and these payments together with the proportion of the net profits paid during the five years to the Government, as its share in the earnings of the company. The net income remaining after these operations is capitahzed at the rate of 5 per cent, per annum for the unexpired term of the company's concession. From these sums the com- pany's debts to the Government under the guarantee and others are retained, in case the Reserve Capital be found insufficient to cover them. The balance arrived at repre- sents the redemption price of the shares which, however, cannot exceed four times the nominal amount of share capital after deduction of the fund for redemption of the shares which may have accumulated up to date of redemp- tion. From the above provisions of the Statutes of private railway companies, the financial participation of the (Govern- ment in their working is shown to be very significant ; the Government guarantee is extended to nine-tenths of the foundation capital of the railway from the moment the company is formed, and later on, with the extension of its lines, may be increased ; also the participation of the Crovernment in the net profits of com])anics, beginning as it does only after such profits attain to 5-00 18-90 14-30 Moscow- Vindau-R\ umsk 100 10-00 II-OO 15-50 Moscow-Kazan 100 28-15 27-55 28-45 Moscow- Kiev- Voroncj 20 31-00 43-50 62-60 South-Eastern 187-50 15-28 16-32 16-50 Riazan-Ural .... 100 1 ■ — ■ 37-80 According to statistics compiled by the Audit Ministry the group of private railways : Bogoslovskiy, Bielgorod-Sunisk, Vladikavkaz, Lodz, Moscow- Vindau- Rybinsk, Moscow- Ka- zan, Moscow- Kiev-Voronej, North Don, Troitzky, South- Eastern and extensions, the Warsaw and Lodz electric roads and Moscow and First Company realized in 191 2 a net income of Rs. 120,234,549, that is, more than 85 per cent, of the net income of all existing private companies. 1 In January 1912 the Warsaw-Vienna Railway was transferred to the Government. R 242 RUSSIA: ITS TRADE AND COMMERCE. Of this sum 120 million roubles was absorbed in obligatory payments on bonds, loans and the guaranteed shares, and payment for leases of Government lines. Of the remaining Rs. 59,196,455, Rs. 17,073,693 went as dividends to share- holders. If to this sum we add the dividends of the Eisk railways, not included in the above schedule, and the guar- anteed dividends of the Lodz, Moscow- Kazan, Moscow- Kiev- Voronej and Riazan-Ural Railways — amounting in all to Rs. 1,907,429, the aggregate amount of dividends paid to shareholders of private railways in 191 2 was Rs. 18,991,122, which represents i6-8 per cent, of the nominal share capital of the corresponding companies. The building of a branch line and short distance feeder is almost commercially impossible as an independent rail- way enterprise ; the payment of interest, redemption of capital and working expenses of such a line requires sums which cannot be earned on freight and passenger traffic over a short line. On the other hand the construction of such branch lines is very useful and necessary, and in 1887 a special and original method of constructing such exten- sions and feeders was adopted. A private contractor — in the majority of cases, the owner of some commercial enterprise directly interested in the la^dng down of the line — furnishes the necessary capital for building it. This is carried out either by contractors under the supervision of the railway to which the branch will be linked up, or, as is more frequently the case, the road to which it is to be joined itself builds the branch line. On completion, the branch line immediately becom.es the property of, and is worked by, the owner of the main hne with which the extension is connected. The main feature of this method of building extensions is the manner in which the expenses are met. The line linked with the branch retains from the receipts for the transport of goods over the extension and main line i/i25th of a copeck per pood and vcrst — an amount necessary to cover working expenses. The balance of the net receipts is made over to the builder in repayment of the cost of the extension with addition to such cost of 4 per cent, interest on the aggregate INTERNAL TRANSPORT. 243 disbursements. The cost of such hues is usually quickly realized — in from three to four years at most — and it is only in exceptional cases, where extensions of more than usual length are laid down, that the repayment of the build- ing capital is extended over a longer period. Thus, the extension is built, so to speak, for the advantage of the receipts to be derived from the additional freight which finds its wa}^ to the trunk line, thanks to the laying down of the branch. This method of building has been long applied to the branch lines of the State Railways. The system is, however, unsuitable for long distance lines, and, owing to the scarcity of Russian railways, and the scattered popula- tion, there is a pressing need of branches and feeders of much greater length. Such branch lines cannot be constructed as independent enterprises, and the Government lacks the large resources necessary to build them. This has resulted in the recent formation of a railway company — to the bonds of which a guarantee on special conditions has been granted — having for its chief purpose the construction of railways for general use, such roads being intended to serve the State railways as feeders and connecting lines which will eventually increase the amount of traffic dealt with. The lines are transferred on their completion to the main line with which they are linked up, the chief condition being the refund of their cost from the traffic returns. Receipts from these new lines are gauged by the cost of transport of freight not only along the extensions themselves, but over the main line which they serve. The difference in their financial organiz- ation lies in the fact that the income calculated in this manner — after deducting the necessary amounts to cover expenses of the main lines in transporting the goods, and expenses and payments due on the capital of the branch line itself — is not turned over to the company as refund of the cost of construction of the branch line, but is split up between the company and the Government proportionately to the run of the freight over the branch line and the State line to which it is linked up. The result of this method is that the extensions and branch lines are not transferred to State ownership at the 244 RUSSIA: ITS TRADE AND COMMERCE. time when the State has refunded the cost of construction, but only at the expiration of the term fixed in the Statutes and against purchase on the basis of the Hne's earning powers. The present organization of railway affairs in Russia and the Government's control and supervision of the railways arose out of the fundamental reforms carried through a period of ten years beginning in the middle of the eighties. Trade and commerce regulations which formerly allowed freedom of action and mutual competition to private cor- porations in connexion with the construction and working of lines ceded to them, gradually yielded to the constant assistance and co-operation of the State, the railways bene- fiting by the systematic management from one centre. The recognition of these principles of public management resulted in a restriction of private interests and freedom of contrac- tors wherever such dispositions disagreed with the interests of the State. At the present time railway matters in Russia are subject to definite Governmental regulations and control in all stages, and in all departments, as for instance, pro- posed lines, realization of the necessary capital, building separate lines in given directions, financial matters, dis- position of the net income, fixing of tariffs for the transport of goods and passengers, etc. The control of railwaj/s is divided between three Depart- ments, the Ministries of Ways of Communication, Finance and State Control (Audit Ministry). The Ministry of Ways of Communication has to see that on the conipletion of the railway, and before its opening for traffic, an inspection of the work and equipment is made, and to assure themselves that the construction has been carried out with due care and is in accordance with the projects ratified. After this the company assumes the obligation of keeping the line in proper order and dealing with the trafiic with due regard to the safety, convenience and uninterrupted movements of passengers and freight. Whilst, in general, the res})onsibility for the management of the company is with the Board of Direction, the Statutes always provide that the Ministry of Ways of Communication and Finance INTERNAL TRANSPORi. 245 may at any time delegate special officials to examine and check the books of the company, and the accounts of the building and working sections, in order to have effective control of the actual receipts and disbursements. Such officials have also to satisfy themselves that the disburse- ments were made in accordance with the duly confirmed estimates. If the Minister of Ways of Communication finds that any actions of the management, or the agents of the railway, are opposed to the interests of society and the State, the guilty party, no matter what position he may be holding with the company, is liable to instant dismissal, on notification from the Ministry. The supervision of the Department of State Control (Audit) is not restricted to payments for work and con- tracts authorized and carried out in accordance with the valuation estimates ; it is charged with the duty of seeing that the Railway Direction, local and central, takes all pos- sible measures to ensure that the work and contracts in connection with the building of the railway be carried out on advantageous and economical conditions. Further, the State Control (Audit Ministry) is definitely charged with the functions of controlling the working of railways which have already been opened for traffic. The Ministry of Finance has extremely wide powers of control and supervision over the railway companies in fin- ancial matters, and especially in relation to the adoption of railway tariffs. All financial operations of private rail- ways come under its control — both the realization of the capital, its disbursement for building work and all financial questions connected with the working of the line. The dis- posal of the net income and payment of dividends to share- holders, are also subject to this control. The functions of the Ministry of Finance under the Act of March 8, 1898, in regard to the supervision of railway tariffs merit special attention. In order to cope with the whole matter the Ministry inaugurated a special Tariff Institution known as the " Railway Department — Tariff Committee and Advisory Board on Tariff Matters." This Department is charged with the preliminary examination of tariff questions and the 246 RUSSIA: ITS TRADE AND COMMERCE. clerical work, and only decides questions of minor import- ance. The great bulk of the business is concentrated upon the Tariff Committee, which comprises three members from the Ministry of Finance, one of whom is the chairman, two members from the Ministry of Commerce and Industry, and one member each from the Ministries of Ways of Communica- tion, Agriculture and Land Organization and Interior and State Control (Audit Ministry). The Advisory Board on tariff questions decides only a few general questions and such matters connected with tariffs wliich for some reason have been referred to it by the Tariff Commiittee. The Advisory Board has a great number of members (besides representa- tives of almost all the Ministries there are also representa- tives of various branches of industry and of private railways) ; it meets comparatively rarely ; its importance in comparison with other tariff institutions is of less significance. The powers of tariff institutions in regard to supervision of rates are defined by the following provisions of the Act of March 8, 1889. According to Art 2 of this law, the Government reserves to itself the right to control the fixing of tariffs, with a view to protecting the interests of the people, of trade and industry and the public funds. It is evident that this provision alone opens up wide possibihties in the way of the Government intervention in tariff questions. However, further provisions of the same broaden these limits beyond the negative problem of protecting the category of interests just mentioned, giving the Government the right to proffer its assistance and co-operation. For instance. Article 8 provides that the Governmental De- partments, Public Institutions and Associations directly interested in economic questions have the right to lodge propositions as to the introduction of new or the changing of existing tariffs, and the Railway Department is called upon to frame tariff proposals in accordance with the aims of Govern- mental supervision of tariffs, and for the satisfaction of the demands of the public, the trade circles and the earnings of the railways themselves. Again, Article 12 provides that deci- sions arrived at by Government Tariff Institutions on tariff questions are binding upon the railways. Finally, by an Act INTERNAL TRANSPORT. 247 of August 12, 1899, it is provided that if any separate railway or congress of representatives of railways fail to present figures as to tariffs within a prescribed term, or do not pub- lish tariff proposals or tariffs which have been confirmed, and which the Ministry of Finance finds are necessary in the interests of trade, the pubhc or the Government, fresh tariffs are drawn up by the Railway Department and are duly pubhshed in the " Collection of Laws and Enactments of the Government " as obligatory upon the railways. Thus, since 1889, the question of tariffs on Russian rail- ways — both on State and private lines- — is wholly within the jurisdiction of the Government. It is true that the railways participate to a great extent in the working out of rates. In fact the general Tariff Congress of the representatives of railways, at which representatives of the country's trade and industry have the right of expressing their views, ' is the body to which almost all tariff questions of any im- portance must unquestionably be submitted for examination in the first instance. But although preliminary examina- tion of questions by the Railway Tariff Congress has been found to be very useful, the resolutions of the Congress, even when unanimous, have only an advisory significance, and do not in any manner commit the Government Tariff In- stitutions in deciding such questions. The role of railways in working out and fixing tariffs is therefore limited to lodg- ing the proposals of interested and competent organizations. The wide powers granted to the Government by the Act of March 8, 1889, were applied in the first place to carry out a radical reform of everything concerning the tariffs on our railways which, up to that time, had been suffering from just such disorders and defects as were experienced in other European countries, and were gradually remo\'ed by the legis- lative chambers of such countries. The only difference was that the reform and consolidation of tariffs required in France and Germany, for instance, about twenty years' labour to accomplish, whilst in Russia similar results were obtained in four and a half years. In 1893 all of the Russian railways adopted a general tariff for goods transported by fast and slow freielit where there arc direct communications 248 RUSSIA: ITS TRADE AND COMMERCE. This tariii also applied to local communications, and con- tains about eighty schedules covering various classes of freight. All the schedules have the character of difieren- tial tariffs under which title we, in Russia, understand only- such tariffs which provide that the single charge per pood and verst be reduced with increase in distance. The so- called table tariffs showing total payment for transport between stations mentioned in the tables, are applied in com- paratively rare cases, and even then only in connexion with exceptional tariffs, which, it should be noted, often take the form of the tariff schedules which are applied to the trans- port over definitely limited distances. The General tariff is applied on Russian railways for transport of goods be- tween all the stations of the railway system, both for direct and for local communications ; such transport may be car- ried out not only by the shortest routes, for which, under the system of tariff schedules, the transport charges are the cheapest, but by round-about routes with the same charges for the greater distance actually covered. As a result the stations of the Russian railway system are not only in direct communication with one another, but also have direct tariffs, as the transport payments are calculated by the cor- responding schedules for the aggregate run over the whole of the lines forming the route from station of dispatch to station of final destination. Up to 1889 there was sharp competition between Russian railway companies for goods trafhc, resulting in great losses not only to the railway companies themselves but to the Government which had guaranteed a definite norm of in- come to the railways. It also caused great harm to trade and industry as the tariffs were not the same for different districts and even for some forwarding agents. The trans- fer of the management of railway tariff affairs to the Govern- ment in 1889, at which time special rules against railway competition were issued, resulted in stopping competition altogether in so far as it relates to reducing and changing tariff. At the present time, competition between the rail- ways — for the most part between the State-owned railways and those in private hands — takes the form of affording INTERNAL TRANSPORT. 249 shippers of goods various conveniences and privileges as regards rapidity of delivery, placing special rolling stock at their disposal, charges for holding goods at the stations of dispatch and destination, granting of loans on the security of the goods, and carrying out of instructions in regard to the sale of such goods, etc. The railways in their efforts to secure the goods traffic often overstepped the limits of fair competition, and at present further measures are being taken to regulate all competition on the roads. Tariffs in Russia follow the general principle of lixing rates in accordance with the value which the transport of goods may have for the owner, i.e. on the ability of the goods to support more or less significant charges, or, as they express it in America, " what the traffic will bear." This capacity to support transport charges is determined by a series of objective symptoms governed by the nature and value of the goods to be transported, the conditions of transport (whether by fast or slow freight, quantity of goods transported, kind of rolling stock necessary, etc.) and in the technical specialities of the roads over which the goods are run. But, with us in Russia, as in other countries, the transport charges are not the only factor in determining railway rates. In adopting tariff rates the combined interests of com- merce, industry and the population must be taken into consideration. To a large extent the rates depend entirely on the discretionary examination of the tariff institutions and, in consequence, Russian railway tariffs directly de- pend upon the character and tendency of her economic policy. They are, in many cases, determined by the neces- sity of protecting home industries against imported goods, of facilitating the export of the country's products, develop- ment of the trade of given districts and regulation of com- petition between different districts and branches of trade. Reference must also be made to the so-called " privilege " tariii's which aim at satisfying certain important require- ments (colonization, aiding districts suffering from effects of crop famine, furnishing farmers with fertihzing manure, seed, etc. etc. ) by means of reductions in the general tariff 250 RUSSIA: ITS TRADE AND COMMERCE. rates. There are very many such tariffs in Russia. In general, the Government, since it has undertaken the fixing of railway rates, has not only extended protection to the interests of trade, but have regarded railway tariffs as one of the most important means of affording actual support to all the interests just mentioned. The Government does not, nevertheless, ignore the influ- ence of tariff rates on the earnings of the railways and the financial results of such enterprises. There have been many cases in which financial considerations and require- ments served as basis for fixing tariffs and rates. For in- stance, the war having made it necessary to increase the free resources of the Treasury, the Government has taken in hand and will carry out a general re-examination of all railway tariffs. This does not mean only the " protection " of Government interests, but that the railways must con- tribute larger sums tov/ards the general expenses of the Empire. It is proposed to introduce the new tariffs in the near future, and simultaneously stop the collection of the tempor- ary war tax on goods transported by the railways. The charges for transport, as compared with present rates, will be considerably increased over short and average distances, in the majority of cases up to 1000-1,200 versts, whilst, with a view to increasing freight movement, there will be a significant decrease for long distances. With the introduc- tion of these new tariffs the relation of cost of transport on Russian railways, as compared with foreign tariffs, will suffer great change. In view of the present revision of tariffs not having yet been completed and, further, the imminent change in existing tariffs, it seems proper to re- strict ourselves to the above general remarks without giving figures as to tarii^' rates fixed for Russian railways. The Russian Government, backed by public opinion, arc strongly determined to push as much as possible the con- struction of new lines of railway, considering them as the best means to economical progress and national wealth. A very large programme of public works has been prepared by the Ministry of Communications ; it covers 50,000 versts INTERNAL TRANSPORT. 251 of new lines, of which 30,000 ought to be taken'in hand as soon as war is over and executed in a few years. It depends 01 the financial help Russia could find. At the beginning of September, 1915, there had been authorized for the State Railways and already taken in hand the construction of 5,296 versts, at a price of 630.7 millions R. Among those lines being built we find the Amour Railway, 1,974 versts, 330 millions, of which 1,358 versts from Kouenga to Blagovestchensk are already worked, Grischino Rovno 867 versts, no millions R. ; Petrozavodsk Kola, 1,077 versts, 82 millions R. ; the transformation of the section Archangel Vologda, 595 versts, 24 millions R. 454 versts were authorized at a cost of 53 millions. The construction of 2,718 versts (Tiflis Vladicaucase, 104 millions R., for 171 versts, Toula Baranovitchi, 98 millions R., for 820 versts; Moscow Donetz (coal roads), 900 versts for 108 millions) were projected. Altogether 8,468 versts, for 1,076 millions R. Part of the amount has already been spent, but the work of most of the lines has been post- poned. As far as the lines belonging to private companies, already in existence are concerned, the construction of 1,127 versts, to cost 96 millions, has been authorized, besides branches of 138 versts. Since the war, no concession has been granted. But there exist projects for 6,437 versts at a price of 563 millions which have received a favourable advice of the new Railways Committee,^ to whom other lines are to be submitted for 7,996 versts. ^ Notwithstanding the war and overcoming difficulties of several kinds, soil, cHmate, dearth of labour, the Russian Government has achieved at the end of 1916 a really glorious feat of engineering : the railway which constitutes the most northerly line of tSe world has been given over to traffic. 1 White Sea Railway (Nadejda Archangel), 1,500 versts ; Liza Kharkoff, 900 ; Saratoff Kamenolomni, 830 ; Kama Petchora, 378. ^ Olga Mantourovo, 100 versts ; Khiva line, 1,725 ; Oural Caspienne, 500 ; Petrugrad Krassnoufinsk, 1,610 ; Lena, 1,000, etc. 252 RUSSIA: ITS TRADE AND COMMERCE. It is the " Mourman line," which has its terminal on a coast washed by the warmth of the Gulf Stream on the Arctic Ocean. The terminus is Kola ; the Une has a length of 1,400 kilometres. The work was divided into four branches : 350 kilometres from Petrograd to Petrozavodsk, finished during 1915 ; 360 kilometres, Petrozavodsk-Soroka, finished March, 1915 ; 400 kilometres, Soroka-Kandalachka, finished autumn, 1916 ; 290 kilometres, Kandalachka-Kola (now Port Romanof) which had been finished earlier. The difficulties to be overcome were enormous : the country had very few inhabitants, no local labour. It was necessary to collect labourers from Norway, from Canada, from all parts of Russia up to 30,000, to whom were added 10,000 prisoners of war (Tepeques, Slovaks, Ruthenians). It was necessary to carry through virgin forests the food and the material. The soil offered great diffi- culties, there were swamps and marshes, many inland seas, snow and ice, and frozen ground. The new railway duplicates the Archangel road. It will be of very great usefulness during the war, and when peace is re-established it will open to trade vast countries covered with forests, with unknown wealth. INLAND WATERWAYS The total length of rivers, lakes and canals of European Russia, including the Caucasus but excluding the eight Fin- nish governments, serving as means of communication is 232,139 versts, of which the navigable routes are 176,788 versts, or 76-2 per cent, of the whole length. These inland waterways are distributed as follows (see table on next page), according to the sea basins with which they are connected. INTERNAL TRANSPORT. 253 Names of sea and river Total length of rivers, lakes and canals Navigable for float- ing timber For Navigable for rafting Total navigable for timber Singly In rafts vessels ^^ ^^^^ j directions and vessels Basin of Caspian Sea . Basin of Black and 85.307 16,443 19.451 7,209 17,412 60,515 Azov Seas . Basin of Baltic Sea . Basin of Arctic Ocean 35.934 54.136 3.880 7,955 22,911 10,588 2,033 9.623 2,58i| 7.388 23.491 43.468 with White Sea . 56,622 28,708 10,914 1,478 8,086 49,186 Separate sections of waterways not in- cluded in maritime basins .... Total internal water- 140 30 98 128 ways of European Russia (without Fin- land) .... 232,139 71.942 48.938 13,301 42,607 176,988 The above figures show that the navigable waterways for rafting and for vessels in European Russia (exclusive of Finland) amount to 134,181 versts, or 75-9 per cent, of all the inland navigable waterways. Of these, 120,880 versts are suitable for floating timber, being 71,942 versts floating the logs singly, and 48,938 for timber rafts. On the remaining extent of the navigable portion of rivers and lakes freight-laden vessels are also able to ply. This total length amounts to 13,302 versts, or 9-9 per cent. Waterways on which navigation is conducted in both direc- tions total 42,607 versts, i.e., 24-1 per cent, of their total extent. Steamer traffic is conducted over a stretch of 31,267 versts, or 17-7 per cent. ; but, if passenger traffic only be reckoned, the figures must be reduced to 24,030 versts, or 13-6 per cent, of the navigable waterways. The table also shows the extent of canals with lakes and sluiced sections of rivers, i.e. artificial w'aterways, the total length of which does not exceed 3,855 versts, or 2-3 per cent. of the total length of waterways. The importance of the river basins of individual seas of navigation and rafting depends, to a certain extent, on the 254 RUSSIA: ITS TRADE AND COMMERCE. total length of inland waterways. In this respect, the most important is the Caspian Sea, with river, rafting and navi- gation routes forming a third of all the available waterways of European Russia. The river basins of the Arctic Ocean, comprising the White Sea and the Baltic Sea, occupy the second place, being one-fourth of the total extent of rafting and navigable waterways ; the basins of the Black Sea and Sea of Azov occupy about one-seventh of the total extent. Comparing the steamer traffic in the same river basins, the Caspian Sea Basin gives 44 per cent, of navigable water- way ; the Black vSea and Sea of Azov 26 per cent., and the Baltic Sea and Arctic Ocean 30 per cent, of the total length in European Russia. The great river Volga, with its tributaries, comprises almost a third of the Russian inland navigable and rafting waterways, and 44 per cent, of the total length available for steamer traffic. Another third belongs to the three great rivers, the Northern Dvina, Dnie- per, and Neva, with their lakes. These four river basins, constituting two-thirds of the total length of the rivers, lakes, and canals of European Russia, and also of their rafting and navigable portions, comprise three-fourths of the extent available for steam navigation. The remaining third of the total length of rafting and navigable waterways, and a fourth of the extent available for steamer traffic belong to the no rivers and lakes at present registered in European Russia, including the Don, the Western Dvina, Niemen, Narova (with the Tchudovo and Pskov Lakes), the Pechora, Onega, etc. The following thirteen rivers of European Russia are more than a thousand versts in length : INTERNAL TRANSPORT. 255 Name Volga Kama. Oka . Bielaya Vyatka Northern Dvina (with Sukhona) Vychegda Dnieper Desna . Don . Ural . Kura , Petchora Total length 3.463 1,883 1.425 1,287 1,170 1,230 1,060 2,140 1,105 1,860 2,290 1,220 1,600 Including Rafting Navigable Including Navigable for steamers 114 322 n 554 427- 75 205 249 313 927 354 199 3.349 i>474 1,256 712 413 1,230 890 1,876 806 1.309 15 459 1,373 3,048 1.474 1,126 712 1,230 629 1,863 784 1,309 15 295 1.338 Statistics for the waterways of Asiatic Russia are neither accurate nor complete at the present time ; they merely concern the m.ore important navigable rivers and lakes and do not extend to rivers and lakes which might be utilized. Total length of rivers, lakes and canals Navigable Vessels Navigable in both directions Total Name of basins Singly Rafts and navigable Arctic .... Behring Sea . Basin of Kam- tchatka rivers . Okhotsk Sea . Japan Sea Aral Sea . . '. 97.858 1,080 580 21,496 1,185 8,175 3.781 926 587 1,091 30,756 540 475 7,624 462 2,277 156 112 34.043 440 7,762 78 3.083 70.857 980 475 16,468 111 4.636 Total in Asiatic Russia . 130.374 6,385 39,857 2,545 • 45,406 94.193 These figures, however, in view of the absence of precise 256 RUSSIA: ITS TRADE AND COMMERCE. investigation, cannot serve as indications of the actual possible development of Asiatic Russian waten\^ays. The artificial improvement of water communications, though extensively applied in several river basins of Euro- pean Russia, has hardly touched Siberia and Central Asia. The river basin of the Obi occupies the foremost place in Asiatic Russia. It is utilized for timber floating and navi- gation for a stretch of 32,735 versts, constituting almost 33 per cent, of the total available waterways of Trans-Ural Russia. The second place is assigned to the Yenesei, with Lake Baikal-19,838 versts, or 21 per cent. Then follow the Amur (15 per cent)., the Lena (12 per cent.), and finally the Kara (84 versts) and the Olyutera (80 versts). The cargo carried on the inland water^vays of Russia for the last few years is as follows (in millions of pouds) : — Basins 1912 Volga . Neva . . North Dvina Dnieper . \V. Dvina . Niemen . Vistula . Don . . . S. Bug . . Dniester . Windau . Treider-Aa . Narova . Onega 1,297 422 175 314 148 150 51 31 15 10 12 II 39 28 Total for waterways of European Russia ()l)i Yenesei Amur Total for Asiatic Russia Total for the Empire . 92 II 76 179 2,882 1911 igio 1,492 419 202 315 172 135 41 44 22 16 10 10 43 1,356 383 148 294 158 127 42 59 25 10 39 21 2,943 2,663 92 75 II II 52 53 155 139 3,098 2,802 1909 1,358 378 150 265 136 129 3 47 25 9 39 14 1,143 364 133 247 120 76 3 38 18 9 43 12 2,552 69 II 29 109 2,661 2,205 7d> II 32 116 2,321 INTERNAL TRANSPORT. 257 Steamer traffic is greatest on the Obi, the Lena being next in available length, but the deserted shores of this river and the sparse population of the adjacent locahties render the traffic of very small importance. The Amur and the Yenesei follow the Lena, the Aru-Darya having the least available length for steamer navigation. Russia's meagre development of canal communication is partly due to the scattered population of the country, which is sufficiently well served by such natural routes as rivers and lakes, but chiefly to the entire absence of private initia- tive in canal construction. The latest inventory, made in 1906, shows 3,897 steamers plying on all the river basins of European Russia, with engines totalling 192,284 h.p. and 23,175 other vessels with a total freight capacity of 786,000,000 poods. For the basins of Asiatic Russia, the figures are 420 steamers with engines of 25,240 h.p. and 800 other vessels with a total freight capacity of 25,700,000 poods. The original cost of the river steam fleet of European Russia amounted to 153,200,000 roubles, and of other vessels, 71,500,000 roubles, while in Asiatic Russia the corresponding figures were 24,800,000 roubles and 9,400,000 roubles re- spectively. Steamers are distributed as follows :— European Russia Asiatic Russia Passenger 461 Freight and Passenger 475 Freight 123 Tug and Tug and Passenger . . . 2,443 Touring (?) 23 Official 368 Ferries j 4 II 63 6 274 66 According to its carrying capacity the entire river fleet of the Empire is divided as follows : — S 258 RUSSIA: ITS TRADE AND COMMERCE. 1 European Russia 1 Asiatic Russia Steam Other Steam Other vessels vessels Less than i,ooo p. . 1.723 150 From 1,000-5,000 p. 1.324 — ■ 159 264 ,, 5,000-10,000 p. 463 8,368 53 10,000-20,000 p. . — 4,037 99 ,, 20,000-30,000 p. . — 3,731 58 161 ,, 30,000-50,000 p. . — 2,919 95 More than 50,000 p. ~ 4,102 181 Length of service of all vessels is as follows European Russia Asiatic Russia Steam vessels other Steam vessels other More than 5 years . From 5-10 years. From 10-20 ,, . . More than 20 j^ears Number of years unknown 1.574 1,001 1,248 74 14.923 5,466 2,359 395 30 155 158 76 31 259 276 211 35 ^9 The kind of fuel chiefly used in the Russian river fleet may be judged from the following figures showing quantity consumed in one year : — Wood (cubic sazhones) . Coal (thousands of poods) . Liquid fuel (thousands of poods) Asiatic Russia INTERNAL TRANSPORT. 259 Existing conditions of water transport in Russia leave much to be desired, but they would be considerably im- proved by the elimination of several fundamental defects in the business of haulage. Chief of these is a lack of uni- formity in the system of waterways, the disconnectedness of som.e of the river systems and the absence of modern requiremxcnts in others. The immediate result of this state of things is a large and burdensome expenditure incurred both on account of the constant necessity of unloading from_ the railway to the water, and vice versa, and the impossibility of utilizing, in some cases the advantages offered by a water route, especially for long haulage. Present war-time circumstances have suspended the energetic work of the Ministry of Ways of Communication in the improvement of inland waterv.'ays, especially in a scheme for uniting the river basins of the Don and the Volga and providing the Donetz coal basin \\ith cheap water transport. The Russian merchant fleet consists of 1,044 steamers with a nett displacement of 513,000 registered tons, 59 motor vessels with a nett displacement of 13,000 registered tons, and 2,597 sailing vessels with a nett displacement of 257,000 registered tons. Thus the steam fleet comprises 28-2 per cent, of the total quantity and 65-5 per cent, of the nett displacement of the vessels of the entire mercantile fleet ; the motor fleet comprises i-6 per cent, and 1-7 per cent., and the sailing vessel fleet 70-2 per cent, and 32-8 per cent, respectively. Out of the entire steam fleet of Russia, 75-7per cent, of the steamers and 86-4 per cent, of the total tonnage have been built in foreign yards. England builds the largest number, the gross tonnage being 517,804 registered tons. Germany comes next with 76,674 registered tons, Sweden third (54,242 registered tons) ; Denmark fourth (28,050 registered tons) ; Austria-Hungary fifth (25,167 registered tons) ; Belgium sixth (12,625 registered tons) ; Italy seventh (10,450 registered tons), etc. As regards number, England comes first with 388 steaniers, 26o RUSSIA: ITS TRADE AND COMMERCE. Sweden 135, Germany 114, Anstria-Hungary 64, Denmark 20, Belgium 13, Holland 12, Norway and China 10 steamers each. Engines for the Russian merchant fleet are mostly built abroad ; only 233 steamers, or 22-3 per cent, of the total, possess engines built in Russia. Of that number only 167 steamers are fitted with engines constructed at Russian shops, the balance being made in Finland. The saiHng fleet is principally built in Russia; 2,521, or 97 per cent, of the vessels, are built at Russian yards, including 11 vessels built in Finland ; only 76 sailing vessels, with a displacement of 8,603 registered tons, have been built abroad. Comparing the tonnage of the Russian mercantile fleet with that of the world, we find it is merely 2 per cent, of the total. This is primarily attributable to the absence of any established shipbuilding industry and to the general insufficiency of capital. The enhstment of foreign capital in the Russian sea-faring industry is, moreover, greatly hampered by the law of June 6, 1904, concerning the right of navigation under the national flag. During the navigation season of 191 2 5,037 Russian vessels of 2,955 tons displacement entered Russian ports, and 10,197 foreign vessels of 10,890 tons displacement. Of these ships 2,055 Russian, of 960,000 tons displacement, or 46 per cent, of the total, and 5,030 foreign vessels of 6,211 tons displacement, or 49 per cent, of the total, entered without cargo. In 1 912, 5,170 Russian vessels of 2,988,000 tons displace- ment and 10,176 foreign vessels of 10,876,800 tons displace- ment cleared from Russian ports, while 17 per cent, of the total quantity did not obtain cargo in Russia, viz., 1,648 Russian vessels of 637,300 tons displacement and 1,396 foreign vessels of "1,324,800 tons displacement. CHAPTER Xi Posts, Telegraph and Telephones The postal, telegraphic and telephone services in Russia are administered by the State ; in a few cases only the direction of these means of communication is transferred to the Zemstvos, to municipal authorities or to private com- panies. The State administration of these services is vested in the Chief Board of Posts and Telegraphs, included in the Ministry of the Interior. The Empire is divided into twenty-nine postal and tele- graphic districts, two or three governments being allotted to each district. There are 7,351 post offices under the Post and Telegraph Department, divided as follows : — ■ Postal and Telegraph Offices . . . 4,584 Post Offices ...... 2,517 Telegraph Offices . . . . .250 There are also auxiliary offices doing postal business on a small scale. Such auxiliary offices are opened under Volost boards and at railway/ stations, where, for a small remunera- tion (from 100 to 240 roubles a year) volost headmen — or writers — and station-masters undertake the sale of stamps and the acceptance and issue of ordinary, registered, and a certain number of insured mail packets ; there are 2,536 of such auxiliary offices under volost boards, and 636 at railway stations. In addition, post offices of the simplest type, existing only for the sale of stamps, for the acceptance and issue of ordinary, and occasionally registered, mail matter, have been opened under 1,714 volost boards and at 3,739 railway stations. Auxiliary post offices are also opened at horse postal stations, rural credit banks, shops and other private estab- lishments. These are for ordinary and registered mail 261 262 RUSSIA: ITS TRADE AND COMMERCE. matter. There are 36,252 post boxes throughout the Empire. Auxiliary telegraph branches are principally found at military telegraph stations, frontier guard posts, light- houses, etc. Of these there are 261. A Zemstvo has the right to establish postal communica- tion for general use in all localities which are not served by the Government post. All railways possess their own telegraph lines for their requirements, and such lines are only under the supervision of the Minister of the Interior. At 4,374 railway stations, private telegrams are accepted at the regulation tariff. Large concessions for the working of the telegraph have been granted to two private telegraph companies. The Great Northern Telegraph Company maintains telegraphic communication with Sweden — by the line Petrograd — Neustadt — Geteberg ; with Denmark by the line Petrograd — Libau — Frederitsia ; with Japan by the line Petrograd — Vladivostok — Nagasaki, and with China by the line Petro- grad — Irkutsk — Kiakhta — Peking. The Indo-European Telegraph Company possesses in Russia its own line running from Alexandrovsk — on the western frontier — through Warsaw, Odessa, Tifiis, to Julfa on the Persian frontier, and beyond to Tabriz and Teheran ; the same company operates the Odessa-Constantinople cable at Odessa. The Government only controls a part of the telephone system ; most of the urban telephone systems, including the larger ones at Moscow, Petrograd, Warsaw etc., are worked by the municipal authorities or by private com- panies. Telephonic communication in rural localities is organized and operated on concession principles by the Zemstvos or companies of local land-owners. Many railways, as also the Military and Naval Depart- ments, have their own telephone communication for their requirements. The development of postal intercourse in Russia may be judged by the following table. POSTS, TELEGRAPH AND TELEPHONES. 263 Total of mails conveyed in 191 3 Ordinary letters Postcards Circulars : With business documents With samples of goods With printed matter . Registered : Letters Other despatches Letters with declared value (For a total value of Money Orders : B}^ post By telegraph (For a total value of Parcels : With declared \-alue . (For a total value of Without value . Periodical publications . Out of this total the following were foreign despatches : 1,329,928,602 467,193,281 17,481,195 20,737,127 235,063,185 87,021,197 8,773,162 5.742,614 6,970,609,650 roubles) 49,341,293 1,468,818 2,561,335.287 roubles) 6,980,455 530,077,569 roubles) 12,982,681 537,403,889 Ordinarj^ letters Postcards . Circulars : With business docu- ments With samples of goods With printed matter Registered : Letters . Other despatches . Letters with declared value . (For a total value of Money orders . (For a total value of Parcels with declared value . (For a total value of Parcels without \-alue Periodical publications (copies) Despatches. Received. 02,616,561 . . 87,793,455 26,439,868 . . 38,510,092 718,816 . . 1,756,420 2,750,150 . . 3,867,161 16,972,100 . . 37.520,575 4,044,987 . . 5.629,827 631,008 . . 1,300,481 258,304 . . 491,202 44,314,961 roubles 75,171,042 roubles) 899,196 .. 1,311,594 25,103,913 roubles 52,049,371 roubles) 231,377 .. 1,028,544 15,411,116 roubles 22,758,223 roubles) 151,720 . . 2,904,360 3,478,185 . . 23,093,197 264 RUSSIA : ITS TRADE AND COMMERCE. Owing to the comparatively poorly developed railway system, there are still many districts in Russia in which the post is carried by horses ; the total length of such postal roads is 64,670 versts ; upon these roads 4,271 postal relay stations are maintained, with 27,382 horses. In remote regions, owing to the absence of other means of communication, the post horses also convey passengers. In 1913, 4,206,858 horses were sent out with the mails and 2,617,594 horses with passengers. In several localities of the Archangel government and of East Siberia the mails are carried by reindeer, and in the extreme North-East (for example, across the Tatar Straits over the ice to Sakhalin) by dogs. In summer, during the season of navigation, the mails are carried on the large rivers — the Volga, Kama, North Dvina, etc., by steamer, on board of which postal branches are opened which conduct all kinds of business ; such postal communication on board steamers is established on the White, Caspian, and Black Seas, and along the coasts of the Pacific Ocean. In remote localities of the north of Russia on rivers of secondary importance, in the absence of available roads during the summer, the mail is always conveyed by boat. The mail is received one and more times a day at 8,114 places in the Empire ; six times a week in 268 ; five times in 167 ; four times in 233 ; three places receive the mail forty-eight times a year ; eight places twenty-four times ; one place sixteen times ; six places twelve times ; and one place only six times a year ; five postal points have mail exchange only five times a year. House delivery of ordinary and registered postal des- patches is carried on in all towns and the larger rural localities. The total length of telegraph lines of the Post and Tele- graph Department amounts to 198,855 versts, of which 63,593 versts are on the poles of the railway telegraph lines ; the length of the latter is 79,506 versts ; moreover there are 449 versts of lines of special designation. The total length of wires of the Post and Telegraph Department amounts POSTS, TELEGRAPH AND TELEPHONES. 265 to 533,596 versts, of which 226,460 versts are suspended from railway telegraph poles ; the total length of the wires of the railway telegraph is 219,623 versts. For the transmission of messages there are more than 9,000 apparatus of the Morse Simplex description, 22 of the Morse Duplex, 639 of the Hughes Simplex, 22 of the Hughes Duplex ; 57 of the dual, and 65 of the quadruple Bodeau ; 52 of the Wheatstone Simplex and 67 of the Wheatstone Duplex, three of the Murray and one apparatus of, the Siemens system ; there are also 25 sounding apparatus, 824 telephonic, nine phonophores and 210 sounders. Besides the Russian language telegrams are accepted in English, French, Finnish, and Swedish ; but the acceptance of telegrams in foreign languages is established only in those institutions where there is necessity for the same. There are 2,365 offices accepting such telegrams. The conveyance of telegramis for 191 3 is shown by the following figures : Inland despatched ; From institutions of the Post and Telegraph Departments ..... 40,709,431 From railway stations .... 9.730,315 International : Despatched ...... 2,749,624 Received . . . . . . 3,421,235 Transit telegrams, inland and foreign . . 163,372,884 (Including foreign in transit) . . . 770,051 In view of the colossal distances of the Empire and its special geographical features, wireless telegraphy in Russia acquires exceptional importance, replacing as it does land telegraph lines and cables where their construction and up- keep would offer insuperable obstacles. The first wireless stations for common use were constructed in 1910 ; at the present time the Post and Telegraph Department controls twenty wireless stations which are subdivided into five groups ; the power of these stations is designated in kilo- wats, while the first figure in brackets indicates the primary power and the second the power in antenna. I . Far Eastern group : Petropavlovsk on Kamtchatka (8) 5 ; Nikolaevsk-on-the-Amur (8) ; Okhotsk (12) 7-5 ; Nayakhan 266 RUSSIA: ITS TRADE AND COMMERCE. (12) 7.5 ; Anadyr (12) 7-5 ; and Kerb (in the Amur province) (1-5) I- 2. Baltic Sea group : Riga (1-5) i ; Runo Island in the Gulf of Riga (075) 0-5 ; Revel (1-5) i ; Libau (1-5) i. 3. Arctic Ocean group : Archangel (14) 8 ; Yugorsky Shar (on the shores of the Straits) (12) 7-5 ; Vaigatch Island (1-5) I ; Mare Sale (1-5) 1. 4. Caspian Sea group : Petrovsk (1-5) i ; Alexandrovsky Fort (1-5) I ; Astrakhan roadstead (075) 0-5. 5. Black Sea group : Taganrog (1-5) i ; Taganrog Road- stead (075) 0-5 ; Novo Rosiisk (1-5) i. Wireless telegrams transmitted by means of these stations and beyond over the wires of the pan-Imperial telegraph system are charged according to the established inland tariff. The number of words conveyed by the wireless stations in 1914 amounted in round figures to 5,600,000. There are besides some seventy wireless stations on vessels sailing under the Russian flag. On January i, 1914, the Post and Telegraph Department was operating 173 urban telephone systems with a total of 76,978 apparatus. There are 221 urban concession systems with 194,193 apparatus. Outside the towns there are 150 zemstvo district telephone systems, three zemstvo government systems and eleven systems exploited by local Cossack bodies ; the apparatus of all these systems totals 11,214. In Russia there are seven inter-urban telephone lines : (i) Moscow- Petrograd ; (2) Moscow-Kharkov ; (3), Pctro- grad-Helsingfors ; (4), Tiflis-Baku ; (5) Petrograd-Revel ; (6) Moscow-Nizhni-Novgorod with a branch to Ivanovo- Vosnesensk ; (7) Kharkov-Bakhmut-Yekaterinoslav. Besides the public telephonic communications, there are 90 systems for private use with 23,507 apparatus, of which 14,939 belong to railways and the remaining 8,568 to other institutions and individuals. Savings bank business is transacted at all postal and postal and telegraphic ofiices. On January i, 191 5, the number of savings banks was 5,970, of which six are working POSTS, TELEGRAPH AND TELEPHONES. 267 independently, while the remainder are branch offices of the nearest State Savings Banks of the Ministry of Finance. The operations of these banks for 1914 are shown in the following figures (in thousands of roubles) : Balance on Jan. i, 191 5 Deposits D e posits In In accepted paid out cash securities In 6 independent banks . . 14.649 12,976 17351 2,573 In 5,694 branch offices . . 317.883 274,771 482,763 38,890 CHAPTER XII The Internal Trade of Russia By J. BooKSHPAN ■ I. Formation of the Home Markets The formation of a market in Russia, using the term " market " in its economic sense, dates from the beginning of railway construction and the reforms of 1861 which led to the emancipation of the peasants. These two events gave a great impetus to the development of Russian trade. The peasants, emancipated from serfdom to a wage-earn- ing condition, and obliged now to pay rent, were forced to find a quick sale for their produce and so made their appear- ance on the markets. On the other hand, the process of drawing agriculture into the circle of exchange was facilitated by the construction of railways for purposes of trade which began in the sixties. This growth of the railways enabled the peasants to take their place in the markets without the large trading capital, the necessity for which had arisen from the centralization of markets and the large scale upon which the landowners traded. Thanks to the railways the markets were decen- tralized and farmers were placed in a position to dispose of their produce on the spot. In place of large trading capital, small buyers or commission agents appeared, bringing in their wake bank credit, which financed and so lent support to this decejitralized grain trade. The history of the development of Russian trade in these 268 THE INTERNAL TRADE OF RUSSL\. 269 first phases is, as a matter of fact, the history' of the grain trade, for parallel with the growth of the market for agricul- tural produce a development of the trade in industrial products was recorded. The evolution of the grain trade is clearly illustrative of the general conditions underlying commerce in Russia and its development. The growth of railways had a great influence on the whole subsequent development of the grain trade. In the beginning the home markets played the chief role ; the exports were compara- tively insignificant. The ever growing railway system linked up the seaports and foreign countries, with the result that much grain was diverted from the home market.. It is only fair to add that the latter was not remarkable for its importance ; the whole supply of grain could not be disposed of, and great quanti- ties were available for export. An enormous extent of land remained uncultivated. The railways infused life into these rural districts ; grain cultivation w^as increased and the produce from this new area was sent to the seaports. The purchasing of grain on railway stations came into vogue ; here, small station traders, having but very limited capital at their disposal, had their place of meeting. The trade in grain was reorganized on a commission basis ; the dis- counting of railway documents by banks was introduced ; the small purchasers needed credit for the purpose of making quick turn-overs and the only manner in which such credit could be obtained was by discounting the railway freight bills. It is true that the Banks in taking up these railway documents introduced some negative features ; they had no means of assuring themselves that the grain was clean, nor could they satisfy themselves as to its quality, or take proper measures for its storage. However, as a result of these operations, the total trading turn-over in grain in- creased and there was a growth in the exports abroad. This process did not pursue its course in all parts with equal rapidity. In the districts far distant from the frontiers and ports, principally in Eastern Russia (on the Rivers Volga, Ivama, Viatka and Bielaia), the distinguishing fea- tures of the former cumbersome centraHzed grain trade were 270 RUSSIA : ITS TRADE AND COMMERCE. retained. But the railways drew one district after another into an ever-widening circle of financial credit transactions and enabled the small exporters to obtain the predominating position on the markets, and to replace the former big dealers or " labozniks." The economic policy of the Russian Government helped the growth of export activities in connexion with agricul- tural produce. Dijverential tarius with reduced pood- verst rates were introduced for the transport of grain to ports. This railway policy was dictated by the necessity for adjusting Russia's trade balance, maintaining the value of the Russian rouble and preparing the ground for reform of the currency. Valuable results were the outcome of influencing the market for agricultural produce, forcing the development of exports and bringing Russia into touch with the world markets. The steady growth of grain exports is seen from the following table :■ — ■ Year Net crop of former years Exports Percentage of net yield exported In thousands of quarters I 870/1-4/5 . . . 1875/6-79/80 . . I 880/1-4/5 . . . 1885/6-89/90 . . 1890/1-4/5 . . . 1895/6-7/8 • • • 184-032 178-622 196-468 211-527 288-517 245-775 22-483 32-185 33-441 46-585 50-345 56-228 12-2 i8-o 17-0 22-0 22-0 22-9 From the later nineties, symptoms of progress and changes may be noted in Russian trade. The fundamental change in the grain trade during the last ten years, is the evolution in the relations of the home and foreign markets. The growth of towns and of industry created a vigorous demand for grain ; home trade in grain grew, exports fell, and finally a demand arose for manufactured goods. The large market THE INTERNAL TRADE OF RUSSIA. 271 for these goods and the growing trade of the rural districts were the results of the same factors, viz., railway construc- tion, bank, credit and monetary reforms. The adoption of the gold standard in 1897 gave stability to home trade which had been sufering from too large an issue of paper money. However elementary the role played by railways in the development of trade, in Russia it has been stupendous ; railways, in view of the enormous distances and the great areas over which the population is dispersed, continue to be the chief stimulus of commercial life. An increase in total amount of trade went side by side with the growth of the railway systems, as may be seen from the following figures showing the amount of freight handled annually by the railways for 1895-1913 : — Amount transported Year Thousands of poods per verst of railway system (in thousands of poods) 1895 .... 2,593.542 78-9 1896 . 2,746,823 76-3 18.97 • 2,954,112 799 1898 . 3.277.196 84-3 1899 . 3,697,628 85-8 1900 . 3.958,385 82-9 190I 3.99I.183 80 -0 1902 4,173,000 8o-i 1903 4.559-336 86-1 1904 ! 4.569.541 85-1 i9«5 4,216,427 767 1906 4.915.902 85-8 1907 5,200,219 877 1908 5.247.756 87-5 1909 5,619,590 93-4 1910 6,058,740 loo-o 1911 6,810,188 110-9 1 912 7,109,718 II47 1913 . . . . 7,981,019 1 1277 2 72 RUSSIA : ITS TRADE AND COMMERCE. An analysis of the freight returns works out as follows : — Iron, Cast Grain Coal Timber Iron and Steel manu- Year factures In millions of poods 1903 .... I-OII 823 373 85 1904. 989 834 356 n 1905 . 967 782 323 67 1906 . 1-079 971 370 72 1907 . 1-030 I-II4 414 78 1908 . 982 I-I29 432 1^ 1909. 1-252 I-IOO 490 ^7 1910 . 1-270 1-089 560 105 1911 . 1-282 1-297 627 115 1912 . 1-200 1-464 647 135 1913 • 1-297 1-709 731 145 1903 1904 1905 1906 1907 1908 1909 I9I0 I9II I9I2 I9I3 Year Sugar Textile manu- factures Cotton Agri- cultural ma- chinery 85 40-1 26-3 12-9 82 37-5 26-6 13-2 75 387 22-4 12-9 98 43-1 30-1 14-2 99 417 27-4 i6-i 103 41-6 29-5 18-3 107 47.4 29-3 21-6 115 477 27-2 24-5 127 507 33-8 27-7 133 52-5 35-9 29-9 137 54-5 35-3 347 other ma- chinery 12 -6' 12-6 II-8 13-0 13-8 i6-3 16-7 20-7 25-5 27-0 31-5 The movement of merchandise, which has considerably outstripped the growth of the railway system itself, is char- acterized by a predomination of three categories of freight, wliich comprise more than one quarter of the whole freight THE INTERNAL TRADE OF RUSSIA. 273 handled, viz., timber, coal, and grain products. It is remarkable, however, that the relative importance of the grain carried in relation to the total amount of transported goods is falling ; this reduction is explained by the steady growth in the volume of manufactured goods dealt with. For instance, the percentage of the general total of merchandise handled which falls under the head of cereals is as follows : — ■ Year Percentage 1903. . 22-2 1904. 217 1905. 23-0 1906. 22-0 1907 19-8 1908 187 1909 21-9 I9I0 21-0 I9II i8-8 I9I2 16-9 I9I3 • • i6-3 Simultaneously with the growth in railway freights de- velopments in the navigation of the inland waterways caused an increase in the number of postal packages, both increases being in direct proportion to the development of commerce. Progress in railway passenger service wrought a funda- mental change in Russian trade. Commercial travellers appeared on the scene, purchases of goods were made direct from industrial and distributing centres (Moscow, Lodz) ; agencies furnishing information regarding the standing of commercial houses were established, and the centre of gravity of trade was shifted. In former times distribution in Russian trade was ham- pered by the great distances separating the various districts. Traders had to make long journeys for the purpose of bar- tering their goods and making settlements to regular places of meeting which within the limits of a given locality are known in Russia as " forzhki," "places of barter," or Bazaars, and, when devoted to wholesale trade and serving 274 RUSSIA : ITS TRADE AND COMMERCE. more extensive regions, as " Fairs." The Fairs in the major- ity of cases were estabhshed at points on the banks of rivers, or where high roads met, and thus served as centres of distribution. These Fairs have gradually adapted them- selves to the special demands made upon them and were so arranged that traders could go from one Fair to another. The huge dimensions of the country and the comparative lack of railways, especially in the East, have retained for the Fairs of Russia an importance up to this day. They have even grown in number ; in 1868 there were 6,500, in 1894 16,604, s-iid according to latest statistics there are as many as 29,808 at the present time. Improvements in Russian trade and its ever-growing world significance have established the Western European " exchange " which, springing up alongside the Fairs and in part re- placing them, effects the bulk of the country's commercial transactions. It is unfortunately impossible to determine by statistics the Russian trade turn-over and the amount of capital engaged in it, as up to the present statistics of Russian trade do not exist. Some data as to enterprises, their number and dimensions, may be found in the information gathered in connexion with the levying of trade taxes. The total num- ber of such enterprises can be ascertained from the number of trading licences taken out. Movements in all trading enterprises, including those at Fairs, for the period 1899- 191 2 are shown in the table on page 274. In 1 91 2 the total number of trading enterprises had increased, in comparison with 1899, to the ex- tent of 367*3 thousands or 43 per cent. This growth has been continuous during the last fifteen years, with the ex- ception of the years 1905 and 1906 when the number appre- ciably decreased. If we consider classified trade returns the following table shows the movements of trade under five heads ; the first and second represent large and medium-sized enter- prises, the third small traders, the fourth the smallest trading houses, and the fifth pedlars and hawkers. To make the picture more complete we have included Fair THE INTERNAL TRADE OF RUSSIA. 275 Year Number of Trading Licences issued Percentage increase ( -|- ) or Decrease ( — ) in the number of Licences in (in thousands) comparison with 1 899 1899 .... 853-8 — 1900 861-9 -1- i-o I90I 874-4 + 2-4 1902 877-7 + 2-8 1903 886-7 + 3-9 1904 898-6 + 5-3 1905 ^192-9 + 4-6 1906 871-2 + 2-0 1907 916-3 + 7-3 1908 955-6 + 11-9 1909 1,076-0 + 26-0 I91O 1,130-4 + 33-5 191I 1,177-6 + 37-9 1912 i,22r.-i + 43-0 enterprises, that is, those which take out hcences for the right of trading at Fairs : — NUMBER OF LICENCES FOR TRADING ENTERPRISES. Actual number Actual Actual Actual Actual number of licences Actual number of licences of number number number Years licences of licences of licences of licences in m in m cate- gory 7,697 category category category category 31,811 category 1899 149,665 428,028 228,056 8,571 1900 7,897 144,913 430,656 240,631 29,927 7,905 190 1 7,774 141,905 440,035 248,024 29,052 7.593 1902 7,759 137,857 451,180 245,546 27,986 7,378 1903 7,921 139,575 461,789 241,293 28,662 7,507 1904 7>934 139,078 458,865 257,819 27,535 7,365 1905 7,755 134,265 463,726 257445 23,351 6,368 1906 7,082 129,580 458,081 249,709 21,070 5,691 1907 7,153 132,982 483,356 266,307 20,419 6,086 1908 7,423 139,270 498,397 283,238 20,904 6,337 1909 7,990 153,338 549-467 329,931 28,658 6,646 1910 8,462 158,397 576,480 350,637 29,707 6,705 I91I 9,407 171,166 599,028 360,721 30,594 6,683 I912 10,175 178,381 632,595 373,689 30,059 6,259 276 RUSSIA: ITS TRADE AND COMMERCE. The number of wholesale dealers has made considerable growth during recent years, although fifteen years ago a falling off in their number was recorded. The medium- sized and small enterprises of the second, third and fourth categories are also growing in number. The development of other forms of trading at the Fairs — a point to which we shall refer when discussing the Fairs themselves — ^has brought about a diminution in trading at Fairs, shown by the lesser number of licences granted. Trade development and reorgan- ization of the markets takes the form of a greater concen- tration of trading enterprises in the hands of a few. Trading capital, supported by credit, banks and exchanges, organizes the markets and organizes itself. Joint Stock Companies, S3mdicates, Stores and commission agents make their appear- ance in the trading world. The table which follows shows the growth of these centralized industries and their share capital : Number of Capital in Year Joint Stock thousands of Companies roubles 1907 93 106,148 1908 99 116,088 Trading Companies 1909 114 123,100 I9IO 119 129,460 191I 1907 7 148,264 2,900 1908 7 2,775 Syndicates for Sale of 1909 10 4.230 Products .... i9ro 9 4,200 1911 9 4.500 1912 1907 9 4.500 10 20,720 1908 II 21,206 Trading Premises and 1909 13 23.569 Stores 1910 13 23,678 1911 17 27.445 1912 19 30,162 THE INTERNAL TRADE OF RUSSIA. 77 The rapid growth of share capital and of the business done in the various branches of trade may be seen from the following approximate figures :— Years Number of enterprises Share capital in thousands of roubles Traders in Mineral Fuel 1903 1910 1912 7 7 8 9.530 10,759 17,820 Traders in Iron Wares . 1903 1910 1912 13 20 23 6,950 10,655 14,130 Traders in textile manu- facture and Dry Goods 1903 1910 1912 16 40 59 16,900 51.985 70,480 Traders in Colonial Produce .... 1903 1910 1912 9 II 18,100 22,400 Traders in Vai ious Lines .... 1910 1912 16 23 10,480 14.990 The development of large Joint Stock Companies in Russia is of comparatively recent date, and involves great changes in the organization of Russian markets. The prices of goods, which used to be subject to considerable fluctuations in different districts, have begun during the last ten years to become more uniform. The capture of a market is now associated with the active co-operation of commercial firms, with advertising on a larger scale, sending out of commercial travellers and generous credit. The home markets have increased in dimensions. All these developments of the trade of the country in the shape of increased circulation of goods, company promotion, arrange- 278 RUSSIA: ITS TRADE AND COMMERCE. ments for credit and general trading conditions have had their effect upon the agricultural market. As we have seen, in the beginning, the agricultural market was the determining factor in the economic life of Russia ; during recent years, on the contrary, Russian agriculture has greatly depended on the conditions governing the town market. It is very difficult to estimate exactly the extent to which agriculture in Russia is dependent on home demands and on foreign markets. In regard to grain the more rapid growth of the home market can be noted fairly clearly. In con- nexion with other products of agriculture and cattle-breed- ing, this growth is still more apparent. The relation of the home to the foreign market in recent years will be seen from the following figures based upon an analysis of railway transport : — Export traffic Internal traffic Average In millions of poods Percentage of total traffic In millions of poods Percentage of total traffic I 896-1 900 . 1901-1905 . . 1906-1910 . 1911 .... 1912 .... 318-0 416-8 463-0 545-1 473-1 55-3 569 51-6 53-4 48-6 257-0 327-9 437-5 475-8 495-4 447 44-1 48-4 46-6 51-2 Fifteen years ago, exports were in excess of home trade ; to-day, the home exceeds the export trade, the home markets consuming more than half the supply, and this increased importance is principally to be ascribed to the de- velopment of industry. If Russian industry continues to develop even at the same rate as it has done in the past, there is every reason to suppose that, in time, agriculture will no longer yield this surplus. Russia, it may be, will reach, though less rapidly, and on a smaller scale, the stage through which the United States is passing at present, when, owing to the rapid growth of the home market, the exports of grain fall. The development of the home market is also important THE INTERNAL TRADE OF RUSSIA. 279 to Russia because of her dependence on imports. This dependence has been already appreciably weakened by the creation of a large market in the towns, principally the capi- tals, for meat, fish, game and butter. 2. The Fairs of Russia The kind of trade transacted at fairs is very typical of Russia. Until quite recently they afforded the best indica- tion of Russia's economic position. They clearly reflect for instance the great extent to which Russian trade is dependent on the harvest ; the slightest delay or misfortune on account of bad weather in harvest- ing immediately affects the trading operations at the fairs. They are held at all times of the year, the summer, spring and winter fairs having each their own distinguishing features. It is true that since the development of the railway sys- tem and the better organization of roads and waterways, there have been improved forms of trade and the business of the fairs has diminished. They are still, however, of very considerable importance at the present day, as many as 29,808 fairs being held in the Russian Empire at 9,215 difierent places. The goods actually brought for sale to the fairs during the year were valued at i ,226,031 thousands of roubles, the actual sales amounting to 826,588 thousands of roubles. Most of the fairs cover the trading activities of a few villages and have only local significance. These local fairs often last from one to three days, whereas the bigger fairs continue as long as six weeks (Nijne-Novgorod), and even extend over several months, as, for instance, the fair in the Barter Court in Orenburg, which lasts six months. Not only a steady increase in the number of fairs we could notice, but in some cases the development of this form of trading has become more intensive, that is, some of the larger fairs which serve whole regions have increased their importance. Bearing in mind that, in Western Europe, where new methods of trading are highly specialized, the form of trading typified by the fair has not altogether dis- 28o RUSSIA: ITS TRADE AND COMMERCE. appeared (for instance, the London Auctions and the Leip- zig Fair), it is not surprising that in Russia, which is some- what backward in economic development, the fairs for the time being retain their relatively large significance. They remain, despite the fact that the system of payments in kind is dying out, that currency is being placed on a proper basis, and that the credit system is being organized. It is true that the fairs are passing through a slight evolution ; trading on the basis of " booked orders " and samples as practised in Western Europe is steadily increasing. The following table gives some figures as to the transactions at the bigger fairs : — Approximate amount of Name When hckl transactions (in roubles) Place Total value of goods y Total value brought to sold the fairs Nijne-Nov- Makarev . 15 July- 10 Sept. 300,000,000 250,000,000 gorod Irbit (Perm. Irbit . . . 25 Jan. -I March 25,785,000 21,108,000 Govt.) '■ Charkoff . Krestchensk . 6 Jan.-3 Feb. 14,430,600 7,215,300 " Provod . 2nd and 3rd weeks after Easter 24,952,400 12,476,200 " Troitz . . 8th and gth weeks after Easter 21,744,000 10,872,000 jf ' ' Uspensk . 15 Aug.-i Sept. 17,888,900 8,944,400 Pokrov . 1-15 October 14,430,600 7,215,300 Kieff" . '. '. Contract . I Feb. -I March — — Orenburg Mienovninsk. I June-i Novr. 20,000,000 15,000,000 (Barter Court) Menzelinsk Zimniaia . 26 Dec. -12 Jan. 7,078,800 5,272,600 (Ufa Govt.) Archangel Margaritinsk. I Sept. -I Oct. 5,000,000 4,000,000 Ilinka (Don Nikolsk . 9-15 May 5,100,000 2,030,000 Region) Gomel . Novogodnia . 1-7 January 4,500,000 2,400,000 Kuiandy Kuiandin.sk- I June-i July 4,832,500 3,650,600 (Semipalat- Gotov insk Region, KarkalDist.) Tiumen (To- Ilinsk. 5-20 June 7,286,300 5,299,700 bolsk Govt.) Kozmode- Liesnaia . 25 May-25 June 2,500,000 1,500,000 miansk (Kazan Govt.) THE INTERNAL TRADE OF RUSSIA. 281 Goods sold at the fairs are not confined to the products of large factories alone, but include also articles made by the peasant craftsman and home worker, and the prepon- derance of one or other line of goods depends on the peculiari- ties of the given region. For instance, in northern parts (Archangel, Olonetz and Vologda Governments) fish and furs predominate ; in the Lake district (Petrograd, Pskoff and Novgorod Governments), flax ; in Siberia furs, raw pro- ducts and cattle ; in the south wool and cattle ; in the central agricultural region (Voronej, Kursk, Orlov, Toula Riazan, Tambov and Penza Governments) we find the horse trade in most evidence, and in the Vistula district hops, poultry, etc. The Fair of Irbit, notwithstanding the fact of the Siberian Railway, continues as an important centre of exchange between European Russia and Asia. In 191 4 the amount of goods brought to the Irbit Fair represented a value of 22-8 milhon roubles, as against 24 million roubles in 1913. The falling off is caused by several firms finding it sufficient now to be represented by commission agents with samples. Still, the fair continues to hold a prominent place in the trading world, especially in connexion with the chief line of goods handled, that is — furs. During the last few years the fur trade has fluctuated between 75 and 8 million roubles, and this fair has acquired a world-wide repute. The attempts of some buyers to purchase furs direct from small traders in distant parts of Siberia and to have these furs sent direct to Moscow, without using the Irbit Fair as a go-between, have been unsuccessful, and this centre is still known to fur traders as the " mirror of the fur market." Trading in other goods at the Irbit Fair rather tends to- wards a system of sale by samples. Textiles, groceries and drugs are fast disappearing from the fair altogether. In 1 91 4 manufactured goods were brought here to the value of 5-8 million roubles, of which 4-3 million roubles worth were sold ; there was an especially brisk trade in peasants' cloth. Traders at the Irbit Fair are served by banks, which ha\e their branches at all the important fair centres. Credit 282 RUSSIA : ITS TRADE AND COMMERCE. is to be obtained only at the larger fairs, but in general it may be considered as non-existent, the purchases being made for cash. Banking operations at the Irbit Fair reach very consider- able dimensions ; the bills discounted alone amounting to an average of 5-9 million roubles during the last few years Below we give figures on this point : — Total amount of Year bills discounted igoi .... 3357-5 1902 3.362-8 1903 3.955-1 1904 4.877-3 1905 3.039-0 1906 3.025-8 1907 4.235-1 1908 5.174-2 1909 4,786-2 I91O 6,849-7 191I 8,806-9 1912 7.999-4 1913 .... 5.302-4 The Kieff Fair is one at which contracts are entered into, whilst the Srietensk Fair is one chiefly devoted to retail trade. At the latter there is a great demand for hand-made " kus- tarny," cheap jewellery, dry goods, fish products, Caucasian specialities, carriages etc. There is also business done in manufactured goods of the cheaper kinds, principally calico, red fustian and cheap woollens. At the Kieff Fair, the sugar factories and refineries make their contracts. The annual business in sugar amounts to about 4,000,000 poods ; the business of the refineries takes the form of arrangements by which the right of placing sugar on the home markets — a right which is limited in Russia by Government regulation of the production for home consumption — is transferred and ceded by one contracting party to another. THE INTERNAL TRADE OF RUSSIA. 283 At the Kieff Contract Fair a place is also reserved for grain, and there is a certain amount of trade in timber and wood materials. At the big fairs in Kharkoff we find, side by side with agricultural products and cattle, textile goods, leather, dry goods and wool. At the Krestchensk Fair alone the textile manufactures sold in 1914 represented a value of 5-2 million roubles, the total suppHes at the fair being valued at 7-1 million roubles. Undressed leather offered and sold at the fair had a value of 2-3 million roubles ; dry goods were offered to the value of 1-4 milHon roubles, of which Rs. 816,000 worth was disposed of ; the value of the wool was Rs. 983,000, of which Rs. 306,000 was sold. " Barter Fair " in Orenburg is a trading centre of quite original character attended by merchants representing the numerous tribes of Eastern Russia. It comprises a tre- mendous collection of all kinds of raw materials, leather, sheep-skins, wool, horses' tails and manes, goat hair, and to some extent furs and Turkestan cotton. This fair receives large consignments of cattle, augumented on their way by small lots purchased at local cattle fairs. They are chiefly sold for slaughter. The undressed leather is taken for the Kazan and Viatka tanneries, and at the same time great quantities are purchased for the Nijne-Novgorod Fair. The Nijne-Novgorod Fair has been held since 181 7 and continues to this day as the most important of Russian trading centres. To it journey each year merchants from all parts of Russia, Central Asia and Persia. Here the prob- able volume of business to be transacted in the course of the year is taken into account ; here, prospects and probable conditions of future trade are considered ; the general con- ditions of other enterprises are discussed and estimates made of their competing powers, this point being of special importance to small and medium-sized businesses which cannot afford many agents. It is true that for various classes of merchandise — iron, cotton, tea, sugar — it has become but a wide local market and no longer fixes trade done by the whole country in these goods. Nevertheless, 284 RUSSIA: ITS TRADE AND COMMERCE. the mere fact that the transactions are estimated at 250 milHon roubles makes it an object of consideration on the part of the commercial world. As to the volume of business transacted at the Nijne-Novgorod Fair, we can draw con- clusions from the operations of the banks. The discounting of bills by all the banks working at the fair amounted in thousands of roubles to- — In 1908 28,611 „ 1909 35,574 ,, 1910 45.921 ,, 1911 49,227 „ 1912 49,656 ,. 1913 • 51,240 „ 1914 43,021 The falling ofi in discount operations in 191 4 is explained as the opening of the fair coincided with the outbreak of war. Other banking operations at the Nijne-Novgorod Fair are expressed in the following figures :■ — Deposits to Current Accounts Paid from Current Accounts . Paid against Drafts Received for Drafts The total transactions at the fair, during a series of years, can be seen from the following figures (in millions of roubles) : — I9I3 1914 In thousands of roubles 131,678 . . 138,512 128,568 . . 132,885 47,471 . . 39,676 82,377 • • 77,206 I 867-1876 I 877-1 886 I 887-1896 I 897-1906 1908 1909 1910 1911 1912 136 175 163 146 194 189 199 190 195 Thus, during recent years, the trading at the fair attained to as high a figure as 250 million roubles and for several years past has not shown any tendency to fall. They flue- THE INTERNAL TRADE OF RUSSIA. 285 tuate from year to year in sympathy with the harvest, on which, to a great extent, the purchasing power of the Rus-- sian people depends, but in general the transactions repre- sent a comparatively stable norm which falls and rises only within narrow limits. The prospects of the Nijne-Novgorod Fair are determined each year as soon as the results of the harvest are known. The fair is also an export market, merchandise being despatched to Eastern countries as well as to Western Europe and America. The most prominent place at the Nijne-Novgorod Fair is held by textile manu- factures which are brought exclusively for home markets. Trading in these goods generally begins before any other business is done at the fair. At the Nijne-Novgorod Fair furs there are purchased for the markets of Western Europe. There is great variety in the hardware sold at the fair. It represents necessary articles of everyday use for the peasant population, small articles of cast-iron, sieves, samovars, Church regalia, etc. The iron market has long since lost its former importance. At present it is only of a local character, as traders in distant regions no longer buy iron at the fair, but receive it direct from the manufacturers. It is interesting to note the influence of the war on the business transacted at the fair. On the very day on which the Nijne-Novgorod fair hoisted its flag, Austria-Hungary declared war on Serbia. The mobilization and the sus- pending of acceptance of private freight by the railways were a great blow to the fair. An immediate stop was put to all dealings, trade was paralysed. However, the paralysis was not of long duration. In a few days trade revived. The waterways on the shores of which the fair is held were of great assistance — Nijne-Novgorod lying at the junction of two rivers, the Volga and Oxa, and in the immediate neighbourhood of the Kama, which unites it with far-re- moved centres of production and consumption. This is the great advantage of the Nijne-Novgorod Fair over the Moscow trading centre, which was, for a short time, isolated in consequence of the diiliculties put in the way of the 286 RUSSIA : ITS TRADE AND COMMERCE. transport of private goods over the railways. Another factor favourable to the market is its distance from Western Russia, which has suffered most from the war, and its close connexion with the Eastern markets, which retained their purchasing power. Finally, the good harvest in the Eas- tern areas of Russia — Siberia, Central Asia and the Cau- casus — also enabled the fair to overcome the influence of the war. As regards the future of this fair, it is beyond doubt that the laying down of new railways, the Siberian Trunk Line, the increase in the number of commercial travellers, com- mission agents, co-operative societies, and the development of postal-telegraphic facilities, all work to reduce the amount of goods sent to the fair. Large firms, which now fix prices in accordance with the general state of business, ignore the fair and address themselves to the commercial travellers or deal direct with the manufacturers ; the growing form of co-operative trading also, to some extent, influences the dealings at the fair. For instance, the greater part of the purchases by the Moscow Union of Consumers are made direct from industrial centres, although in 191 3 this organization also purchased goods at the fair to the ex- tent of 1^ million roubles. On the other hand, the market is visited by merchants from far-distant points, comparatively small traders, who have not at their disposal the latest facilities or the services of middlemen. The manufacturers cannot possibly ignore this great number of small purchasers and must thcMTfore retain their connexion with the fair. Exchanges Russian exchanges, in contrast to those of Western Europe, are not only places for bargaining (markets), but, in consequence of the Russian system of social organization, have the supplementary functions which, in the West, belong to chambers of commerce. They have been created in Russia not so much with the direct aim of pushing trade, as of the demand felt for or- THE INTERNAL TRADE OF RUSSIA. 287 ganization and representation of trade interests. This pecu- liarity of Russian exchanges, unknown in Western Europe, is deeply engrained in the habits of Russian trading circles. In Russia, the work of Exchanges is regulated by the Statutes of Trade legislation. Their supervision is vested in the Ministry of Trade and Industry. The only exception is the Securities Department of the Petrograd Stock Exchange which comes under the jurisdiction of the Ministry of Finance. The exchange "public" embraces all those who visit the exchanges, but not all visitors to an exchange are mem- bers of the " Exchange," which is a corporation ; to become a member several conditions have to be satisfied : — The payment of an annual subscription. Candidates for membership must be engaged in trade or agriculture or be acting as the duly appointed repre- sentatives of such activities, of joint-stock companies, societies and trading companies. The Exchange Association in conjunction with the Ex- change Committee, which is appointed for the direct super- vision of all matters pertaining to the exchange, have with- in their jurisdiction all institutions and persons connected with the exchange. The powers of the exchange in Russia are autonomous and govern both the internal and external relations of the exchange. The organization of Russian exchanges and their methods of doing business are still in process of development, but are gradually approximating to those of Western Europe. The real development in Russia began in the sixties of the nineteenth century. The first exchange in Russia, opened by Peter the Great in Petrograd in 1703, was the only one of its kind for many years. In 1763 a second exchange was founded in Odessa ; in 181 6 a third in Warsaw ; in 1842 and 1848 two other exchanges began operations on the Volga, viz. at Rybinsk and Nijne-Novgorod. In the sixties, however, their number considerably increased (to six), and the seventies and eighties also registered an increase of six. At the present moment Russia possesses about 100 exchanges. 288 RUSSIA: ITS TRADE AND COMMERCE. Trade on the Russian exchanges is chiefly in flour and agricultural products. There are also exchanges for timber and wood products (Archangel, Minsk and Riga), fish and fruit (Astrakhan and Tzaritzyn), naphtha products (Baku and Batoum), cotton and silk cocoons (Kokand), gold bullion (Ekaterinburg), sugar (Kieff), flax (Pskoff) and wool (Simbirsk.) Russian exchanges deal not only with samples but with goods of a " definite type, class or origin," and in goods corresponding to the " standard established by the ex- change." Business is also done in goods which are subject to prehminary " examination and approval " by the pur- chasers, that is, in goods which do not come within the sense of " exchange " goods as the word " exchange " is un- derstood in Western Europe and America, and the offering of which on exchange has no sense. Further, just as on foreign exchanges, Russian exchanges distinguish goods on sight and futures, but " term contracts " are not yet met with. Unity of contract, of which mention is often made in the rules of foreign markets, is as yet unknown in Russia. The statutes of our exchanges are absolutely void of any provisions as regards dates for filling contracts in connexion with " futures " ; no mention is made of any medio or ulti- mo ; further, on Russian exchanges there can be no liquida- tion of term contracts. Attached to the exchanges are brokers, experts, sorters, arbiters and quotations committee. Brokers on the Russian exchange are middlemen. They bring a purchaser and seller together, or they conclude bar- gains themselves, on authorization. Each exchange has a fixed number of brokers, the number being established in the order laid down in the Statutes of the Exchanges. The Institution of Brokers includes not only ordinary brokers, but ship-brokers, marine insurance brokers, averagers, exchange notaries and auctioneers. The exchange notaries appear for unfulfilled brokers' agreements, and auctioneers arrange for the public sale of goods on the exchange. Experts are attached to each large exchange. For instance, there are special staffs of experts attached to the Odessa. THE INTERNAL TRADE OF RUSSIA. 289 Libau and Kalashnikoff (Petrograd) exchanges. The hst of experts is drawn up by the Exchange Committee from among the brokers, from the commercial men who are mem- bers of the exchange, and other competent persons, on reso- lution being passed by general meeting of the members of exchange. Sorters officially certify the quality of merchandise for export, and are elected by the merchants whose goods are subject to inspection and possible rejection. Arbitration Committees for settling disputes and mis- understandings which may arise in the course of fulfilling bargains concluded " on Exchange " consist of a certain number of members elected annually by general meeting of the Exchange Committee. In Russia Arbitration Com- mittees exist in Odessa, Libau, Riga and at the Kalashni- koff Grain Exchange. At the present time the instructions drawn up for the Arbitration Committee lie under the very great disabilit}' of their decisions not being obhgatory. Quotation Committees formed of members of the ex- change are elected by this institution. They are under the presidency of one of the members of the Exchange Com- mittee, who is in turn elected by the latter, and one of the senior exchange brokers must participate. The duties of the Quotation Committee are the drawing up of a quotation sheet on the basis of information received daily from the brokers after the closing of the exchange. The exchanges have their central representation in the form of the " Council of the Congress of Representatives of Exchange Trading and Agriculture," chosen at the Con- gress by the representatives of exchange committees with the participation of other commercial organizations. At these meetings questions of a general economic character affecting the existing interests of trade and commerce are also discussed. So, for instance, at the extraordinary Pan- Russian Congress of Representatives of Exchange Trading and Agriculture, which was held in Petrograd from the 5th to the nth of April, 191 5, there were discussed, amongst others, the following important questions of State interest : V ^90 RUSSIA : ITS TRADE AND COMMERCE. the question of the foreign exchanges in relation to prices of merchandise and the external trade of Russia, the requisi- tion of merchandise for the needs of the Army and Fleet, the fixing of prices by Obligatory Orders, measures for develop- ing the export and import trade of Russia through ports of the White Sea, the transfer to Russia of the fair trade which is carried on abroad in Russian products, measures for re- placing in our markets manufactured goods of German and Austrian origin by the Russian manufactures and those of the Powers in friendly relations with her. Syndicates Trade in metallurgical and some chemical products is in the hands of special syndicates for the regulation of their sale. Of the largest syndicates we may mention the following : (i) "Produgol " ; (2) " Prodameta " ; (3) Provoloka " ; (4) " Krovlia " ; (5) " Mied " ; (6) " Prodvagon " ; (7) " The Agreement of Locomotive Builders " ; (8) " Drojki " ; (g) " The Settlement Bureau of Super-Phosphate Works of the Vistula Region " ; (10) " Agreement of the Manufacturers of Sulphuric Acid in the Vistula Region." Of these syndicates, seven exist in the form of joint stock companie's which conclude contracts with their share- holders as to the exclusive right of selling their goods. The " Agreement of Locomotive Builders " was organized in the form of a " Council of Representatives " temporarily, until such time as the Statutes of the " Association for Trading in the Manufactures of Russian Locomotive Build- ing Works " was confirmed. Syndicates Nos. g and 10 have fixed agreements as to granting to each works a definite share in the total sales and as to the formation of a " Settlement Bureau " from among the representatives of the works, for settling accounts in connexion with the sales made under this agreement. The cost of transport, the supplies, discounts and loss on credit are shared between the works proportionately to the amount of their sales, but the prices and other conditions of sale arc fixed by the works themselves. THE INTERNAL TRADE OF RUSSIA. 291 The metallurgical industry, created by means of a whole series of protective measures (the system of premiums on output of rails and locomotives) and supported by Govern- ment contracts, established itself on a firm footing after the construction following the great demand for rail- roads. With the passing of the period of feverish railway build- ing and system of " premiums," Russian metallurgy was faced with the necessity of meeting the demands of factories, towns and the general public. Since that time the position of Russian towns has changed for the better and the peasants' requirements in the way of ironware has increased ; the growing and flourishing machine industry in Russia requires cast and assorted iron. Finally, iron is at the present day being more widely used for building purposes and " \\'ooden Russia " is disappearing ; the market for metallurgical products has been firmly established and is at the present time quite important. In former times, when the chief supplies of iron came from the Urals, the trading centre for these products was the Nijne-Novgorod Fair. In the sixties the fair was the cen- tral metallurgical market of Russia, almost all the iron and copper of the Urals and a great part of the products of the Moscow district, being sold there. To-day, however, it has only a local signiiicance as a market. The Zemstvos occu- pied themselves, until quite recentl}^ with the sale of iron and the supply of roof iron and agricultural machinery to the people on one or two years' credit. But this service is not organized on a commercial basis, the village stores are financially weak and, notwithstanding their number (about 400), cannot be a significant factor in the home sale of metal- lurgical products. The supply of these articles has now been concentrated in the hands of the two above-mentioned syndicates, " Prodameta " and " Krovha." The Company for the sale of products of Russian metal- lurgical works, popularly known in Russia under the title of " Prodameta," was formed in 1902 with the object, as the Statutes state, " of trading in cast-iron, steel, iron and in general, all kinds of articles of the metallurgical industr}^, 292 RUSSIA: ITS TRADE AND COMMERCE. both on its own account and on the ba.sis of instructions." At first it occupied itself with the sale of sheet iron, this being followed by the sale of the chief . market product — assorted iron. The relations between the " Prodameta " and its agents, that is, the works which transfer to it the right of sale, can be described as follows : — Each agent enters into a contract with the Company " Prodameta " by which it transfers to, the latter, on com- mission basis, the exclusive right of selling a given product in the Russian Empire and acquires the right to a certain part — preliminarily agreed upon — of the orders received by the Company, calculated on the scale of production and sales of the given product before the contract was entered into with the Company. The average basic price is cal- culated on the total receipts and the total sales for all the agents (or works) supplying the given class of products. On the basis of this average price, the sum due as pa3^ment by the " agent " in favour of the Company or by the Com- pany in favour of the " agent " is arrived at. Each " agent " is a shareholder of the Company, and dur- ing the whole period of existence of the contract relations, such agent has not the right, without permission on the part of the company, either to transfer or to sell his shares. If a new agent enters the Company, the existing agents are obliged to cede to him a certain nimiber of the shares. In case of cancellation or non-renewal of a contract, the agent concerned is obliged to cede his shares to the remaining agents of the Company. The agents of the " Prodameta " are enterprises occupied in the production of all kinds of iron goods ; the Syndicate at the present time sells sheet-iron girders, wide bars, longitudinal sleepers, fish plates, axles, assorted iron of all denominations, and rails. It counts amongst its members ironworks in the south, in Poland, the Baltic Provinces, Central Russia Volga region, and even in the Urals. During the last few years the " Prodameta " Company has booked the following orders (in thousands of po^ds) : — THE INTERNAL TRADE OF RUSSIA. 293 1911. ....... 106,887 1912. ....... 117,890 1913- • 147.679 1914 114.556 The Company does not participate m the export of rails abroad ; this export is regulated by an International Syndi- cate, which is managed from London. The second large organization of the syndicate type is the Joint Stock Company " Krovlia," in which Ural pro- ducers of roof iron participate exclusively. This Syndicate is made up of the following works : Alapaevsky, Kamsky, Stroganovsky, Verch-Isetsky, Shuvalovsky, Bieloretzky, Demidovsky and Kyshtymsky, and is a general commission agent for those participating in the association. The whole of the iron turned out by the works is placed at the disposal of the Company and sold by it independently, in its own name, there being paid to the works for the merchandise sold not less than " the direct basic prices," agreed on in advance, and fixed by a council consisting of repre- sentatives of all the participating works. The sales are divided between the works in proportion to the extent to which they participate in the total sales according to contract. The " Krovlia " Company does not play such an import- ant role in the iron markets of the Empire as the " Proda- meta," and its importance in relation to its outside firms is less. The " Produgol," which has united in a common agree- ment 60 to 65 per cent, of the output of the Donetz Basin, is a very important factor in regulating the Russian coal jnarket. The stimulus towards uniting the coal-mining companies of South Russia, who have not the right to issue bonds and are largely financed by foreign banks, was given in 1 901 and 1903, when coal prices fell. Notwithstanding abuses on the part of syndicates, which are the subject of frequent unfavourable comment, their value in countries which are poor in private capital must be recognized. 294 RUSSIA: ITS TRADE AND COMMERCE. Banks in Russian Trade The financing of trade in Russia is in the hands of " general " banks. We use the word " general " in view of the fact that there have been repeated attempts to estab- lish special banks in Russia : grain, sugar, milling trade and others. The grain bank was on the point of reaHzation, and had for its chief object the placing of Russian grain on the international grain market, with which it is united by numerous middlemen and commission agents, for the most part Germans. The general financing of the grain trade is facilitated in Russia by the great importance attached to railway freight bills, which have won popularity as bankers' warrants, that is, documents which can be pledged with banks. Owing to the fact that bankers began to issue loans on a la,rge scale against such documents (as much as 80 to 90 per cent.) the grain trade has been democratized and a great number of small firms created. Banking commission operations have also developed ; the banks began to receive important lines of goods for sale on commission. Their participation in such dealings, how- ever, has been protested against by traders, who point out that such transactions are not authorized by the statutes of the banks. Eor instance, at one of the Pan-Russian Congresses of Representatives of Exchanges, the following resolution was put : I. Banks are forsaking the original object for which they were incorporated- — the financing of trade and industry, and arc endeavouring to acquire the right to trade on their own account. Such activities on the part of banks are not authorized by the law, and are being developed at the ex- pense of deposits and capital of third persons, which money was placed at the disposal of the banks for other purposes. 2. The continuation of their activities in this direction will deprive the banks of their position as institutions lending support to trade, and make of them competitors, which will have regrettable results as it threatens the stability of the markets and will surely disorganize trade. THE INTERNAL TRADE OF RUSSIA. 295 During the deliberations of the members of the Congress of Representatives of Exchanges and Agriculture on April 6, 1910, the representatives of the banks furnished ex- planations with regard to their commission activities. They recognized the participation of banks in trading transac- tions, but affirmed that the charge brought against them had not its origin in a desire to protect the interests of the State, but was calculated to serve the interests of commer- cial circles which were dissatisfied with the competition on the part of the banks. There is no ground, as one of the representatives put it, to accuse the banks of having de- tracted from the prosperity of Russia ; on the contrary, they have aided in creating the present satisfactory condi- tions. It is well known that numerous competitors ensure benefit to certain classes of the population, let us say land- owners and agriculturists. Formerly business was in the hands of a few dozen, or perhaps a hundred merchants, who, enjoying a monopoly, fixed their own prices, but at present the competitors number thousands and the State can only reap an advantage thereby. It is beyond doubt that banks as competitors deprive certain firms and persons of profits, and influence the pros- perity of separate groups and regions. For Petrograd and Moscow, which have many large merchants, this has not the importance that it has in the South, where exporters often do not fulfil their obligations. The southern branches of banks admitted to one of the representatives at the meet- ing in question, that they do not work on their own account but on instructions from third parties. If, for instance, an order is received from Italy for a given number of poods, the grain is purchased, the freight guaranteed and the grain shipped. On this point we have grounds for supposing that this business is not purely of a com- mission nature but that the bank purchases for its own account. Any control of banks in this direction is very difficult. The point is that a commission agent is always responsible to third parties, but no one knows whose interests he repre- sents. 296 RUSSIA: ITS TRADE AND COMMERCE. The internal trade of Russia has not yet been sufficiently studied, but it is clear that its successful development and prosperity are dependent on the carrying through of meas- ures fundamentally aifecting present methods and calculated to improve its conditions, a proper organization of the formation of joint-stock companies, and the passing by the legislature of laws carrying out projected reforms. But with these difficulties which stand in the wa}^ of Russian trade, and the dearth of capital to develop the productive forces in a degree corresponding to Russia's natural re- sources, and the requirements of her population of 180 millions, we must recognize the fact that Russian trading circles have not yet adapted themselves to the needs of the present day. The Russian merchant is not endowed with the spirit of enterprise which is necessary for the develop- ment of present-day trade. He is hindered by lack of know- ledge and by the habit of looking to the (iovernment for support and guidance. Under the old methods, Russia attained its present system of trade — small sales but sure profits — whilst economic requirements have created a new type of trade, based on large turn-overs and small profits. The war will undoubtedly give a fillip to Russian com- mercial men by intensifying their activities. The move- ment to free Russian markets from (ierman goods, which began with the outbreak of war, will result in the creation of a national trade and industry, and in placing on the mar- ket larger quantities of the products of countries friendly to Russia. Such countries must, on their side, display some initiative. English, French and other merchants who desire to take advantage of our markets, after they have been freed of the Germans, must adopt the methods of doing business with which the Germans have developed their foreign trade. The attention of English, French, Belgian and other merchants must especially be directed to the proper ecpiipment of commission agents, the study of local conditions and the possibility of meeting those conditions in the way of quality and price, to the prompt and careful execution of orders received, and particularly to the granting of more favourable credit conditions. THE INTERNAL TRADE OF RUSSIA. 297 In this respect, the report of the British Consul in Batoum published — February 11, 191 5 — in the Journal of the Board of Trade, No. 950, is of special interest. He states that, in the opinion of local trading circles, the sending of samples of English goods is useless, as the traders have be- come accustomed to frequent visits by German commercial travellers, who explain in detail the qualities and advan- tages of their goods. It is his opinion that English mer- chants should sendcommercial travellers, speaking Russian, to study local markets. CHAPTER XIII The Foreign Trade of Russia By M. Soboleff The development of her foreign trade has ahvays been a matter of vital concern to Russia. She has seen therein, not only a means of supplying herself with goods not pro- duced in her own country, but of selling her own surplus abroad. During the period of the supremacy of Kieff, trade was organized between the Slavs and Constantinople, with the Khazars in the region of the lower course of the Volga, the Don and the Kuban, and with the Bulgarians who lived along the middle part of the Volga and the Kanra. In those early days, before the eleventh century, the Slavs who in- habited the extensive plain of Eastern Europe exchanged their raw produce, furs, wax, leather and hone}^ for manu- factures of precious metals and stones, spices, wine, incense, silk, woollen and cotton fabrics. Somewhat later, in the twelfth century, the Russians began to trade with the (icrmans, chiefly with the Hanseatic League. The centre of Cierman trade was Novgorod, where a special building, a so-called " Dvor," was erected for the stocks of foreign goods, and as a dwelling-place for the for- eign merchants. Here the Germans brought cloth, wine, salt, metals and metal manufactures, and the people of Nov- gorod sold furs, flax, wax, honey, hops, leather, timber and tar to them. For several centuries the exchange of Russia's raw ])roducc for foreign manufactures and articles not pro- 298 THE FOREIGN TRADE OF RUSSIA. 299 duced in Russia was entirely concentrated in Novgorod, but trade could not be developed to any great extent as it depended upon the inland waterways and roads. A great need was felt for a sea route, and the first attempt to trade with Russia by sea was made by the English in the sixteenth cen- tury, when a route was opened via the Arctic Ocean and the White Sea. In the middle of the sixteenth century a com- pany was formed in England " for the search of the North- east Passage to India." In 1553 this company equipped an expedition of three vessels under the command of Sir Hugh Willoughby and Richard Chancellor. A storm scat- tered the vessels, but one ship under the command of Chan- cellor was saved, entered the White Sea, and reached the Russian coast. Chancellor told the inhabitants that he had been sent by the King of England, Edward VI, with presents to the Russian Tzar, and with a proposal to estab- lish commercial relations. He went to Moscow and was received in audience by the Tzar, John IV, to whom he handed a letter from his King. The letter stated that " God had bestowed on men the desire to hold intercourse with each other. Our fathers," it continued, " gave most hospitable reception and showed the greatest gratitude to all who came on friendly terms to them from far and near. More especially is it desirable to act thus towards traders who travel over the world, sail over the seas and traverse the deserts in order to bring to distant countries useful arti- cles from their own country, and to take back from there whatever they are in need of. . . . One country requires the help of another, a nation needs the goods of other na- tions, whereby friendship and mutual assistance is estab- lished between peoples." The letter further asked for permission and assistance to be given to the English mer- chants to travel through Russia, and promised the same help to Russian subjects in England. John IV received the English merchants very graciously ; he saw in this new route an easy way to communicate with Western Europe, especially acceptable as at that time the way through Poland was extremely difficult. He gave the English vessels permission to bring goods to Russia 300 RUSSIA: ITS TRADE AND COMMERCE. and to trade there, and asked that representatives might be sent from England to draw up trading regulations. In 1 555 Chancellor again j ourneyed to Moscow by the White Sea, and received from the Tzar permission to trade freely in all goods throughout the whole of Russia. In March, 1556, the Governor of Vologda, Nepeia, was sent as ambassa- dor to England, and arrived there in 1557 after many mis- fortunes. Nepeia obtained from the English Government permission for Russian merchants to go to England and to trade without paying duty. Several houses in London were allotted to these Russian merchants for themselves and their goods. In 1567 Jenkinson succeeded in obtaining from John IV the monopoly for the London Trading Company to trade with Russia by way of the White Sea. The company obtained the right to erect special trading establishments in Moscow, and to establish warehouses in other towns. In 1584 the port of Archangel was founded on the coast of the White Sea, and most of the sea-borne trade was concentrated there. Such was the origin of Anglo-Russian trade. Simultaneously with the establishment of trade via the White Sea Russia was able, by the capture of Narva in 1558, to trade with the countries of Western Europe by the Gulf of Finland and the Baltic. In 1581 Russia was obliged to give up Narva to Sweden, and this route was closed to Rus- sian trade with Europe. John IV wished to take advantage of the commercial re- lations with England for the purpose of concluding a political alliance, but England did not wish to quarrel with Poland and Sweden, who were at that time Russia's chief enemies, and John's proposals were declined. As a result, England was deprived in 1574 of her monopoly with Russia. Nevertheless trade continued to flourish and develop. The English had offices and warehouses in Mos- cow, Novgorod, Vologda, Kholmogory and Archangel. They brought to Russia cloth, silk fabrics, haberdashery, metals, sugar and paper, and imported from Russia furs, leather, flax, hemp, rope, tallow, blubber, timber, pitch and tar. THE FOREIGN TRADE OF RUSSIA. 301 In the eighteenth century the English merchants lost the right of free trade with Russia, and their goods were sub- jected to a customs duty, on equal terms with those of other foreigners. In spite of this the English continued to play a very important part in the foreign trade of Russia. After this Russia continued her attempts to reach the sea and thereby secure a cheap and easy means of com- municating with foreign countries. The conquest of the Baltic coastline by Peter the Great at the beginning of the eighteenth century established a sea-borne trade with Wes- tern Europe by a more direct route. A series of seaport trading towns sprang up : Petersburg, Riga, Revel, Narva, Wiborg. During the reign of Catherine II Russia obtained access to the Black Sea and the Sea of Azov, and by the treaty of Kainardji with Turkey in 1774 Russia acquired Export Import Turnover Year In millions of rouble JS 1742-45 • • . 4-9 3-9 9 1763-65 12 9-3 21-3 1786-90 28-3 22-3 50-6 1802-07 63 51-5 II4-5 1812-20 208-2 147-2 355-4 1821-30 2l8-I 191-1 409-2 1831-40 251-1 207-1 458-2 1841-50 97-8 85-9 183-7 1851-60 129-3 119-2 248-5 1861-70 222-7 225-9 448-6 1871-80 454-8 488-2 943-0 1881-90 622-2 471-8 1,094-0 1891-900 659-8 ^ 535-4 1,195-2 1900-10 1,073-1 887-4 1,960-5 I91I I.59I-4 1,161-7 2.753-1 I912 . 1,518-8 : 1,171-8 2,690-6 1913 • 1,520-1 1,374-0 2,894-1 I914 . 956-1 1,098-0 2,054-1 I915 . 397-2 1,114-0 1,511-2 302 RUSSIA : ITS TRADE AND COMMERCE. the ports of Azov, Taganrog Kertch, Enikale, and Kin- burn. Once firmly established on the Baltic and Black Seas, Russia's foreign trade grew rapidly. The increase in the turnover is shown on page 300. It is interesting to note the comparative rate of growth during the nineteenth century. Tabulating in periods of twenty-five years, the following averages (in millions of roubles) are arrived at : — Increase on Year Export Import Total the first 25 years 1800-24 . 64-1 48-2 II2-3 100 .1825-49 • • • II2-I 100 -I 212-2 189 1850-74 . . . 261-4 263-9 525-3 467 1875-99 . . . 596-1 495-9 1,092-0 972 1900-13 . 1,148-4 943-4 2,091-8 1765 Foreign trade during the second half of the nineteenth century was 89 per cent, greater than that of the first half. The turnover of the third quarter was 148 per cent, greater than that of the second quarter ; the turnover of the fourth quarter 108 per cent, greater than that of the third, while the turnover during the beginning of the twen- tieth century was 192 per cent, greater than during the last quarter of the nineteenth. Thus the beginning of the twen- tieth century marks the most intensive growth of Russian foreign trade, and displays Russia in flourishing commercial relations with foreign countries. During the last hundred years, a great change has taken place in the nature of Russian imports and exports. The proportion per cent, of the various groups of goods imported and exported was as follows : — THE FOREIGN TRADE OF RUSSIA. ^03 Imports Exports I 802-04 1896-98 1908-12 1 802-04 1896-98 1908-12 Food Stuffs 39-0 17-3 19-1 19-4 58-2 6o-8 Raw Materials and partly manufac- tured Articles , 24-0 527 48-5 70-1 35-5 33-1 Animals .... 1-8 0-6 0-9 2-1 2-3 17 Manufactures . 35-2 29-4 31-4 8-4 4-0 4-4 At the beginning of the twentieth century, raw material constituted the largest exports, but at the present moment, food stuffs, chiefly grain, occupy the first place. The principal imports at the beginning of the nineteenth century were food stuffs (colonial produce) and manufac- tures. At the present time the chief imports are raw materials and partly manufactured goods, and after these, finished manufactures. During the first half of the nineteenth century foreign trade was chiefly sea-borne, but afterwards, with the con- struction of railways and the increasing trade relations with Germany, much of it, especiall}^ imports, was carried over- land. The overland trade of Russia stands in the following pro- portions (percentages) to the total foreign trade of Russia :— Years Exp< :irt Import 1802- -04 ... . 12 per cent. 22 per cent. 184I- -50 .... i8-5 ,, 25-5 ,, 1871- -80 .... 29-5 ,, 39 ,, 1881- -90 ... . 27-5 ,, 43-5 ,, 1909- -13 ... . 27-1 " 53-8 " In the overland trade the Austro-German frontier is of chief importance ; in the sea-borne trade exports are divided 304 RUSSIA: ITS TRADE AND COMMERCE. between the Black Sea and the Baltic, while imports come principally via the Baltic.^ Variations in the sea-borne trade may be seen from the following table : — Exports 1846-50 White Sea . . . 5-6 Baltic . . . . 60 -6 Black Sea and Sea of Azov .... 33-1 Caspian Sea . . 0-7 Pacific Ocean . . — 1896-99 1-9 38-6 57-3 2-2 1911-13 2-9 44-9 49-5 2-4 0-3 Imports 1846-50 • 0-5 83-7 13-5 2-3 1896-99 1911-13 0-5 68-7 27-5 3-3 0-8 69-2 15-7 3-8 10-5 ^ The war lias brought great changes, by closing the outlet through the Baltic and the Black Sea and the Austro-German frontier ; it has intensified enormously the imports of war material through Archangel and Vladivostok and through Scandinavia. Following figures are interesting : — Million Roubles. European frontier Black Sea and Caucasus Asiatic Frontier . Trade with Finland Exports Imports 1,232-8 132-9 99-2 55-3 1914 1915 706-1 181 -3 1,146-3 104-3 — I 18-3 90- 83-3 j 153-5 55-7 132-6 ; 56-0 854-3 22-4 158-9 62-4 429-1 1-4 439-8 243-7 During the war, export has been greatly restricted, imports have maintained themselves. Million Roubles. Imports Exports 1913 1914 1915 1913 1914 1915 Food Stuffs Raw materials Manufactures . Animals .... 163-0 622-5 431-9 3-1 120-9 472-0 343-8 2-4 25-6 297-3 300-4 0-9 807-2 550-3 30-4 33-0 492-1 339-1 22-0 12-9 1 69- 1 130-6 1 4- 1 0-0 1,220-5 939-1 674-2 1,420-9 866-1 331-8 THE FOREICxN TRADE OF RUSSIA. 305 The following table shows the number of vessels which arrived in Russian ports from abroad :• — 1802 1850 1900 1913 Tonnage 551.272 i>233,350 8,679,000 16,478,000 Since the beginning of the present century the predomin- ance of England in the carrying trade of Russia has been somewhat diminished by the increasing share of Swedish, Norwegian and Russian vessels. The comparative tonnage of vessels of various national- ities which entered Russian ports is given in the following table :— Nationality 1802 1850 1900 1913 British 367 Russian 6-2 German 27-2 Swedish and Norwegian. 8-o Danish '^•2 Italian — French 1 0-5 36-4 36-5 267 I5-I II-8 17-5 «-5 12-8 137 3-4 8-5 13-6 i-o 9-8 6-8 5-4 4-5 4-4 1-8 3-0 27 At the present time, some Russian traders are greatly in favour of rendering Russia completely independent of foreign markets. The supporters of this independence believe that Russia can already develop her industries sufficiently to supply the home markets with agricultural produce and to furnish consumers with all the requisite manufactures. This point of view pre-supposes a state of ai^airs nothing short of Uto- pian. No matter how rapidly our manufacturing industries are developing they would be unable either to consume the 3o6 RUSSIA: ITS TRADE AND COMMERCE. surplus products of agriculture or to cover the home demand for manufactures. There is no doubt that the interests of Russian agriculture require the greatest possible develop- ment of our industry. But in order to create an industry capable of supplying the home market, it is necessary to have capital to invest in industries, qualilied business management and skilled labour. To bring about these conditions will take some time. Russia requires many goods which are not produced in the country or are produced only in small quantities. Her climate precludes the production of commodities such as tea, coffee, cocoa, spices, jute, rubber, etc., and cotton, wool, many metals, chemicals, dyes and machinery can only be produced in limited quantities. Owing to the scarcity of capital in Russia, imports cannot be paid out of the revenue received from capital invested abroad — the only source of payment for imports is a corre- sponding export of Russian products. As the Russian home market does not dispose of the enor- mous quantity of home produce, the urgent need for export arises. For this reason Russia exports grain, bran, oil-cakes, hides, butter, eggs, sugar, cattle, pigs, wool, spirit, kerosene, hemp, timber, peltry, caviare, bristles, platinum, etc., etc. A highly developed export trade makes it possible for Russia to solve the problem of her balance sheet in a more or less satisfactory manner. She has not only to pay for her imports and the interest on foreign loans (up to 300 million roubles amortisement), but she has other obligations to meet — the services of foreign vessels for the transport of goods to and from her ports and the expenses of Russian agents abroad. If the value of Russian exports docs not cover all these payments, Russia is in danger of her gold going abroad. The only means of avoiding this danger to the money market is the attraction of foreign capital in the form of State and municipal loans and for investment in Russian industrial concerns. The latest commercial policy of Russia which rules the THE FOREIGN TRADE OF RUSSIA. 307 foreign trade is subjected to certain guiding principles. First of all, as we have shown, the Government is interested in securing a satisfactory balance sheet, either by excess of exports over imports or by the reduction of imports conse- quent upon the levy of a high customs duty. In order to increase exports, varied and complicated measures of fin- ancial policy are necessary and the alternative course is much the easier. The Russian Government has resorted to it more than once, the most obvious instance being at the end of 1876 when the law required the payment of customs duty in gold currency at its nominal value instead of in paper money. This was equivalent to an increase of the customs duty of about 50 per cent., as the market price of a gold rouble was i rouble 48 cop. to i rouble 50 cop. of paper money. The law of 1876 was introduced as a means of stopping the growing influx of foreign merchandise. With the same object laws were passed at the end of last century increasing the amount of the customs duty. But the only effect of lessening imports was to restrict the pur- chase of home products by foreign countries and it seemed more desirable to increase exports. By this method new openings for Russian produce on the international markets arise and an impulse is especially given to agriculture. Another influence upon the customs policy of Russia is the condition of the State Treasury. In its search for additional sources of State Revenue, the I\linistry of Finance has long turned its attention to the taxation of articles of consumption. Russia has a customs tariff with 218 paragraphs, many of which are subdivided, so that the total number of tariff rates amount to over a thousand. A number of customs duties have a purely fiscal character, as they neither serve to develop or support any home industry. Several of them yield a very considerable revenue. The duty on tea yielded in 1 91 3 73 million roubles, rice over three millions, oranges and lemons 6-3 millions, coffee 4I miUions, butter and gutta-percha over one million, olive oil one million. Other customs duties are protective, but bring in revenue at the same time, as the import of the goods on which this 3o8 RUSSIA: ITS TRADE AND COMMERCE. duty is levied does not diminish but often increases. Such products are cotton, coal, coke, many metals and metal manufactures, machinery and so forth. The result is a. steady growth in the customs revenue shown as follows : In 1822 . 157 million In 1880. 104-9 niillion roubles. roubles. In 1840 . 417 In 1900 . • 2097 In i860 . 49-9 In 1910 . . 318-6 „ In 1913 . . 377"i million roubles. The third principle actuating the customs policy of Russia is the protection of home industries. The Russian customs tariff is applied to the protection of a large proportion of home industries, beginning with agriculture and mining and ending with manufactures, such as machinery, musical in- struments, etc. The history of the customs policy of the last quarter of the nineteenth century shows cases of a high protective tariff being introduced for branches of industry which were only in their infancy or even on the point of starting ; for instance, in 1886, a duty of this kind was put upon super-phosphates and in 1887, on hops. Protection in Russia has been gradually increasing. By expressing it in terms proportionate to the value of the goods imported, this proportion stood in 1853 at 33 per cent.; under the influence of the lower customs duties in the tariffs of 1850, 1857 and 1868, it dropped in 1870 to 13 per cent., while from 1876, when the higher customs duty was renewed, the proportion began to rise steadily. In 1880 it stood at 16 per cent. ; in 1890 at 287 per cent., in 1900 at 32-5 per cent., and in 1913 at 28 per cent. Comparing the rates of imi)ort duty in Russia with those of other countries, it appears that customs duties arc highest in Russia. In 1 91 2 the duly on imports into the United Kingdom constituted 57 per cent, of their value, into Austria-Hun- gary 7-5 per cent., Germany 8-4 per cent., France 8-2 pei cent., Italy 9-8 per cent., the United States 18-5 per cent., and Russia 28 2 per cent. The fiscal element of the Russian customs tariff is most The foreign trade of russia. 309 clearly seen in the high duty on food-stufis which is levied for financial rather than protective purposes. In 1898-1902 ■the percentage of duty formed 85 per cent, of the value of the imports, in 1903-1907 88 per cent., and in 1908-1912 71 per cent. A higher rate of duty on this class of goods is only to be obser\'ed in the United Kingdom where customs duties are in general levied for purely fiscal purposes (viz. 100 per cent, in 191 2 as compared with by per cent, in Russia). A characteristic peculiarity of the Russian customs tariff is the high duty on raw materials and partly manufactured articles. Until the eighties of the nineteenth century the duty on raw materials was very low as the Government was trying to develop the manufacturing industries and wished to supply raw materials for these industries as cheaply as possible. The chief argument put forward by the Finance Ministry in favour of high customs duties was that with the introduction of steam transport by land and sea, the expenses of transport of bulky raw materials had so much decreased that they ceased to have the efxcct of protecting home manufactures from foreign competition. Gradually the customs policy of Russia extended its protection to coal, cotton, wool,. wood pulp, ores, iron, steel, copper and other metals, whereby home productions were greatly encouraged. The customs duty on raw materials and on partly manu- factured goods is considerably higher in Russia than in other countries. The amount of the customs duty on these imports in relation to the value of the goods stood at an average of 30 per cent, in Russia between 1898-1902, at 27 per cent, between 1903-1907, at 24 per cent, between 1908-1912, and at 22 per cent, in 1912, whereas in Germany in 1 91 2 it stood at 3 per cent., in France 3 per cent., and in the United Kingdom o-i per cent. If certain articles are taken separately then the high rate of duty becomes more apparent : on thin sheet iron, 106 per cent., on thick sheet iron, 78 per cent., on steel bars and shaped steel, 79 per cent., on pig iron in bars and scrap, 58 per cent., on copper in pigs and ingots, 43 per cent., on raw cotton, 39 per cent., on raw jute, 30 per cent, (figures for 191 3). 310 RUSSIA: ITS TRADE AND COMMERCE. Trade of Russia with Foreign Countries The share of different countries in the foreign trade of Russia is not equal and has undergone considerable changes in the course of time. Their participation in Russian foreign trade is given in the following table : — 1 1846-1848 1896-] [898 1908- 912 1913 H-l '^ ! - HH . ! . ' "3 ?? c a 2-^ i 2-^ 3 0x1 •S-S ^ a; ' 3 0) 1 --c u ■^ 3 ^ l-l ^^ ^ i Sp:i Ph ^^ Ph §« Oh United Kingdom 96-5 33-6 260-9 20-0 437-8 17-9 440-8 15-2 Germany . 32-8 II-4 370-3 28-4 836-5 34-2 1105-8 38-2 France 28-3 9-8 88-6 6-8 139-3 5-7 157-9 5-4 China. 19-4 67 46-1 3-5 105-4 4-3 115-6 3-9 Holland . . . 17-6 6-1 84-0 6-4 181-7 7-4 198-8 6-9 Italy .... 12-0 4-2j 51-0 3-9 70-7 2-9 906 31 Austria-Hungary 107 371 591 4-5 91-4 3-7 lOI-O 3-5 United States . 8-9 3-1 57-0 4-4 91-4 3-7 93-3 3-2 The table deserves most careful analysis, how changes have occurred in the trade relations in almost all the coun- tries. The most important fact is that at the beginning of the present century, Germany, in her trade relations with Russia, occupied the predominating place. This was de- trimental to the United Kingdom which had the principal share in Russian foreign trade up to the end of last century and also to other countries (France, Italy, Austria-Hungary and the United States). Germany succeeded in eclipsing all other countries, and possessed about two-fifths of Russian foreign trade. At the same time, the United Kingdom, which up to the middle of the nineteenth century had two- thirds of Russia's foreign trade in her hands, has now but one-sixth, although the absolute totals of Anglo-Russian trade have increased four and a lialf times. Of all the countries which play a part of any importance in the foreign trade of Russia, China and Holland only have THE FOREIGN TRADE OF RUSSIA. 311 retained their relative positions, which, however, are small. China owes this chiefly to her tea trade, and Holland to her position as broker for certain kinds of colonial produce and other goods. The dominating position of Germany has given rise to a lively discussion in the Russian press during the last few years of the so-called " German influence," and the necessity for Russia to free her foreign trade from this one-sided in- fluence. The war has clearly shown to the Russian people and the Russian Government the fruits of this peaceful con- quest by the Germans of the Russian market and Russian trade : Russia was placed thereby in a most difflcult position in the matter of obtaining a large number of manufactures hitherto supplied by Germany. These goods had to be sought for on other markets, such as the United Kingdom, France, Sweden, Denmark, Japan and the United States, and to be heavily paid for. An analysis of the details of Russian foreign trade, taking exports and imports separately, shows with great clearness the economic dependence of Russia on Germany, in the matter of imports. During the years 1908-1912 Germany's share of our imports was 41 -6 per cent., and in 1913 47-5 per cent., that is to say, almost half of the foreign goods imported into Russia were German. It is true a certain portion of these goods were merely resold by Germany (coffee, cotton, dressed hides, and certain metals), but this fact does not in any way diminish the importance of the astonishing proportions given above. In the years 1908-1912 the United Kingdom exported to Russia 13-4 per cent, of the value of Russian imports, and in 1913 only 12-3 per cent., yet the United Kingdom occupies the next place after Germany in the matter of imports. Imports from other countries were insignificant (from i to 6 per cent.). Germany's share in Russian exports is some- what less. In the years 1 908-1 91 2 exports from Russia to Germany constituted 286 per cent., and in 1913 29-8 per cent. Exports to the United Kingdom during these periods were 21-3 and 17-6 per cent, of the total. Holland took 11 -8 312 RUSSIA: ITS TRADE AND COMMERCE. per cent, of Russian exports in 1908-12 and 117 per cent, in 1913. The expansion of trade relations with the AlHed countries will be a most important part of the modern commercial policy of Russia. The " rapproche- ment " is to the interests of both parties. It is important to Russia that her exports should not be sent principally to one country ; by supplying the markets of a number of differ- ent countries she can retain greater economic freedom and obtain better prices. ^ It is also desirable for the above-named countries that they should find in Russia a market for their manufactured and partly manufactured goods, and it is much more to the advantage of these countries to receive Russian goods direct from Russia and to avoid the costly brokerage of Germany. 1 The following figures give the trade with several foreign coun- tries : — Million Roubles. England France . Sweden . Roumania . United States Norway Denmark . Italy . . . Holland Germany . Belgium Austria- H iingary Turkey Spain . Egypt . . . Exports 1913 267 lOI I I 22 14 6 36 74-8 177 453 64 63 39 9 1914 56 6 13 8 5 18 40 95 249 49 39 14 7 4 150 17 5 3 3 0-4 0-4 0-2 O Imports 170 56 •16 I 74 ID 13 16 24 643 8 34 17 6 6 1914 167 43 II . 2 77 7 7 15 19 419 5 23 9 4 7 228 29 54 I 151 6 7 8 8 23 0-6 I 06 0-8 0-2 There has been no import from Germany and Austria. The figures of 1915 relate to goods taken out of customs warehouses. In 1913, Germany imported 53 per cent, of the total imports, in 1915 the first place was taken by England, the United States, Sweden. Through Vladivostok passed in eleven months over 261 million roubles. THE FOREIGN TRADE OF RUSSIA. 313 The problem of developing such trade connexions is not, however, so easy as it might seem at first sight. At the present moment, of course, the Russian market is free from the influx of German goods and is in need of many imported articles. But this lack of imports cannot mechanically be filled up by goods from other countries. In order to sell Russian goods in other countries than Germany, a certain commercial organization is necessary without which the most ardent and best wishes will remain without results. The example of Germany itself must be followed. We know how cleverly commercial organization was established in Germany, by what skilful means the Germans succeeded in securing new markets for their merchandise and in driving out their competitors. The methods of Germany must be thoroughly examined and the reasons found why the Germans steadily oust the English and other nations from the markets of Russia, China, Turkey, Africa, etc. These methods must be adopted by those who wish not merely to fill up vacant gaps left at the present time by the war, but to estabhsh their position after it. Otherwise those prophets who assert that, after the war, the Germans will soon occupy the same commercial position and capture the same markets, may be proved right. Many causes helped the Germans to push the English out of the Russian market. There was first the German com- mercial organization. German manufacturers and exporters established an army of travellers who systematically visited old and new markets, entered into commercial dealings with the local traders and even directly with the consumers, showed samples of their goods, pointing out their superiority and advantages, concluded sales, and in this way found outlets for the goods of the firms the}/ represented. The presence of German commercial travellers became a matter of every day occurrence throughout the Russian Empire. You met them in the capitals, in the south of European Russia, in the Urals, in the Caucasus, and in Siberia. They found their way everywhere, and by direct personal relations created a demand for German trade. Up to the present the English have made hardly any use of this important and 314 RUSSIA: ITS TRADE AND COMMERCE. perfected weapon for the capture of trade markets. They stick to the old custom of remaining at home and waiting till customers come to them. Such a policy might be pos- sible as long as the English had command of the world's markets and had no competitors. Now, the world's markets are an arena, of a hotly contested fight among many competitors, in which the winner is he who shows the greatest amount of skill and energy in obtaining customers. If the English wish to be successful, they should make use of the method by which the Germans succeeded. Another important point is to adapt goods to the tastes, customs and fancies of the local inhabitants. Investigators such as Williams, Aubert, Blondel and others have shown how the Germans have succeeded by studying the tastes of the consumers and by adapting the appearance, colour, em- bellishment, packing, sizes, etc., of their goods to these tastes. The Germans find out what kinds of goods are required by and will please the consumers of a particular district. On several occasions Germany has sent special expeditions, of a scientific character to China, the Balkan Peninsula, Africa etc., to study the local markets and conditions of trade (amount and length of credit, buying seasons, etc.), and to collect samples. Cierman manufacturers and mer- chants took advantage of the results of these expeditions ; they sent the goods that were in demand to these foreign markets and effected their sale according to the local customs and conditions. Further, commercial museums, formed by the Government, and public organizations, export unions, and sample museums of exported goods created by private individuals, served the same object of giving information to (jcrman manufacturers and merchants. The former, being public organizations, gave wide publicity to the samples of goods which are found on the various markets of the world, indicating prices, cost of transport, customs duty, etc. The latter, having private interests in view, displayed samples of the goods of their members in order to extend their sale in a certain market, and also acted as intermediaries between German manu- THE FOREIGN TRADE OF RUSSIA. 315 facturers and foreign buyers. Again, an enormous amount of information about the requirements of various markets is collected by these commercial travellers who go all over the world on behalf of German firms. They become acquainted with market conditions, with the climate and soil of the country, with the tastes and habits of the people, with the conditions of transport and credit, with the customs tariffs, with the solvency of the people, and with the goods which up to then have been used, with those supplied by their competitors ; on the basis of this information they show the manufacturers what kind of goods should be supplied, in what form, what kind of weight, packing, colour, price, etc. German manufacturers pay great attention to the appear- ance, colour and other qualities of the articles in question, and immediately adapt their manufactures to market condi- tions. This explains the readiness with which German goods are bought almost ever3/where. In Russia, the Germans have most carefully complied with the market requirements and supply their goods accordingly, with labels in Russian. Advertising is also largely resorted to. German sellers distribute on a large scale illustrated price lists, printed in the language of the locality and provided with local weights, measures and prices. Large firms literally overwhelm their customers with price lists and catalogues. They make use of the local papers for the regular insertion of advertisements of their goods, and advertise by means of posters in public places, along the railways, etc. Amongst the general public this causes the names of German goods to be fixed in the minds of the people, and buyers become interested. Unfortunately, English manu- facturers and exporters hardly make any use at all in Russia of this powerful weapon of modern commerce. One of the defects of the English export trade to Russia is the too limited application of credit. The English are accustomed to deal either on a cash basis, or against an assured and sound credit to well-known and reliable firms. The Germans have long understood that one of the principal means of opening up sales on a new market is liberal and 3l6 RUSSIA : ITS TRADE AND COMMERCE. advantageous credit. The local purchaser, attracted by tlie possibility of receiving goods without having to pay cash, but on credit for a small interest and for a long term (say from nine to twelve months), takes goods which he would not otherwise have done. Once he has taken the goods the merchant in his turn does everything in his power to sell them to his customers. In this way German goods become firmly established on the market. German sellers when giving credit, inquire into the solvency of their clients either through their commercial travellers or through special inquiry agencies. They do not act blindly, but are guided by certain concrete information. They reckon that by granting very extensive credit, a certain percentage of unpaid debts will be more than covered by the profits accruing from highly developed commercial operations. Present day sales in Russia depend entirely on credit, without which it is impossible to do business. English manufacturers and exporters should reckon with this fact, and the same applies to English banks, which up to the present have looked upon credit operations in Russia with too much reserve. English banks wish to handle first-class bills only, and show great caution in discounting. On the other hand the capture of a market requires a certain amount of dash, some risk and disregard for routine. When crediting Russian customers it is necessary to bear in mind that the length of commercial credit in Russia is not the same as in England. In Russia the wheel of commerce turns more slowly than in England, trade turnover takes a longer time, especially trade in the depths of the provinces and on the outskirts of the Empire. Here the usual credit is from six to nine months, though a credit from twelve to fifteen months is also met with. Of course Russian mer- chants should in their turn do all in their power to improve the state of the bill market and the conditions of credit, and special ei'iorts in this direction should be made by the Russian banks. P'inally, another important factor which is necessary for successful sale of merchandise in Russia, is cheapness of goods. German manufactures maintain their hold on the THE FOREIGN TRADE OF RUSSIA. 517 market through their cheapness. Good quahty but dear manufactures can only be purchased by the well-to-do classes and such purchasers are not numerous. For the general mass of consumers, especially in comparatively poor countries, such as Russia, cheapness is of primary import- ance, and not the finish of the goods, or their outward appearance. It is more important for the general mass of the Russian purchasing public to be able to buy cheap woollen German cloth rather than the high quality but dear English cloth. The latter has a sale in Russia only amongst the wealthier classes, and does not find its way at all to the general public, as they have not the means to buy it. In the same way a large variety of cheap German metal goods have a ready sale in Russia. English manufacturers should give serious attention to the cheapening of articles exported to Russia. This could be attained by simplifying the finish and by using a cheaper quality of raw material in so far as this is possible without detriment to the goods. This cheapening need not be so very difficult as it has not to be carried very far. IManufactured articles are in general dearer in Russia than in Western Europe, and to assure a successful sale of English manufac- tures it would be sufficient if, with the customs duty, they worked out slightly cheaper than home manufactures. An analysis of the more important items in the foreign trade of Russia and of the prospects which open out before commercial exchange between England and Russia is not devoid of interest. The most important article of Russian export is grain. By taking all kinds of grain, including leguminous plants of the bean family, flour, meal, rice, bran, etc.,. the exports amounted to : — Years JMillions of Poods 1903-1907 1908-I912 1913 . . 612 678 651 Millions of Roubles 490 634 595 Percentage of Total Exports 47 45 39 3i8 RUSSIA : ITS TRADE AND COMMERCE. The exports of grain to the principal foreign countries are as follows : — 1893- 1898- 1903- 1908- 1893- 1898- 1 1903- 1908- 1897 1902 1907 1912 1897 1902 1907 1912 Millions of Poods Percentage Total Exports . 523 454 612 678 100 , IOC 100 100 Exports to — Germany . 83 95 136 216 15-9 20-9 22-2 31-9 United Kingdom I3« 92 133 104 26-4 20-3 21-7 15-3 Holland . . . 67 77 112 136 12-8 17-0 18.3 20-1 Italy .... 36 41 53 48 6-9 9-0 8-7 7-1 France 49 38 41 ■43 9-4 8-4 6-7 6-3 Belgium . 18 10 17 19 3-4 2-2 2-8 2-8 Until the end of the nineteenth century the United King- dom was the largest importer of grain from Russia, but was gradually surpassed by Germany. The position of Germany was further strengthened by the fact that part of the grain exported by Russia to Holland is sent from that countr}^ to Western Germany. A peculiar fact is that the actual quantity of grain exported to the United Kingdom has remained of recent years at about the same level, and only dropped suddenly in 191 2 and 191 3 (to 63 and 58 million poods) . Exports to Germany on the contrary have increased greatly, both absolutely and relatively. Rye has a very small share in Russian exports at the present time (in 1903-1907 — 63 million poods annually, or ten per cent, of the exports ; in 1908-1912 an average of 37 millions, or 5-4 per cent, of exports). Exports of rye con- stitute about 3 to 5 per cent, of the total amount harvested. The most important grain export is wheat, which amounted during 1 903-1 907 to an average of 238 million poods (39 per cent, of the total grain exports), and during 1 908-1 91 2 to 236 million poods (35 per cent, of exports). The principal purchaser of Russian wheat has been the United Kingdom (during 1 903-1 709 — 22-5 per cent, of the total wheat exports, and during 1908-1912—19-5 per cent.). Holland bought 1 8-6 and 12-6 per cent, in the same periods, Italy 21 and THE FOREIGN TRADE OF RUSSIA. 319 i8'8 per cent., France 12*6 and 12-2 per cent., and Germany 6 and 8 "5 per cent. Although Russia has maintained the amount of wheat actually exported to the United Kingdom, its relative importance has declined before the growth of the exports to the Argentine, the United States, Canada, and the East Indies. A certain influence on the Anglo-Russian wheat trade has been brought about by the conditions of sale in England, such as the adjustment of reductions on the difference between the consignment of wheat and the sealed sample and the regulations of the courts of arbitration. In the interests of both countries it would be well to simplify the formalities of grain contracts and to give all possible facilities to the export of Russian wheat. Barley ranks second in importance and during the years 1 903-1 907 was exported, on an average, to the amount of 143 million poods annually (23 per cent, of the grain exports), and between 1 908-1 91 2 to the amount of 211 million poods (31 per cent.). Here Germany figures as the principal purchaser (up to one-half of the total quantit}' of exported barley), the barley being chiefly required for cattle food. The United Kingdom also takes a fairly large and steady supply of barley (between 1 883-1 887 — 22 million poods annually, 1 898-1 902 — 22-2 million poods, 1 908-1 91 2 — 22-7 million poods), which, however, forms a decreasing propor- tion of the total quantity of exported barley (between 1883-1887 — 51 per cent., 1898-1902 — 26-7 per cent., 1908- 1912 — 10-8 per cent.). Russia still holds the first place amongst countries suppl^/ing barley to the English market, and supplied more than one-third of the total imports of barley into the United Kingdom between 1908 and 191 2. Between 1 903-1 907 the annual exports of oats averaged 27 million poods (10-9 per cent, of the total exports), and between 1908-1912 — 65 million poods (9-6 per cent.). The largest exports are to the United Kingdom — between 1903- 1907 on an average of 29-2 million poods annually (43 per cent, of the total exports), and between 1 908-1 91 2- — 19 milHon poods (29-2 per cent.), while exports to Holland were 15 and 19 millions, and to Germany 9 and 10 million 320 RUSSIA: ITS TRADE AND COMMERCE. poods. Of recent years the East Indies have become competitors of Russia in supplying oats to the United Kingdom, having sent 167 milUon poods between 1 908-1 91 2 against 18 5 milHon poods supphed by Russia. Serious attention should be given by interested circles in Russia to a development of the export of wheat and oats to the United Kingdom, for the English market is a large one, and has a tendency to increase with the growth of the population. Of other exported food-stuffs butter and eggs deserve attention, as their commercial importance has greatly increased of recent years. Whereas in the eighties of the nineteenth century Russia exported 2 to 3 million roubles worth of butter, by 1902 the exports amounted to 28-5 million roubles, and in 1913 to 71 "6 millions (4,763,000 poods). Russia exported 11 to 12 million roubles worth of eggs towards the end of the eighties, and in 1902 — 38*6 million roubles worth, and in 191 3 — 90-6 million roubles worth (3,572 million eggs). About half of the Russian butter is sent to the United Kingdom, followed by Germany and Denmark. A third of the export of eggs goes to the United Kingdom, about a quarter to Austria-Hungary and the same amount to Germany. The United Kingdom is an inexhaustible market for these products. Russia supplies but 13 per cent, of its consumption of butter, and half of its consumption of eggs. Denmark and Australia are the principal suppliers of butter to the United Kingdom. The capacities of Russia as a butter-producing country are very great and promise a further development. It is only necessary to study more Note.— -The Economist of September 9, 1916, has a most impor- tant article on " Our Need of Prussian Produce." It .shows that it is not only for wheat that England may hope to look in the near future. Russia has been the chief source of the supply of imported eggs. She was second only to Denmark in supplying us with butter, and almost half of our imports of wood and timber were drawn from Russia in 1913. In 1913, Russia sold 38 million pounds worth of food and raw materials to England. The average for ten years (1903-1912) in million cwts. of wheat was 20 millions from Argen- tina, 17-75 from India, 17-3 from Russia, 16-5 from the United States, 13-25 from Canada, 9-05 from Australia. THE FOREIGN TRADE OF RUSSIA. 321 carefully the requirements of the English butter market, to bring the methods of production in conformity with it, to improve the conditions of cold storage during transport by rail and sea, and to remove the superfluous intermediary operations of certain countries. The export of pork from Russia has good prospects. Very good conditions exist in Russia for the production of bacon, one of the national dishes of England. However, up to the present this export covers but 3 per cent, of the imports into the United Kingdom, which amount to between 16 and 17 million poods. This import has been covered so far by Denmark and the United States. Exports of live stock from Russia include a large number of horses (106,820 in 1913, valued at 13-9 million roubles), pigs (110,000, valued at 87 million roubles), geese (6-9 milhons, valued at 7-8 million roubles). The major portion goes to Germany, though the United Kingdom is a good market, purchasing from Russia nearly one-half of the number of horses imported, and more than one-third of the imported poultry and game, both alive and dead. Sugar is an important export, though it fluctuates greatly from year to year (from 6 million poods in 1906, and 9 millions in 191 3, to 27 million poods in 1911, and 23 million poods in 1 91 2). In some years the exports of sugar to the United Kingdom have attained large dimensions (8-9 million poods in 1912, and 127 million poods in 1911). The importance of the export of raw materials in the general exports of Russia is inclined to drop, although it still forms now over one-third of the total exports. Timber is the chief raw material exported in the form of wood for building purposes, matchwood, staves, etc., and these exports in 191 3 amounted to 165 million roubles (at the end of the nineteenth century between 50 and 60 million roubles). Of this quantity two-thirds are shipped to the United Kingdom, where Russian timber takes pride of place, one-quarter to Germany, and smaller quantities to Holland, France, and Belgium. According to English statistics about half of the round and hewn wood, sawn wood and staves are imported from Russia, and about half of the Y 322 RUSSIA: ITS TRADE AND COMMERCE. prepared wood from the United States. In this way the timber market is held by Russia, and it is to be hoped that the Russian timber industry will be developed, and that the enormous wealth of timber in northern European Russia and in Siberia will be made use of to increase the export of timber to the United Kingdom and 'other countries of Europe. Petroleum products (kerosene, petrol, lubricating oils, etc.) were exported in 191 3 to the value of 50 milHon roubles and 58 million poods in quantity (the average for the years 1 904-1 91 3 was 56-5 million poods). The largest export of these products goes to the United Kingdom (one-fifth of the total Russian exports), and somewhat less to Turkey and Germany. The only competitor of Russia in this branch of trade is the United States. Flax occupies an important position in Russian exports, the quantity exported being about 127 million poods (the average for the years 1 904-1 91 3), valued at 68 milHon roubles. In 191 3, 16 -6 million poods were exported, valued at 86-8 million roubles. Russia is the largest supplier to the flax markets of the world. About 30 per cent, of the total export is shipped to the United Kingdom, and con- stitutes three-quarters of the flax imported into England. Seeds are exported from Russia to the amount of 17 to 18 million poods (average for the years 1 904-1 91 3), valued at about 30 million roubles. About a half goes to Germany and only one-fourth to the United Kingdom. Linseed and rape-seed make up the bulk of the exports. England receives more seeds from the Argentine and the East Indies than from Russia. The export of oil cakes is valued at 30 million roubles (36 million poods) for the years 1 904-1 91 3, of which two- fifths went to Germany, and about one-third to Denmark. About one-tenth of the Russian export is sent to the United Kingdom, amounting to one-fifth of the English imports. The United States export more to England than Russia. Finally, mention should be made of the export of hides, almost exclusively undressed, to the value of between 23 and 24 million roubles (for the years 1 904-1 91 3) with big THE FOREIGN TRADE OF RUSSIA. 323 fluctuations annually. In 191 3 exports amounted to 37 million roubles ; in 191 2 to 48 million roubles. Two-fifths of the export go to Germany, and one-fifth to the United Kingdom. The remaining articles of export (peltry, bristles, wool, manganese ore, platinum) are of less importance, and therefore we will not refer to them in detail. Amongst the imports which might well be supplied by the United Kingdom to Russia are machinery and apparatus. Their import has grown rapidly in connexion with the increased demand on the part of the home industries. During the years 1 903-1 907 the average imports stood at 60-5 million roubles, during 190 8-1 91 2 — 118 million roubles, and in 191 3 — 169 million roubles. Germany is the principal exporter of machinery to Russia, sending her about two- thirds of the total imports, while the United Kingdom follows next, but a long way behind Germany, with one- sixth of Russian imports. Particularly important condi- tions for the successful sale of English manu^'actures are cheapness and adaptability to the conditions of Russian industry. At the present moment the United Kingdom is ahead of other countries only in the matter of exporting complex threshing machines and steam ploughs (to the sum of 586,000 roubles in 191 3), complex steam threshers (339»ooo roubles), and complex agricultural machinery (738,000 roubles), and in the export of other machinery yields to Germany, and is also behind the United States in the export of certain kinds of agricultural machinery. Coal and coke form an important part of Russian imports. In spite of rich deposits of coal in Russia and a rapidly increasing output, Russia is obliged to order larger and larger quantities from abroad for the requirements of her manufacturing industries. Between 1 903-1 907 the average per year import of coal was 214 million poods, and that of coke 30 million poods, between 1 908-1 91 2 — 270 million poods of coal and 33 million poods of coke, and in 1913— 474 million poods of coal and 59 million poods of coke (valued at 87-5 miUion roubles). Half of this quantity came from the United Kingdom and two-fifths from Gcr 324 RUSSIA: ITS TRADE AND COMMERCE. many. Owing to the high quahty of EngUsh coal and the facihty of sea transport the Enghsh are able to supply this product to Russia on a very large scale. Russia imports a great quantity of metal manufactures, mostly of iron and steel, followed by copper, sheet-iron, wire, instruments, etc. The total value of this class of imports averaged 45 million roubles between 1908 and 1912, and reached 60 million roubles in 1913. Here Ger- many also takes the first place. EngUsh manufacturers would do well, however, to pay attention to the Russian market, which is a large one. For success detailed knowledge of the requirements of Russia is necessary, and ability to supply comparatively cheap goods which could be within the reach of the mass of the people. The Russian market offers a good sale for woollen yarns (over half a milHon poods, valued at 19 to 22 million roubles) and woollen manufactures (valued at 16 to 17 million roubles). More than half of these goods are suppHed by Germany owing to the cheapness of her manufactures, which find their way amongst the poorer classes. About two-fifths of Russia's imported woollen yarns and only from one-sixth to one-seventh part of the imports of woollen manufactures come from the United Kingdom. The United Kingdom might also extend the sale to Russia of colonial products which up to the present has been chiefly in the hands of Germany, who has cieated centres in Hamburg and other towns for commerce in coffee, cocoa, resin, rubber, spices, Chili saltpetre, cotton, and wool. Coffee imports into Russia amount to between 8 and 9 million roubles, more than half coming through (lermany and only 7 per cent, through the United King- dom ; imports of cocoa are valued at 2 1 to 3 milHon roubles, two-thirds coming through Germany and one-tenth through the United Kingdom ; resin — 4 to 5 million roubles (about half from Germany) ; rubber and gutta-percha — 35 to 40 million roubles, one-third coming through Germany, one- quarter through the United Kingdom, although in 1913 onothird came through the United Kingdom and only a THE FOREIGN TRADE OF RUSSIA. 325 quarter through Germany ; spices — 4 to 5 milhon roubles, half through Germany, and one-eighth through the United Kingdom ; saltpetre — 4 to 5 million roubles, two-thirds through Germany; cotton — 115 to 120 million roubles, in quantity 11 to 12 million poods, one-half from the United States, over one-fourth through Germany, and only 10 per cent, through the United Kingdom ; wool — up to 3 million poods, valued at 50 to 60 million roubles, one-third through Germany, and only 7 to 8 per cent, through the United Kingdom. The reciprocal needs of Russia and the United Kingdom are apparent. Up to the present time the commercial skill and organizing capacity of the Germans have enabled them to take the first place in the foreign trade of Russia. The present political situation requires that the Allies should put forward their utmost efforts to extend their trade relations with each other and to reduce Germany to a position of lesser importance. There arises, however, the question of the basis upon which the extension of trade relations between the United Kingdom and Russia may be founded. Up to 1894, Russia strictly adhered to one commercial customs tariff and gave no country preferential treatment. In 1892, the conclusion by Germany of numerous com- mercial treaties by which she lowered her customs duty on grain imported from the countries concerned, placed Russia at a disadvantage for the sale of her grain and caused her to pay a higher duty than her competitors. Consequently, after much hesitation and discussion, Russia also began to make commercial treaties on the basis of a conventional tariff. In 1893 Russia made a treaty with France, in 1894 with Germany, Austro-Hungary and Italy, in 1895 with Portugal. Russia had two rates of customs duty : one, the higher, or general tariff, as it was named, in 1893, and the other, the lower, according to commercial treaties. By treaty with Portugal Russia's concessions only affected two articles of the tariff, whereas Portugal conceded fifteen. In the treaty with Germany, on the other hand, the concessions made by Russia affected eighty-eight articles, 326 RUSSIA: ITS TRADE AND COMMERCE. many of which were subdivided, while Germany Hmited her preferential treatment to thirty-two articles. An important factor of the new commercial policy of Russia was that all customs concessions made by Russia in her treaties with Germany, France, Austro-Hungary, etc., were automatically extended to all other countries with which Russia had concluded a so-called most favoured nation treaty. A treaty of this nature was concluded in 1859 (12 January, new style) between Russia and the United Kingdom. According to paragraph 10 both con- tracting parties undertook that the subjects of one country should have all the privileges, advantages, and benefits in the other country which were then given or might in the future be given to the subjects of any other power. By this arrangement the duty on goods of the United Kingdom when imported into Russia was levied not according to the general tariif, but by the conventional and more favourable tariff. The United Kingdom by this treaty of a general nature with Russia obtains all the advantages of a most favoured nation treaty. Between 1904 and 1906, the commercial treaties concluded with Germany, France and other countries, were renewed for a further period, but with important alterations. Ger- many raised the duty on foreign grain and Russia imposed higher duties on a number of German manufactures. Almost all the other countries with most favoured nation treatment continued to reap the advantages offered by the conven- tional tariffs. This continued until the present European war, which rendered void all commercial treaties between belligerents, and when the treaty between Russia and Germany ceased to exist, the grounds on which English and other goods paid a lower rate disappeared. At the present moment only the conventional tariffs concluded with France, Portugal and Italy remain ; but these affect a comparatively small number of articles and refer to goods in which the respective countries are particularly interested. As a result the duty imposed on English goods imported into Russia has considerably increased, a fact which impedes EngHsh exports. THE FOREIGN TRADE OF RUSSIA. 327 The radical change which the war has caused in the pohtical aspect of Europe makes it necessary to re- examine the principles governing the commercial policy of Europe. There is an urgent need for the economic isolation of Germany, who has laid claim to universal domina- tion of the civilized world. The ties existing between the countries at war against the Austro-German Alliance must be extended and strengthened. This makes it necessary to re-examine the principles of most favoured nation treat- ment and introduce a series of limitations. In Russia at any rate there is apparently a tendency in favour of such restrictions. On the other hand it is often dilhcult to create close commercial relations by merely restricting the principle of most favoured nation treatment. The United Kingdom is a free-trade country — permitting the import of goods from all countries duty free, while Russia is a protectionist country with high customs duties. If Russia grants the United Kingdom preferential tariff rates, what can the United Kingdom give Russia in return ? Nothing beyond the right to import duty free on an equality with other countries, i.e. from the economic point of view — nothing at all. In this way the political situation makes it necessary that Great Britain should thoroughly review the principles of her commercial policy and reconstruct them on the basis of reciprocal concessions and preference. Russia is undoubtedly interested in developing and strengthening her trade relations with the United Kingdom. She will willingly grant English goods preferential customs treatment, for which she must receive corresponding treat- ment for the sale of her products in England. At the same time the United Kingdom will have to face the necessity of establishing some kind of barrier to the import of German goods. The great events of which mankind is a witness to-day are giving birth to tremendous social and economic problems and are rousing Europe to a reconstruction of many prin- ciples which have served in the past. But we do not doubt 328 RUSSIA: ITS TRADE AND COMMERCE. that, in spite of all the difficulties which surround these problems, the civihzed countries at war against German aggression will find within themselves the necessary force to pave a way for their future welfare. CHAPTER XIV Public Finance By Professor M. Bogolepoff The Russian fiscal system dates from the Budget reforms of 1862, which were part of the whole reform movement following the liberation of the serfs. The first Budget drawn up on the new basis was that of 1863. The 1913 Budget (the last " peace " Budget) began the second half century in the history of modern Russian finance. The most characteristic future in the development of State finance during this period was the steady increase in the amount of the Budget. The following figures show the annual totals of the ordinary and extraordinary State expenditure — Years 1863 1870 1880 i8go 1900 1905 igro 1911 1912 1913 Million roubles 563 793 1.056 1,889 3.204 2.596 2.845 3.171 3,382 In fifty years the Budget had increased by 681-9 per cent., the average annual increase being 59 million roubles. The increase in the Budget was naturally great in years 329 330 RUSSIA: ITS TRADE AND COMMERCE. of war, for instance, in 1905. But even in the years of peace following the Russo-Japanese war the growth of the Russian ]3udget was exceptional :■ — I9II . by R. 249,000,000 or 9-6 per cent. I9I2 325,000,000 ,, 11-4 I9I3 211,000,000 ,, 67 The peace Budget of 1913 exceeded the war Budget of 1905. Chief among the causes of this rapid growth is the develop- ment of State undertakings, such as State railways and the Government spirit monopoly. The Russian Budget in- cludes the gross revenues and expenditure of State under- takings. Therefore any extension of such undertakings, or the introduction of new ones, always entails an increase in the figures of the Budget, which is, to a certain extent, purely formal. But the growth of the Russian Budget was due to other factors, such as increase of population, extensions of the political frontiers, increased military expenditure, growth of national prosperity, and, of late years, a specially large expenditure for improvements of culture, etc. This may well be seen in the period 1903-1913, when the Budget did not include Government undertakings, and when, in the first half of the decade, the Budget increased in consequence of war expenditure, and in the second half in consequence of expenditure on land reforms, public education, etc. The Russian Budget is drawn up according to the so-called ministerial system, i.e., almost the whole bulk of the expenditure is distributed among the separate Ministries, and only the National Debt and the fund for unforeseen expenditure are included under separate heads. With such a distribution of State expenditure there is no possibility of exactly ascertaining the expenditure on any particular requirement of the State ; for instance, the expenditure on national education is spread over the estimates of many Ministries. Since the institution of the Duma, the Ministry of Finance gives supplen.enlary tables showing the dis- PUBLIC FINANCE. 531 tribution of ordinary State expenditure according to particular requirements. The following table shows this distribution for IUC3 and 1913- 1. General administration 2. National debt 3. Army and Navy . 4. Productive expendi- ture 5. State under Laivings 1903 Million roubles 327-4 2887 466-3 2137 5869 Per- centage 17-4 15-3 248 31-2 1913 Million Per- roubles centage 5030 402-8 8i6-5 519-2 828-5 16-4 13-1 26-6 16-9 27-0 Total 1883-0 I — 3070-0 The total of ordinary State expenditure shows an increase of 63 per cent. ; expenditure under the first head increased by 54 per cent., that under the second by 39 per cent., the third by 75 per cent., the fourth by 143 per cent., and the fifth by 41 per cent. Owing to the unequal increase in the different heads of expenditure, their relative position in the Budgets of 1903 and 1913 gradually changed. The expenditure in the Russian Budget is divided under two heads, viz., ordinary and extraordinary. Extraordinary expenditure includes the construction and installation of new railways, expenditure on war or national disaster, the redemption of State loans before their due date, and the expropriation of various undertakings. The disbursements for 1903-1913 were as follows : — Million roubles Russo-Japanese War .... 2,442^ Construction of railways .... 763 • By adding the R. 566,000,000 disbursed on the redemption of short-term securities issued to cover war expenditure, and R. 8,000,000 for working expenses of the loans issued for the same purpose, the above figure (2,442 millions) will amount to R. 3,016,000,000. 332 RUSSIA: ITS TRADE AND COMMERCE. Million roubles. Expropriation of railway lines . . 32 Other railway expenditure ... 91 Construction of ports .... 24 State Defence ..... 455 Military expeditions to China and Persia . 20 Redemption of loans before date . . 199 Expenditure entailed by bad harvests . 403 Miscellaneous expenditure ... 47 Total 4,476 Deducting from the above figure the R. 2,462,000,000 spent for the Russo-Japanese War and the expeditions to China and Persia, it will be seen that in time of peace the extraordinary expenditure of the decade amounted to R. 2,014,000,000, of w^hich R. 1,412,000,000 (70-1 per cent.) was covered by the excess of ordinary revenue over ordinary expenditure. The ordinary (or regular) State revenue covered not only the ordinary expenditure, but also yielded a con- siderable amoynt for extraordinary expenditure. This fund was formed by the excess of ordinary revenue over ordinary expenditure, and was transferred to the so-called free balance of the Treasury. The free balance likewise included the unexpended remainders from extraordinary revenue. In 1910 the excess of ordinary revenue over ordinary expenditure amounted to R. 324,700,000 ; in 1911 it was R. 438,100,000 ; in 1912, R. 402,600,000 ; and in 1913, R. 341,400,000. The continuous excess of ordinary revenue over ordinary expenditure was partly the result of a deliberate fiscal policy, for the purpose of covering extraordinary expenditure, and partly the result of the unrestricted growth of revenue. The development of the ordinary State revenue of Russia may be seen from the following figures : — Ordinary Revenue (Million Roubles) (+) or (-) as against preceding year 1900 ..... 1,704 . . — 1901 1,799 . 95 1902 ..... 1,808 . . I PUBLIC FINANCE. 33: 2,031 . 126 2,018 • -I3 2,024 . 6 2,271 . 247 2,342 • 71 2,417 • 75 2,526 . 109 2.781 • 255 2,951 . 170 3,105 • 154 3,417 . 312 1903 . 1904 . 1905 . 1906 . 1907 . 1908 . 1909 . 1910 . 1911 . 1912 . 1913 • For the above period the average annual increase of ordinary revenue was R. i22,ooo,cco ; in reality, for the years when there was war, the growth of revenue was greatly reduced, and even ceased, and it is only of late years that it has again shown an impetus. Before discussing the causes of the growth of ordinary revenue, it is necessary to examine its composition and the degree of increase in the receipts under different heads. The State revenue of Russia is divided as follows :- - 1903 1912 Million roubles Direct taxes .... Indirect taxes Duties Royalties Property and funds be- longing to the State . Land redemption receipts Miscellaneous receipts . 135 440 107 607 571 89 83 Per cent. 6-6 217 5-2 299 28-1 4.4 4-1 243 650 199 943 937 132 Per cent. 7-8 209 6-4 30-4 302 4-3 Total 2,032 100-0 3.105 loo-o This table shows that, during the period considered, the alterations in State revenue were inconsiderable. On the whole, the Budget developed on the old lines, owing to the absence of any essential reforms in taxation. The chief 334 RUSSIA: ITS TRADE AND COMMERCE. items of the Budget were Royalties (with the Spirit Mono- poly at their head), Property and Funds belonging to the State (with such important returns as railway receipts) and indirect taxes. Altliough all the groups of revenue have approximately kept their old relative positions during the decade, the amount of increase of the separate sources of revenue was very unequal : some increased more rapidly than others, so that, in order to retain their former relative position, unequal efforts were made in the case of particular sources of revenue. The table shows this amount and percentage for 1903-1913. Increase Million roubles Percentage Direct taxes . Indirect taxes Duties .... Royalties .... State property . Miscellaneous receipts Total Budget Per cent. 108 80 210 47 92 86 336 55 366 64 49 59 1,073 52 The Russian system of direct taxation is a combination of taxes assessed on separate sources of revenue, such as land, industries, houses, capital, etc., without direct reference to the owners or possessors. Under modern conditions such a system is no longer sufficiently elastic, nor is it profitable from a fiscal point of view. Of late years the system has undergone considerable improvement, e.g., certain taxes, such as those upon trade and industries, have been amended and have partially become an income-tax. In other taxes, such as the house tax, for instance, the system of assessing the " whole apportioned tax " (so called) has been replaced by ascertaining the real quota of taxation, the " rated tax." PUBLIC FINANCE. 335 In spite of such improvements, a reconstruction of direct taxation has been considered necessary, and great prominence has been given to the idea of introducing an income tax as the basis of direct taxation. The Government has drawn up and presented to the Duma a Bill embodying these proposals, but in view of the present state of war it has been laid before the legislative assemblies for their consideration. Direct taxes in Russia include : Land taxes levied on private land ; a tax on buildings in towns and boroughs ; a hearth tax in the boroughs and villages of Poland ; a kibitka (or tent) tax in the Steppes provinces ; rent on land from the reserves of State land allotted in perpetuity to emigrants ; the State inhabited house tax ; the tax on commerce and industries, and the tax on interest on capital. The tax on industries is divided into the following groups : The principal industrial tax (licences) ; supplementary tax on undertakings obliged to publish balance-sheets, being a tax on the capital and on the net profits ; supplementary tax on undertakings not obliged to publish balance-sheets, consisting of a licence duty and a percentage tax on excess profits above a certain fixed hmit. The tax on the interest on capital is levied on income derived from securities, deposits and accounts current in banks, and, for the duration of the war, on private mortgages. The movement of direct taxes may be seen from the following figures : — 1903 1909 1913 Million roubles Taxes on land and other real es- tate ; rents and other receipts from real estate .... Tax on commerce and iiidustries. Tax on pecuniary capital . 49 67 17 71 104 23 87 150 35 Total 133 198 272 336 RUSSIA : ITS TRADE AND COMMERCE. In the above table the growth of the tax on industries is very striking, and is in close connexion with the rapid industrialization of Russia, and the accelerated growth of Russian commerce of late years. In estimating the direct Imperial taxation in Russia, it must be borne in mind that in this country the system of zemstvo and municipal local finance, as well as that of volost and rural finance, is based on the same sources as Imperial direct taxation. For this very reason the Government must exercise great caution in direct taxation, and this explains why for numy years the Government has not introduced any new real taxes, and has abolished some of these, e.g., land redemption for allotments made to peasants on the emancipation of the serfs. The second category of taxes in the Russian Budget consists of excise duties on articles of popular consumption. Excise duty is levied on spirits used in the manufacture of vodka liqueurs and in varnish factories, on spirits distilled from grapes and fruit, on beer and mead, and on yeast. In this group, the excise on vodka liqueurs and on beer is the most important item. The other excise duties are those on tobacco and tobacco manufactures of Russian origin, on cigarette tubes and cigarette paper, on sugar, petroleum, and matches. The receipts from such taxes are as follows ; — 1903 1909 1913 Million roubles Excise on spirits, beer, mead, and yeast Tobacco excise Excise on cigarette tubes . Excise on sugar Excise on petroleum products Excise on matches 34 49 75 32 8 40 53 45 ! 78 3-5 4-8 107 149 41 48 17 1 20 Total 189 265 353 PUBLIC FINANCE. 337 These revenue receipts have a tendency to increase very rapidly, as they are levied on articles widely consumed, and the productivity of the taxes increases with the growth of the population. The growth of towns in Russia also causes an increase in the consumption of excisable articles. More- over, with the development of railways and of national prosperity, excisable articles find every year a wider market. Excise duty is also levied on articles which are produced in abundance in Russia, and which do not suffer from foreign competition. In the classification of the Russian Budget, indirect taxes include Customs revenue receipts, among which there are duties of purely fiscal character, such as the duty on tea. But Customs duties are principally protective. Customs revenue is chiefly dependent on two principal factors : the rate of the Customs duty and the growth of imports. Of late years, Russia's foreign imports reached an enormous figure, which had its effect on the Customs revenue. In IQ03 the "Customs receipts amounted to R. 242,000,000, in 1909 they rose to R. 274,000,000, and in 1913 to R. 353,000,000. In the Russian Budget there is also a separate category of taxation revenue, viz., " duties," which include revenue stamp duties, law costs, registration fees, death duties, duties on the transfer of property, port dues on ships and cargoes, duty on lire insurance, and a series of minor receipts. Under this head the special tax on passenger fares, and on freight carried in passenger trains is also included. These duties have yielded a considerable revenue. As regards its importance in the Budget, this group is somewhat like that of direct taxes. This importance of duties in the Russian Budget is largely due to the fact that the increase of such revenue is organically connected with the circulation of commodities and the whole trend of economic hfe. The recent rapid development in the commercial and industrial life of the country has caused a natural increase in revenue from duties, at times artificially induced by a rise in the rates of duty. The revenue from duties has become one of the indicators of the country's economic z 338 RUSSIA: ITS TRADE AND COMMERCE. position, and to a certain extent replaces an income tax. The following table shows the growth of revenue from duties : — Revenue stamps and registration ieei .... Transfers of property . . Port dues on ships and cargoes On passengers and freights Insurance duties Miscellaneous duties Total 107 The next place in the Budget is taken by the important item of royalties, which include the revenue from Mining, the Mint, Post Offtce, Telegraphs and Telephones, and the Government Spirit Monopoly receipts. The revenue from the Mining tax plays an insignificant part in the Budget. It consists of inconsiderable receipts on pig-iron and copper produced at so-called " possession works." Until 1902, the special duty on the output of gold (now abolished) used to be included under this head. The Mint revenue is derived from the coinage of gold and silver. In Russia the postal and telegraph services are under Govern- ment management. Telephones are partly in the hands of the Government and partly in the hands of municipalities and joint-stock companies. Before the outbreak of the present war, the postal, telegraph and telephone receipts reflected the animation in the economic life of the country and its business transactions. The revenue from the Government Spirit Monopoly, (prior to the war) reached about a milliard roubles. In the PUBLIC FINANCE. 339 present book a special article is devoted to this Government undertaking. The following table shows the revenue obtained from royalties of late years : — 1903 1909 1913 Million roubles Mining revenue Mint Postal revenue Telegraph and telephone revenue. Spirit monopoly 0-3 5-5 37-0 21-0 542-0 008 0-6 7-0 5-0 580 79-0 300 41-0 719-0 899-0 Total 605-8 814-08 1024-6 All the above revenue, with the exception of Mining, is entered in the Budget in the form of gross receipts, so that the net revenue will, of course, be less than these figures. Thus, for instance, the postal, telegraph and telephone receipts for 1913 amounted to R. 120,000,000, the expenses of collecting this revenue amounted to R. 80,000,000, and the net revenue from this Government undertaking w^as R. 40,000,000. The next important State revenue is that derived from property and funds belonging to the State. The Russian Government has an enormous amount of land, fisheries, etc., at its disposal. State land abounds in natural wealth. This land is usually leased to private persons and institutions, and the remainder is the revenue of the State. State property includes land let on lease, oil-fields, gold-mines salt and mineral springs, collieries, fisheries, sealing ground:-? and other aquatic industries, etc. This group also includes the State revenue from an enormous forest area. The State obtains revenue from its forests, partly by the sale of stand- , ing timber, and partly by the sale of wood fuel, lumber, and other working timber. Forest meadows are leased for mow- 340 RUSSIA : ITS TRADE AND COMMERCE. ing. The revenue from forests is rapidly growing. The Government is now paying special attention to the organi- zation of forests, and the increase of revenue from that source. In 1912 the expenditure on the organization of forests was about 14 million roubles, and in 191 3 over 15 miUions. The subjoined table shows the condition of State forests : — Regions Area of State forests (1,000 dessiatinas) 1912 Revenue per dessiatina Total area Available area Total area Available area Five northern pro- vinces . Ten Vistula pro vinces . Other European provinces . Siberia Far East Central Asia. Caucasus . 94,402 615 12,930 110,383 73.195 10,831 4.747 73.421 562 10,266 37.694 36,261 7.955 2,963 R. 11-50 kop. R. 12-05 R. 3-23 .. R. 0-0-27 ,, R. 0-0-5I ,, R. 0-5-92 ,, R. 0-8-00 ,, R. I 4-50 kop. R. 13-19 .. R. 4-07 .. R. 0-0-81 ,, R. 0-1-03 .. R. 0-8-07 .. R. 0-13-0 ,, Total . . 305,103 169,122 — — Average revenue for Empire = 20 kop. 36 kop. The Russian State is not only the owner of enormous forests, but possesses also a vast network of railways, part of which was built by the State itself, and part expropriated by the State from joint-stock companies. The State rail- ways comprise lines both commercial and of a purely strategic character. The State has also built railways which did not promise any profits in the near future, but which carried civilization and culture into the distant regions of Russia, and therefore the fiscal importance of Russian State railways is conditional. For a long time this State undertaking resulted in annual deficits ; State railways have only lately begun to yield any revenue. On January i, 1914, the Russian railroads covered 63,693 versts, of which 44,613 versts (70 per cent.) were in PUBLIC FINANCE. 341 the hands of the State. In 1913 the State railways yielded a revenue of R. 813,383,000, while the expenditure thereon amounted to R. 499,041,000. The net receipts therefore work out at R. 314,342,000, and the coefticient of exploitation for European Russia at 57 "66 per cent., and for Asiatic Russia at 82 •15 per cent. Besides the revenue from the actual State railways, the State participates by certain agreements in the receipts of joint-stock railway companies, many of these roads haying been built with money either borrowed under Government guarantee or advanced from the Treasury. With the gradual increase in the net revenue of joint-stock railways, which are all for purely commercial purposes, the share of the State in their profits increases. The State owns a number of mills and works, which work partly for the Government and partly for the open market. For instance, there are State mines, printing offices, stud farms, collieries, peat briquette works, powder-mills, etc. State revenue is also obtained from the Securities and Bank- notes Printing Office, where, amongst other things, the shares, bonds, coupons, etc., of joint-stock companies are printed. Further, the State receives revenue from interest on its capital and from the operations of State banks. The most important of these latter is the State Bank of Russia (the bank of issue), which has of late yielded over' R. 30,000,000 net revenue. Many State revenue receipts are only reimbursements to the Treasury of previous advances and reimbursable expenditure. Of a similar nature is the revenue received by the State in the form of subventions to the Treasury or in reimbursement of Treasury expenditure on the main- tenance of certain institutions which, by law, have to be provided for from other sources. The movement of all these revenue receipts may be seen from the table next page. Besides the above-mentioned revenue, there are sundry incidental receipts, e.g., the postponed war indemnity from China (R. 9,500,000 per annum), and, up to 1910, an indem- nity paid by Turkey. 342 RUSSIA: ITS TRADE AND COMMERCE. Rents and leases Forests State railways State mills and works .... Interest on funds and banking operations Share of the State in profits of joint-stock railways Annuities from railway companies Reimbursement of loans and ad- vances Total Such, in its general features, is the constitution of the revenue in the Russian Budget. In round figures, the total ordinary revenue of Russia for 1913 amounted to R. 3,417,000,000, of which R. 1,213,000,000 was derived from taxation, and R. 2,204,000,000 from other sources. Beginning from the late 'eighties of the last century, the -Ordinary Budget used always to be balanced without a deficit, and there was frequently a surplus of ordinary revenue. But it was otherwise with the Extraordinary Budget. Russia is a country still young in culture ; its economic system, which for a long time was founded almost exclusively on agriculture, has within living memory been acquiring a new basis — a combination of agriculture and industry. Current life presents a multitude of essential problems, for the solution of which considerable immediate outlays, for the construction of railways and ports, and the creation of a powerful State defence are required. Russia, having gone through a long period of expansion of geo- graphical frontiers, has now entered the stage of internal organization, w^hich entails an increase both of ordinary and extraordinary expenditure, the most important being PUBLIC FINANCE. 343 that on railway construction and State defence. All over the world it is the custom to cover non-recurrent extra- ordinary expenditure by extraordinary resources, i.e., loans. Russia, more than ary other country, has tried to cover a considerable part of the extraordinary expenditure from ordinary revenue receipts. This was done, for instance, in the case of railway construction, in order that the increase of the National Debt (placed on foreign money markets) might be as small as possible. Until the middle of the last century, Russian Government loans were issued prin- cipally to cover war expenditure and deficits in the Budget. From the middle of the century the National Debt began to increase rapidly, principally for the purpose of attracting capital for the construction of railways. Since the end of the eighteenth century, when Russia contracted her first foreign loan in Holland, until the eve of the great war, Russia borrowed (both by home and foreign loans) a total of about 15 milliard roubles, of which half has been duly amortized. The movement of the National Debt of late years is shown below : — At January i Mill ion roubles 1900 .... 6,220 1905 .... 7,081 I9IO .... 9.054 I9II .... 9,014 I912 .... 8.957 I913 . .* . . 8,858 ■ I914 .... 8,811 This table shows that after a great rise in indebtedness, caused by the Russo-Japanese War, Russia did her utmost to reduce her debt, at the expense of her ordinary revenue. Of course, in this respect Russia could not attain such brilliant results as England did after the Boer War — Russia being poorer in national revenue than England, and continuing to extend her State railways — but the trend of National Debt policy was the same in Russia as in England. As regards the extraordinary Budget, it is the expenditure that shows the greatest steadiness : there is always some urgent requirement that must be satisfied. But in regard 344 RUSSIA: ITS TRADE AND COMMERCE. to extraordinary resources no such steadiness is observable. During the last few decades Russia covered a part of her extraordinary expenditure with the unappropriated balance of the ordinary revenue. These balances were subject to considerable annual fluctuations, in dependence on the general condition of the Budget and the trend of current financial policy. The other principal sources of extra- ordinary revenue are Government loans. The total indebtedness of Russia, as a result of financing the extraordinary Budget, has reached nine milhon roubles, as has already been mentioned. This represents various Government loans. During the last few decades, since the creation of 4 per cent. Rentes, the consohdation of the Russian National Debt has begun ; but, even now, the composition of the Russian National Debt is still very heterogeneous, as the following table for 1913 will show : — . , . , , Number Denomination of loan ^^ ^^^^^ Amount Ratio to (million total roubles) (per cent.) 6 per cent 2 38-4 0-4 5 10 1,569-6 17-7 4h .. 4 775-3 8-8 4 45 5.5303 62-7 3 ny .. I . 82-4 0-9 3i ,r I 141-9 1-6 3 9 486-9 5-5 Perpetual deposits — 66-2 07 Exchequer biUs . • • 150-5 8,8417 17 Total — 100 The prevailing type of Government loan is 4 per cent, on Government railways. Five per cents, have generally been issued by Russia for war purposes. As regards the term of redemption, Russian loans may. PUBLIC FINANCE. 345 be divided into three groups, viz. : short-term, long-term, and those not redeemable at any fixed date. Short-term loans are of two kinds : (i) Treasury bonds, issued for a term ranging from three months to a year, in bills of not less than R. 500 ; and (2) Exchequer bills, issued for a term of eight years and four years, in bills of not less than R. 50. During the war, bills of smaller value (R. 25) have been intro- duced. These bills bring in 4 and 36 per cent. , and the State Bank and Treasury receive these bills at their nominal value in all payments. Long-term loans are issued for various terms, specified in the law concerning the loan. In loans not redeemable at any fixed date, known as rentes, the Government does not bind itself to repay the capital, but reserves the right of redemption at any time it chooses. Russian State loans are issued in two currencies : Russian and foreign, according to the market where the loan is placed. Sometimes the rate of exchange for various countries is indicated in the loan. All the loans may be divided according to the currency of issue. Loans con- tracted prior to the currency reform of 1897 were issued in metallic roubles, equal to one-tenth of an imperial ; after that reform, they were issued in rorubles equal to one-fifteenth of an imperial. On January i, 1914, loans of the first kind amounted to R. 2,857,000,000, and of the second, R- 5.953.000,000. Government loans are divided into home and foreign. Often the very appellation of "foreign" is fixed by the law of issue, though sometimes this is not done. The report of the Audit Ministry stated that on January i, 1912, Russia had R. 2,728,000,000 worth of foreign loans, and R. 4,586,000,000 of home loans. Roughly speaking, such a division of loans is a sufficiently correct indication of the actual disposition of the Russian National Debt. But in reality, a certain amount of home loans is placed in foreign markets, and a certain amount of foreign loans finds its way back to Russia. All Russian Government loans have a Stock Exchange value, as they are in circulation on Russian bourses. Moreover, a whole series of particular loans are quoted by foreign Stock Ex- 346 RUSSIA: ITS TRADE AND COMMERCE. changes, e.g., Paris, London, Amsterdam, Brussels, New York, Berlin, Vienna, etc. The war has seriously affected Russian State finances, and has brought about a great change in the general character of the Budget. According to the regulations in force in Russia, " extraordinary assignments, over and above the Estimates, for war requirements and for special preparations preceding the war, are made to all departments, by Imperial prerogatives as by law appointed " (art. 117 of the Funda- mental Laws). In virtue of these laws, war expenditure in Russia is provided for outside the Budget, and is published for general information on the conclusion of the war. There- fore during a war the Russian Budget does not include any direct war expenditure, and remains a " peace " Budget, the effects of the war being noticeable only in the form of interest on war loans, and (indirectly) in the reduction of State revenue, or its increase in consequence of the rise in the rates of existing taxation, or the introduction of new taxes. But this great war has placed before the Budget a special problem that is only incidentally connected with the war : namely, on the outbreak of hostilities in July, 1914, the Government sale of spirits ceased, and the trade in other spirituous liquors was prohibited. This measure at once deprived the Budget of the colossal revenue derived from spirits and beer. In the Budget for 1914 the Spirit Mono- poly revenue was estimated at R. 936,000,000, while in the Budget for 1915 this was reduced to R. 144,000,000. In order to cover the deficit caused by the cessation of the sale of spirituous liquors, the Government raised the rates of a series of existing taxes, duties, and tariffs. Among direct taxes, there has been a rise in those on real estate in towns (with the exception of Poland) from 6 per cent, to 8 per cent, of the net profits on real estate ; the kibitka (or tent) tax on nomads has been raised from R. 4 and 6 to R. 8 ; there has been a 50 per cent, rise in the principal tax on commerce and industries, as well as a rise in the supple- mentary tax on undertakings obliged to publish balance- sheets ; the other kinds of industrial taxation have been increased, and certain undertakings hitherto free from PUBLIC FINANCE. 347 taxation (e.g., cinematographs) are now taxed ; the in- habited house tax has been raised 50 per cent. Among indirect taxes, the excise duty on pressed yeast has been raised (from 20 to 32 copecks per pound) ; the tax on cigarette tubes and matches has been raised ico per cent., on sugar— from R. 175 to R. 2 per pood, on petroleum products from 60 cop. to 90 cop. ; the excise on spirits has been raised (from II cop. to 20 cop. per degree of pure alcohol), that on beer from R. 1-45-270 to R. 49 per pood of malt in the mash-tubs. The excise duty on mahorka (coarse tobacco) is raised from 9 cop. to 24 cop. per pound ; the duty on smoking tobacco is raised from 37 cop. — R. 2*50 to 50 cop. — R. 4 per pound. A new 25 per cent, duty on all passenger fares and luggage has been introduced, while freights, carried in both goods and passenger trains have been subjected to serious charges. A duty on home-grown cotton has been introduced (R. 2-50 per pood), and the revenue stamp and Customs duiies have been raised. In 1 915, a new tax was levied on persons exempted from conscription. Postal and telegraph rates have been raised, and a R. 10 tax levied on telephones. As a result of all these measures, it is estimated that there will be an increase of over R. 500,000,000 in the revenue receipts. In 1916 some new taxes were introduced and some of the existing ones again increased. The most important act was the introduction of the income tax, which is to be levied on private incomes exceeding 850 roubles per year. The income tax takes the form of a progressive assessment of personal incomes and it wiU come into force from 1917. It is anticipated that it will yield at least 130 million roubles, but there are sufficient reasons for assuming that the actual yield of the income tax will considerably exceed the ex- pected figures. In the same year (1916) was introduced a tax on war profits of trade undertakings for 1916-1917 and on increased appointments for personal trade occupa- tions for the same years. A sum of 55 million roubles is expected as a result of this tax. In 1916 the excise on tobacco was increased, which means an additional revenue 348 RUSSIA: ITS TRADE AND COMMERCE. of 90 million roubles ; that on sugar was increased from 2 roubles to 280 roubles per pood, an addition of about 60 million roubles. The customs duty on tea was also increased and this ought to give additional revenue of 23 million roubles. As the aggregate result of the tax reforms of 1916 there is expected an increase of revenue of 360-400 million roubles. Taking into consideration the successful influx of state revenues in 1916, it is permissible to think that the above tax reforms will more than justify the hopes placed on them. It can be stated with full satisfaction that the loss caused to the state budget by the abolition of the state sale of spirits is now finally compen- sated for by the increasing income from other taxes. The state taxes ought to yield a revenue of 2,107 million roubles within 1 917. In this amount there is included no revenue from alcohol at all. The amount of revenue anticipated for 1913 was 1,245 niillion roubles. This figure included the revenues from taxation of beer and some alcoholic beverages which did not form state monopolies. In 1914, part of the war expenditure was covered (to the extent of R. 180,000,000) by the unexpended remainders of the ordinary assignments to the Ministry of the Marine. Then, by the Law of July 27, 1914, the State Bank was authorized to discount the short-term securities of the Treasury to an amount in accordance with the requirements of the period of hostilities. These short-term securities have formed the basis of war finances, and are issued for three, six, nine and twelve months. By the Ukase of October 10, 1916, the total of Treasury bonds in circulation must not exceed 12,000 million roubles. Part of the issues are designed for the substitution of pre- ceding issues. Short-term Treasury securities were also issued in foreign currency, viz., pounds sterling, for discount abroad. There were three issues : under the Ukase of October 6, 1914, and December 26, 1914, to the amount of £52,000,000, and under the Ukase of June 10, 1915, ;£5o,ooo,ooo, and September 9> £30,000,000, making a total of £132,000,000. By the Ukase of March 13, 1915, the INlinister of Finance was PUBLIC FINANCE. 349 authorized to raise Frs. 625,000,000 in France. By the Ukases, April 16, October 9, 1915 and June i and October 22, 1916, the Minister of Finance was authorized to raise in foreign currency F. 925 milhon roubles. In both France and England the Russian securities were discounted on the same terms as the securities of the respec- tive Governments. In England the securities were issued for one year. The Russian securities were issued in Russian currency at 5 per cent., and were discounted principally at the State Bank, but R. 400,000,000 of them were disposed of at joint-stock banks. The Treasury bonds were issued in denominations of R. 1,000,000, R. 500,000, R. 100,000, R 50,000, R 25,000, R 10,000 and R 5,000. Added to this there were R. 200,000,000 of securities issued under the Ukase of April 16, 1915, for discount in foreign money markets, not only for war expenditure, but in order to obtain the necessary foreign bills of exchange for international settlements. By the Ukase of October 9, 1915, Treasury bonds, issued under the Ukases of October 6, 1914, December 26, 1914, and June 10, 1915 (to the total amount of R. 102,000,000), were extended, while by the Ukase of October 9, 1915, the Ministry of Finance was authorized to issue Treasury bonds in Enghsh, French, and American currency, to the amount of R. 5,500,000,000. Three Ukases, August 22, 1914, March 27, 1915, and August 14, 1915, authorized the issue of Exchequer bills. The first issue was for R. 300,000,000, the second for R. 300,000,000, and the third for R. 250,000,000. By this means, R. 850,000,000 were obtained for war purposes. The bills were issued at R. 50, R. ico, and R. 500, and in , the last issues there were also bills at R. 25. These bills have been placed on the open market ; they bear 4 per cent, interest and are free of coupon tax. Russia was the first of the belligerent countries to issue long-term Government loans to cover war expenditure. On October 3, 1914, a 5 per cent, loan of R. 500,000,000 was issued, free of tax in perpetuity. This loan was issued for a term of forty-nine years, the amortization to begin from 350 RUSSIA: ITS TRADE AND COMMERCE. November i, 1916. It was issued in bonds of R. 50, R. 100, R. 200, R. 500, R. 1,000, R. 5,000. Bonds of R. 50 were a novelty in Russia and had no great success. An association of joint-stock commercial banks was formed for the realization of the loan, which was disposed of at 94 per 100. As in previous loans, much of the realiza- tion was done by the State Bank and State savings banks. The loan was open for public subscription, and attracted large masses of the people who had previously purchased securities through banks, and had stood aloof from public issues. The second credit operation in the home money market was carried out in 1915, when, by the Ukase of February 6, a new 5 per cent, loan for R. 500,000,000 was issued, on the same terms as that of 1914. This second loan is to be redeemed in forty-nine years, beginning from 1916. Under the Ukase of April 24, 1915, the second loan of 1915 was issued, being the third since the outbreak of war. This amounted to R. 1,000,000,000, a figure never before attained in the Russian home money market. The terms of this loan were as follows : Until May i, i()2i, the interest on the loan will be 5I per cent. ; after that date the loan will be automatically converted to one of 5 per cent., the holders having the right to demand the return of their capital, should they not agree to such conversion. The amortization of the loan is to begin at May i, 192 1, the annual assignments for this purpose being 0'i32ir)i per cent, of the nominal capital. All the above-mentioned loans are issued quite free of coupon tax. Under the Ukase of October 28, 191 5, a loan of 1915 was issued to the amount of R. i,ooo,ooo,oco, under the following conditions : the loan is issued for s^ term of ten years, with interest at 5|- per cent. ; it was realized by public subscription, at the rate of 95 per 100, and has been a great success. Under the Ukase of February 10, 1916, a loan was issued to the amount of R. 2.000.000,000, and finally under the Ukase of October 10, 191 6, a fresh loan to the amount of R. 3,000,000,000 (on the same terms as the war loan of 1915). PUBLIC FINANCE. 351 Up to the end of October, 1916, i.e. during the whole time of the present war, there were issued loans — At home market to the amount of 20.8 million roubles. ,, foreign ,, ,, ,, 9.4 Total 30 '2 million roubles. There is no doubt that the war, and likewise the abolition of the liquor revenue, throws a heavy financial burden upon Russia. The future of Russian finance is now in direct dependence on the rapid development of Russia's mighty and inex- haustible productive forces, which will enable her to survive this unparalleled war, and to counteract its evil effects.^ ' Notwithstanding the war calamities, the elasticity of Russian resources has already shown itself ; the first six months of 1917 have given to the Treasury satisfactory receipts. The ordinary receipts for 1917 were estimated at 3,998 million roubles, an excess of 966 millions above the estimate of 191G. 573 million roubles of this excess coine from the old taxation, and new taxes are estimated to yield 393 million roubles. CHAPTER XV Money and Credit By V. A. MuKOSEYEv The present organization of the Russian money market and of the Russian credit system is of quite recent origin, dating no further back than the nineties of last century. And this is quite natural. For a developed system of credit and an efficient mechanism for regulating the supply of, and demand for, money presuppose a comparatively high stage of economic development, and it is only within the last twenty or thirty years that Russia has fully satisfied this condition. On the one hand the reform of the currency, the strengthening of the position of the State Bank in the money market, the growth of capital and its mobilization ; on the other the considerable extension of the railway system, the great increase in the postal and telegraphic services, the enormous development of trade and industry and the growth of towns — in short all the factors which provided a sound foundation on which to build up the present organization of money and of credit in Russia — are of quite recent date. In Russia, as in other countries, it was the transition from old economic conditions to the new capitalistic forms which resulted in money and credit affairs being efficiently organized. The continuous development of capitalistic relations called for the creation of a stable currency and of an elastic system of credit, and after these had been set up provided them with the requisites for their maintenance and further growth. 352 MONEY AND CREDIT. 353 Adopting this point of view, we may consider the recent history of the money and credit system in Russia as com- mencing with the currency reform of 1897. Russia then possessed all the conditions necessary to ensure the success of such a reform. The economic hfe of the country could no longer be contained within its geographical boundaries, and had got into touch with the world market, but was severely handicapped by the fluctuations in the Russian monetary standard. The economic needs of the country had become more complex and a more efficient money mechanism was required for their satisfaction. Russia first of all obtained a stable currency on a gold basis. A central bank of note issue, a stream of foreign capital, and a properly organized money market appeared soon after. The new institutions in their turn promoted and stimulated the process of economic development to which they owed their origin. The currency reform was the result of general economic development. The foundation of a central bank on the other hand was merely the inevitable consequence of the already existing economic relations. A central bank was required in order that it might regulate the reformed currency by means of note issue, but this necessity for the exist- ence of a central bank was determined beforehand by the organization of the economic life of the country, by the co-ordination and unification of the individual branches of that life into a single national economy. At the time, however, when the gold standard and a central bank came into being the money market was still weak and ill organized. Economic Russia was in a period of transition and was undergoing a process of organic reconstruction. In such periods there is always a great demand for money and capital, which are then chiefly obtained from abroad, since the home money market is in such circumstances still ill-equipped to meet the demands made upon it and is indeed only beginning to take shape. It is for this reason that foreign capital — chiefly French, Belgian and German, partly also British and Dutch — • exercised so great an influence on the economic life oi A A 354 RUSSIA: ITS TRADE AND COMMERCE. Russia at the end of the nineties of last century and in the first few years of the twentieth century. The adoption of a gold standard had established a firm connexion between Russia and the foreign market for capital, and this foreign capital began to pour into Russia. According to one estimate the investments of foreign capital in Russia amounted in 1893, i.e. before the fixing of the rouble exchange, to 2| million roubles, in 1897, the year of the currency reform, to 80 million roubles, and in 1898 to 130 million roubles, without taking into account money put at the disposal of the Russian market for short periods. The Russian money market afforded great opportunities for short period investment, but even more capital was attracted for long period investment in productive under- takings — railways, industrial and commercial ventures, etc. By the beginning of the present century, Russia was in possession of a fully established monetary and credit system corresponding to the country's extended and complicated demands. The number of banks increased ; they mobilized the country's financial resources which had, up to that time, been in the hands of private individuals and businesses, and placed all that capital upon the money market. The capacity of the latter increased extraordinarily. At the same time the position of the State Bank was much strength- ened, and its huge supplies of gold provided supplem entary resources as well as allowing direct operations for short- term credit. These two factors weakened the dependence of the money market upon foreign influence to a consider- able degree. Seventy-five per cent, of the large demands for capital to meet the growing needs of the population were met by the home market and discount at times stood lower than in Germany and Austria-Hungary. Moreover, the Russian market was repeatedly able to extend help to the German market. The essential elements of the l^ussian money market are : — (i) The currency, as in other advanced countries, is based upon the gold standard, with free coinage of gold, limited coinage of silver and copper. MONEY AND CREDIT. 355 (2) The issue of bank-notes is regulated by a law very similar to Sir Robert Peel's Act of 1S44, and is carried out by the State Bank. Before the present war, the gold guarantee for notes issued ordinarily exceeded 100 per cent., and even reached 170 per cent. ; in fact, these notes were rather warrants on gold than typical bank-notes. Possessing a monopoly for the issue of notes and concentrating in itself all the national monetary reserves, the State Bank was naturally the supreme organ of the money market in the same sense as the Bank of England is for the English money market. Private credit institutions, chiefly joint-stock banks, serve as the fundamental nucleus of the money market in Russia, as in all other economically developed countries ; there are also numerous mutual, co-operative, and municipal banks and banking houses. These institutions, together with the State Bank, operate in the sphere of short-term commercial and partly indus- trial credit of the country, and undertake all ordinary bank operations. Long-term credit is supplied by special institu- tions — two State land banks, a series of joint-stock land banks, and a considerable number of mutual societies. They accept immovables as security, paying the borrower in mortgage bonds issued by the various institutions them- selves and at their face value. Pawnbrokers' establish- ments are, for the most part, either joint-stock, municipal, or partly State institutions. For the supply of credit to wide circles of the rural popu- lation there are small special co-operative banks, the number of which has grown extraordinarily in recent years ; these banks, which obtain their resources from deposits and governmental loans, serve exclusively the interests of the small peasantry, for whom they are of great importance. There are State Savings Banks for the people which are widespread. In general, the formal construction of the Rus- sian monetary system may be considered entirely satisfactory. Less satisfactory is its actual econo- mic effect upon the country, for, under present conditions, the Russian system cannot dispense with the aid of 356 RUSSIA: ITS TRADE AND COMMERCE. foreign capital. This fact has determined the course of the credit poHcy of Russia. 11. During the last two centuries, Russian currency has constantly incurred changes. Until the beginning of the second half of the eighteenth century, copper money pre- dominated, silver and gold being only partly used. In 1768, the so-called " assignats " were issued for the first time. They could be exchanged for metal at banks especi- ally established for that purpose ; but in 1787 this exchange operation was discontinued. Subsequent attempts were made in 1810 to establish silver monometallism, but were unsuccessful, being frustrated by the events of the Napo- leonic wars. In 1843 the assignats were replaced by state credit notes convertible into silver, 3I assignat roubles being for the purpose of this operation taken as equal to one silver rouble. The Crimean war, which began in 1853 and lasted three years, required enormous financial sacrifices from Russia ; in consequence of these circumstances the currency suffered disorganization, and in 1858 the exchange of notes was suspended. In 1862, the Government revived that exchange, but, as the exchange fund was too small, the exchange was again suspended, in 1863. Further attempts in the same direc- tion were cut short by the Russo-Turkish war. At the end of the 'eighties, the Government adopted a series of very energetic measures with the object of creating conditions for a transition to a gold standard, and on this occasion these endeavours were crowned with entire success, which found its chief expression in a considerable accumula- tion of gold. On December 12, 1895, the State Bank fixed the rate of exchange at i roub. 50 kop. paper for i roub. in gold ; this special measure was sanctiojied by an Imperial order on August 8, i8g6, which fixed the rate for an indefinite period, while on January 3, 1897, an Imperial Ukase finally fixed the rouble note at the above-mentioned ratio of 1-50 : 1'oo. On the basis of the Ukase of August 29, 1897, a law was passed permitting the issue of bank-notes by the State Bank only MONEY AND CREDIT. 357 for strictly commercial purposes and on condition that the amount of bank-notes, not guaranteed by gold, should not exceed the sum of 300,000,000 roubles. Bank-notes issued above that amount were to have a gold guarantee of rouble per rouble. In the first balance-sheet of the State Bank published after the promulgation of that law, gold was entered at 1,132,000,000 roubles. Bank-notes issued by the State Bank have the following imprint, which guarantees their exchange and circulation 'on a par with gold coin (Law of November 14, 1897) : " The State Bank exchanges credit notes, i.e., bank-notes for gold coin without limitation of amount (i rouble = one-fifteenth of an imperial and contains 17,424 dolias of pure gold). The law of August 29, 1897, operated without interruption till July 27, 1914, when, owing to the outbreak of the world war, the exchange of bank-notes for gold was temporarily sus- pended. The present currency in Russia is regulated by the terms of the Coinage Statute, issued on June 7, 1899, i.e., soon after the introduction of the gold standard. The funda- mental features of this law are the following. The basic monetary unit (standard money) of the Russian State is the rouble, which contains 17,424 dolias of pure gold. In the laws of August 29, 1897, and November 14, 1897, on which the reforms in the issue of notes were based, the old terminology is preserved, so that the juridical designation of the bank-notes created by these laws remains as before— " State credit notes " ; the latter in fact differ very little from bank-notes in the precise meaning of the word, and are such according to the sense of the law. Therefore, for the sake of simplicity and clearness, we call the credit notes issued by the State Bank " bank-notes." Gold coins contain 90 per cent, of fine gold, the limits of deviation from the normal (the so-called remedium, being fixed at y,/,,,, ; it is coined in denominations of 15 r., 10 r., 7 r. 50 k., and 5 r., and is legal tender to an unlimited amount. Free coinage forms the connecting link which establishes and maintains almost unbroken the corre- 358 RUSSIA : ITS TRADE AND COMMERCE. spondence between the face value of the coin and its value as metal. The Bureau of the Mint accepts pure gold at the rate price of 5 r. 50-350/363 k. per zolotnik, or 52839669 roubles for I Russian pound = 1290-3 roubles per kilogramme. Every owner of an ingot has the right to convert it into coin, paying for coinage 42 r. 31^ k. per poud. Silver and copper money circulate in the capacity of subsidiary coins. From an exchange point of view, that money depends upon the standard money unit and has no free coinage, its value being fixed by the gold coin. There are two groups of silver coin — bank and token money. Bank coin is struck from high-grade silver, con- tains nine-tenths of pure metal and denominations of i r., 50 k., and 25 k. ; its compulsory acceptance in payment by private persons is limited to the sum of 25 r. Token silver money contains five-tenths of pure silver, and is struck in denominations of 20, 15, 10, and 5 kopeks ; copper money is struck in 5, 3, 2, i, I, and J kopek pieces at the rate of 50 r. from a poud of copper. The compulsory acceptance of both silver and copper token coin is limited to the amount of 3 r. for each payment. The Treasury accepts these coins in payment for any amount, except for customs duties. The quantity of silver coin in circulation must not exceed an average of three roubles per inhabitant — a standard which must be regarded as sufficiently low. No limits have been made for the issue of copper coin, the character of which hinders its extensive circulation. It is issued, when required, under legislative enactments framed for this purpose. The whole Russian money system is thus constructed on a gold basis. Only for this one metal is a connexion between the face value and metallic value established, but all other forms of money are subject to gold which, so to speak, solders them into a single unified money S3^stem. The quantity of monetary tokens in circulation since the introduction of the gold standard is shown in the following figures (in millions of roubles) : — MONEY AND CREDIT 359 1 Full-price On Jan. i : Bank-notes i 1 1076-9 Gold Bank Silver Coin Total 1897 : 360 299 II33-8 1898 . 901-0 147-8 78-9 II27-7 1899 . 661-8 451-4 I2I-5 1234-7 1900 491-2 641-3 1453 1277-8 1901 555-0 682-1 145-7 1382-8 1902 542-4 694-2 140-3 1376-9 1903 . 553-5 731-9 137-5 1422-9 1904 . 578-4 774-8 133-2 1486-4 1905 . 853-7 638-6 123-0 1660-3 1906 1207-5 873-8 133-4 2178-7 1907 . 1194-6 641-9 119-8 1956-3 1908 1154-7 622-4 II9-6 1896-7 1909 . 1087 -I 651-1 IIO-5 1758-7 1910 II73-8 580-9 112-5 1867-2 1911 1234-5 641-7 115-9 1992-I 1912 1326-5 655-8 117-6 2099-9 1913 • 1494-8 628-7 120-5 2244-0 1914 . 1664-7 494-2 122-7 2281-6 From these figures it appears that from 1897 to 1914 the quantity of monetary tokens in circulation increased by I0I-3 per cent., i.e., more than doubled. But the growth would have been greater if during recent years measures had not been taken to counteract the demand for money by instituting transfer and clearing operations. In this connexion may be mentioned : — 1. The opening of banking operations in the branches of the State Treasury which nowadays have a very large turn over in transfers and in bills of exchange which have to be sent to other towns for payment, 2. The introduction since 1906 of postal orders every- where for any amount. 3. The organization at the principal commercial and industrial centres of clearing houses which now handle by means of cross liquidations of payments and settlements on current accounts about 25-30 milliards of roubles a year. 4. The creation of a special clearing house for the railways. 36() RUSSIA: ITS TRADE AND COMMERCE. 5. The opening of operations of special current accounts which now yield an annual turnover of about 30 milliard roubles. It is important to note that of late years the quantity of coin circulating in the country has declined in comparison with the circulation of bank-notes. On Jan, i Distribution of monetary tokens in circulation (in per cent.) Total 1906 1907 1908 1909 I9IO I9II I912 I913 I914 Bank-notes Gold Silver 55-4 38-5 6-1 loo-o 6l-I 32-8 6-1 loo-o 60-9 32-8 6-3 100 -0 6i-8 31-9 6-3 loo-o 62-9 311 6-0 lOO-O 62-0 322 5-8 100 -0 63-2 31-2 5-6 loo-o 66-6 28-0 5-4 lOO-O , 72-9 217 5-4 lOO-O This phenomenon is not exclusive to Russia. It has been observed in other countries, for example, in Germany and Belgium, as the well-known authority Charles A. Conant recently pointed out in the Journal of Political Economy. The lessened circulation of gold coin has been caused by the necessity of its concentration in the central bank of issue, partly with a view to substituting as far as possible small notes for the coined metal, partly in view of the clearly disclosed instability of the political stains quo of Europe, especially after the Morocco crisis of 1910. The State Bank's policy of accumulating gold yielded important results, for the outbreak of the present war found the Bank in possession of a very large gold reserve. III. The Russian State Bank, unlike many European central banks of note-issue has no shareholders, is a State institution directly subordinate to the Minister of Finance. Many have considered this a weak point in the present organi- MONEY AND CREDIT. 361 zation of the State Bank, holding that the joint-stock form would make it more independent of the Government in its note-issue policy. In a certain sense such critics are right, but the question is one of opinion rather than of fact. The Bank of England in the eighteenth century, the Austro-Hungarian Bank in the nineteenth, and latterly the Bank of Spain, have shown that under certain conditions the joint-stock form of administration of a bank is far from being a guarantee against active influence on the part of the Government upon the issue of bank-notes, especially if such issue appreciably swells the shareholders' profits. The Russian State Bank arose in i860 ^ from the former State Commercial Bank, founded in 1817. At the time of its establishment it was the only institution giving short- term credit. Its capital, however, was small (16 million roubles) and it was also burdened with liabilities connected with the liquidation of earher State credit estabhshments : the Loan Bank, founded in 1754 ; the Deposit Banks, founded in 1772, and Boards of Public Charity, founded in 1775 and abolished in i860. The payment of interest and refund of capital to the clients of these institutions were imposed upon the State Bank, so that it was unable to engage extensively in com- mercial credit operations. True, it was greatly helped in this connexion by the private deposits which it attracted because of the high interest offered (4 to 4I per cent.). But the State Bank possessed but few branches and had to expend such large sums from its resources upon State Treasury requirements that it was not in a position to effect large loan and discount operations, even with the help of the deposits. On the other hand, it was not a bank of issue in the direct sense of the word, because it possessed no right of emission and assumed no obligations or responsibility whatever with regard to the notes issued. Thqi issue of notes was actually effected on the basis of an obsolete law of June i, 1843, by the State Printing Ofhce, and was carried out solely on the demand of the Government. The notes issued and their 1 The Statute was instituted May 31, i860. 362 RUSSIA : ITS TRADE AND COMMERCE. exchange fund were entered, however, in a special section of the balance-sheet of the bank, and that part of them which was not secured by the fund was reckoned as a debt of the Exchequer. Thus the problem of providing extensive commercial credit for the country proved to be beyond the powers of the State Bank ; the solution followed only on the institution of joint-stock banks, which after 1864 developed with extraordinary rapidity. The Bank was equally powerless to act as a bank of issue because the currency was as yet unorganized. The tremendous work of the State Bank in the liquidation of the old accounts of the Treasury was completed between 1880-1885. From that time it was relieved from the necessity of financing the Government upon any large scale, and had an opportunity to undertake a series of measures directed to the expansion of active commercial operations, and also to make preliminary attempts to create favourable conditions for a transition to the exchange of notes. The interest was lowered on fixed deposits (five and ten years) from 4-|- per cent, and 4 per cent, to 4 per cent, and 3 percent., and on termless deposits from 3 per cent, to i per cent., while current accounts on which the Bank had paid fluctuated by between i and 3 per cent, it now ceased to pay any interest at all. The Bank's own capital grew. Years 1863- 7 1868- -72 1873- 77 1878- -82 1883- 7 1888- -92 1893- 7 Disbursements of the Bank (in millions of Roubles) On ac- count of Treasury 1697 i6o-o Il6-2 867 58-6 6o-i 13-9 Com- mercial 59-8 79-2 1368 215-8 216-4 243-5 3243 Exchange Fund Private deposits Capital (millions (millions of Roubles) of Roubles) Roubles) 20-6 1647 18-4 141-4 176-6 22-3 213-4 223-6 24-0 174-5 2409 27-8 I7I-5 285-1 28-2 22I-I 246-1 28-5 409-9 239-8 38-9 Debt of Exchequer on ac- count of credit notes (millions of Roubles) 570-2 576-0 6255 9425 783-8 742-1 597-8 MONEY AND CREDIT. 363 Between 1879 and i88q, its branches grew from 53 to 89, established in the more important commercial and indus- trial centres. The debts of the State Exchequer, which formerly had burdened the Bank, tended to decrease ; the issue of notes almost ceased, and the gold stocks, thanks to special pur- chases and loans, grew appreciably. This state of affairs allowed the State Bank to acquire a predominant position on the money market as a central bank directing and controlhng all the credit and financial relations of the country. In accordance with the law of June 6, 1894, ^ ^^6W statute of the Bank was issued amend- ing that of i860. These alterations, however, had no organic character and chiefly concerned the higher supervision, the form of administration, the facilitation of several previously per- mitted commercial operations, etc. It was only the currency reforms of 1897 which con- verted it into a central bank in the proper sense of the word by making it the principal bank of note-issue in Russia. The reform of the currency on the basis of the gold stan- dard automatically imposed upon the State Bank the operation of exchange. At the beginning of this operation, i.e., September 8, 1897, the quantity of notes in circulation had reached 1,068,800,000 roubles, while the entire stock of gold belonging to both the Bank and the Exchequer, reckoned in terms of the new currency unit, amounted to 1,131,700,000 roubles. To carry out the exchange of notes (1,068,800,000 roubles) the Treasury transferred to the State Bank 862,500,000 roubles of gold, in consequence of which the debt of the Exchequer on account of notes fell to 206,300,000 roubles. By the Ukases of December 13, 1897, and December 18, 1898, this debt was further decreased to 100,000,000 roubles by payment to the State Bank of 31,300,000 roubles and 75,000,000 roubles from the free resources of the Exchequer. The Ukase of December 24, 1899, again curtailed the Exchequer's debt to the Bank by 50,000,000 roubles, on account of the extraordinary expendi- tures of the Budget of 1899, while by the Ukase of April 28, 364 RUSSIA : ITS TRADE AND COMMERCE. igoo, this debt was finally redeemed. Since then the notes of the State Bank have been real bank-notes convertible on demand into gold and bullion and issued on the basis of short-term banking operations. Turning to the present position of the State Bank, it should be noted that in the Russian money market it occupies first place both as credit institution and as a bank of issue. It supplies money in three ways : — (i) Direct credit as expressed in the carrying-out of ordinary banking operations with the public ; (2) opening of intermediary credits through railways, zemstvos, small co-operative banks, etc. ; (3) giving credit to private institutions in the form of rediscounting bills of exchange by opening special current accounts against deposit of bills and by granting short-term easily realizable advances, usually on securities. The State Bank in its capacity as a bank granting short- term credit carries out banking operations of all kinds and on a very large scale. In this respect it differs little from private banks with which, until lately, it competed on the money market, and partly continues this competition still. If, however, the historical conditions under which banking has developed in Russia helped the State Bank to occupy first place as a source of direct credit, such conditions, for example, as the considerable number of provincial branches of the State Bank, the trust reposed in that bank by the public, and the policy of attracting deposits which it has adopted — recent economic conditions are inexorable, gradually transforming the State Bank into a " bank for banks." For this we see at work the general economic law which has determined the character of operation of all central banks of issue in Europe. Beginning from the middle of the first decade of the twentieth century together with the growth of private banking estabhshments and the rapid accumulation of capital, the State Bank begins to play a relatively less important part in the domain of direct credit, while its credits to other banks and to intermediary institutions assume greater importance. This process MONEY AND CREDIT. 365 of evolution of the State Bank has not yet terminated, for in spite of the very large growth of the resources of the money market, the needs of current business transactions cannot yet be met without active support of the State Bank. In addition the State Bank has to fulfil functions which are scarcely compatible with those of a central bank of issue and which involve extension of the commercial operations of the Bank : the grant of loans to small co- operative banks, the development of loans on goods, indus- trial loans, organisation of the Russian grain elevators system, etc., etc. Thus, at the present time, the State Bank, although it has lost predominance in regard to direct credit, continues to hold an important position and is not materially affected by its increased credits to private banking estab- lishments. The State Bank derives the funds required for its opera- tions mainly from its deposits and from the exercise of its right of note-issue. Its own capital is not large — 50,000,000 roubles and 5,000,000 roubles of reserve. The large amount of deposits is a characteristic feature which distinguishes the position of the State Bank from other European banks of issue. Deposits in the Central Banks of Europe (average) Russian Bank of Banque dc Reich s- Oesterr. Years State Bank England France bank Ungar. (mil. of (mil. / (mil. (mill. Bank roubles) sterL) frcs.) marks) (mill, kr.) 1903 . 6907 50-1 634-1 553-7 I57-I 1904 . 764-4 49-8 790-4 534-8 177-5 1905 . 586-2 54-1 860-9 585-2 197-3 1906 . 522-6 53-9 866-9 575-7 187-7 1907 . 556-3 53-8 768-8 579-2 229-1 1908 . 601-5 53-2 7293 649-3 173-9 1909 . 669-8 54-3 891-2 722-4 191-5 1910 . 773-2 54-8 778-5 648-7 211-4 1911 . 941-4 55-5 832-5 653-2 218-2 1912 . 1038-8 59-6 95I-I 718-2 2396 1913 • 1115-0 55-0 943-0 668-0 231-0 366 RUSSIA: ITS TRADE AND COMMERCE Possessing so large an amount of working capital on the shape of deposits, the State Bank has been able to con- duct its business without straining its right to issue bank- notes. Unutilized Average Right of Issue in Various European Banks Russian Bank of Banque de Reichs- Oesterr. yr State Bank England France bank Ungar. \ GBlTS (mil. of (mil. £ 1 (mil. (mil. Bank roubles) sterl.) 1 frcs. ) \ marks) (mil. kr.) 1903 . 522-2 23-8 1 ■ i 694-2 136-8 300-6 1904 . 527-6 24-6 719-0 153-5 262-2 1905 . 389-8 25-0 590-8 153-5 259-6 1906 . 193-5 23-5 1046-5 34-4 II2-8 1907 . 312-5 24-3 988-4 58-2 6-7 1908 . 378-7 26-8 i 9447 57-5 41-1 1909 . 471-3 26-6 I 77^-^ 61-3 100-9 1910 550-7 27-1 543-8 10-6 23-4 I9II . 486-9 28-0 561-4 II3-3 50-4 I9I2 . 442-4 28-4 ; 1471-8 54-7 98-2 I9I3 . 369-0 27-0 II33-0 i 18-0 220-0 It is evident from the foregoing that the Russian State Bank avails itself less of its right of issue than other large European banks. Under normal conditions its power of further issue is greater than that possessed by other banks, though the Banque de France is an exception, its reserve right of issue for the term under review having been raised twice — by the Law of February 11, 1906, from 5,000,000,000 francs to 5,800,000,000 francs, and by the Law of December 29, 1911, from 5,800,000,000 francs to 6,800,000,000 francs. In consequence of this, in 1912 the reserve right of issue of the Banque de France exceeded the right of issue of the Russian State Bank by 20 per cent., and in 1913 by 15 per cent. The very large total of the deposits has imposed, however, a no less heavy liability on the Bank over and above the obligation to MONEY AND CREDIT. 367 redeem its notes, especially when one bears in mind that the bulk of the deposits were those of the Exchequer and other public bodies. Average Deposits in Central Banks of Issue in Europe ^ Private Public Name of Bank 1903-7 1908-12 1913 1903-7 1908-12 1 91 3 Russian State Bank (mil. rbls.) . . 95-0 1322 183-4 525-5 672-7 931-6 Bank of Eng- land (mil. ■£ sterl.) . . 42-6 42-8 42-0 9-7 12-7 130 Banque de France (mil. frcs.) . . . 566-1 6497 680-0 218-1 168-8 263-0 Under complications of various kinds, political more especially, public deposits might suddenly be called up, and so deprive the State Bank of the larger part of its working capital usually involved in current commercial operations, and inasmuch as its liabihties with regard to its deposits are without any gold cover, they can only be met by the issue of bank-notes. Furthermore, the nature of the commercial operations undertaken by the Bank does not fully correspond to the policy of a bank of issue, which demands that the bill portfolio should be elastic and should consist of short-term material, in the sense of elasticity and brevity of discount term. In the case of the banks of issue of France and Germany, the average duration of bill discounts ranges from 15 to 20 days, whereas in the case of the State Bank it averages 43- 68 days ; in the former case the discounting of bills of exchange constitutes about 70 to go per cent, of all com- 1 The Reichsbank and the Austro-Hungarian Bank give their deposits jointly, without dividing them into private and public. 368 RUSSIA: ITS TRADE AND COMMERCE. mercial operations ; in the case of the State Bank the proportion is only 50 per cent. In view of these circumstances it may be concluded that under normal and peaceful economical and pohtical conditions, the Bank, in order to maintain its position, has had to endeavour to increase its gold reserve by issuing small notes in order to withdraw gold from circu- lation, the Bank's right of note-issue has rather the char- acter of an extraordinary resource than of one which is constantly brought into play. Moreover in times of stress and disturbance this right is on the face of things insufficient to meet the calls which are made upon it, since the deposits subject to immediate withdrawal exceed the Bank's total right of fiduciary issue. We might refer, too, in this con- nexion to the inelasticity of the Bank's bill portfolio (during the Russo-Japanese War of 1904-5, and the international political complications of 1910-13), and also its inability to attract private deposits by offering a high rate of in- terest, for instance during the political crisis of 1905-7.^ In presence of a catastrophe such as the present war it has proved impossible to avoid the necessity of expanding the right of issue fixed by the Law of August 29, 1897, and even of suspending the exchange of bank notes for coin. In general the defects of the State Bank's organization in respect of note-issue are in a sense analogous to those of Sir Robert Peel's Bank Act. Sir Inglis Palgrave's words regarding the Bank of England that " the pressure is enhanced by the requirements of the Bank Acts of 1844-45"- are also perfectly applicable to the Russian State Bank. The above sufficiently explains why under normal con- 1 Interest on current accounts in the State Bank has fluctuated within the following limits : From May 31, i860, to April 15, 1875, 3 per cent. ; from April 16, 1875, to April 3, 1886, i per cent. ; from April 4, 1886, to May 18, 1886, 2 per cent. ; from May 19, 1886, to June 31, 1886, I per cent. ; from June i, 1886, to July 31, 1895, o per cent. ; from August i, 1895, to April 16, 1899, 1-2 per cent. ; from April 17, 1899, to January 31, 1906, o per cent. ; from Febru- ary I, 1906, to April 29, 1908, 2 per cent. ; from May i, 1908, to the present time, o per cent. The payment of interest on deposits was abolished on August i, 19 10. " Falgrave, Bank Rate and the Money Market, p. 139, London, 1903. MONEY AND CREDIT. 369 Table showing the Position of the State Bank's Note- issue (VEARLY averages) Gold! Note cir. Right of further issue Gold cover for bank- Ratio (gold and silver) to liabili- Years (mil. (mil. notes issued (in ties (bank- roubles) roubles) roubles) notes and per cent.) deposits (in . per cent.) 1903 . 802-1 579-9 5222 138-3 69-5 1904 . 9363 708-7 527-6 132-1 699 1905 . 1073-0 983-2 389-8 109-0 72-0 1906 . 1057-8 1164-3 193-5 90-9 65-8 1907 . II93-5 ii8i-o 3125 lOI-I 72-1 IQ08 . 1171-0 1092-3 378-7 107-2 73-3 1909 . 12980 1126-7 431-3 115-2 76-7 I91O . 1431-6 1080-9 550-7 I2I-2 77-2 I9II 1453-8 1266-9 486-9 114-8 68-4 I912 . 1522-6 1380-2 442-4 II0-3 65-9 I913 • 1619-1 1550-1 3690 104-5 63-4 ditions the State Bank's commercial operations and the general position of the money market find comparatively little reflection in the note-issue of the Rank. 1 The gold fund of the State Bank is composed of : {a) Gold in Russia: in coin, ingots, and assignments of the Mining Boards ; (b) gold abroad on current account with foreign bankers. The ratio between these two items for the last few years has been as follows (in millions of roubles) : — ■ . Gold (on an average) In Russia 728-8 819-4 888-8 806-6 937-4 1019-4 1131-1 12 19-3 1262-0 1299-0 1 43 1 -8 Abroad 1903 1904 1905 1906 1907 1908 1909 1910 I9II I9I2 1913 74-3 1 16-9 184-2 251-2 256-1 151-6 166-9 212-3 191-8 223-6 178-3 B B 370 RUSSIA: ITS TRADE AND COMMERCE. The gold abroad serves exclusively for the regulation of foreign payments and settlements by means of the purchase and sale, as dictated by circumstances, may require, of foreign bills. Such measures prevent sharp fluctuations of the rate of exchange and the necessity of shipping gold abroad to meet heavy foreign obligations. For States with a large foreign indebtedness, for example Russia and Austria, this policy is necessary to supplement the note-issue policy of the central Banks. Only once during the period covered by the above table has the State Bank exercised its right of fiduciary issue, and then by no means fully. This occurred in the troubled year of 1906 when the unutilized right of issue sank to 193 '5 million roubles. During the rest of this period the right of fiduciary issue (300 million roubles) was not used at all. Of late, although the gold reserve has been doubled, the ratio of cash to liabilities has fallen and has to a certain extent affected the metal cover for the notes. The ratio of gold to notes is thus very high in the case of the Russian State Bank, higher indeed than for all other banks with the exception of the Bank of England. The Gold Security for Bank-notes and ratio of Cash to Lia- bilities AT the Central Banks of Issue (average per cent.) Russiar State Bank of Banque do Oesterr Ungar. Bank England France Bank >.'& 1 >.S >'i ' >■'£ ^S Years 'C o oJ& 3 t= ■ c 5 9 .0 S 'C 2 3 ? J 3 T .2-" w a 3^ ll 25 ll' 0!^ f u u u 00 ° U ^ s C u "2 00 00 119-1 00 74-4 1903 138-3 69-5 43-5 57-8 72-8 52-1 52-3 53-3 1904 132-1 69-9 12 I -6 44-0 60-0 72-6 52-9 53-3 73-4 82-8 1905 109-0 72-0 123-8 43-0 64-8 75-1 55-8 53-1 72-9 81-6 1906 90-9 65-8 117-5 41-0 6i-8 71-1 48-6 48-3 66-9 75-7 1907 lOI-I 72-1 I20-5 42-1 56-2 65-8 42-9 46-0 62-8 70-0 1908 107-2 73-3 I29-I 45-6 63-3 71-2 51-5 51-0 64-2 73-9 1909 II5-2 76-7 I28-I 44-8 71-4 75-7 50-4 49-4 70-0 78-6 19IO I2I-2 77-2 130-7 44*4 65-3 71-2 48-4 50-7 67-1 74-4 19II 114-8 68-4 133-4 45-4 61-2 66-5 49-7 52-5 62-0 68-7 1912 I 10-3 65-9 134-6 43-8 60-8 64-1 49-4 50-8 57-2 63-1 I913 104-5 63-4 130-6 44-9 59-0 6o-i 54-5 53-7 54-3 59-3 MONEY AND CREDIT. 371 ratio of cash to liabilities approximates to that of the Bank of France, but in view of the peculiar character of the deposits and the inelasticity of the Bank's bill portfoHo, this ratio is undoubtedly low and bears heavily on the position of the State Bank as a bank of issue. The active work of the Bank is conducted on the basis of the antiquated pro- visions of the Statute of 1894, issued three years before the currency reform. The Bank discounts commercial bills of exchange, local as well as those payable in other towns, provided with two signatures and running for terms up to six months, comparatively rarely up to nine and twelve months. About 50 per cent, of the bills discounted are one to three month bills, 40 per cent, three to six months. Discount operations are extended also to securities, coupons, etc. Further, the Bank grants loans of various terms and designations — industrial, agricultural, on bonds and on goods. On security — ^principally State bonds, securities bearing interest guaranteed by the State and mortgages — ■ loans are granted up to nine months, or the Bank opens a special current account. Loan operations on goods take the form of pledging agricultural and industrial products for terms up to nine months (for metals, fifteen months) ; the Bank also grants loans on the security of different com- mercial documents, for example, bills of lading, railway duplicates, etc., their term being specified at three months. The State Bank also extends special loans to agricul- turists, industrial undertakings, and in some cases to artisans and small traders, on bills with one signature for a term up to twenty-four months, with security of movable or immovable property, or a guarantee from other persons already enjoying credit. Such loans must be, however, secured by the pledge of real or personal estate or by guaran- tees given by other persons of standing. The credit which the Bank opens for industrial undertakings, in particular, are not, for the most part, granted in the way described. The terms depend on individual circumstances and in each particular case ratified by the Minister of Finance. The State Bank also gives credit to small agriculturists, farmers, handicraftsmen, artisans, etc., through the medium of the 372 RUSSIA: ITS TRADE AND COMMERCE. zemstvos, railways, or private and public credit banks, granting loans within the limits of the security put up by the final borrowers, and under rules issued by the Minister of Finance in agreement with other Ministries supervising the institutions receiving credit. Another form of indirect credit is granting of loans on the security of goods en route or intended for transport. Somewhat similar is the issue of loans to small co-operative banks which provide credit for the population of country districts. Such loans are issued on the security of biUs for periods up to twelve months. The Bank also has the right to extend credit to zemstvos and municipalities, although, in actual fact, operations of this kind occur but rarely. Irrespective of these different kinds of credit, the State Bank has, since 1911, undertaken the construction of a large number of grain elevators for the improvement of the corn trade of the country. Grain stored in these elevators may be pledged at the Bank. Loans, Bills, Etc. >> uj"'-; en 13 tn CO ^ tisa her iari rt '-*_) § CO -i^ 1-. P +J 13 >-. 1 6 CO l-c a G ■'2 all credi tutions •ists or a of agric y, and interme 7a H 13 ^ 4^ a; 6 H CO 3 CO J2 3 S^ S H m 13 On se( and gc o-S H agricu] purch machi vances 94-2 38-8 -S 8-7 1903 225-6 41-4 183-1 408-7 1904 218-9 lOI-O 41-I 39-0 9-1 190-2 409-1 1905 185-4 124-7 42-3 36-6 — 11-2 2148 400-2 1906 224-3 168-9 5I-I 33-4 — 10-7 264-1 488-4 1907 213-3 I53-I 44-6 31-9 — ii-i 240-7 454-0 1908 220-2 125-2 46-2 30-5 — 15-1 217-0 419-2 1909 224-0 94-3 50-5 28-7 4-0 13-1 190-6 414-6 I9IO 2329 85-0 74-6 21-9 23-7 12-4 217-0 449-9 I9II 352-5 142-4 lOI-O ; 14-6 307 12-5 301-2 627-7 I9I2 424-3 145-6 96-3 i6-6 52-4 14-6 325-5 749-8 I9I3 519-8 184-1 105-6 14-2 82-4 19-1 405-3 925-9 MONEY AND CREDIT. 373 The development of the commercial operations of the State Bank is shown below (bank balances on an average for the year, in millions of roubles) : — Excluding the years 1904-5, which were characterized by extraordinary events (the Russo-Japanese War and a domestic policital crisis), the loan and discount operations of the State Bank had a tendency towards extension. From 1903 to 1913 discounts increased by 130 per cent., and advances by 121 per cent., whereas the total growth of loan and discount operations for this period is 126 per cent. This figure undoubtedly indicates a very extensive development, but the question arises whether this growth has been evoked by the extension of the direct activity of the Bank with the public or by the increased demands made upon it as upon a central bank by various organs of the money market. This question may be answered by an analysis of the loan and discount operations of the Bank in recent years. Sums paid out in connection with Loan and Discount Operations of the State Bank (in millions of roubles) : — 1909 1910 1911 1912 3533 96 27 1326 1913 To private banks . To small credit institutions (small co-operative banks) To other intermediaries . Direct payments 1004 25 14 873 1930 37 15 1050 3210 50 34 1250 4530 153 35 1448 Total .... Percentage ratio to amount of all payments — To private banks Direct payments Others 1916 54-2 45-5 0-3 3033 633 34-4 2-1 4544 707 27-5 1-8 4982 70-8 267 27 6166 73-4 235 31 Total .... 1000 1000 1000 100 -0 J 1 100 -0 The centre of gravity of these enormous payments has been shifted to the private banks, showing that the domain 374 RUSSIA: ITS TRADE AND COMMERCE of direct credit, though growing absolutely, shows a sharp decline relatively. From this example it may be seen how the State Bank is undergoing evolution from an ordinary banking institution into a central reservoir for the money market. This process of evolution is, however, given a peculiar stamp by the economic conditions of a rapidly developing country. During recent -years, which have been years of great and general growth for economic Russia, the State Bank has had to provide direct commercial credit on a greater scale than any other central bank of issue in Europe. And this increase in the activity of the State Bank in the realm of commercial credit took place alongside a very great increase in the resources of the money market. Total sums paid out by Central Banks of issue in con- nection with credit operations (on an average) : — ! Russian Bank of Banque de ' France Reichs- Oesterr. ^, State Bank ^"^'''^ (mil. England (mil. £ bank (mil. Ungar. Bank roubles) ^ sterl.) I lliXX. li ^-O . 1 marks) (mil. kr.) 1903 . . 470-5 62-7 j 4305-8 1084-6 870-4 1904 473-2 60-7 4281-0 i 1084-0 936-8 1905 476-1 65-3 4409-3 II76-I 949-4 1906 594-1 66-9 4661-2 1-298-1 1122-4 1907 568-1 66-0 4811-6 1408-1 1271-6 1908 554-7 62-7 4855-3 ' 1363-2 II57-I 1909 513-9 64-0 5082-9 1448-7 1118-7 1910 547-0 64-1 5197-0 1395 -I 1209-1 1911 785-4 63-8 5238-6 1387-7 1439-6 1912 895-2 67-2 5328-2 1522-6 1591-3 1913 1051-4 64-0 5667-0 1525-0 1690 From 1903- 13 in- crease . 123-6% 2-0% 31-6% 40-4% ^4-3% It is evident that, under existing economic conditions in ^ Loan and discount operations (including debts of State pawn- shops, broking establishments, rediscounts, renewed loans, and pro- tested bills) and securities belonging to the Bank and acquired on commission. MONEY AND CREDIT. 375 Russia, the State Bank will for long have to continue to play an important part in supporting the credit organiza- tion of the country, and not merely, as is the case with most central banks in highly capitalistic countries, as a clearing house for all kinds of settlements and as keeper of the national reserves, but as an active credit institution which makes good the weakness and shortcomings of the Russian money market. The discount rates of the State Bank were regulated by the provisions of the Statute of 1894 in the following way. A minimum rate w^as laid down for short term bills up to three months, while for longer bills this rate rose i per cent, for six-months bills, i4 per cent, for nine-months bills and 24 per cent, for twelve-months bills. On August 26, 1910, these increases were diminished by 4 per cent., so that when the rate for three-months bills stood at 44 per cent., six-months bills were discounted at 5 per cent., nine-months at 54 per cent., and twelve-months at 64 per cent. On March 3, 1912, a further change was effected Official Discount Rate of the State Bank Year Highest Lowest Average 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 . . . . . 1907 1908 1909 19IO 1911 1912 1913 5 6 7 6 54 5 44 54 7 8 74 7 54 44 44 6 6 44 44 44 54 5 44 44 44 54 64 7 54 44 44 44 44 6 4-65 4-83 5-35 5-53 519 4-54 4-50 5-41 5-68 7-28 7-12 5-93 4-95 450 4-50 5 -06 6 00 ]y6 RUSSIA: ITS TRADE AND COMMERCE. whereby the rates were equalized for three- and six- months bills ; for nine- months the rate was raised by ^ per cent., and for twelve-months i| per cent. Since this change led to lengthening of the average term of the bills by the Bank, the former gradation of interest propor- tionate to the length of the term was again restored on July 15, 1914. As already stated, the liabihties of the State Bank, without taking into account the issue of bank-notes, are chiefly composed of deposits by the Treasury and others. According to the law of April 29, 1896, the entire ready money of the Exchequer is included in the working resources of the State Bank. If again the ready money at the disposal of the Exchequer should be insufficient for current payments the sums which it requires are in turn taken from the Bank's working resources ; from this point of view the State Bank is the cashier of the State, the trustee of its money, while the Exchequer is the Bank's agent. By the law of June 6, 1894, the Exchequer is charged with the conduct of simple banking operations on account of the Bank. All the sums of money received by the State Bank from the Exchequer are divided into two groups : (i) General current account of the Department of the State Exchequer, and (2) Special resources and deposits. For the past five years the average balance of these amounts was as follows (in millions of roubles) : — . Current account of the Department of State Exchequer 1909 ! 170-8 1910 244-2 1911 438-8 1912 475-5 1913 547-6 Special means and deposits 216-6 257-3 285-3 311-6 327-8 Moreover, the liabilities of the State Bank include taxes on the earnings of railways, customs duties, part of the MONEY AND CREDIT. 377 ready money of savings banks, etc. The Bank also manages foreign operations of the Treasury, pays coupons, exchanges Hsts of State loans, keeps Treasury securities, etc. All the assets of the Treasury on current account in the State Bank are free of interest ; on the other hand, the Treasur\^ does not pay the State Bank any remuneration for its functions as cashier. Private deposits and current accounts, which formerly ran to large amounts, have in recent years shown a great falling off, as a result of interest no longer being paid on such sums. At the same time, however, there has been a noticeable development of conditional current accounts (account-giro), introduced in 1895 and reformed in 1900. This form of current account is designed to form a basis for the clearing-house operations of the Bank. The system is one of individual accounts with a fixed minimum balance which bears no interest (not less than 300 roubles) ; all settlements are affected by means of cheques and orders drawn by one of the participants in the giro-account in favour of another. Such operations are conducted gratis by the State Bank. Average Balance (Millions of Roubles) Simple Deposits current account Conditional current account 1909 567 927 I IIO-O 1910 57-4 59-0 1147 1911 447 43-6 1127 1912 363 184.1 1913 320 177.3 Among other deposits of the State Banlc, reference must be made to the current account of State and private rail- ways (for mutual settlement in connexion with the handling of through trafic). This operation was introduced in 1893 with the object of economizing the use of ready mone}' in settlements of railways between themselves. ]y8 RUSSIA: ITS TRADE AND COMMERCE. Average Balance in Millions of Roubles 1 909 1910 1911 1912 1913 Account of section for railway settlements . 23-0 40-6 36-3 31-3 30-3 The other items on the liability side of the State Bank's accounts are book-keeper's entries and comprise unpaid money orders, interest due on various sums, etc., etc. The profit of the State Bank is naturally included in the revenue of the Treasury. Profit of the State Bank (Millions of Roubles) Deducted for revenue of Treasury 1903 1904 1905 1906 1907 1908 1909 1910 I911 1912 1913 10-2 II-2 16-4 i8-5 22-2 20-5 ^73 24-5 24-8 31-2 40-1 At the beginning of the year 1914 the State Bank com- prised the following institutions : — Offices Branches, ist class 2nd ,, 3rd „ ,, temporary Agencies at elevators Settlement sections Exchequer offices discharg operations . IV. 10 18 56 47 6 9 45 ng banking -191 791 -982 Private banks began to develop in Russia in the second half of the nineteenth century. Till then all banking MONEY AND CREDIT. 379 operations were in the hands of the old Government banks, and when these were abohshed (by the Law of May 31, i860) their functions were transferred to the newly-created State Bank which, however, as we have seen, could fulfil its task only very incompletely. At the same time, owing to the abolition of serfdom (in 1861), economic hfe of the country entered upon a phase of industrial and commercial activity which laid the foundations of the capitaHstic regime in Russia. The need of credit institutions, already felt, now acquired an acute character. Under this pressure the Government changed its view and adopted a pohcy of en- couraging all private initiative in the organization of joint- stock credit banks. To what extent at this time the Government gave its assistance may be seen from the fact that the State Bank provided part of the capital for the first joint-stock com- mercial bank, by taking up 40,000 shares of this bank, amounting to a million roubles, and renounced in favour of the other shareholders its right to dividend during the first ten years so long as the dividend did not exceed 5 per cent. The following figures will show the demand for private, banks. In 1864, one joint-stock commercial bank was formed ; in 1866, one ; in 1868, two ; in 1869, three ; in 1870, five ; in 1871, twelve ; in 1872, ten ; in 1873, six. In ten years the number of banks increased from one to thirty-nine. The organization of commercial banks, which coincided with the economic rebuilding of the country after the reforms of 1861, terminated early in the 'seventies of the nineteenth century. By then the economic Ufe of the country afforded a soHd basis for banking activity, and the further development of that activity depended in consider- able measure on the fact and nature of Russian economic growth. The latest epoch of the banking business in Russia is closely connected with the general improvement in the economic condition of the country which began in the second half of 1909. This period of economic growth is 380 RUSSIA: ITS TRADE AND COMMERCE. remarkable for the extent and variety of the results achieved. Banks of short-term credit acquired, at this time, very great importance, both as institutions entrusted with vast amounts of capital and as a great organizing force actively influencing the whole economic life of the country. The growth of joint-stock banks is shown in the following table : — Y ears. Banks Branches Total 1874-1883 ... 36 42 78 1884-1893 ... 34 49 83 I 894-1 903 • • . 37 212 249 On Januai •V I— 1904 . • • yj 278 315 1905 ... 35 295 330 1906 • • . 35 327 362 1907 ... 35 339 374 1908 ... 35 363 398 1909 ... 34 409 443 1910 ... 31 492 523 1911 ... 33 643 676 1912 ... 34 691 725 1913 ... 45 732 m 1914 . • • , 47 1 743 790 By the growth of these banks, capital was mobilized and the Umits and the capacity of the money market extended. The increase in the number of such banks, especially in the provinces, brought new circles of the population into the sphere of credit relations, and the new field thus opened up afforded ample opportunity for productive work on the part of the banks. The following table shows the development of banking operations (in millions of roubles) : — MONEY AND CREDIT. 381 Assets Invest- Advances and discount > Advances Years hand and (Securi- Bills Against Corres- at ties be- Against Merchan- pondents Bankers longmg Govern- dise and to banks) dis- counted ment stocks and other securities docu- ments of title to merchan- dise 1874-1883 . 43-2 26-0 177-0 106-5 "•5 295-0 9I-I 1884-1893 . 39-8 42-2 155-8 156-9 I4-I 326-8 119-4 1 894-1 903 . 55-2 86-0 339-9 249-1 46-5 365-5 240-9 On Jan. i — 1904 . . 74-6 109-3 631-2 258-3 94-2 983-7 282-8 1905 . . 104-8 107-9 633-2 250-5 I IO-9 999-0 314-9 1906 . 86-8 100-7 555-3 288-8 134-3 978-5 351-3 1907 . . 84-4 106-7 549-2 285-1 143-2 977-5 356-0 1908 . 77-7 107-5 612-4 286-2 173-7 1072-3 363-4 1909 . . 92-1 114-1 715-8 286-5 194-6 1 196-9 418-9 Car ital Deposits Re-dis- count (at Years spondents Capital Reserve Deposits Current State . fully paid fund 6-4 accounts Total 245-0 Bank) 25-4 1874-188 ^ . 98-2 1 29- 1 I15-9 75-7 1884-189 ^ . 109-2 21-8 103-9 148-2 252-1 28-4 1218 1894-190 3 - 167-9 65-8 184-8 262-8 447-6 61-3 273-6 On Jan. i — b 1904 • 194-3 74-5 264-6 457-5 722-1 71-3 402-6 1905 192-6 77-3 254-4 521-2 775-6 52-4 439-1 1906 • 193-6 79-1 214-2 457-2 671-4 161-9 435-2 1907 2II-I 84-8 217-0 543-9 760-9 68-1 434-1 1908 • 235-5 87-7 239-8 578-3 818-1 93-1 443-7 1909 • 232-1 89-9 290-1 686-7 976-8 85-1 498-4 1910 . 236-6 95-5 334-0 928-2 1262-2 58-0 529-1 1911 • 305-5 136-7 422-9 1252-1 1675-0 202 -I 782-6 1912 - 384-1 176-1 528-9 1288-4 1817-3 275-0 986-3 1913 • 518-2 222-7 657-7 1635-6 2293-3 329-9 1208-9 1914 • 585-0 251-5 752-9 1786-1 2539-0 334-7 1458-1 From 190 4 to I9r4inc rease 201% 240% 1 88 0/0 302% 251% 371% 261% The above figures indicate the extraordinary progress made by joint-stock banks in recent years. This progress would of course have been impossible had it not been based on 382 RUSSIA: ITS TRADE AND COMMERCE. corresponding progress in the general economic life of the country. Concurrently with ordinary business, Russian joint-stock commercial banks engage in certain of the operations which in England are usually left to Financial Syndicates, Finance Companies, or Trusts. This is due to perfectly natural causes. The Russian public is generally very little interested in industrial shares as a firm investment for capital, so that a newly-created joint-stock industrial undertaking must necessarily seek support in the banks which concentrate all the free available means of the well- to-do portion of the population. The financing of industry offering great advantages to the banks, although, under certain conditions, it is not unattended with risk. By no means all Russian banks engage in it, in fact only some big Petrograd banks devote themselves to such work. The activity of joint-stock commercial banks in Russia is regulated by the provisions of a general Credit Statute, which, however, does not embrace all aspects of banking work. Before 1872, the bank statutes were ratified by special legislation on every new occasion for each individual bank. By the Law of May 31, 1872, the rules regulating the establishment of new banks were made uniform as regards the size of the capital-stock (up to 500,000 roubles), the value of the share coupons of 250 roubles, the conduct of discount operations, the acquisition of real estate, the publicity of reports, and administrative supervision. This procedure was subsequently altered and supplemented by the Law of April 5, 1883, but operation of that law was not extended to previously established banks. Most of the Russian banks were founded before 1880. The substance of the Law of April 5, 1883, is as follows. The minimum amount of capital-stock required for the estabhshment of a joint-stock bank is fixed at 5,000,000 roubles, half of which is paid on subscription to the shares and the other half within six months of the closing of the subscription list. The number of founders must not be less than five. Cash in hand, together with sums on current account in the State Bank, must cover at least 10 per cent, of the liabilities. The ratio of Uabilities to the bank's MONEY AND CREDIT. 383 own capital — ordinary and reserve — must not exceed 5:1. Credit given to an individual client must not, as a rule, exceed one-tenth of the ordinary-stock, open credit, the so- called credit en hlanc, one-tenth of the ordinary-stock and reserve capital, on condition of its being covered within thirty days. When the profit exceeds 10 per cent., half of it is transferred to reserves. Administrative posts may not be held simultaneously in several banks. At shareholders' general meetings no one person may exercise more than one-tenth of the total voting power represented at the meeting. Government inspection of a bank may be held at the request of the shareholders. Monthly statements and a yearly report must be published by the bank. These provisions are now applied to all newly-established banks. The Credit Lyonnais is the only foreign bank permitted to operate in Russia, and this by a special Law of June 14, 1891. The so-called societies of mutual credit are also prominent in the task of providing short-term credit. These co-operative banks have multiplied during recent years, and serve chiefly middle and lower classes of the urban population. They form a series of groups, only formally united. For example, certain societies of mutual credit in Moscow and Pctro- grad, possessing enormous resources and conducting business upon a solid foundation, closely resemble large joint-stock banks; others which form the majority, operate in the provinces, with limited means, and grant credit on sums of even less than 100 roubles to their members, for the most part small shopkeepers and artisans unable to obtain credit in the banks. The first society of mutual credit was founded on March 17, 1864 ; at the beginning of 1914 they numbered 1,108. According to the Law of May 31, 1872, the working capital of these societies consists of members' fees in cash in the proportion of 10 per cent, of the amount of credit opened for each member. This capital serves as security for the operations of the societies. Respon- sibility for the said operations is determined by the obliga- tions assumed by the members on account of their credits opened to them. A society of mutual credit transacts all 384 RUSSIA : ITS TRADE AND COMMERCE. ordinary banking operations of short-term credit. The growth of these societies for the last few years is shown by the following figures : — On Jan. i No. of societies No. of members 1900 1910 19IJ 1912 1913 1914 117 467 604 776 932 1,108 83.431 267,107 371.585 501,821 589.322 634.355 The growth of the banking operations of these societies has been correspondingly rapid, as shown by the following figures (in millions of roubles) : — Assets 1 Advances Invest- On Jan. i Notice 22-3 At call 54-5 ments 1900 . 8-0 127-6 9-2 19IO . 49-3 2743 17-1 79-6 17-8 1911 . 556 3809 20-3 1083 i8-6 1912 . 577 505-4 26-5 155-9 20-5 1913 . . 61 -8 583-4 26-0 184-4 2I-I 1914 . . 62-2 579-0 27-7 206 -8 21-2 Liabilities On Jan. Capital I (fully paid and Deposits Borrowings •(Re-discount) reserve fund) 1900 . . . ' 38-0 168-3 1 14-9 I9IO . • • 73-5 3295 28-1 I9II . . . 93-8 405-6 60 -0 I912 . ■ • 119-7 487-4 126-6 I913 • ■ 142-1 545-1 159-7 I914 . . . . 150-9 595-4 157-7 MONEY AND CREDIT. 385 In dealing with the institutions of commercial credit, mention must be made of municipal banks. These exist chiefly in towns with poorly developed trade, where they are the sole credit institutions. The first of these banks was founded on October 29, 1809 '< by January i, 1914, there were 319 of them. At the present time the activity of municipal banks is regulated by the Laws of April 26, 1883, and January 13, 1912, by which the mini- mum capital of such a bank is fixed at 10,000 roubles, while the total liabiUties must not be more than ten times the total ordinary-stock and reserve capital. These banks not only give short-term credit but grant loans to municipalities and zemstvos and also on security of real estate. They also do pawnbroking business. Data concerning the activity of municipal banks are given below (in millions of roubles) : — Assets Liabilities On Cash Capital Jan. I (fully Dis- Ad- Invest- paid and De- Borrow- accounts at banks counts vances ments reserve fund) posits ings 1900 II-5 70-3 45-8 I4-I 389 84-1 0-4 I910 20-3 79-5 73-2 17-0 51-6 128-6 2-2 I91I 25-5 89-3 767 17-2 53-5 146-3 2-6 1912 265 105-8 83-3 17-8 55-5 I66-I 4-5 1913 25-5 117-1 93-6 17-7 577 183-5 51 1914 23-0 1 126-1 io6-2 17-8 597 198-4 8-0 Rural districts are supplied with credit by special popular co-operative banks of various names but grouped under the general head of small credit institutions. These advance money to the rural population, to individuals and also to groups of individuals for periods up to twelve months on personal or against material security or against sureties of third parties, and, if the bank has long term deposits, for periods up to five years against material or personal c C 386 RUSSIA: ITS TRADE AND COMMERCE. securit}/. Co-operative banks also undertake inter- mediary operations in the sale and purchase of goods for their clients. They receive part of their working capital in the form of subsidies from the Treasury and part from deposits and loans. The members of such institutions have a mutual liability for their obligations. Their operations are regulated by the Law of June i, 1895. Of recent years, the extension of credit by the State Bank to such small co-operative banks, the grant of subsidies to them from the savings banks, both as contributions to their capital and for the construction of grain elevators, depots, etc., have immensely -strengthened their position. Their number has greatly increased, and their previously disconnected efforts have been united by the foundation of the Moscow People's Bank. This bank which started business in April, 1912, is now their central credit institution. Operations of small credit banks are shown in the follow- ing figures :• — Institutions and participants Operations (millions of roubles) On Jan. I No. of institu- tions No. of partici- pants (thou- sands) Advances Own resources Deposits Borrow- ings 1910 . 1911 . 1912 . 1913 . 1914 . 9-978 11,567 13,627 15,979 17,933 4,644 5,578 7,095 9,008 10,678 213-0 279-2 389-8 5247 673-0 75-0 87-0 1090 130-0 1577 144-2 198-8 284-7 365-0 466-0 24-9 377 58-9 105-4 128-0 Long-term credit. In a predominantly agricultural country like Russia, where urban civiHzation is not of long standing long-term credit is very important, providing owners of real estate with the capital required for estate improvements and for the development of town lots. Long-term credit operations are conducted by 56 institu- MONEY AND CREDIT. 387 tions, of which two are of the type of State banks for particu- lar classes (the Nobility's and Peasants' Land Banks), one a zemstvo, andten joint- stock banks, the remainder belonging chiefly to the co-operative banks of land and property owners. This credit is usually realized in the form of land mortgage to the bank for a term mostly up to 43 years 6 months — 66 years 6 months, mortgage on buildings, gardens, etc., for a term of 14 years 6 months,. 18 years 7 months, and 26 years 9 months. The mortgaged real estate is valued on the basis of existing prices, and loans are to the mort- gager to the amount of 60 per cent, of the estimated value ; in the case of co-operative banks the proportion is raised to 75 per cent, if the mortgaged immovable is allowed. Pay- ment of loans is usually made in 4I per cent, debentures, these always finding a ready sale. Latterly, owing to the rise in the price of land, resulting from the growth of the urban population and the high price of cereals, long-term credit operations have been greatly extended. The figures below show the development of the indebtedness of extra-urban and urban real^ estate (in millions of roubles) : — Extra-urban Years real estate (land-owner- ship) Urban real estate Total 1870-1879 3537 218-5 572-2 1880-1889 . . . 776-5 416-1 1192-6 1890-1899 1246-4 620-6 1867-0 I 900-1 909 21237 II68-6 3392-3 On January i — 1910 .... 2773-1 1265-2 4038-3 1911 .... 30517 13937 4445-4 1912 .... 3300-2 1496-8 47970 1913 .... 3478-8 1642-6 5I2I-2 The Law of June 26, 1912, founded, as a State establish- ment, the Zemstvo and Urban Credit Bank, the object of which is to make loans to zemstvos and towns and to carry 388 RUSSIA: ITS TRADE AND COMMERCE. through the realization of zemstvo and urban debenture loans ; by the same law the right is granted to joint-stock land banks to issue loans to zemstvos and towns without mortgage security. Up to January i, 1917, the Bank had issued long-term loans to municipalities for 26,351,000 roubles, and short-term loans for 8,376,000 roubles ; to zemstvos, long-term loans for 15,480,000 roubles, and short- term loans for 16, c 82,000 roubles. Chattel credit in Russia is served by a series of pawnshops, of which two are national, eighteen joint-stock, and 105 muni- cipal. State pawnshops operate principally with pledges and storage of valuables ; chattel credit in the broad sense of the word is provided by joint-stock and municipal pawn- shops. General data about the operations of pawnshops are given below (in millions of roubles) : — On Jan. i Advances Capital (fully paid and reserve fund) Borrowings 1900 19IO 191I I912 1913 I914 28-1 53-8 54-4 587 637 68-2 19-8 317 35-2 40-5 43-8 46-9 I2-I 34-3 30-3 39-5 39-4 44-4 In conclusion we must mention the savings banks. These were founded in Russia by the Law of October 16, 1862, but, owing to the general economic conditions of the country at that time, they did very little business. With the growth of commercial life came the growth of these banks. Per- ceptible increases in deposits began in 1890-1900. A new Law issued on June i, 1895, substantially simplified the opening of new banks, and at the same time offered the depositor many important conveniences which greatly facihated operations. MONEY AND CREDIT. 3«9 No. of savings banks No. of savings Balance of On ]i in. I banks books (in thousands) money deposits (mil. roubles) 1870 . 64 67 4-8 1880 . . 75 97 7-6 1890 . " 871 638 III-3 1900 . 4781 3.145 608 -3 19IO . 7.051 6,940 1282-9 191I . 7.3^5 7.436 1396-8 I912 . 7.705 7.973 1503-0 I913 . 8,005 8,455 1594-9 I914 . • 8,553 8-992 1685-4 According to the statute, the maximum hmit for any single depositor is 1,000 roubles, and for hypothetical persons 3,000 roubles ; amounts in excess of these limits are converted into securities. Nevertheless, by a regulation of the Council of Ministers sanctioned by the Emperor on June 7, 1915, the Minister of Finance is empowered to authorize individual savings banks to accept deposits without restriction of amount. Depositors may purchase securities on account of their deposits through the banks which deal with such securities free of charge. Savings bank deposits in securities are shown below :— On Jan. i No. of bank books (thousands) Balance of deposits in securities (mil. roubles) 1910 1911 1912 I913 1914 189 193 200 211 231 279 287 300 318 349 As a rule the savings banks pay 3-6 per cent, on deposits. By the Law of May 30, 1905, life insurance business was added to deposit operations. Until recently savings banks 390 RUSSIA: ITS TRADE AND COMMERCE. deposits were invested in securities, chiefly State funds, mortgages, and railway loans guaranteed by the Govern- ment. Under the Law of June 21, 1910, several changes were introduced : 10 per cent, of the annual increase in deposits is allotted to small credit institutions in the form of loans for long periods (up to twenty years), as contribu- tions to the ordinary capital of such institutions, and also for shorter periods, if used for the purchase of stock (periods up to three years) or for estate improvements (periods up to five years). V Progress in the domain of banking and credit in Russia has resulted in the creation of a national money market. The Russian money market regarded as an important independent financial system is a product of recent economic development. Only recently has it acquired the characteiistics of the rich foreign money markets. Up to the end of the nineteenth century, the Russian market had difficulty in meeting even the limited demand for money on the part of current business, and was of almost no importance as a market for capital. All loans of any importance were concluded abroad. Indeed, even now, notwithstanding an extraordinary growth of resources, the Russian money market is comparatively small. Owing to the low average level of material well-being the accumula- tion of capital is a slow process. By no means all classes of the population have been brought within the sphere of credit relations. Again, the number of banks and savings- banks, although it has increased very considerably in recent years, is yet insufficient when compared with the size and population of the gigantic Russian Empire. The following figures give the growth of capital and savings : — MONEY AND CREDIT. 391 I. Savings (Millions of Roubles) Deposits aiK i current accounts in credit institutions and savings banks in — At end of vear , S at Jomt- stock ^ com- Mutual credit Muni- ' Small cipal .credit Savings Total Growth ( + ) or decrease B an mercial socie- banks institu- banks (-)for banks ties tions year 1900 I 6^ 5 536 178 97 662 1,641 . . 1901 I 8^ t 545 180 98 — 723 1,730 89 1902 2 5; 613 198 102 — 784 1.954 4-224 1903 2 35 722 216 107 — ■ 860 2,136 + 182 1904 2 5^ ) 77^ 215 109 — 911 2,266 4-130 1905 2 6. [ 671 191 108 • — ■ 831 2,065 -201 1906 . 2 4S ) 761 203 109 — 1.035 2,357 4-292 1907 ' 2 3] [ 818 229 1 10 95 I-I49 2,632 + ^75 1908 2 IC > 976 271 115 113 1,207 2,892 4-260 1909 2 7- } 1,262 329 129 144 1,283 3,421 4- 52^' 1 910 2 6 [ 1,675 406 146 199 1.397 4,084 4-665 I9H 2 5^ i 1,817 487 166 285 1-503 4,516 + 432 I912 2 6( ) 2,293 545 183 365 1.595 5-247 4-740 I913 2 6^ J 2,539 595 198 466 1,685 5.746 4-499 II. L ^lOUNT OF Secur ITIES (MiLLIC )Ns OF Roubles) Secun ti es distnb uted i ti this countr y:-^ At end Governme Stocks an other secu nt d ri- J a tlortgages issued by oint stock nd public Total Growth (-f ) or decrease of year ties guarant by the Governme 3,212 eed nt m tut t utual insti- ionsof long- grm credit (— ) for year 1900 1,903 5-II5 I9OI 3,382 1,960 5.342. 4- 227 1902 3-434 2,070 5,504 4- 162 1903 3,563 2,157 5,720 4- 216 1904 3.912 2,230 6,142 + 442 1905 4,462 2,252 6,714 , + 572 1906 4,739 2,247 6,986 + 272 1907 4,906 2,229 7,135 ; + 149 1908 5,151 2,257 7,408 + 273 1909 5-354 2,356 7,710 4- 302 191O 5,505 2,565 8,070 4- 360 I9II 5.782 2,793 8,575 + 505 I912 6,027 2,956 8,983 + 408 I913 6,238 3,142 1 9.380 + 397 Registered in the credit institutions of the country. 392 RUSSIA: ITS TRADE AND COMMERCE. III. Capital of Joint-stock Enterprises (Mill. Roubles) Capital of commercial and industrial enterprises and railway companies : — , Commercial and industrial undertakings At end of year Ordi- nary Deben- tures Total Joint- stock railway companies Total capital Growth ( + )or decrease {-)for year 1900 1,742 199 1,941 144 2,055 I9OI 1,899 211 2,120 116 2,236 + 181 1902 1.990 233 2,223 116 2,339 + 103 1903 2,016 233 2,249* 116 2,365 + 26 1904 2,134 233 2,367 116 2,483 + 118 1905 2,391 309 2,700 116 2,816 — 1906 2,517 323 2,840 116 2,956 + 140 1907 2,635 318 2,953 116 3,069 + 113 1908 2,774 321 3,095 132 3.227 + 158 1909 2,819 323 3,142 139 3.287 + 54 I9IO 2,999 319 3,315 140 3.458 + 177 I91I 3,301 341 3,642 ~ ~ The above tables clearly show that the growth of capital and of savings in Russia has in recent years been extremely rapid. This rapid growth is closely connected with the increase in the funds at the disposal of the Russian money market, in which the current, mobile resources of the country are concentrated. To make our picture more complete we include in the following table the capital belonging to the banks themselves. Thanks to this growth of resources, the Russian money market has been able to solve many important national economic problems. In recent years Russia has obtained enormous sums from her home money MONEY AND CREDIT. 393 market and national development has been based mainly on national capital. Funds at disposal of the Russian Money Market (Mill. Roubles) Private credit institutions (Joint-stock companies, banks, mutual credit institu- tions and municipal banks) State Bank Total Total At end of year De- posits (not in- Capital eluding [Govern- ment j money) Own capital De- posits Growth for year Own capital De- posits 1900 190I 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 354 356 344 363 365 371 395 412 424 456 589 736 941 1,047 811 822 913 1,042 1,099 969 1,073 1,157 1-363 I-719 2,227 2,470 3,011 3,332 55 168 55 184 55 257 55 231 55 255 55 264 55 249 55 231 55 210 55 274 55 261 55 258 55 266 55 i 263 409 411 399 418 420 427 450 467 479 511 644 791 996 1,102 979 1,060 1,170 1,273 1,354 1,233 1,322 1,388 1,573 1-993 2,488 2,728 3,277 3,595 1,388 I-471 1-569 1,691 1,774 1,660 1,772 1.855 2,052 2,504 3,122 3,519 4,273 4.697 + 83 + 98 + 122 + 83 -114 + 112 + 83 + 197 + 452 + 618 +393 +754 +424 In contradistinction, however, to the wealthy markets of Western Europe, short-term investments are still the most im- portant part of the Russian market. National capital cannot yet meet all the national needs, to say nothing of foreign in- vestments. This state of affairs is due to two causes — to the comparative slowness of the process of capital-building and to the increased demands for capital in consequence of continued extensive internal economic development. The outlays of the Russian money market in short-term investments are given below. 394 RtfSSIA: ITS TRADE AND COMMERCE. Balance on account of Active (Asset) Operations of the State Bank, of Private Commercial Banks, Societies of Mutual Credit and Municipal Banks (Mill. Rbls.) 1 Advances against security of merchandise Growth for year On Jan. i Discount and documents of title to merchandise Total upon short-term investments Lgo8 1,164 819 1.983 1909 1,268 811 2,079 + 96 I9IO 1444 942 2,386 + 307 I9II 1,889 1,461 3.350 + 963 I912 2,353 ^^m 4,126 + 776 1913 2,693 2,074 4.763 + 637 I914 2,878 2,313 5.I9I + 488 The above figures do not include the outlay of private banking houses and numerous small credit institutions. A guide to the capacity of the Russian capital market may be found in the issues of securities, the data for which are available only for the following years : — New Issues of Russian Securities (Mill, of Rbls.) In Russia Abroad Total Per cent. Per cent. Per cent. 1908 . 645-2 65-9 254-4 34-1 899-6 100 1909 . . . 449-8 79-3 345-5 20-7 795-3 100 1910 . 713-8 1T1 205-1 22-3 918-9 100 1911 . 980-3 56-6 256-0 43-4 1236-3 lOO-O 1912 . 868-0 71-7 448-3 28-3 1316-3 lOO-O Total for five years . 3657-1 70-8 1509-3 29-2 5166-4 loo-o Average for year . 731-4 70-8 301-8 29-2 1033-2 loo-o For the period under review the money market met the home demand with fresh capital of from 450,000,000 roubles MONEY AND CREDIT. 395 to 980,000,000 roubles annually, or, on an average, 731,000,000 roubles a year, i.e., more than two-thirds of all the Russian issues. This supply of capital is considerable, especially if we remember that previously Russia may be said to have had practically no money market of her own. Nevertheless, even in recent years, about one-third of Russian issues have been placed abroad, thus giving rise to an influx of foreign capital. The direct consequence of the extensive use of foreign capital has been large foreign indebtedness. Russia's national debt, and in particular her foreign in- debtedness are greater than those of most other Great Powers. In Russia discount and loan rates are higher than in wealthier countries : the insufficiency of the home supply of capital and the consequent necessity of attracting capital from abroad compel high rates of interest to be maintained. During the past five years the discount rate in London has touched i^ per cent., and in Paris to i| ; while in Petro- grad it has only fallen to 4^ per cent. On the Russian money market, by reason of its comparative unimportance in the realm of international finance, by reason, further, of the imperfection of its mechanism of payment and settle- ment, and of the fact that the demand for money almost invariably exceeds the supply, fluctuations of the discount rate are reduced to a minimum. The rate is affected only by economic causes of a general national character and by movements influencing the international money market as a whole. The maximum increase of the discount rate in Russia is observed in the autumn and winter months, when there is a very big demand for money for the handling of the harvest of corn, cotton, and beet. The repayment of that money, owing to material defects in the payment and settlement system, takes place very slowly and ends only in March. In spring the market is very well supplied with money, and at that time the discount rate falls to its lowest point. It remains at a reduced level approximately until July, i.e., till the Nizhni-Novgorod Fair Settlements at the Fair make great 396 RUSSIA: ITS TRADE AND COMMERCE. demands : the discounting of market bills alone exceeds 50,000,000 roubles. From this moment the tendency to an increase in the cost of money begins to make itself felt, and is particularly strong from the middle of September to the middle of October. High discount rates are maintained till December, and then, gradually falling, reach their lowest level during the spring months. In addition to these causes the Russian discount rate is affected by the state of the foreign discount markets. The cheapness of money abroad enables the Russian money market to make extensive use of foreign credits, to increase its resources by borrowing for short periods on the rich Western European money markets. If the discount rate is low on these markets, more use is made of foreign money, if it is high, then the amount of short- term indebtedness to the foreign money markets is reduced ; and both conditions, of course, influence the level of the discount rate in Russia. When cheap foreign money is being freely used, the private discount rate on the Russian market declines without reference to the official discount of the State Bank ; when the supply of foreign credit is restricted, the rate rises very often reaching, and occasionally even exceeding, the Bank rate. Hence the state of foreign money and discount markets is of very great importance for the Russian money market. Thus a rise in the discount rate in Paris, where an enormous quantity of Russian bonds is held, or in London, the centre of international financial settlement operations, almost always compels Russia to raise her discount rate corre- spondingly. The discount rate in Russia is also affected by the predominance of six- or nine-month bills over shorter-term bills, by the distance between the centres of economic lite of the country, the vastness of the country as a whole, the lack of communication, the preponderance of raw material in the export trade, the insufficient organization of commercial inquiry bureaux, defects in commercial legislation, etc. Private discount in Russia is entirely unregistered. Data MONEY AND CREDIT. 397 regarding the movement of official discount rate of the State Bank are given above. The rate of interest on capital in Russia, as in every other country is subject to considerable fluctuations, varying in different geographical regions and according to the nature of investment. Its minimum, determined by the return of capital invested in fundamental forms of State debt, fluctuates about 4 per cent. ; money invested in other securities, on which a fixed rate of interest is paid on the par value, for example, various kinds of mortgages, give about 4I per cent.-4j per cent. ; the capitalization of solid dividend stock, for example, bank shares, fluctuates approximately about 6 to 6| per cent., i.e., the rate of interest on capital invested in solid private enterprises con- stitutes in Russia, on an average, not less than 6-6| per cent. For the facilitation of payments and settlements the Russian home market possesses special institutions — clear- ing houses — attached to the large branches of the State Bank. Their operations during recent years are shown below (milhons of roubles) : — Settled by Per- Claims trans- centage No. of presented Met by fers of Total No. of bran- for counter from claims trans- partici- ches payment claims one met by actions pants current counter a/c to claims another 1900 3 2,811 1,954 857 69-4 5,622 48 I90I 3 2,975 2,026 948 68-1 5,949 48 1902 3 3,624 2.507 1,116 69-0 7>247 51 1903 5 4,770 3.432 1,338 71-9 9,540 64 1904 5 5,449 3.986 1,463 73-1 10,898 75 1905 5 6,337 4,528 1,809 71-5 12,674 77 1906 5 5.999 4,363 1.635 727 11,997 73 1907 10 6,697 4,916 1,781 73-4 13.394 122 1908 16 8,422 6,007 2,415 7^-3 16,844 184 1909 24 9,885 7,003 2,881 70-8 19,769 230 I9I0 27 13,434 9,525 3,909 70-9 26,868 277 I9II 32 15,409 10,773 4,636 70-0 30,818 326 I9I2 40 19,855 14.414 5,442 726 39.711 402 I9I3 45 21,431 15,426 6,005 71-9 42,863 430 398 RUSSIA: ITS TRADE AND COMMERCE. In view of Russia's heavy foreign indebtedness, the regulation of foreign payments is chiefly effected by the aid of special measures, by a policy of regulation of the foreign exchanges. Large sums are required to meet obligations in foreign countries. In order to avoid con- stant shipment of gold and prevent disorganization of the exchanges, which is always possible under such conditions, the Russian Ministry of Finance maintains a gold fund abroad, which serves as a constant source for foreign pay- ments. This Russian foreign gold fund is kept on current account with foreign bankers and in foreign branches of Russian banks. Part of it belongs to the State Bank, part to the Treasury. The total amount of this gold and its distribution according to countries was as follows, on January i, 19 14, (millions of roubles) : — r ranee .... Germany . . . England .... Holland .... • 431 • 103 . 46 8 Other countries. 6 594 The actual method of utilizing this gold fund is as follows. In autumn, when there is a brisk export of corn, large numbers of the bills of exchange in foreign currency, given by foreign purchasers in payment for Russian grain, are bought up. In addition to these purchases the Ministry of Finance also acquires loans — chiefly debenture stock — floated by Russian railway companies on foreign markets. The Ministry takes over the proceeds of these loans in foreign currency, and itself pays the railway companies in roubles. Altogether the foreign gold fund is a very important part of Russia's mechanism for effecting foreign settlements. Thanks to this fund, the possibility of a marked rise in the exchanges and consequent efflux of gold to foreign countries is held in check by the fact that a stock of foreign currency is always available. In this connexion the so-called " report " oj)eration of MONEY AND CREDIT. 399 the State Bank is also of great importance. This opera- tion consists in the State Bank buying foreign currency (bills, cheques, etc.), from private banks and industrial undertakings for a certain number of roubles. At the same time the Bank promises to repay the same sum in foreign currency at a fixed date upon repayment to the Bank of the same sum in roubles. The " report " opera- tion thus in effect insures the rate of exchange and allows foreign banks to open credits to Russian banks and indus- trial undertakiags without any risk of loss arising from variations in tlie rate of exchange. Apart from the " re- port " operation, the State Bank also engages in the pur- chase and sale of foreign bills and cheques (in foreign cur- rency) at its Petrograd, Moscow, Warsaw, Odessa, and Riga branches. It deals both in bills actually on the market and also in bills for delivery at a stipulated period in the future. The Bank buys short bills (not over three months), cheques on sight. It also purchases bills paid in to the account of Russian exporters by foreign purchasers at the agencies of the Bank abroad, and gives the exporters the right to receive the equivalent in roubles at any of the branches of the Bank. The State Bank further sells bills {papier fait, and drawn on foreign correspondents of the Bank), cheques, foreign currency from the amounts stand- ing to the Bank's credit abroad, foreign bank-«o/^s, etc., and also grants credits secured by bills drawn on its own correspondents (the term of such bills not exceeding six months) . These measures facilitate Russian settlements with foreign countries and strengthen the position of the Russian money market. The principal market for stocks and shares in Russia is the Petrograd Stock Exchange, followed in importance by the Moscow Exchange, and to a less degree by the Exchanges of Warsaw, Riga, Odessa, Kiev, and Kharkov. The Petrograd Stock Exchange was founded in 1703, but it was in 1900 that it was organized for stock and foreign exchange business, as a section of the general Bourse. It is now regulated by the rules of January 10, 1901, and is made up of : — 400 RUSSIA: ITS TRADE AND COMMERCE. 1. Actual members consisting of representatives of banks, who pay a member's fee of 200 roubles a year. 2. Regular visitors possessing business certificates of the first category in Petrograd, who also pay 200 roubles yearly. 3. Guests with the right of visiting the Exchange only on the recommendation of actual members. The actual controllers of the Stock Exchange are those who form the Council of Administration, chosen from the actual members. This Council supervises the quotation committee, which also includes representatives of the Ministry of Finance, the Institute of Brokers, etc. Regular visitors may only attend general meetings of the Stock Exchange, and can only do business through brokers. For actual members, on the other hand, brokers' services are not compulsory. The stockbrokers must be recognized by the Ministry of Finance, and are obliged to deposit a security of 15,000 roubles, besides being sworn in. Brokers are forbidden to deal on their own account. For their participation in the stock and foreign exchange transac- tions they receive a commission at rates sanctioned by the Minister of Finance, viz. : for transactions in stocks, y\y per cent, of the amount of the transaction from both the seller and purchaser ; for transactions in shares of low value, not less than 15 kopeks per share from both parties ; for discount of accepted foreign bills of exchange, according to the term, from 3^,- per cent, to | per cent, from the dis- counter and the seller of the credit liabilities ; for transac- tions in foreign drafts and cheques, j\, per cent, from the seller. In practice, the scale of commissions is not strictly applied. On the Petrograd Stock Exchange the rules of November 10, 1907, regulate transactions in stock on hand and for delivery at a stipulated date. Such transactions for future delivery are, however, very different from the analogous " dealings in futures " on other European exchanges. They are without some of the essential elements of " fu- tures " and their settlement, contrary to foreign practice, MONEY AND CREDIT. 401 takes place directly between the parties themselves without the intervention of an intermediary institution. The result of the absence of real dealing in futures on the Russian Stock Exchange has been to affect prejudicially the extent and stability of the business done. At the beginning of 1914 this defect was to be eliminated by the introduction of genuine future transactions on the Petrograd Stock Exchange. On business days the quotation committee draws up an official Stock Exchange bulletin which is published in Russian and French. Besides information about the state of discount and transactions in foreign exchange, the bulletin gives data (i) regarding the nominal (face) value of stock, dates of payment of coupons of loans bearing a fixed rate of interest, dividends on shares during the last three years and the working-years of industrial undertakings (2) prices for extensive as well as for small transactions, buyers' and sellers' prices at the closing of the Exchange and official closing prices. The absence of single quotations is a defect of the Petrograd Stock Exchange bulletin. Admission of securities to quotation on the Exchange takes place in accordance with the rules of September 5, 1902. According to these rules Government stock and securities backed by a Government guarantee are admitted to quotation on an order to that effect from the Minister of Finance. Munici- pal loans, mortgage bonds of private and mutual long-term credit institutions, and all kinds of industrial .and com- mercial shares and debentures are admitted by resolution of the Exchange Council. In this case documents relating to the origin and activities of the undertakings in question — statutes, balance-sheets, reports, etc., etc., have to be laid before the Council. The minimum amount of a stock to be quoted on the Exchange is usually fixed at 500,000 roubles at par. The usual denominations of shares are 100 and 250 roubles, while 1,000-rouble shares are not infrequent. The nominal (par) value of securities quoted on the Petro- grad Stock Exchange amounted on January i, 1913. to over seventeen milliards of roubles. DD 402 RUSSIA: ITS TRADE AND COMMERCE. The distribution of these securities was as follows (in millions of roubles) : — I. With Fixed Interest. Loans : State and State railways 8.623 Private railways . . . . 1,574 Municipal . . . . . 240 Mortgages : State land banks . . . . 2,061 Joint-stock land banks , 1775 Co-operative land banks 1,161 Debentures : Joint-stock commercial and indus- trial enterprises 98 II. Stocks and Shares. Steamship Companies ... 48 Insurance and transport companies 54 Railways ..... 114 Commercial banks 452 Land banks, . . ... 88 Pawnshops , II Distilleries and breweries II Colliery and mining enterprises 46 Petroleum undertakings 94 Glass ...... 15 Cement . . . . . 18 Metal and mechanical . • 297 Manufacturing .... . 83 Water, gas, and electricity . 52 Various ..... 122 Total ..... 17,037 The total number of securities dealt in at that time amounted to 618, of which 323 were loans and mortgages and 295 shares. To complete our picture we give figures showing the number and total par value of Russian securities quoted abroad on January i, 1915 {sec page 403). VI. The war has ver}^ deeply affected the money markets of many countries, and that of Russia among them. At the present moment, however, this influence cannot be exactly MONEY AND CREDIT. 40: Fixed interest stocks and Share Total Amount Amount Amount No. (mil. roubles) No. (mil. roubles) No. (mil. roubles) Paris 69 7^905 71 642 140 8.547 London . 44 5.775 79 268 123 6,043 Brussels . 75 5.443 66 317 141 5.760 Amsterdam . 92 8.502 7 105 99 8,607 Berlin 75 6,443 35 376 no 6,824 appreciated. On the eve of the war there had been a great industrial boom in Russia, inevitably accompanied by large imports of foreign goods and a strong demand for money and capital. These two causes had unfavourably affected the rate of exchange, thus compelling the State Bank to keep the discount rate at a high level. Owing to the exhaustion of the home market and the dearness of money abroad, it was difficult even at that time to satisfy the demand. In consequence Russia's balance of foreign indebtedness showed in 1913 a considerable debit, v/liich unfavourably affected the rate of exchange of the rouble and compelled the State Bank to keep the discount rate at a high level. Even then it was difficult to meet the increased demand for money and capital, for the resources of the home money market were exhausted and it was impossible to make extensive use of foreign credits owing to the dearness of money abroad. 1914 brought no change. It is true that the slackening of the trade boom in the world market made it easier to obtain foreign credits, but the pohtical complications of the spring of 191 4 and Russia's less favourable balance of trade did not allow the Russian money market to attain normal conditions. Under such circumstances, the declaration of war could not fail to result in financial disturbance. The declaration of war on July 19 (old style) everywhere put the whole money and credit system out of gear, and at times the disturbance even assumed the form of a panic. 404 RUSSIA: ITS TRADE AND COMMERCE. The alarm which took possession of the international money market soon after the famous Austrian ultimatum to Serbia spread to Russia and there as everywhere else led to the Stock Exchange becoming demoraUzed. As the hopes of a peaceful solution of the points at issue between the Great Powers gradually faded away Stock Exchange business collapsed. Large numbers of solid securities fell with a rush, engendering panic and universal depression. On July i6 (old style), following the example of the Vienna and Brussels Stock Exchanges, the Petrograd Stock Exchange was closed for an indefinite time, by order of the Ministry of Finance, and the rest of the Russian exchanges followed suit. Public feeling in Russia eagerly desired peace, and sincerely believed in the possibiUty of a European settle- ment without recourse to arms. Thus although the political crisis which preceded the war lasted a fort- night, its outcome — the war — came as a complete sur- prise to the Russian money market. Exaggerated fears of the German menace to the capital and more especi- ally to the frontier regions immediately arose. Moreover, owing to mobihzation, demand for money sprang up every- where. At this acute moment, however, the assets of the Russian banks were far from liquid and the closing of the Stock Exchange deprived them of the possibility of strength- ening their cash reserve by the sale of securities. Many banks somewhat lost their heads and in most cases greatly curtailed their operations, a step which was all the more natural since the moratorium declared on July 20 affected a large number of governments (provinces) and left the banks no hope of a speedy release of sums invested in dis- counting operations running to many millions of roubles.^ 1 By the Ukase of July 20 (August 2) holders of bills of exchange were granted the right, in the event of non-payment, to postpone protest of bills without loss of the bills' validity. Subsequently the Ukase of July 25 (August 7) established a moratorium which post- poned till September 25 (October 8) payment on account of bills drawn before the war in the western and southern governments. The Ukase of November 11 (24) restricted the moratorium to ten governments, but a general moratorium was left in force for the theatre of war. MONEY AND CREDIT. 405 The result of this was a whole number of difficulties, a pessimistic view of the general financial position and a panic which affected chiefly the districts adjoining the actual theatre of war. This panic was, however, short lived, lasting little more than a week. A very important part in allajdng the fears of the market was played by the popularity of the war amongst the people, for the Russian people speedily became convinced that the war was being waged in a righteous cause and that the issue would be certain victory for Russia. Great Britain's active adherence to the Russo-French Alliance materially aided in the restoration of confidence. The State Bank gave great help to the market. By rapidly opening credit to private banking institutions it averted the crisis which had begun. How great was this help will appear from the fact that from July 16 (29) to August I (14) the indebtedness of joint-stock banks to the State Bank rose from 179,000,000 roubles to 564,000,000 roubles (+ 385,000,000 roubles), i.e., it absorbed more than half of the issues of bank-notes effected at that time. Evidently, under such circumstances, the position of the State Bank as the central organ of the Russian money market was subjected to serious trials. While supporting the market, the Bank was obliged not only to return big sums on current account belonging to the State, but also to give to the latter the financial aid indispensable under such critical conditions. The position was further complicated by an acute shortage of foreign exchange material in consequence of the almost complete stoppage of Russian export and the moratoria declared in some countries for bank deposits. The latter circumstance made it impossible for the State Bank to withdraw the money it had lodged on current account with its foreign correspondents. Hence arose the necessit}^ of immediately expanding the Bank's right of note issue, at the same time suspending the convertibility of the Bank's notes, and this was done by the Law of July 27, 1914. Thanks to the Uberal assistance of the State Bank the disturbance of the Russian money market was not of long 4o6 RUSSIA: ITS TRADE AND COMMERCE. duration. The deposits which had been withdrawn began to lind their way back to the banks in the second half of August, and by September the money market had quietened down. It was not, however, until October that the state of the market allowed of the flotation of a war loan, and even then the loan was a comparatively small one (500 million roubles). Up till then, since it was impossible to carry out any extensive credit operations in the money markets of Allied countries, Russia's war expenditure was covered in the' following ways : — (i) By utilizing the free cash resources of the State Treasury (514 milHon roubles). (2) By the issue of 4 per cent. Treasury Bonds (300 million roubles). Such bonds may be regarded as interest- bearing money and find a wide market in capitalist circles. (3) By the issue of 5 per cent, short-period Treasury Bills (400 million roubles). Such Bills are discounted for the most part by the State Bank and only in a minor degree by the joint-stock banks. Thus even the first three months of the war showed fairly clearly that for the money market the assistance of the State Bank was merely temporary. On the other hand, the assistance afforded by the Bank to the State, though at first not extensive, was found, in view of the slight capital resources of the home market and of the impossibility of borrowing any considerable sums abroad, to assume very considerable dimensions and further to become permanent. It was further clear that under such conditions the rouble exchange, left to look after itself and deprived of all means of external support, became subject to chance demoralizing factors which exercised an effect on the actual rate of exchange quite independent of the actual strength of the position of Russian currency. On the basis of these facts there naturally developed the present system of financing the war in Russia, a system which has given the Russian money market and the Russian currency system a distinct character of their own during the war. Since the system in question is entirely based on State MONEY AND CREDIT. 407 credit the chief place in it is occupied by war loans. The enormous war expenditure, however, has of necessity forced such loans to be issued with extreme rapidity and has strained the whole credit and money resources of the nation. Hence in Russia's system of war finance, along with the usual form of loans, a large and ever-growing share has been played by the issue of paper money. Russia's credit operations up to the present may be summarized as follows. The long-period loans floated in the home market are shown in the following table : — Per cent. Issue price Amount of loan (in mill. roubles) October 3, 1914 February 6, 1915 .... April 24, 1915 October 28, 1915 .... February 10, 1916 . . October 10, 1916 .... 5 5 5i 5i 5i 5i 94 94 99 95 95 95 500 500 1,000 1,000 2,000 3,000 Total 8,000 Four-year Treasury Bonds, which are issued in denom- inations ranging down to 25 roubles and which are accepted in payment at all branches of the Treasury, have been placed on the home market in the following amounts : — • Per cent. Price of issue Amount issued (in mill, roubles) August 22, 1914 March 27, 1915 . . August 14, 1915 4 4 4 100 100 100 300 300 250 Total 850 4o8 RUSSIA: ITS TRADE AND COMMERCE. Further, the method of utilizing paper money issue has involved the issue of 5 per cent, short-term Treasury Bills, which are usually discounted at the State Bank. The amount issued was at first very small but afterwards greatly increased. The following table shows the Hmit fixed for the total issue at various periods. Maximum fixed for issue (in mill, roubles) I2th Issue — August 26, 1915 . . 4,000 13th Issue — December 30, 1915 . . 6,000 14th Issue — June i, 1916 . . . 9,000 15th Issue — October 10, 1916 . . 12,000 — 12,000 ^ The credit operations carried out in the home market during the war may thus be summarized as follows : — Long period loans ..... 8,000 Treasury Bonds ..... 850 Treasury Bills ...... 12,000 ^ Total . . . . . . 20,850 In addition, Russia, in order to obtain resources for the payment of orders placed abroad, has obtained considerable credits on foreign money markets. By virtue of a series of Ukases credit operations abroad are allowed for effectua- tion to the following amounts : — October 6, 1914 . £12 million December 22, 1914 . £^0 June 10, 1915 . ^50 ,, September 9, 1915 . £30 £132 million March 13, 1915 .... 625 million francs April 16, 1915 . 200 million roubles October 9, 1915 . 5,500 June I, 1916 . 225 October 22, 1916 . 2,000 7)925 million roubles Total ..... 9,410 million roubles ^ At the beginning of December (1916) the actual issue amounted to 9,125 million roubles, of which 6,236 million roubles were dis- counted at the State Bank and 2,889 naillion roubles on the open market. MONEY AND CREDIT. 409 The total amount to which the Ministry of Finance is entitled to reaUze loans at home and abroad thus amounts to the gigantic sum of over 30,000 million roubles. Internal External Russian War Loans 20,850 million roubles . 9410 „ Total .... 30,260 million roubles These thousands of millions of roubles have been used to cover the similarly gigantic expenditure on the war. The following table shows Russian war expenditure. Russian War Expenditure (Preliminary data) (in millions of roubles) Including Per Quarter Total expenditure abroad III Quarter, 1914 950 ■ ■ IV 1.247 82 I Quarter, 1915 . 1,598 247 II 1,668 359 III „ 2,201 275 IV „ 2,808 1,037 I Quarter, 1916 2,757 915 II 3.322 707 III „ 3,628 1,351 The Russian currency system has undergone deep changes during the war, due chiefly to the increasing issue of paper money for the discounting of Treasury Bills at the State Bank, to the fall in the rate of exchange of the rouble on foreign markets, and to the token-money crisis. In consequence of the increasing demands made by the discounting of Treasury Bills at the State Bank the Bank's right of note issue has repeatedly been expanded, as will be seen from the following table (figures in milhon roubles') : — ■ 410 RUSSIA: ITS TRADE AND COMMERCE. Expansion of State Bank's Fiduciary Issue By Law of July 27, 1914 (Decree of July 23, 1914), from 300 million roubles to 1,500 million roubles. By Law of March 17, 1915, to 2,500 million roubles. By Law of August 22, 1915, to 3,500 million roubles. By Law of August 29, 1916, to 5,500 million roubles. In order to reduce the demands made by the discounting of Treasury Bills on the State Bank's note issue it was announced on October 13, 1915, that Bills were to be placed also with private capitaHsts (the joint stock banks had even before that date taken over a certain proportion of the BiUs). This measure was to a certain extent successful. The desire to increase the Bank's gold reserve has found expression in various measures — in the prohibition of the export of gold (September 14, 1915), in the withdrawal of gold coin from circulation (beginning with July, 1915), in offering foreign currency at par rates in exchange for gold coin (from May 19, 1915, to January i, 1916), and also in the fixing of a premium on gold paid into the Treasury, the premium amounting to 45 per cent. (January 14, 1916). Further a portion of the sum raised by means of foreign loans was, beginning from November, 1915, placed to the credit of the State Bank, thus increasing the Bank's foreign resources. ^ In the course of last year Russia experienced a token- money crisis, which came to a head in Petrograd on August 17, 1915, and was afterwards felt in other districts more or less connected with the theatre of war and in direct contact with the stream of refugees from Poland and the western provinces. The acute shortage of token money 1 In terms of an agreement conchided between the Russian and the British Governments Russia has exported the following amounts of gold to Great Britain as cover for credits opened to her in that country. End of October, 1914 . 75-3 milUon roubles (;^8 milUon) Middle of May, 1915 . 94-5 ,, ,, (;^io million) Middle of November, 1916 94-5 ,, ,, (;^io million) Total . . . 2643 miUion roubles (^28 million) MONEY AND CREDIT. 411 was relieved by the issue of stamp money (small change in the form of stamps of the denominations of 20, 15, and 10 kopecks) (September 28, 1915), and Treasury notes or tokens of 50, 5, 3, 2, and i kopeck. The effect of the war on the activity of the State Bank may be seen from the following table, based on the weekly returns published by the Bank (figures in milHons of roubles). t"^ ^1A Discounts and Loans Liold. advances to the Current Bank Note State on security account of the circu- Ad- of State Tn lation vances Trea- Ex- J.11 Russia Abroad Total Total against securi- ties sury Bills chequer I9I4 Jan. I 1,518 170 1,688 1,665 1,604 201 — 608 July I 1,600 144 1,744 1,630 774 116 — 491 July 16 1,604 141 1,745 1,633 777 129 — 514 July 23 1,602 116 1,718 1,860 1,012 217 — 531 Aug. I 1,605 117 1,722 2,321 I,2Q2 252 — 518 Sept. I 1,612 178 1,790 2,554 1,198 212 175 231 Dec. I 1,533 215 1,768 2,846 1,162 258 473 211 1915 Jan. I 1,558 170 1,728 3,030 1,117 253 657 230 Mar. I 1,568 140 1,708 3,152 945 201 1,130 202 June I 1,574 124 r,698 3,477 1,236 601 1,573 491 Sept. I 1,589 52 1,641 4,211 1.235 616 2,423 212 Dec. I 1,607 228 1,835 5,201 1,375 775 3,289 203 1916 Jan. I 1,613 648 2,261 5,622 1,231 632 3.232 271 Mar. I 1,624 946 2,570 5-899 937 407 3,894 209 June r 1,540 1,494 3-034 6,380 1,184 686 3,679 264 Sept. I 1,552 2,055 3,607 7,122 1.246 447 4.420 207 Oct. I 1,554 2,055 3,609 7,587 970 399 5,144 202 Nov. I 1,560 2,055 3,615 8,083 433 504 6,202 212 Nov. 23 1.465 2,150 3,615 8,305 856 520 6,014 215 The chief features of the Russian money market during the war are caution in the granting of credit, a reduction 412 RUSSIA : ITS TRADE AND COMMERCE. in the amount of discount material (bills), a serious rise in the rouble rates of foreign currency, and the authority of State credit over investments. The reserve which the money market displays has been in evidence ever since the early days of the war. War circumstances have not been in favour of a return to the usual methods of granting credit. Again the disorganization of goods transport and the disappearance of stocks (of goods) in consuming centres have led to a great reduction in credit transactions, i.e. business is now being conducted almost exclusively on cash terms. The provinces which used to buy goods from wholesale dealers in Petrograd and Moscow and pay for them six to nine months later now pays cash in advance. The quantity of commercial bills of exchange has thus been greatly reduced. The occupation of the manufacturing districts of Poland has also contributed to the shortage of commercial discount material, for business in these districts was for the most part carried on by means of commercial bills. Reduction in the Amount of Discount Material on the Market Approximate Figures End of 1914 . . . . .10 per cent. I9I5 50 M ,, 1916 . . . . . 70 ,, The holding back of supply and the lessening of demand have in their turn limited the requirements of the market in respect of capital seeking short-period investment, have increased the resources available for long-period investment, and have caused the market rate of discount to fall. The official discount rate of the State Bank which was raised on July 15, 1914, from ^\ per cent, to 6 per cent, has since then remained at the latter figure. The fluctuations in the private (market) rate during the war may be seen from the following table (figures represent rate per cent.) : — 1914 1915 191 January . 6 54 5l Februar\- . • 5 5f • 51 March " . . . 51 . • 5i . • 51 April . . 5i . 6 • 5i MONEY AND CREDIT. 413 1914 191 5 1916 Mav . . . -Si 6 • 5f June 51 • 6 • 51 July. 51-8* . 6 • 51 August 7f • • 61 . 5f September 7i • 6 • 51 October 6| . • 5-1 . • 5^ November 61 • 5-1 • 5f December 6i . • 51 54 The market discount rate in Russia during the war is in considerable measure determined by the investment of the resources of the joint stock banks in the discounting of 5 per cent. Treasury Bills, which so to speak compensate the lack of ordinary discount material. If we further bear in mind that the free resources of the market have been mobilized for the flotation of the War Loans, it becomes evident that the Russian money market, Hke the money markets of other belligerent nations, now serves ends quite different from those of peace time and has become simply an instrument of State credit. Below will be found data regarding the work of com- mercial banks during the war (figures in millions of roubles)' Cash and Securi- ties ~ current Dis- Ad- belong- De- Re-dis- accounts counts vances ing to posits counts in the banks 203 banks Jan. I, 1914 1,546 1,615 314 2,539 335 July I. „ 220 1.798 1,482 394 2,808 196 Sept. I, ,, 250 1,817 1,473 435 2,674 448 Dec. I, ,, 303 1,698 1,491 523 2,794 388 Jan. I, 1915 339 1,667 1,523 486 2,873 363 Mar. I, „ 305 1.738 1,520 506 3,082 279 June I, ,, 260 1,739 1,491 550 3,308 399 Sept. I, ,, 327 1,896 1,497 408 3,557 433 Dec. I, ,, 293 1,968 1,995 743 3.726 512 Jan. I, 1916 395 1,967 1.749 690 3,931 432 Mar. I, ,, 335 1.738 1,738 697 3,082 279 June I, ,, 376 2,315 1,776 767 4,786 334 Aug. I, „ 434 2,724 1,892 727 5,357 267 ^ The most recent date for which figures are available. 414 RUSSIA: ITS TRADE AND COMMERCE. One of the characteristic features of the activity of institutions granting short-term credit has been the growth of deposits during the war. The State Bank and the State Savings Banks show a particularly large increase, as may be seen from the following table of deposits (figures in milhon roubles) : — Private credit institutions — joint stock banks, mutual state Bank state credit institu- Savings Total j tions, munici- Banks 1 pal banks ] (preliminary data) Jan. I. 1914 . . 3,218 239 1,685 5.442 July I, „ 3.607 238 1,704 5.549 Nov. I, ,, i 3.427 443 1,721 5.591 Dec. I, ,, : 3,434 420 1.745 5.599 Jan. I, 1915 4.538 438 1.835 5.811 July I, „ 4.053 745 2.135 6,933 Nov. I, ,, 4.165 885 2,336 7.386 Dec. I, ,, 4,160 878 2,378 7,416 Jan. I, 1916 4.342 948 2,375 7.765 July I, „ 5.731 1.313 3.043 10,087 Oct. I, „ 6,809 1,441 3.458 11,711 Nov. I, „ . . 7,106 1.497 3.598 12,201 Increase on Nov. i, 1916, as compared with Nov. I, 1915 2,941 612 I,2C2 4,815 The shortage of foreign exchange material which had been felt even before the war assumed after the outbreak of hostilities, when exports almost entirely ceased, the dimensions of a positive famine, and this very seriously affected the rate of exchange of the rouble. It was, however, impossible to remove this state of affairs or even to lessen its prejudicial effects, since foreign indebted- ness increased owing to extensive imports, mainly of war material. On the other hand the supply of foreign exchange MONEY AND CREDIT. 415 material was almost a negligible quantity. The only way out of this situation was the conclusion of loans abroad. These, however, could not under the circumstances be very large, and their proceeds barely sufficed to cover payments in respect of war orders placed in foreign countries. The small supplies of bills which were in existence before the outbreak of war were quickly used up, and later the rate of exchange of the rouble showed a considerable and steadily increasing agio. With a view to counteracting this tendency a special department was set up on January 25, 1916, in the Credit Chancellery of the Ministry of Finance. This new depart- ment was given the task of exercising actual control over transactions in foreign exchange material and of fixing rates of exchange for payments to be made in the chief foreign markets — Allied and neutral. At first this Foreign Settlements Department was successful in its efforts to stop the fall in the rouble exchange rate, since its assistance rendered it possible considerably to counteract the influence of demoralizing factors which had affected the rouble rate. Later, however, it played a less important part, chiefly owing to the abundant supplies of Russian exchange constantly offered on Allied and neutral markets. On London {£ sterling) On Paris (francs) On Berlin (marks) Average, Highest Lowest Average Highest Lowest Average Highest Lowest 1909 . 1 94-77 95-55 93-90 37-63 38-04 37-33 46-31 4643 46-00 1910 . 94-57 1 94-80 94-30 37-47 37-57 37-37 46-30 46-30 46-08 191 1 . 94-63 94-85 94-37 37-46 37-71 37-30 46-23 46-30 46-16 1912 . 94-68 95-25 .94-57 37-58 37-80 37-20 46-32 46-51 46-17 1913 • I9I4— Jan. 95-04 95-52 94-45 37-62 37-77 37-39 46-41 46-61 46-27 94-85 95-22 94-57 37-63 37-71 37-65 46-32 46-41 46-22 Feb. 94-84 95-05 94-67 37-62 37-69 37-58 46-39 46-50 46-47 March 95-01 95-10 94-97 37-72 37-79 37-66 46-47 46-50 46-40 April 95-35 95-62 95-10 37-90 38-00 37-79 46-57 46-65 46-47 May- 95-74 95-90 95-45 38-01 38-09 37-87 46-68 46-78 46-53 June 95-72 95-92 95-45 38-02 38-11 37-90 46-68 46-73 46-58 July 1-15 96-07 96-85 95-72 38-18 38-55 38-01 1 46-77 47-00 46-71 4i6 RUSSIA: ITS TRADE AND COMMERCE. The fluctuations of the rate of exchange of the rouble before and during the war are shown in the following table : — Roubles for /"lo Roubles in francs and francs n roubles In London In Paris for — francs 100 R. In Petrograd In kopecks Petrograd I franc (Settle- (Foreign ments De- Settle- Highest Lowest partment quotations Highest Lowest ments Depart- ment quota- tions) I9I4 From Jan. i-July 15 96-85 94-57 — 265i 254 — ,, July 15-Dec. 31 125 1 10 — ■ 240 205 . — 1915 ,, Jan. i-Dec. 31 161I I49i — 240 169 — 1916 January 163I 153-1- 159-152 181 168 57-54i February 151 150^ 152-149 185 181 54-53 March 157 i5oi 149 192 182 52i April 156 1502 149 184 178! 53-52i May . 157 155 149 180 I76i 53 June I55f 155I: 149 1 86 J 178 53 July . I57i i55f 149-144 i84i 177 53 August . 1 56! 135-139 144 202 177 53-5 1 i September I52i I45i 144 I94i 180 52 October . 161A I53i 144 i88i 171 52 November 1 62 J 154 144 178^ 167 52 So considerable a fall in the rate of exchange of the rouble was naturally felt as a hardship both by Russian exporters and by foreign, more particularly by British importers. None the less, very few attempts have been made to deal with the disorganized state of the exchange. British banks in a few cases have opened draft credits for Russian banks of good standing, the settlement with regard to such credits to be effected at a rate of exchange which is to be fixed on the first day after the re-opening of Petro- grad Stock Exchange. Such operations, however, have for the most part been carried out on a comparatively slight scale. The Treasury could meet only a small pro- portion of the demands made by private importers for foreign currency. The result has been that prices of MONEY AND CREDIT. 417 imported goods have risen very considerably and consumers have in consequence had to pay enormous additional sums. In this connexion one may note the Imperial Decree of November 15, 1914, which regulates payments to foreign countries, the aim being to protect the national mone}^ market. The Decree imposes the following prohibitions : — (i) It is forbidden to make payments or send securities of any kind. (2) It is forbidden to export mioney, securities, silver, gold, and platinum to the amount of more than 500 roubles for each person. An Order issued by the Minister of Finance on March 26, 1915, interpreted the second prohibition as permitting the free export of cheques, transfers and letters of credit, payable abroad without any restrictions as to the sums involved. ^ The Russian Ministry of Finance negotiated with the Bank of France the loan of 500 milhon francs, to be repaid within a year after the war, in gold or in francs, without interest. The proceeds of the loan were used to repay to the French market debts con- tracted by banks or merchants and industrial enterprises who were not able to find bills of exchange to repay their creditors. The loan was made to the Russian State Bank under guarantee of the Russian State. The contract was signed in February, 191 5, by the Governor of the Banque de France and M. Arthur Raffa- lovich, financial attache to the Russian Embassy. E E CHAPTER XVI Joint Stock Companies By a. Kahan-Shabsay The existing laws as to Joint Stock Companies and partner- ships ^ have been evolved from the Law of December 6, 1836, which has remained without change up to the present time. However, as the Statutes ^ of Joint Stock Companies are confirmed by the Government and become valid only on the notification of Imperial consent, a special legislation has been created in connexion with Companies, which has become almost an integral part of the general law. This special legislation takes the form of Statutes of separate Companies, which not only supplement, but in many respects change the aspect of and abrogate the general law. In this connexion, it is necessary to consider separate Statutes, as most of these contain a series of resolutions which are not in agreement with the general law upon the same subjects. In each set of Statutes there is a reference to the general law, but it may be affirmed that this law, which takes the form of an explanatory memorandum on the regulations for Joint Stock Companies, drawn up as far back as 1872, exists on paper only. As a matter of fact, there arc, at present, no general company regulations in Russia. This is certainly true as regards the statutes of 1 Articles 2126-2198, Vol. X, Part I, Civil Laws ; Arts. 63, 64, 77, 78, Vol. XI, Part II, Trading Statutes. * Statutes are the articles of association sanctioned by the Im- perial authority. 418 JOINT STOCK COMPANIES. 419 individual companies, but the order in which they are confirmed shows greater uniformity, although practice has introduced quite appreciable digressions from the procedure established by the out-of-date law. The uni- formity in the order of forming Joint Stock Companies was the source from which sprang the diversity in the provisions of the Statutes themselves. Each of the Govern- ment Departments to which the Statutes are referred for examination, in the endeavour to include in the Statutes of newly formed Companies the greatest possible number of safeguarding conditions, introduces various regulations largely dictated by experience of the practical working of Statutes confirmed earlier. Having adopted the general principle that no Joint Stock Company can be founded without special sanction of the Government (Article 2140, Vol. X., Part I), the law established an exception in connexion with the formation of Joint Stock Banks having a foundation capital of not more than five million roubles. Joint Stock Rural Banks and private Pawn Shops. The Statutes of these credit institutions are confirm.ed by the direct authority of the Minister of Finance when they are in agreem.ent with the text of the Imperially confirmed Statutes of the Warsaw Discount Bank, of the Azoff-Don Commercial Bank and with the Statutes of the Charkoff, Petrograd- Toula and the Poltava Joint Stock Land Banks, and of the Company for mortgage of property in Petrograd and the private Pawn Shops of Petrograd and Odessa. All other Joint Stock Companies, from the largest to the smallest, cannot be formed without Imperial sanction. Requests for permission to form Joint Stock Companies are sent for examination to the Ministry within whose competency falls the object for which the Company is to be formed (Article 2189). In the majority of cases this means the Ministry of Trade and Industry ; but the Statutes of Joint Stock Companies, whose activities are to be directed to municipal services, or the exploitation of electrical or building enterprises, are examined by the Ministry of In- terior, while Statutes relating to credit operations are sent 420 RUSSIA: ITS TRADE x\ND COMMERCE. up for examination to the Ministrj^ of Finance. As, how- ever, the great majority of Statutes are lodged for examina- tion with the Ministry of Trade and Industry, we shall restrict ourselves to setting forth the practice established in that Ministry, which has a special " Joint Stock Department." To the petition for confirmation of the Statutes of a newly formed company, there is attached the project of the Statutes themselves, duly signed by the promoters, and a so-called explanatory memorandum. The latter must contain an exposition of the grounds on which the financial and commercial calculations of the promoters are based. Although the law makes the reservation that the sanction for the formation of a Company does not carry with it the Government's guarantee of the success of the enterprise itself (Article 2142), the same law establishes (Article 2131) that Joint Stock Companies are formed " In the interests of the political economy of the Empire," and would seem to impose upon the Government the duty of examining the extent to which each projected Joint Stock Company corresponds to the "Interests of the Empire's political economy." However, as neither the law nor the Ministry require from the promoters any proof of correct- ness in their calculations as to the success of the enterprise, the presentation of the explanatory memorandum has been transformed into a pure formality which has no influence on the final decision. At the present time the Statutes themselves do not demand much attention or examination on the part of the Ministry, as in the great majority of cases they arc an exact copy of Statutes already confirmed. Just as in England the adoption of normal Statutes by a Joint Stock Company (Table A, law of 1908) relieves the promoters of the necessity of drawing up Articles of Association, so in Russia the lodging with the petition of proposed Statutes which are copies of those already confirmed will, in most cases, assure the success of the petition. In so far as the projected Statutes of a newly incor^^orated Joint Stock Company do not contain any digressions from the law JOINT STOCK COMPANIES. 421 established by practice, the procedure of examining the proposals in the Joint Stock Department is reduced to making a report to the Ministry of Interior, without which no Statutes can be confirmed. In this case, about six months elapse from the time of lodging the petition to the final confirmation of the Statutes. If the proposed Statutes do not represent an exact copy of Statutes which have been previously confirnicd, the procedure of the Ministry is somewhat complicated and sometimes delayed. The law requires that the Ministry shall include in the projected Statutes such changes as it renders necessary, but only after notifying the promoters (Art. 2196) or their lawyers ; if the promoters are not agreeable to making the suggested corrections, the projected Statutes are returned to them unconfirmed. This necessitates the promoters being summoned to the Ministry to give explanations of each change, however small, and they, or their lawyers, must appear for such negotiations. Questions which are especially the subject of negotiations between the Ministry and company promoters are — I. The definite title derived from the article of commerce or nature of the enterprise which the law requires in the case of every Joint Stock Company (Art. 2 141). The law requires (Art. 2193) that the Ministry examining the pro- ject shall take into consideration whether " the special conditions proposed to be included in the project do not violate the legal rights of third parties " ; as the adoption of a given title may undoubtedly affect the rights of third parties, the Ministry has first of all to consider the title of the new Company. In spite of the exact sense of Article 2148, the titles of Russian Joint Stock Companies are often taken, without regard to the above provisions, names of private individuals, of the founders or of the late owners of the enterprise which is to be transferred to the Company being frequently chosen (for instance, Bros. K. & S. Popov) ; more recently the adoption of titles with wide meanings, such as " Naphtha," " Copper," etc. has found special favour. While not raising any objection to such digressions from the law — frequently called forth by necessity, and dictated 422 RUSSIA: ITS TRADE AND COMMERCE. by the interests of business — the Ministry assures itself that tlie titles of newly incorporated Companies clearly distinguish them from all other existing Joint Stock Com- panies, in order to avoid unfair competition. 2. The law contains no reference to the persons or the number of the promoters, but in referring always to the promoters in the plural, would seem to assume that a Joint Stock Company cannot be formed by a single person and, in one case, indirectly establishes a minimum of two persons (Art. 2166, § 8, Vol. X, Part II). In connexion with Joint Stock Commercial Banks the law specifically establishes a minimum of 5 founders (Article 17, Div. 10, Vol. XI Credit Statutes). In the remaining cases, owing to the absence of provisions in the law to the contrary, the Ministry very seldom raises objections to confirmation of Statutes on account of the number of promoters, and side by side with Companies, such as the Tifiis Commercial Bank, where the projected Statutes were signed by thirty- four promoters, companies are met with in Russia which have been formed by a single person, for instance, the Nevsky Refinery Works. As regards the promoters themselves, the law makes one restriction only, namely, Joint Stock Companies formed for the navigation of the Caspian Sea must be formed exclusively of Russian citizens. In regard to full partner- ships and trust partnerships, practice has established their right to found Joint Stock Companies (see, for instance, the Statutes of the Petrograd International Commercial Bank, Warsaw Discount Bank and many others.) The negative position taken by the Ministry as to the right of companies to assume the responsibilities of founders, is dictated partly by legal considerations. A limited liability Joint Stock Company cannot act as a promoter, but this assumption is open to dispute, as the law places no responsibility on the founders, except in the case of bankruptcy of one to whom the keeping of the books or the recording of the share transactions had been entrusted, and who may be guilty, while carrying out these duties, of any improper action. The legal aspect in such cases JOINT STOCK COMPANIES. 423 plays an exceedingly second rate role. A far greater danger — if we recognize the right of Joint Stock Companies to act as founders — is the possibility of the foundation of such Companies having for their sole and exclusive purpose the promotion of other Joint Stock Companies, that is, so-called " Financing Companies " or " Company Promoting Banks." In this respect. Joint Stock Companies as a general rule are not recognized as having the right to form share Companies, nor even the right to participate in other Joint Stock Companies. The inclusion in the Statutes of this point is generally accompanied by great difficulties, but in practice there have been cases where such rights have been granted to Joint Stock Companies (see, for instance, the Statutes of the Electro-Transmission Company, having a basic capital of six million roubles). 3. The law lays down no general rule restricting the amount of capital stock of newly incorporated Joint Stock Companies. Restrictions in this direction have only been established in the case of Insurance Companies, which are granted the right to carry on one or more forms of insurance operations conditional on their paying into the State Bank a guaranteed capital of not less than Rs. 500,000 (Article 22001, Vol. X, Part I.) for each branch of insurance with which they are occupied and for Joint Stock Banks, of which the capital must amount to not less than Rs. 500,000 (Article 6, Div. X, Vol. II Credit Statute). The law does not restrict the nominal value of the shares. In practice, however, it is very rarely that the Statutes of Joint Stock Companies with small capitals are confirmed. The number of the Companies with capital of less than Rs. 100,000 does not attain to ten. In practice, the rather high minimum of Rs. 100 has been adopted as the nominal value of shares ; shares of lower denomination are only permitted in rare cases. 4. However, the above-mentioned questions are by no means those of most vital importance in the negotiations between the Ministry and the promoters. Business life has adapted itself to the restrictions placed on the pro- 424 RUSSIA: ITS TRADE AND COM]\IERCE. meters, and such restrictions no longer influence the pro- gress of the formation of Joint Stock Companies. Of far greater significance are the restrictions inserted in the Statutes in connexion with existing legislation in Russia regarding Jews and foreigners. In view of the legal pro- hibition of ownership by Jews of real estate outside the precincts of towns, and forced by pressure of necessity to allow in practice the issue of shares to bearer (a practice which the law does not sanction), the Government has extended these restricting laws to all Joint Stock Companies with shares to bearer and, gradually, there has appeared in the Statutes of almost every newly incorporated Joint Stock Company a provision against the Company acquiring " as its own property or on lease, or using real estate, in places where the acquisition of same is prohibited by law to foreigners or persons of the Jewish faith." If the ownership of real estate outside the Jewish pale is a necessary condition to the forming of the Com.pany, the Ministry fixes in each given case the maximum area which the Company is allowed to acquire. In such cases, the Ministry requires the insertion in the Statutes of a supplementary provision to the effect that the Directors and Managers of the real estate of the Company situated in the prohibited areas must not be persons of the Jewish faith. Later on, measures were initiated for removing Jews from the Boards of Directors of newly formed Companies, and a provision began to appear in the Statutes according to which the majority of the Directors, and one out of every two Directors, must be of other than the Jewish faith, also that a Jewish- candidate for the post of Director may only replace another Director who is a Jew. The Chairman may not be a Jew.^ The latest measure in this direction. May, 1914, fixes the maximum areas of real estate which different categories of Joint Stock Companies are permitted to hold. The projected Statutes of the Company, after examina- 1 Those restrictions have been abolished according to decrees of the Provisional Government. JOINT STOCK COMPANIES. 425 tion and correction at the Ministry in agreement with the founders, are either sent up, together with the conclusions of the Ministry, for further decision by the Council of Minis- ters — where formal permission only to found the Company is required — or is directed to the proper legislative quarters when an exception to the existing laws is required. In both cases, the Statutes are sent up for Imperial confirma- tion ; on receipt of confirmation, the Statutes of the Com- pany are again signed by the founders and are pubhshed in the Collection of Laws and Enactments of the Govern- ment " (Part II). The confirmation of the Statutes of the Company does not mean that it has been properly incorporated ; according to the law (Article 2175, Vol. X, Part I) the capital must first be guaranteed. This may consist not only of cash in return for the shares, but also of property or so-called deposits in material, that is, property or real estate, repre- senting the assets of the partnerships or having a com- mercial value. Further, in heu of property transferred to the Company, the owner may receive shares of the Company at their nominal value to an extent mutually agreed upon between him and the first general meeting of the shareholders. Article 2165, Vol. X, Part I, extends to the founders the right to set aside for their own benefit not more than one- fifth of the total number of shares which it is proposed to issue ; by Article 2166, the remaining shares must be allotted by way of public subscription. Practice, however, has long since disposed of this out of date restriction, and in recent Statutes the founders are released from the obliga- tion of applying to the public, but the whole of the shares mentioned in the Statutes must be divided between the founders, and persons assisting them, by mutual agreement. This means that, in Russia, the successive, as also the simultaneous, formation of Companies is permitted, the latter being unknown in English Company Law. In the first instance, the promoters do not undertake to appeal for public subscription, unless this is found necessary. Only a few of the Statutes provide that, if the whole of the shares 426 RUSSIA: ITS TRADE AND COMMERCE. arc not divided between the promoters and persons assisting them, those which remain unallotted after publication of the Statutes shall be offered for pubhc subscription, at not less than six months ; further, contrary to the Enghsh law of 1908 (Article 80), neither the law nor the Statutes demand the publication of a prospectus explaining the chief objects of the Company. The Statutes establish a term of not more than six months from date of their publication during which the foundation capital must be obtained. Within this period there must be paid not less than 40 per cent, of the nominal value of each share with the exception of those which it is proposed to issue against property transferred to the Company. In this connexion, Ministers may authorize the prolongation of the term for reahzing the foundation capital, but not on more than three occasions for each enterprise, and, with the condition that such extensions must not in any case exceed six months. Publication of each extension granted is made in the " Collection of Laws and Enactments of the Government." The money received for the shares is paid in by the pro- moters to the State Bank, where it remains at the disposition of the Board of Direction of the Company. Later on, after a certificate showing that the first call on the shares has been received has been presented to the corresponding Ministry, the Company begins its operations. If this requirement is not observed, the Company " is considered as not having been incorporated " and the money paid for the shares is returned to the proper parties. The dates and amounts of the subsequent calls arc fixed by resolution of the general meeting, as and when necessary, with the restriction that the payment of the whole amount due on each share be made within two years from the day the Company began operations (in some Statutes, only one year). In case of non-observation of this requirement, the Committee is obliged to liquidate its affairs. Both the original payment on the shares and all later payments are noted on the temporary certificates issued to the shareholders, which certificates must be nominal ; JOINT STOCK COMPANIES. 427 on the last payment being made, the temporary certificates are replaced by the shares. If any owner of a temporary certificate fails to pay the amount due in the proper time, the temporary certificate is cancelled at the expiration of a term of grace of thirty days, of which advertisement is made, and is replaced by a new one which is sold by the Board of the Direction of the Company ; the balance of the sums realized, after covering the unpaid balance with late interest, and also the expenses of Management, is delivered to the late owner of the cancelled certificate. This provision has been included in the Statutes in place- of the extremely severe provisions of the law, by which an individual who fails to make any of the payments within the periods fixed loses the right to receive the shares, and the whole amount paid becomes the absolute property of the Company, which has the right to replace the cancelled shares by the new issues. From a comparison of Article 2175, Vol. X, Part I and the above mentioned provision of Statutes, which provides that the Company is considered as not founded unless within the period fixed in the Statutes there be presented to the appropriate Ministry a certificate to the effect that the whole of the foundation capital or the first call on the shares has been received at the State Bank. It might be inferred that in Russian legislation. Companies can only be con- sidered as finally formed, that is, as having received the right to transact business, from the moment of the presenta- tion of the necessary certificate. But the Company cannot be considered as existing in the absence of the organs by which it operates ; and as, according to the law, the election of the organs of a Company (Board of Direction, Re visional Committee) is carried out at the first General Meeting of the shareholders called by the founders on receipt from the State Bank of the mentioned certificate, the final act in the process of formation of a Joint Stock Company must be considered, not the receipt of the foundation capital, but the election of the first Board of Direction and the members of the Re visional Committee. The order of the formation of Russian Joint Stock Com- 428 RUSSIA: ITS TRADE AND COMMERCE. panics has been recognized as unsatisfactory for some time past ; the revision of existing company laws has been con- sidered by innumerable Government Commissions since 1866, but not a single one of the projects worked out by them has ever received confirmation. The project submitted to the Imperial Duma in October, 19 13, introduces the method of formation of Joint Stock Companies by simple registration, and, in many respects, reforms the out-of-date law affecting such companies. CHAPTER XVII The Drink Question in Russia By M. I. Friedmann There are many ancient records of the propensity of the Russian people for strong drink. An unknown Greek writer in the ancient annals puts into the mouth of Prince Vladi- mir the following words : " Russia's delight is drink. Russia cannot exist without it." Priests and foreigners constantly noted the wide diffusion of drunkenness. Father Theo- dosius, of Petchersk, describes the people " some crawling on their knees, not being able to stand upon their feet ; others wallowing in the mud and filth, ready to give up the ghost at any moment." In the lirst half of the tenth century, the Arab Ibn Fozlan reported of the Russians : " They are given to the drinking of wine in a senseless manner, and drink it for entire days and nights ; it often happens that they die with the glass in their hands." At that time the Russians drank beer, mead, and foreign wines. Vodka made its appearance, it is thought, considerably later ; its distillation began only in the sixteenth century, and was marked by a still greater increase of inebriety. Fletcher writes of our ancestors : " When beginning to eat they usually drink a goblet or small cup of vodka, then drink nothing till the end of the meal ; after it they drink continuously, kissing each other at each draught, so that after dinner it is impossible to talk to them about anything, and finally they all betake themselves to the 429 430 RUSSIA: ITS TRADE AND COMMERCE. benches to sleep. It is a very usual thing for them to make themselves intoxicated every day in the week. Their principal beverage is mead, but the poorer people drink vodka and a weak drink called kvas." Marzheret arrives at a very unflattering conclusion about the Russians of that epoch. " A simple people," he says, " extremely given to intoxication. Men, women, boys and girls are infected with the vice of drunkenness to an inor- dinate degree. The clergy are no improvement upon the laity, but occasionally surpass them." In the first half of the seventeenth century, the Memoirs of Olearius state : " During our stay in Moscow, liquor- houses or taverns were open everywhere, and everybody who wished entered and drank vodka for his money ; with such facilities, the common people would bring all they earned to the tavern and sit there so long that, having drunk all their earnings, they would take the clothes from their backs, even to their shirts, and leave them in pawn for vodka, returning home as naked as when they were born." The same author reports that " the vice of drunkenness is spread among the Russian people, alike among the clergy and the laity, the higher and the lower classes, among men and women, old and young, to such an extent that if in the streets one sees drunkards rolling in the mire it excites no attention, but is regarded as the most ordinary phenomenon." In the seventeenth century, also, George Krizhanitch laments the same condition of things : " About our drunk- enness it is sad to speak. You might travel all over the world and not find anywhere such abominable, hideous and terrible drunkenness as there is here in Russia." Drunkenness is an ancient evil manifested among various peoples from the early centuries. St. Augus- tine in the fourth century preached against drunken- ness in North Africa with all the heat and indignation of a modern apostle of temperance. St. Boniface, of the Saxon race, wrote to the Archbishop of Canterbury in the eighth century : " They report that in our dioceses the vice of drunkenness is far too widely spread. This evil is peculiar to the heathen and to our race. Neither the Franks, the THE DRINK QUESTION IN RUSSIA. 431 Gauls, the Lombards, the Romans, nor the Greeks are given to it." Shakespeare even confirms this conclusion. " In Eng- land," says lago, " they are very great in drink." The EngUsh historian, Lecky, says of the eighteenth century : " The passion for tippling gin seemed to have infected the masses of the population and grew with the rapidity and force of an epidemic." In a word, we wish to note the indisputable fact that " Merry England " was also not remarkable for sobriety. Things were not much different in Germany. Two ■ authorities will suffice here. Martin Luther, in 1541, writes : " Unhappily all Germany is tainted with drunkenness ; we preach and cry out against it, but this does not avail . . . every country must have its devil . . . our German devil is in a good keg of wine and its name is drunkenness." " We Germans," says Melanchthon, " drink away our property, our health, and the Heavenly Kingdom itself." Alcoholism is not a national phenomenon developed in and destroying any particular country. It is a universal evil demanding the application, with the united strength of mankind, of measures for its repression. Custom and national conditions have created in each country distinctive forms of consumption of spirituous liquors and special methods of their abuse. This naturally calls for special measures adapted to local conditions. In this sense it is possible and proper to speak about the drink question and the struggle with drunkenness in Russia. The total quantity of vodka drunk in Russia is extra- ordinarily great. In 1913, during the last year of the opera- tion of the Monopoly, 105,000,000 vedro (vedro = 270 gallons) of 40 per cent, vodka were sold, and in the shape of methylated spirit about 5,000,000 vedro on a basis of 40 per cent, vodka were manufactured. Nevertheless the con- sumption per capita of the population was inconsiderable ; it constituted a total of o-66 vedro a year, i.e., at the rate of y-; ^,ths of a vedro a month. It was by no means all the people wlio drank vodka— probably only adult males able to consume strong Hquors. 432 RUSSIA: ITS TRADE AND COMMERCE. But it is difficult to estimate the dimensions of actual con- sumption. It is only possible to affirm that the consump- tion per capita in Russia is less than in the majority of Euro- pean countries and that it has increased of late years. In any list of countries arranged according to their consump- tion of spirit, Russia occupies one of the lowest places. In 1900-5, the total consumption of alcohol of all forms in Russia amounted to 2-65 litres (of absolute spirit) ; in France, 22-42 ; in Belgium, 12-97 5 i^ Great Britain and Ireland, 10-84; ^^ Germany, 9-54. Even if we take vodka alone, its consumption for the above period was equivalent to 2-47 litres of waterless spirit : in France, 3-54 ; in Great Britain, 2-3 ; in Germany, 4-1 litres. Thus in Russia comparatively little is drunk on an aver- age, although of late years the consumption of vodka has not fallen as in many European States, but has increased. According to official data, the consumption of vodka per capita in 1889 was 0-57 vedro ; in 1899, 0-56 vedro ; in 1904, 0-54 vedro ; in 1909, 0-58 ; in 1910, o-6o ; in 1911, 0-60 ; in 1912, 0-62 ; in 1913, 0-66 vedro. If it were possible to judge the degree of development of alcoholism by these figures, Russia might be proud of her sobriety. But both in our own country and abroad, a convic- tion exists that intemperance in Russia is not less but greater than in the neighbouring European States, and unfortu- nately this is an undoubted fact. The character of consump- tion in Russia must therefore be materially different from what it is in other countries. In Russia the regular consump- tion of spirituous liquors, which is possibly quite as harmful as rare but intensive drinking, is comparatively small. As a rule, the Russian peasant dispenses with vodka. But on the occasion of weddings, funerals, christenings, public holidays, and on the completion of bargains in towns or at fairs, the peasant deems it his duty, in fulfilment of a cus- tom sanctified by centuries, to drink as much as his purse permits, having in view the attainment of complete intoxi- cation. Town workmen are more subject to temptation because they receive money wages, are surrounded by public-houses THE DRINK QUESTION IN RUSSIA 433 and have more frequent holiday's. For long intervals the peasant never sees any money at all. The town workman drinks oftener than the peasant, but also generally prolongs the pleasure until intoxicated, and is not content with the regular consumption of small quanti- ties. Possibly in a physiological sense the results of hard occasional drinking and constant regular tippling are the same, but, from the social standpoint, a very material differ- ence exists between the two forms of consumption. The man who drinks a great deal but does not make himself drunk is less harmful and dangerous to those about him than the man who loses his reason and may, in a condition of complete intoxication, do great injury to himself, his family, and others. From the social point of view, therefore, Russian alcohol- ism represents a greater and more harmful vice than the West European, in so far of course as the latter really does bear the character of constant moderate consumption, which by no means always corresponds to actual fact. No precise investigation of the extent of drunkenness among various classes of the Russian population has been made ; nor do we know the forms of alcoholism peculiar to any class. Much of the information collected through a general inquiry is of necessity subjective in character, but possesses, nevertheless, a certain importance in our estimate of Russian aicoholism. As above stated, drinking customs are sharply divergent in town and country. In the towns, the workmen drink, but also the intellectual workers. In the Russian provinces, card-playing and drinking have hitherto been unbecomingly manifested, and not even the comparatively enlightened portion of society had heard anything about temperance until recent years. Country correspondents of the Vladimir Zemstvo, when questioned as to which classes drink the most, replied : " The rich drink, as well as the poor ; the gentleman drinks, the merchant drinks, the fool drinks, and the person of superior intelligence." Unhappily the consumption of vodka is growing among F F 434 RUSSIA: ITS TRADE AND COMMERCE. women, and even children. To the question in what cases do the people most frequently drink, the same universal reply is given. " My neighbour came along drunk," writes a peasant. " I asked, ' Why have you been drinking ? ' He answered, ' From grief — a horse has died.' I ask another, ' Why are you drunk ? ' He replied, ' From joy — my wife has given birth to a son.' Hence ' the muzhik drinks from grief, he drinks from joy, he drinks from plenty, he drinks at a meeting, and cannot make any bargain without the aid of drinking." The principal motive of drunkenness is given thus : " The life of our people is dull and monotonous. Eternal work, work, and nothing with which to relieve the mind from work ; there are no recreations ; this dull exist- ence hangs heavily upon people, literally the heart is empty." A peasant writes : " Man must have work, rest, and recreation — one to replace the other. There is very much of the first, very little of the second, and absolutely nothing of the third except drunkenness." These statements were made in 1910. Somewhat earlier the Alexander Society of Temperance made an investigation by examining the rural clergy. The picture drawn is, on the whole, a sad one, giving details of the spread of alco- holism in the country among the intelligent classes and the clergy. A peasant in reply to an inquiry of the Kostroma Zem- stvo rightly replied : " In the country there is no recreation ; mental interests are but few. Liquor is a pleasure. It is clear a man cannot always work, work, work. To get drunk is our recreation, although it is a senseless one." When the sale of vodka was forbidden, " many former drunkards began to gamble with cards." It is not only the native Russian population that is sub- ject to the vice. In the Baltic region, for instance, tho public-house works terrible havoc among the Letts and Esthonians. A report made to the first Congress on the drink question says : " Without God, without Church, without masters, the rural inhabitant of the Baltic region could manage to exist, but on no account without the pot- house." His acquaintance with drink begins from the THE DRINK QUESTION IN RUSSIA. 435 tenderest age, from the moment of christening. The public- house is the meeting-place of pastors and communicants, brides and bridegrooms ; here workmen seek for work, sweethearts are trysted and wives betrayed ; here quarrels, murders, and gambling occur ; here criminals are hidden. Naturally those who frequent the pot-house spend their time in the incessant consumption of strong liquor. According to statistics regarding the Petrograd working men (igo8), the average expenditure on strong drink is 27-28 per cent, of the expenditure on food. Other informa- tion, referring also to the Petrograd workmen, shows the expenditure on vodka to be 13 per cent, of the total income. An inquiry among the Baku workmen gives also an outlay of 12-16 per cent, of the family budget on spirituous liquors. Various reasons are given for the passion. Some com- plain of the burden of work and unduly long hours, others of the general conditions of life, others of bad food and lack of places where men may meet and exchange ideas. One man blames his own ignorance, another cannot free himself from the drinking habit, but most of the workmen assign the evil to the results of hard work unaccompanied bv suit- able rest and sensible relaxation, to the ennui, monotony and greyness of their lives. There is no sense in arguing as to whether povertv is the consequence or the cause of alcoholism. It is quite clear that if the people did not expend such huge sums on drink (more than a milliard roubles a year), their well-being might be improved. Bad food leads to vodka ; but if the workman did not drink vodka he could increase his expenditure on food a quarter or a third and be better nourished. Besides the huge losses in money must be placed the injury to health. One need not be a temperance fanatic, attributing all ailments to the use of alcohol, in order to recognize the extreme danger of drunkenness both for the drunkard and for his descendants. Alcoholism leads to the increase of crime and the degrada- tion of manners and customs, especially in manufacturing villages, where the bad effect of factory life vividly asserts 436 RUSSIA: ITS TRADE AND COMMERCE. itself, and has not the restraining influence of the poHce, as in the towns. In 1913, Dr. Korovin drew a harrowing picture of the alcohoHzation of the population of the Mos- cow Government and the influence of drunkenness upon crime. " In the villages," says this observer, " quarrels and knife-play are perpetual ; people beat and kill each other for trifles, even without any visible cause. Life is held cheap ; if a quarrel arises you may expect it to end in murder, especially on festival days. The village youths are full of this morbid passion for mischief. One grows weary of seeing how the young men of neighbour- ing villages, when visiting each other, arrange fights and quarrels ; similarly it is quite an ordinary thing for work- men to fight to the death." Here is a picture of a village situated on the highroad : " There are five flourishing tea- shops which do a roaring trade in vodka ; a wine-cellar- liquor and State wineshop ; of the thirty-four houses com- prising the entire village, fifteen are tap-houses, so that there is no shortage of vodka. All these places are con- stantly visited, not only by men, but also by women, and even children. In this village you will not find a single news- paper ; no books are read ; and yet there are many literate people, and there is a passable library at the school. On the other hand, the people of all ages are interested in gam- bling as well as alcohol. Gambling goes on day and night in the teashops and tap-houses ; the play is high, the stakes sometimes running to tens of roubles. The winner must stand treat, and all the money is usually spent on drink till nothing is left. There are fights almost daily ; nobody can pass on account of the village bullies ; even strangers run the risk of being ill-treated for no reason whatever. An agricultural society, whicli had been started with difliculty, recruited membership of from ten to fifteen persons." From the foregoing it is clear how tremendous the curse of intemperance has been for many centuries in Russia. The question may naturally be put : " Is it possible that the State and sound public opinion have not recognized the necessity of fighting alcoholism ; is it possible they have remained indifferent to the spiritual and physical destruction THE DRINK QUESTION IN RUSSIA. 437 of the people ? " Of course not. Both the Government and the spiritual leaders have adopted many measures for the reduction of liquor consumption, some working by example and others by penalties and the regulation of the drink trade. As early as the middle of the seventeenth century laws were made restricting the trade in vodka. They were more drastic than those of the well-known Gothenburg system. Only one liquor establishment was allowed in each town ; nobody was allowed to buy more than one tankard ; it was forbidden to spend time in drinking-houses, or to play cards or throw dice there. On the occasion of the great fete of the Assumption the sale of vodka was prohibited on Sun- days ; during the Christmas and St. Peter's day, trade was not allowed on Wednesdays and Fridays. Priests and monks were not admitted to bars, and vodka was not sold to them. Wine was not given on credit. Hours of trade were restricted even on weekdays. Outside the towns, drink establishments were not permitted everywhere ; only in the large villages, and only one in each. Unfortunately both these and other later restrictive measures were only temporary and did not yield any material benefit. In Russia, as in many other European States, the Treasury very early interested itself actively in the revenue from the consumption of spirituous liquors, and being in almost incessant need of money feared to enter into resolute conflict with intemperance lest it should affect the revenue from the excise. Moreover, as a rule conflict with popular passions does not yield particularly good results even when strictly and resolutely conducted. Nevertheless, in establishing a system of taxation, the State endeavours to find one which, while producing a fiscal revenue, promotes at the same time the sobering of the population. In Russia, from the very beginning of the taxation of spirit, a State monopoly has exsted, sometimes embracing only the trade in vodka, at others extending its operation to the distillation of spirit, and the State either traded it- self in vodka or leased out the trade to others. This con- tinued up to the 'sixties of last century, the leasing system 438 RUSSIA : ITS TRADE AND COMMERCE. predominating. After the emancipation of the peasantry it was decided, in order to place a restriction upon the de- moralization of the population by the owners of the leases, to adopt the ordinary excise system. Happy results were anticipated from free competition at this time, when hopes were entertained that liberal principles would be applied to the administration of economic measures ; it was thought that vodka would be cheap, good, and accessible, and that the exploitation of the people by publicans would become a thing of the past. Various restrictions of the drink traffic were issued, but in thirty years the State again reverted to a change in the system of taxation and the form of regula- tion of the drink trade. In effecting the liquor monopoly in the 'nineties of last century the State intended, with the help of the transfer of the vodka trade to the Treasury, not only to increase the revenue but by degrees to transform it. At that time everywhere people looked upon alcoholism as the consequence of immoderate consumption of liquors of bad quality, and believed that purified alcohol, used regularly in small doses, but not to the point of intoxication, would not lead to special harm. From the fiscal standpoint the monopoly justified itself. The receipts from the liquor traffic grew and latterly attained to enormous sums. The gross revenue from the liquor monopoly from the year of its extension to 1904 amounted to 547,000,000 roubles ; in 1909 to 719,000,000 roubles ; in 1913-14 to 899,000,000 roubles ; while according to the Budget for 1914 the sum estimated was 936,000,000 roubles. If expenses are deducted from these sums, we get a net revenue equivalent in 1904 to 380,000,000 roubles ; in 1909 to 522,000,000 roubles ; and in 1913-14 to 644,000,000 roubles. In a calculation of all tlie Treasury receipts from strong drink, the excise on beer, vodka, and the customs duties on imported wines, spirits, and beer must be added. In addi- tion to the monopoly and customs duties, the tax on liquor in 1913 yielded 54,000,000 roubles, and the customs tax on spirituous liquors about 7,500,000 roubles (1912). Conse- quently the total received by the Treasury from liquors THE DRINK QUESTION IN RUSSIA. 439 containing alcohol exceeded 700,000,000 roubles annually, which constitutes about one-third of the net budget of the Russian State. The figures prove more convincingly and more eloquently than long speeches how great was the interest of the State in the receipts from beverages containing alcohol, and, therefore, in their consumption by the people. That is why the State authority looked, so to speak, with half an eye at the fact that the monoply had not led to the anticipated results in temperance, and for some time took no steps to- wards the correction of the ancient evil. The fact is that, although the sale of spirituous liquor in the State liquor-shops proceeded more or less in the desired order : the hours of trade were restricted ; the shopman was not interested in enticement of purchasers ; consumption on the premises was prohibited, as also the sale to children, intoxicated persons, or on credit or in return for articles pledged. Nevertheless the drinking habits did not im- prove, either in the country or in the town. It appeared that pure vodka produces as befuddling and destructive an effect as the adulterated variety. It would be incorrect to deny that the " dramshop hell," as it was called in the past, has disappeared, but without speaking of the Baltic pothouse — the typical dramshop before the monopoly period — it has not infrequently happened that secret taverns and public-houses, illegally trading in vodka, have taken the place of the former dramshop. Moreover, the domestic consumption, as far as it goes, has also exerted a pernicious influence in the sense of accustoming certain members of the family, such as women and children, to the use of vodka. Again, a considerable number of drunkards were now forced upon the street and the sight of them has had a corrupting example upon those who formerly held aloof from drunkenness. Illicit trade, which does not restrict its clients either in the matter of hours or other limitations, has spread inordi- nately, as all country residents and town workmen testify, and as is now officially admitted. In the country many women and girls earn money by this illicit trade in vodka, 440 RUSSIA: ITS TRADE AND COMMERCE. not to mention teashops, small stores, and regular illegal dramshops. Some state that this trade is not conducted on credit, and is not accompanied by abuses, whereas others, on the contrary, affirm that the illicit sale affords oppor- tunity to pawn linen, harness, clothing, and bread, in return for drink, and that the secret dramshops are dens of vice. In any case the State liquor-shop, under such conditions, ceases to be the sole source for the acquisition of vodka ; it gives rise to numerous secret places of unregulated traffic without supervision on the part of the authorities, and is con- verted into a wholesale depot from which illicit dealers may obtain vodka for retail sale. In the opinion of a very well- informed author, in the government of Penza, which he investigated, one-fifth of the turnover of the liquor-shops is on account of illicit trade, and in the district not less than half. .It thus appears that the liquor monopoly has by no means led to the sobering of Russia. The role of the trusteeships for national temperance, which arose with the introduction of the monopoly, has also been very small. These trustee- ships or guardians consisted of officials and lacked the public element, although at the beginning this was enlisted in the organization of tea-houses, lectures, popular recreations, etc. The trusteeships languished, without doing either good or harm, with the exception of the metropolitan ones, which occupied themselves in the organization of theatrical and other recreations, less for the working population than for minor officials and less wealthy residents. According to the admission of the Imperial Council, these recreations were by no means always of a suitable character. Recognizing that concern for the people's sobriety could not devolve upon the Ministry of Finance, seeing that its natural task was, not to curtail but to increase the State revenue, the Imperial Council declared itself in favour of the abolition of the trus- teeships and the transfer of the v/ork for the sobering of the population to the cities and zemstvos. But this occurred on the eve of the closing of the monoply and the discontinua- tion of all trade in vodka, and therefore had no practical application. THE DRINK QUESTION IN RUSSIA. 441 In public circles, the agitation against drunkenness found but few influential supporters until the convocation of the legislative institutions. As soon as the latter embarked upon legislative work, with the session of the third Duma, the hopes and plans of the temperance reformers found a response. In 1907 a proposal from thirty-one members respecting measures for fighting against intemperance was introduced. The projected measures resolved themselves into a plan to invest the village communes with the power to prohibit trade in spirituous liquors on their lands, to the increase of the size of the utensil in which vodka was sold from the State liquor shops, from .jl^^ to ^,\, of a vedro, and to reduction of the hours of trade. The Duma recognized that these measures were insufficient, and that more radical reforms were indispensable, but deemed it desirable for the time being to go no farther. Corresponding Bills were drafted by a special Duma Committee for the suppression of alcohoUsm, and by the Ministry of Finance. One of the fundamental points of the Bill was to prevent the illegal sale of vodka, for which pur- pose it was proposed to offer a reward for the discovery of illicit trade and to increase the penalities for those found guilty of this offence. Further, the Bill prohibited all trade in vodka at railway stations, wharves, and on private per- sons' estates in a district (uyszd). Adult wives and mothers of householders are allowed at village meetings to vote for or against the continuation of the sale of vodka. Consump- tion on the premises in public-houses is prohibited and only allowed in hotels and restaurants. At the end of the session of 19 lo-ii, the Bill, with imma- terial amendments, was adopted by the Duma and brought before the Imperial Council. At the end of 191 1 the Imperial Council sent the Bill to a special committee, where it was discussed for a fairly long time, and only in January, 1914, submitted to the decision of the general assembly of the Imperial Council. It is curious to note that it was here that the speeches were made upon the necessity for resolute action for the eradica- tion of intemperance, which led to a change in the policy of 442 RUSSIA: ITS TRADE AND COMMERCE. the Government in relation to alcoholism. This occurred notwithstanding the fact that, as the representative of the Upper House observed in his report, the Imperial Duma was inclined to measures of restriction in regard to the consumption of spirituous liquors, while the commission of the Imperial Council wished to fight only against drunkenness. The commission of the Imperial Council sounded a warning against impulsiveness in the business of fighting vodka ; it advised caution and deliberation. But the House heard quite other speeches from very influential members. Thus, Count Witte, under whose regime the liquor monopoly was achieved, declared that " the object of reform, the reduction of intemperance, had retired into the background, and that the influx of money to the Treasury from the people by means of the drink monopoly had stepped to the fore." Count Witte expressed small faith in the operation of the proposed law, and considered it necessary to abolish the interest of the Treasury in the further growth of the drink revenue, fixing this revenue at the amount of the previous year, and devot- ing the remainder to the conflict with intemperance.^ Count Tolstoy drew a terrible picture. " The country has been transformed into a nightmare of drunkenness," he said. " All drink. Adults drink, women drink, youths drink, while children dwelling amid this fetid atmosphere of drunken debauchery follow the example of their parents." " The people are perishing both physically and morally." Prince Golitsyn-Muravlin emphasized the national danger of alcohol. " I speak about the great and glorious Russian people, about that people who under the most arduous con- ditions of conflict with nature have created a great State, about that people to whom neither Batyjat at Kiev, Sapyega at Lavra, Karl at Narva, nor Napoleon at Moscow could bring final ruin, but who are being sapped and devoured by a more dangerous internal enemy. In the course of later ^ This idea was expressed much earlier by the author of this article, both in the Press and at a sitting of the Committee for suppression of alcoholism formed by the Society for the Protection of National Health on February 27 (March 12), 1908. THE DRINK QUESTION IN RUSSIA. 443 decades we have been slipping downwards on vodka — on vodka and champagne." " In strong drink not only Rus- sian money but Russian labour and Russian dignity are drowned." Happily Russia bestirred herself, and to the Imperial Duma belongs the honour of the initiative in this good work. The Bill was finally passed with certain amendments and again transferred to the Imperial Duma, as by that time the labours of the Third Duma had terminated and the Fourth Duma had been assembled. But interest in the project declined because other and more important events than the abolition of alcoholism had occurred. Under the direct impression of the debates in the Imperial Duma the President of the Council of Ministers, and former Minister of Finance, V. N. Kokovtsov, resigned, and P. L. Barck was appointed. In the Imperial Rescript addressed to the present Minister of Finance specific mention was made of the necessity for radical reforms in financial and general economic policy for the sobering of the population in parti- cular. This was on January 30 (February 12), 19 14. On June 9 (22) the new Minister of Finance, in giving an ex- planation of the Budget in the Imperial Council, dwelt upon the drink question. He noted that efforts were being made for the closing of liquor establishments and that the Minister of Finance was ready to meet these efforts half-way, by adopting measures to ensure that the closing of places of lawful trade should not be accompanied by the develop- ment of illicit sale and distillation. The Minister reported that he had given categorical instructions to give effect to all concerning lawful resolutions of village meetings on close or prohibit of the liquor trade. From the beginning of the year till May i, 811 of such resolutions were passed, while 208 shops had already been shut down. The Govern- ment proposed to raise the price of vodka from 8 r. 40 c. to 12 r. for inferior quality, and from 10 r. to 16 r. for the higher quality, presuming that the increase of the price would lead to a reduction of consumption. Further, the Government had in view a gradual decrease of the number of public-houses, the prohibition of sale on certain holidays 444 RUSSIA: ITS TRADE AND COMMERCE. and festivals, also on days of the muster of recruits ; the restriction of hours of trading on weekdays and on the eve of Church holidays ; the severer prosecution of illicit trade by the police, in co-operation with the excise officials and co-operative societies ; the support of public and private initiative in the struggle with intemperance, etc. In this manner urgent measures were taken in the struggle with alcoholism. It is interesting to note that the Minister of Finance at that time gave a warning. " It behoves us to beware of being carried away," he pointed out. " Suc- cess in the struggle with intemperance can only be attained with great deliberation, with complete co-ordination of the measures of various departments and the harmonious sup- port of society and the legislative institutions." Soon after the war began. On the announcement of mobilization on July 17 (30) trade in strong drink was stopped. At first it was proposed to prohibit the trade until after the formation and dispatch of reserve troops ; then the term of prohibition was extended, and on August 22 (September 4) a regulation followed forbidding the sale of vodka till the end of the war. By a circular dated October 13 (26), 1914, permission was granted to trade in wine and beer, but at the same time the power was given to city councils, zemstvos, and village communes to prohibit in their territories all trade in liquor, and of this the local organizations widely availed them- selves. In 1914 petitions for the permanent suspension of the traffic in strong drink were received from 219 towns, 443 zemstvos ; and till the end. of the war the trade was sus- pended in 124 towns and 52 zemstvos. It may be said that at the present time there are very few places where the legal trade in any strong drink whatever is carried on. In this manner Russia became suddenly sober. And this experi- ment is deemed so far successful that we have the word of His Majesty the Emperor for the abolition of the State trade in vodka for ever. More than this, there is ground for hoping for the entire discontinuation not only of the State but of private sale of vodka after the war as well. It may be asked : What arc the results of temperance ; THE DRINK QUESTION IN RUSSIA. 445 what unfavourable and dangerous influences manifested themselves on the sudden introduction of absolute temper- ance ? Is it advisable to continue this regime further, or to return to the old order after the war, with certain restric- tions ? We have not at our disposal any precise data, but here are some facts for judgment on the results of suspension of the vodka trade. First of all, mobiHzation passed off with rare tranquillity and order, whereas in the Japanese war things were very bad in this respect : the calling-up of recruits was accompanied by scenes of ugly violence and fighting. Furthermore, from the country come blessings, which are repeated by the working population of the towns. From Penza government a peasant writes : " After the closing of the hquor-shops the disposition of the people improved, the poorest persons began to wear boots, and have an extra copek in their pockets." From Kostroma government correspondents of the zemstvo narrate amazing facts. For example, a peasant of one village had led an intemperate life, abandoned his home, leaving his wife and four children without any help ; they lived in such poverty that they had nothing to wear and were starving. When the sale of liquor was suspended this peasant returned home, and " became the father of his children and a good head of the household ; he now has bought a horse and a cow ; all of the family are clothed and shod, and their life has entirely changed." From the same government they write about the special delight of the women on account of temperance. " There has never been on earth such a festival as that now among the women," declares one correspondent. " The women literally bloom, inasmuch as they are tranquil and live without fear of their drunken husbands," reports another. A town working man answers a question : " For God's sake, I pray and beg for the stoppage of all strong drink and beer, which brings evil worse than wine, for ever, for all eternity. I would rather consent to pay a tax if only the trade in wine and beer can be suspended. I pray on my knees before the people who can tear up this curse of humanity by the root. When 446 RUSSIA: ITS TRADE AND COMMERCE. I drank I felt both weakness, melancholy, and incapacity for work. I was quite bhnd, but now I work without glasses ; my health is hke that of a cathedral bell : I feel as though I had been born again. My family are tranquil, always in good health ; they keep chickens, ducks. The heart rejoices from peaceful sentiment. I pray for those who closed the State liquor-shops." A peasant reports the feehng of the country : " Robbery, debauchery, and fights have ceased ; on festival days now the congregation in the church has doubled ; the children no longer see their fathers misconducting themselves ; they have become much better morally, and may God bless the man who bethought himself of undertaking this sacred task." A blacksmith writes : "I have always saved money in m}^ pocket now, and there is plenty of it ; my wife has become merry, and has ceased to be afraid of me." Similar testimony from peasants and working men is received from all quarters. Evidences that the productive labour of the workmen has appreciably risen, thanks to increased punctuality, conscientiousness, etc., prove the improved capacity of sober people. The Ministry of Trade and Industry and the Moscow Association of Mill and Fac- tory Owners have made two interesting investigations into the question. Their reports showed that the employees had become more punctual, worked more carefully, without omitting days after holidays and pay davs ; they earned more than before, and spent their earnings upon actual requirements. " Working men, formerly incorrigible drunkards," it is reported from a mill in Vladimir govern- ment, " are now of best repute ; they are well dressed, clean, and the image and likeness of God has begun to glow in them." " The workmen are dressed and shod ; they have begun to send more to the country or deposit more in the savings banks," is reported from a Moscow factory. At- tempts of various kinds have' been made to reckon how far a reduction has taken place in the fires from which Russia suffers so much ; how far crime and the quantity of suicides have lessened. But all statistics of this description suffer greatly from lack of precision, inasmuch as the immense ' THE DRINK QUESTION IN RUSSIA. 447 number of men summoned to the war cannot be taken into account. It is equally inaccurate to explain the growth of savings in the banks merely by the prohibition of vodka. Of course, sober people save more, but in the joint-stock banks deposits also have appreciably increased, the cause of which must be deemed principall}^ the increase in currency issued for the needs of the war, and the slackening of trade, and con- sequently the curtailment of advantageous investment for capital. However, independently of statistics, it is possible to regard as proved the tremendous ameliorative influence of the prohibition of spirituous liquors on the health, well- being, and mental condition of the Russian people ; it will suffice to remember how the results of drunkenness were described in order clearly to imagine what the abolition of the drink traffic is leading to. Here, however, we en- counter doubt as to whether sobriety has actually super- vened ; substitutes for vodka in the shape of methylated spirit, varnish, refined lacquer, and eau-de-Cologne are poisoning some of the population and destroying its health. The question is asked : How great is this evil ? The illicit distillation of spirituous liquors and their secret preparation from varnish and methylated spirit do occur. But it must not be supposed that this consumption can have so wide a diffusion as the former alcoholism which required upwards of 100,000,000 vedros. If the police and local authorities will strictly keep down the illicit distillation of spirits, it cannot assume any threatening dimensions. Both public opinion and the Government clearly recog- nize the necessity of giving the people, now weaned from vodka, something positive in its place. Proposals have been made for increased education after school age, and the establishment of a large number of People's Palaces, similar to Toynbee Hall, where amid comfortable surroundings the workman and peasant may rest, have tea, hear music, read a paper or book and look at the cinematograph. It may be said : " This has already been tried by the trusteeships on national temperance, and proved to be impracticable," 448 RUSSIA: ITS TRADE AND COMMERCE. but Russia's civilization has advanced far beyond the times of the Hquor monopoly. These palaces will be organized by the zemstvos, the towns, the co-operative societies, which have so largely developed among us, and by workmen's unions. This will no longer be an official or private philanthropy, but a really national affair. In the absence of legal trade in vodka, and with the re- striction of illicit traffic, we may assume that those semi- diseased dregs of the people whom no public reform could restore will give themselves up to drunkenness. This is a strong reason for the continued prohibition after the war of the sale of vodka at least. There have been exaggerated apprehensions concerning the prejudicial effects of this measure upon agriculture and upon the distiUing industry. The liquor monopoly abolished the class of those who traded in vodka ; there remained dealers in wine and beer, distillers, brewers, and wine-growers. The war has made it impossible for them to defend their trade interests with much energy, while after the war the distillers at least will consent, for the sake of the interests of the nation as a whole, to discontinue their manufacture, and to adapt their agri- culture to the new conditions, insisting only upon a certain compensation for the losses sustained in consequence of the changed attitude of the State towards distilling. It is much more difficult to declare definitely in favour of the prohibition of beer and wine after the war. Without entering into the question of the comparative evils of vodka, wine, and beer, if suitable measures be taken to control the strength of wine and beer, the time, place and form of sale, and the preservation of wine from adulteration, these liquors, while prohibited in the country, may not prove a very great evil in the towns, serving as substitutes for the more pernicious vodka. Despairing of complete temperance, we should be dis- posed to allow, on such restrictive conditions, the sale of wine and beer in the towns after the war. In any case, so far as it is possible to judge after a year's THE DRINK QUESTION IN RUSSIA. 449 experience, the absolute prohibition of spirituous hquors is far more easily and simply realizable in practice than many convinced opponents formerly thought. Although the measure is not wholly effective, although it is not free from defects which accompany all human work, it may never- theless be said that the social experiment of compulsory sobering of a country with a population of 180,000,000 has given satisfactory results. It will, of course, be difficult to keep up the present enthusiasm evoked by the war, when millions of men, accustomed to drink, return from the front. The prospect of a loss by the State of a source of revenue which yields over 700,000,000 roubles annually is not so terrible as it might appear. It is obvious that a sober population can produce with greater ease not only this sum, but a far more considerable one. Moreover, the revision of the system of taxation, the in- troduction of new taxes, and thC; increase of those in opera- tion, are in any case inevitable in order to pay off the war loans now being contracted. In Russia it is clearly recognized by all that the financial question can only be settled by the development of the productive forces of the country. The fundamental pro- blem is the working of natural resources, the proper utiliza- tion of economic forces and opportunities of the heretofore slumbering Russia. And this problem will be incomparably easier of realization by a sober population, which not only keeps its money but preserves its physical and moral well- being. INDEX Administrative Governments, list of, 15 Agricultural Banks, 19, 385, 419 Agricultural Co-operative Asso- ciations, 18 Agricultural Machinery : British, openings for, ^z^ Oil Engines, Russian require- ments, 205 Russian Manufacture of, 210 Russian Market, Statistical Table, 213 Agriculture : General Condit ons and Pro- spects, J-j et s-^q. Government Assistance for, 60 Alcoholism, see Drink Question Alexander Society of Temper- ance, 434 Amur River, 10 Anthracite, Supply in Donetz Coalfields, 174, 178 Antimony Beds, 167 Aral Sea, 7, 8 Arbitration Committees of Rus- sian Exchanges, 289 Area of Russian Empire, i Army Expenditure, 331 Asbestos, Supply of, 170 Asphalt Beds, 170 Automobiles : Imports of, 202, 206 Market for, Tables, 216 Russian Manufacture, 206 Azoff-Don Commercial Bank, 419 Azov, Sea of, 5 Bacon and Pork Exports, ^^i, 34, 37. 3^1 Baikal Valley, 6 Baku Oilfiekls, 179, 180 Balkash, Lake, 7, 8 Baltic Basin, Pilchard Fishing in, 222 Baltic Region : Forestry and Timber Trade, 91, 102 Fruit growing, 79 Banking System, 354 et seq. Agricultural Banks, 19,385,419 Central Banks of Europe, De- posits, Table, 365, 367 Currency Reforms, 270, 271, 353 et seq. Current Accounts, fluctuations of interest, 368 note Discount Rates of State Bank, Table, 375 Gold Reserves of State Bank, 369 note, 370 Irbit Fair, Banking operations at, 282 Municipal Banks, 385 Nijne-Novgorod Fair, 284 Private Banks, Institution of, 379 et seq. Savings Banks, 388 et seq. Trade financing by Banks, 294 Bank-notes, Right of Issue, 366, 368 et seq. Barck, P. L. 443 Barley Imports, 319 Beet Sugar Production 70 et seq. Bessarabia : Fruit Cultivation, 80 Vine Growing, 84 Bismuth, Supply of, 168 Bogolepoff, M., 329 Bookshpan, J., 268 Boot-making, Output of Fac- tories, etc., 141, 142 Boundaries, Land and Maritime, I et seq. Bran, Output and Exports of, 27, 28, },j, Bricks, Manufacture of. Output and numbers employed in, 139, 140 451 45-2 INDEX. British-Russian Trade : Agricultural Machinery, 323 Coal, 323 Developments in, 323 et seq. English Trade Methods criti- cized, 315, 316 Origin of, 299, 300 Russian Exports to British Markets, 37, 40, 45, 47 Timber, 100 et seq. Budget : DistributicMi of State Expendi- ture under, 330 Growth of Russian Budgets, 329 et seq. Butter and Cheese Exports, i},, 320, 321 Canal Communications, 252 et seq. Canned Fish, 227 Capital : Foreign, attracting to Russia, 236 Growth of Share Capital, Sta- tistics, 276, 277 Joint-Stock Enterprises, Capi- tal of. Table, 392 Railway Building, Capital for, 236 et seq. Cargoes carried on Inland Water- ways, Table, 256 Caspian Sea, 4, 8, 12 Caspian- Volga Basin, Fisheries of, 220 Catherine H, 301 Cattle : Breeding, 28, 34 Exports, 35, 41 Caucasus : Coal Production, 177 Copper Production, 187 Forestry in, 8q, 90, 93, 94 Fruit Cultivation, 81 Machinery Requirements, 205 Vine Growing, 86 Caviare Industry, 227, 228 Cellulose and Wood Pulp Indus- try, 103, 104, 136 Cement Manufacture, Output and number employed, 139, 140 Chancellor, Richard, 299 Charcoal, 193, 194 Charkoff Joint Stock Land Bank, 419 Cheese and Butter Exports, 33, 320 Child Labour in Factories, Re- strictions, 146, 147 Chinese Trade with Russia, 310, 3 I.I Chromium, Supply of, 168 Clearing-Houses, Operations of, 397 Climate, 11 Coal : British Exports to Russia, 323 Caucasus, Coal Production in, 177 Dombrovo Coalfields, Produc- tion and Output, 175 Donetz Coalfields, see that title Growth of Production, 124 Output of Coal, Tables, 172 Surveys of Coalfields, 166 Cobalt, Supply of, 167 Cocoa Imports, 324 Cod Fisheries, 223 Coffee Imports, 324 Coke, British Exports to Russia, 323 Commercial Travellers, introduc- tion of, 273 Company Regulations, 418 e^ seq. Conant, Charles A., 360 " Concession " policy for con- struction of privately- owned Railways, 231, 236 Conscription, Exempted men taxed, 347 Contracts between Employers and Workmen, 150, 151 Co-operative Agricultural Asso- ciations, 18 Co-operative Rural Banks, 385 Copper Industry, 184, et seq. Cost of Production, Tables, 114, 121-123 Cottage Industries, 19 Cotton Growing, 54 et seq. Customs Duty on Foreign Cotton, 59. 347 INDEX. 453 Cottonization of Flax, 68 Credit operations of the State Bank, 374 Credit System of Russia, 352 Crimea : Forest Trees of, 90 Fruit Cultivation in, 80 " Vine Growing, 84 Currency Refonns, 353 et seq. Effect on Trade Development, 270, 271 Customs Duties, 307 et seq., 325, 337 Cotton, 59 English goods first subject to, 301 General Policy in relation to, 106, 307 Machine Building, effect of protective tariff upon, 200, 208 Vodka, Beer and Wines, 438 Dairy Farming, Development of, 27 et seq., 33 Dangerous Trades, Legislative Enactments, 147 Danube River, 4 Discount Rates of State Bank, 375 Discounting of Bills, European and Russian Banks com- pared, 367 Dividends of Privately-owned Railways, 241 Dombrovo Coalfields, 175 Donetz Coalfields : Anthracite from, 174 Coking By-products, value of, 175 Production and Output, 1 74 Dnieper River, 4 Dniester River, 4 Drink Question in Russia, 429 et seq. Customs Duties on Beer and Spirits, 438 Government Spirit Monopoly, 336. 338. 347 Taxes, Rise in, owing to Liquor Prohibition, 346 Drojki Syndicate, 291 Dvina River, 5 Education, Agricultural, Statis- tics of, 18 Egg Exports, 46, 320 Eisk Railway, 242 Emancipation of Peasants, 1861, 106, 109, 268 Engines : Engines and Parts used in Russia, 1910-12, Table, 215 Oil Engines, Demand for, 205 Type and Distribution of, 126, 127 English Markets, Russia as pur- veyor to, 37, 40, 45, 47 English Trade Methods in Rus- sia, 315 Euro-Russian Plain, 4 Exchanges, Powers and Func- tions of, 286 et seq. Exchequer Bills, 349 Excise Duties, Table of, 336 Experimental Agricultural Sta- tions for Cotton Growing, 60 Exports : Agricultural Products, 17 Anthacite, 174 Bacon and Pork, 32, 34, 321 Bran, 27, 28, 33 Butter and Cheese, 33, 320, 321 Cattle, 35, 41 Caviare, 228 Cereals, Tables, 22, 23 Eggs, 46, 320 English Markets, Table of Ex- ports to, 38 Fish, 218 Flax, 65, 66, 322 Flour, 26 Fodder Grass Seeds, 50, 51 Furniture and Wooden Ar- ticles, 103 Geese, 321 Grain, 22, 23, 270, 317, 318 Hemp and Hemp Seed, 69 Hides, 322 Home and Foreign Exports, relation between. Table, 278 Hops, 84 454 INDEX. Exports {contd.) : Horses, 321 Imports and Exports, Table, Manganese Ore, 323 Meat, 35 Money, Export prohibited in War time, 417 Oats, 22, 23, 319 Oil-Cake, 33, 322 Petroleum Products, 322 Platinum, 189, 323 Poultry, 44 et seq., 321 Rye, 22, 23, 318 Sea-borne Trade, Table, 304 Seeds, 322 Sugar, 75, 76 Swine, 36, 321 Timber, 92, 100, 321 Tobacco, 78, 79 Wine, 84 Wood Pulp, 103 Wool, 323 Factories and Workshops : Child Labour, Restrictions, 146, 147 Factory Inspectors, Appoint- ment of, 146 General Review of System, 105, et seq. " Fairs " of Russia, History of, 272 et seq., 279 Fauna of Russia, 1 1 Fines imposed on workmen, 153 Fish Exports, 218 Fisheries, 12 et seq., 217 et seq. Flax : Cultivation of, 64 Development of Manufacture, 134. 135 Exports, 65, 66, 322 Flour : Exports, 26 Milling Industry, Statistics of, 24 Fodder Grass Seeds, Exports, 50, 51 Food Production : Factory Output, 116 Number of Workmen employed in, 116 Foreign Settlements Department, 415 Forestry, 88 et seq. Exports of Timber, 92, 100, 321 Fuel, use of Timber as, 122 State Forests, Revenue from, 339. 340 Freight Returns, Tables, 271, 272 Freshwater Fisheries, 13 Friedmann, M. 429 Frontier Line, Length of, i Fruit Cultivation, 79 et seq. Fuel : Coal, see that title Cost of, in Manufacture, 12? Factories, Consumption by, 124 Mineral Fuel, Insufficiency of, 108 Prices, Comparative Table, 126 Timber used as, 122 Fur Trade : Irbit Fair, 281 Nijne-Novgorod, 285 Furniture Exports, 103 Gas Engines, Demand for, 203 Geography of Russia, i et seq. Geological Committee, Work of, 166, 174, 180, 189 Geology of Russia, 10 et seq. German-Russian Trade : Automobiles, 206 Cattle and Swine, 36 Gravitation of Russian Ex- ports to Germany, 36, 37 Imports and Exports, 311 Machinery, 202 Organization of, 296, 298, 311, 3^5 Poultry, 45 Glass Manufacture, 139, 140 Gold Mining 9, 190 et seq. Gold Reserves of State Bank, 369 note, 370 Gold Standard, Adoption of, 271, 353. 356 Golitzin-Muravlin, Prince, 442 Government Railways : Cost of Construction, 234 INDEX. 455 Government Railways {contd.) : " Moiirman Line," 252 Revenue from, 340, 341 State Ownership, 231 Grain Trade : Crops, Statistics of, 21 Development of, 269 Exchanges, 288 Exports, Z2, 23, 270, 317, 318 Mining Industry, Statistics of. Prices, 23, 24 Graphite, Supply of, 169 Grass Seeds, Exports of, 50, 51 Great Britain, see British Great Northern Telegraph Com- pany, 262 Grozny Oilfields, 179, iSi " Guslits " Hop-Growing Re- gion, 83 Handicrafts : Cottage Industries, 19 Furniture and Wood-work, 138 Output, 120 Stimulation of, 19 Hematite, Red and Brown, dis- tribution of, 171, T72 Hemp : Cultivation, 68 et seq. Exports, 69 Manufacture, 134, T35 Herring Industry, 220 Hides, Export of, 323 Holland's Trade with Russia, 310, 311 Hop Cultivation, 82 et seq. Horses : Breeding, 41, 42 Exports, 321 Hours of Labour in Factories, 146 et seq. Imports : Agricultural Machinery, t8, 202 Automobiles, 202, 206 Coal, 323 Cocoa, 324 Coffee, 324 Customs Duties, see that title Imports [coiitd.) : Dyeing Materials, i r3 Exports and Imports, Table, 303 Iron and Steel, 198 Lead and Zinc, 187 Machines and Machine Tools, 113, 202, 203, 209, 212, 214, 3-^3 Metals and Metal Manufac- turers, 112, 324 Resin, 324 Rolling Stock and Rails, 2^8 Rubber and Gutta-percha, 324 Saltpetre, 325 Sea-borne Trade, 304 Spices, 325 Tanning Extracts, 113 Textile Materials, 112 Wines, 84 Income Tax, introduction of, 347 India-rubber Works, 145 Indo-European Telegraph Co., 262 Inland Waterways, 252 et seq. Insurance and Sick Benefit for Workmen, Legislation, 146, 158 * Irbit Fair, 281 Iron Industry : Consumption per Capita, 197, 198 Development of, 192 Manufacture, 196, 197, 199 Ores, Supply of, 171 Prodameta and Krovlia Syn- dicates, 290 et seq. Pyrites, 168 Iron and Steel Imports, 198 Irtysh River", 9 Isenberg, A., 54 Issyk-Kul Lake, 7 Japan, Sea of, 10 Jews as Directors of Joint Stock Companies, 424 Joint Stock Companies : Growth of, Statistics, 2 76 History of, 418 et seq. Syndicates for Special Sales, 290 456 INDEX. Joint Stock Trade Banks : Institution of, 379 et seq. War Activities of, 413 Kahan-Shabsay, A., 118 Kasperovicz, H., 88 Kharkoff Fair, 283 Kieff Fair, 282 Knoop, Professor, 39 Kokotsov, V. N., 443 " Kolodka," 226 Korzukhin, J. A., 165 Krestchensk Fair, 283 Krovlia Iron and Steel Syndicate, 290, 291, 293 Kusheleff, P. N., 40 note Kustarny Work, 97, 282 Kyshtin Copper Corporation, t 85 Labour : Contracts, 150, 151 Factory Laws, 146 6 < seq. Insurance of Workmen, 146, 158 Mechanicians, demand for, 208 Statistics, 107 et seq., 129 Strikes, 145, 146, 154, 155 Wages, 120, 159 Women's Factory Workers, see that title Workmen's Compensation, 146, 156 Land, see Agriculture Land Banks, 19, 385, 4 9 Land Tenure, 19 Lead Industry, 187 Lead and Zinc Imports, 187 Leather Industry : Exports, 298 Factories, Output, 141, 142, 143 Fairs, Sale of Leather at, 283 Tanning Extracts, Imports, 113 Leipzig Fair, 280 Lena River, 10 Licences, Trading, 274, 275 Lime Manufacture, 139 Liquor Trade, see Drink Question Live Stock Expoits, 321 Loans : Agricultural Loan Funds, 19 State Loans, 344, 345, 371 War Loans, 349, 406 "Loco-Factory" Prices, 119, 121 Locomotive Builders Agreement Syndicate, 290 Lodz Railway, 241 London Auctions, 280 Machinery : Agricultural, see that title British Manufactures, open- ings for. 323 Imports of Machines and Machine Tools, 113, 202, 203, 209, 211, 212, 214,323 Industry, 200 et seq. Requirements in various Dis- tricts, 205, 210 Statistics of Manufacture, 201, 210 Malakhovsky, N. 54 Manganese Ore, 167, 323 Manufactures, Classification Tables, no, 112, 114, 115 Matches, Excise Duties, 336 Meat Exports, 35 Mechanical Engines, Type and distribution of, 126, 127 Mekk, M. 39 Merchant Shipping, Statistics of 259 Metallurgy : Imports of Metals and Metal Manufactures, 112, 324 Mining, see that title Syndicates for Metallurgical Products, 290 Mica, Supply of, 1 70 Mied Syndicate, 290 Mineral Waters, Russian Springs, 170 Mining : Boards, 166 Coal, see that title Gold Mining, 9, 190 et seq. Output, 116 Rights, 165 Royalties, 338, 339 Russian Mines, general account of, 167 et seq. Syndicates, 290 Women's Labour prohibited, 147 INDEX. 457 Mining {contd.) : Workmen Employed, ii6 See also Names of different Minerals Molybdena, Supply of, i68 Money : Export prohibitions, 417 Russian Monetary System, 352 et seq. Mountain Ranges, 3, 5, 6 Mourman Railroad, 252 Moscow-Kazan Railway, 241 Moscow-Kiev- Varony Railway, 241 Moscow People's Bank, 386 Moscow Region, Coalfields of, 176 Moscow Stock Exchange, 399 Moscow-Vindau-Rybinsk Rail- way, 241 Mukoseyev, V. A., 352 Municipal Banks, 385 Murman Coast Fisheries, 222 Naphtha Engines, Demand for, 205 Naphtha Refineries : Growth of Production, 124 Output, Number of Workmen Employed, 117 National Debt, 331, 343, 344 Navy : Expenditure upon, 331 Shipbuilding "^^ards. Output of, 116 Neva River, 5 Nickel Ores, 167 Niemen River, 4 Nijne-Novgorod Fair, 283, 395 Early German Trade, 298 Exchange, 287 Nikolae-Pavdino Platinum Co., 189 Oats : Crops, Statistics of, 2 1 Exports, Tables, 22, 23, 319 Obi River, 9 Odessa Exchange, 287 Oil and Cotton Seed Manufac- ture, 63 Exports of Oil Cakes, 33, 322 Oilfields, 178 et seq. Okhotsk, Sea of, 6, 10 Orenburg " Barter " Fair, 283 Overtime in Factories, Limita- tion of, 149 Palgrave, Sir Inglis, 368 Paper Mills : Development of, 136, 137 Output and Number of Work- men Employed, 117 Pawnbroking Business, Statis- tics of, 355, 385, 388, 419 Peasants, Emancipation of , 1861, 106, 109, 26S Peasants' Land Bank, 1 9, 387,4 1 9 Peasant Proprietorship, 20 Pechora River, 5 Peel, Sir Robert, 368 Pelferoff, J. J., 17, 217 People's Palaces, 447 Peter the Great, 301 Petrograd Exchange, 287, 399 et seq. Petrograd-Toula Joint Stock Land Bank, 419 Petroleum Industry, 178 et seq. Petroleum Products : Excise Duties, 336, 347 Exports, 322 Pig Iron : Manufacture, Tables, 196, 197 Mining of, 192, 194 Pigs : Breeding, 32 Exports, 36, 321 Pilchard Industry, 222 Plains of Russia, 8, 9 " Plast," 226 Platinum Industry, 188 Podolia, Fruit growing in, 80 Poland : Coal Production, 175 Forests of, 89 Iron Production, 195 Zinc Output, 188 Poltava Joint Stock Land Bank, 419 Population, 13 Pork and Bacon Exports, 32, 34, 321 458 INDEX. Possession Rights, 193 Postal and Telegraph Services : Development of, 261 et seq. Revenue, 338, 339 Rise in Rates, 347 Poultry-farming, 43 et seq. Precious Stones, 169 Prices : Cattle, 29 Eggs, 47 Fuel, Comparative Table, 126 Independent movement of, 109 "Loco-factory," 119, 121 Printing Trades, Output, Num- bers employed, 136 Privately-owned Railways : Capital invested in. Table 234 Concessions, mode of issuing, 236 Cost of Construction, 234 Dividends earned by, 241 Government Redemption of, 237 et seq. Prodameta Syndicate, 290, 291 Produgol Syndicate, 290, 293 Prodvagon Syndicate, 290 Protection, see Customs Duties Provinces, List of, 15 Provoloka Syndicate, 290 Public Finance, 329 et seq. Pumps, Imports of, 202 Quicksilver Ores, 167 Railways : Branch Line Feeders, 242 Capital for building, 236 et seq. Competition between Com- panies, 248 Control of, 244 Expenditure, Rapid Growth of, 330 Fares, effect on Railway deve- lopment on, 286 Government Railways, see that title Privately-owned, see that title Programme of New Construc- tion, 250, 251 Railways {coiitd.): Receipts, Working Expenses and Income Table, 233, 234 Rolling Stock and Railways, Imports of, 238 Statutes, 237 et seq. Subsidies, 235 Tariffs, Control and Regulation of, 245 Telegraph, Lines of, 262 Traffic handled, Tables, 233, 271, 272 Trade development dependent on, 268 et seq. Raw Materials : Import Duties, 309 Machinery Manufacture, high cost of materials, 207 Refrigerating Machinery for Fish, 229 Resin, Imports of, 324 Revenue Tables, 332, 333, 334 Riazau-Ural Railway, 241 Rivers, 4 et seq. Fish Species, 13 Navigable Waterways, 252 et seq. River Fleet of Russia, 257 Rouble, Fluctuations before and during War, Table, 416 Royalties, Revenue from, 338, 339 Rubber and Gutta-percha Im- ports, 324 " Russia " Leather, 283 Russo-Japanese War, 1904-05, 368 Cost of, 331, 332 Rybinsk Exchange, 287 Rye : Crops, Statistics of, 21 Exports, Tables, 22, 23, 318 Sailing Ships of Russia, Statis- tics, 259, 260 Salt Mines, 168 Salting and Curing of Fish, 226, 228 Saltpetre Imports, 325 Savin, N. N., 200 Savings Banks, 2G6, 335, 388 et seq. INDEX. 459 Sea Trading Routes, English first opening, 304 Seaborne Trade Exports, Table, 304 Securities : Discounting, 348 New Issue, Table, 394 Value and distribution of, 1 91 3, Table, 401, 402 Seeds, Exports, 322 Semga, 222, 226 Settlement Bureau of Super- phosphate Works, Vistula Region, Syndicate, 290 Sewing Machines, Imports, 202 Sheep-breeding, 30 Shops — Factory Shops, 152 Siberia : Coal-mining, 177 Forests, 89, 95 Goldfields, 190 Iron Production, 195 Rivers, 9, 10 Salt Supply, 168 Timber Trade, 99 Shipping : Carrying Trade, Number and Tonnage of Vessels, 305 Inland Waterways, Steamer Traffic, 252 et seq. Merchant Fleet, Statisfcs of, 259 Silk Manufacture, Output, 133, 134 Small Holdings, 20 Soap Works, Output and Num- ber of Employees, 141, 142 Soboleff, M., 298 Soda, Sulphate of, 169 Soils of Russia, 1 1 Soskiss, M., 39 South Eastern Railway 241 Spirits : Excise Duties, 336, 347 Government Monopoly, Rev- enue from, 338 Liquor Restrictions, see Drink Question Refining Works, Output of Labour, 1 1 9 Spices, Imports, 325 Srietensk Fair, 282 State Bank : Branches and Offjcrf;, 378 Cu'rent Accounts (Accounts- giro) 377 Gold Reserves of State Bank, 369, 37" Historical Account of, 360, 361 Liabilities, 376 Opening of War 1914, State Bank's position, 405 Operations of, 354, 355, 357 ct seq., 363 et seq. " Report " operations, 398 War, Effect of, on, 411 State Forests, 91 State Property and Funds, Rev- enue from, 339 State Ownership of Railways, ^31 Statutes of Joint Stock Com- panies, 418, et seq. Railway Statutes, 237 et seq. Stcherbatoff, Prince, 39 Stearine and Tallow Works 141, 142 Steel : Imports, 198 Manufactured, 199 Stock Exchanges, 399 et seq. Position at opening of War 1 914, 403 et seq. Strikes 145, 146, 154, 155 Sturgeon and Caviare Industry, 221, 227 Sugar : Exports, 76, 321 Production, 70 et seq. Refineries, Kieff Fair Trade, 282 Sulphur, Supply of, 169 Sulphuric Acid, Vistula Region Syndicate, 290 Swine Breeding, 32 Swine Exports, 36, 321 Syndicates, 290 Tallow and Stearine Works, 141, 142 Tanning Extracts, Imports of, 113 460 INDEX. Tar Manufacture, 99 Tariffs, see Customs Duties Taxation System, 334 et seq. New Taxes introduced through War, 347 Rise in, owing to Liquor Pro- hibition, 235, 346 Trading Taxes, 107 Telegraph and Telephone Ser- vices, 261 et seq., 338, 339, 347 Teletskoe, Lake, 6 Tenure of Land, 19 Textile Industry : Hours of Labour, 146, 149 Machinery Imports for, 203 Output and number of Em- ployees, no, 114, 118, 123, 131. 132 Strikes, frequency of, 155 Textile Materials, Imports, 112 Thermal Engines : Home Manufacture, 2(^4, 214 Imports, 202 Tiflis Woodworking Trade, 99 Timber : Exports, 321 Fuel, Timber used as, 122 State Forests, Revenue from, 339, 340 Trees of Russia, 89 et seq. Tin Mines, 167 Tobacco : Cultivation, 76 Excise Duties, 336, 347 Exports, 78, 79 Trade : Banks, position of, 294 British-Russian, see that title Carrying Trade, Number and Tonnage of Vessels, 305 Commercial Travellers, intro- duction of, 273 Exchanges, Powers and Func- tions, of 286 et seq. Fairs, 273 et seq. Freight Returns, Tables, 271, 272 German-Russian, see that title Grain Trade, Development of, 269 et seq. Trade {covtd.) : Holland, Russian Trade with, 310, 311 Joint Stock Companies, see that title Overland Trade, Table, 303 Railway Construction stimula- ting, 271 Syndicates, 290 Turn-over Increase 1742-1915, 301, 302 Trading Tax, 107 Transcaucasia : Cotton Growing, 57 Tobacco Cultivation, 77 Treasury Bills, discounting, 409 et seq. Tribes of Russia, 14 Tsar John IV, 299 Turbines, Demand for, 205 Truck and Deductions, 152 Turkestan : Coal Mining, 177 Cotton Growing, 54, 60, 61 Fruit Cultivation, 82 Irrigation Needs, 62 Machinery Requirements, 205 Oilfields of, 183 Under-sized Fish, Restrictions as to, 221 United States of America : Agricultural Machinery Ex- ports, 204 Automobile Exports, 206 Ural Regions : Coalfields, 176 Copper Production, 186 Forests, 91, 93 Iron Ore Production, 179, 192 Mineral Products of, 168 Oilfields, 182 Ural River, 4 Vanadium, Supply of, 168 Varzar, V., 105 Vegetation of Russia, 1 1 Village Handicrafts, 19 Vine Growing, 84 et seq. Vistula River, 4 Vladikavkaz Railway, 241 INDEX. 461 " Vobla," 221 Vodka : Consumption belore War, 431 et seq. Customs Duties, 438 State Monopoly, 437 Voigh, Dr., 52 Volga Region, Forests, 91 Volga River, 4 Volhynia, Hop Cultivation in, 83 Wages : Increase in relation to Pro- ductiveness, 120 Legislative Enactments, 150 et seq. Statistics of, 159 War Expenditure, 409 War Loans, 349, 406 Warsaw Discount Bank, Warsaw Exchange, 287 Warsaw-Vienna Railway, Wheat : Crops, Statistics of, 21 Exports, Tables, 22, 23, 318 Willoughby, Sir Hugh, 299 419 Wine Manufacture, 84 Wireless Telegraphy, 265 Witte, Count, 442 Wolfram, Supply of, 168 Women Factory Workers : Regulations for, 146 et seq. Statistics of, 163 Wages, 163, 164 Women's Labour in Mines, pro- hibited, 147 Wood Pulp Exports, 103 Wood-working Trade, 96, 117 Wool Auctions, 31 Wool Trade, Output, Cost of Pro- duction, etc., 132, 134 Woollen Yarns and Manufac- tures, Russian Demand for, 324 Workmen's Compensation, 156 146, 241 Yenisei River, 9, 10 Zemstvo and Urban Credit Bank, 387 Zinc Industry, 187 Prinled by P. S. King & Son, Ltd.. Orchard House. WeMminster, S.W. Royal 8vo. Cloth. 450 pages. 12s. net. Inland Postage, 9(1, Postage Abroad, Is. A PRACTICAL GUIDE FOR RUSSIAN CONSULAR OFFICERS And All Persons having Relations with Russia. SECOND EDITION— REVISED AND AMPLIFIED. By BARON A. HEYKING, D.C.L., Imperial Russian Consul -General in London. This work, besides covering the whole ground of the Consular Service, contains detailed information as to the legal position of foreigners in Russia, both in general and in particular, as regards certain branches of industry and commerce, with instructions as to the most important Customs Regu- lations. Many points of detail arising in the everyday business of the Consulates are not provided for in the written laws and regulations, but are, nevertheless, satisfactorily disposed of in accordance with the unwritten law of custom. Thus, the work is a combination of theoretical knowledge and of practical experience acquired during twenty-eight years of State service at the Russian Foreign Office and at different Consular posts. Contents : — Part I (15 Chapters). Consular Duties in General— Staff — Office. Part II (5 Chapters). Supervision of Commerce and Shipping. 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