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productive expenditures. But the other half of her indebtedness has been spent on armaments, wars, and other unproductive items.
Russia's new budget is about 3,500,000,000 rubles, ($1,800,000,000.) The interest on the new loan will increase this budget only 6 per cent. But this new loan increases again her unproductive debt and places a heavy burden upon the taxpayer for whom the Government has prepared many "surprises" this year. The possibilities of internal loans are
not very great. During the first month of the war about 380,000,000 rubles of savings were withdrawn from the banks. Of this sum only 76,000,000 were redeposited later, when the first excitement had passed. The rest of the money evidently was either used up for production, for consumption, or for private storing of ready cash. How much of this money will come forth to buy the various shorttime loans no one is able to tell beforehand. But the big manufacturing interests are craving for foreign gold loans, not for internal paper money loans.
How Russian Manufacturers Feel
[Summarized from Russkia Vedomosti, Nov. 18, (Dec. 1,) 1914]
HE manufacturers of war supplies
are making large profits through the war. All they need is Government advances to buy their raw material. The Government permits them to borrow from the State bank upon Government orders for war supplies. The only difficulty lies in the extent of the credit. The Government would not permit borrowing more than one-third of the amount of its orders, while the manufacturers are asking for two-fifths.
The manufacturers who are using imported raw material and are working for the private consumer are suffering heavily from the war. The lack of coal, of hides, of wool and of cotton is threatening Russian industry with a crisis. There is a great want of hydroscopic (absorbent) cotton, since the only factory for this product was in Poland (City of Zgerzc) and has been destroyed. Lack of dyestuffs and other chemicals is hampering many other industries. The importation of tea and coffee has been curtailed considerably.
Russian cotton mills used to get 45 per cent. of their raw material from the United States, since only 55 per cent. of their demand can be supplied by Central Asia.
Furthermore, this Asiatic cotton can be used for the coarser grades of manufacturing only.
The war has cut off the American supply altogether.
Moreover, the manufacturers need cash to buy the cotton available. But they have none. They have already applied for some hundred million rubles gold loan from the Treasury, but the Government has promised them only about eight million from the new loan.
The wool manufacturers are faring no better than the cotton interests. The only way to get raw wool seems to be to ship it from Australia via Vladivostok. But the lack of foreign exchange prevents them from using this source.
The tea trade of Russia will be paralyzed soon for the same reason.
The big manufacturers see only three possibilities of remedying this situation.
The first would be to export gold, the other to export Russian commodities on a large scale, and the third-to get a gold loan from Great Britain.
The first proposition is imposs since the Government will not permit any exportation of gold at this moment. The second proposition won't work owing to the demoralized transportation. Thus the only escape from a serious national
crisis seems to lie in a large foreign gold loan.
This idea is favored by such prominent manufacturers as S. I. Tschetverikov, G. M. Mark, and A. E. Vladimirov of Moscow, the first speaking for the wool interests and the other two for the tea wholesalers. Mr. N. A. Vtovov voices the same sentiments on behalf of the Russian cotton mill owners.
New Sources of Revenue Needed
By A. Sokolov
[From Russkia Vedomosti, July 26, (Aug. 8,) 1914]
USSIA entered upon the present war better equipped financially than ever before in her history. But it is evident that her ordinary resources will not suffice, and the Ministry of Finance will have to find new sources of revenue to meet the gigantic expenditures. The Ministry of Finance has begun the usual banking and credit operations-the supervision of specie payments, the issuance of paper money, and the discounting of the Treasury notes in the State Bank. In addition to these the Ministry is ready to turn to new taxes.
It proposes to increase the tax on tobacco and to raise the price of whisky. Both are desirable objects of taxation. The tobacco tax has been relatively low in Russia. Only the poorer grades of tobacco have been taxed 100 per cent. ad valorem, while the higher grades have been taxed at a lower rate.
Any increase of indirect taxation can be justified only by the present emergency. We should bear in mind that already three-fourths of the Russian revenue raised by taxation comes through indirect taxes. Further increase of these taxes will inflict new heavy burdens upon
the poorer classes, who in any case will have to bear the heaviest burden of the war.
The present historical moment is of such magnitude that it can be compared only with the Napoleonic wars. But at that time also the higher classes had to contribute to the war expenditures. In 1810 an income tax was put upon the landed nobility. Wishing to make it appear that the war tax is a voluntary contribution, the Government levied it according to the declarations of the taxpayers and refused to listen to informers as to tax-dodging. The tax rate was progressive, with a maximum of 10 per cent. All incomes below 500 rubles ($250)* were exempt.
It is to be hoped that the great memory of the year 1812 will induce the well-todo classes to contribute their share to the expenditures inflicted upon us by the war. An income tax and possibly a temporary property tax should be accepted by them. A. SOKOLOV.
*It should be noted that the purchasing power of money was then approximately four times higher than at present.
Our Russian Ally
By Sir Donald Mackenzie Wallace
LAIDLAWSTIEL, Oct. 5, 1914.
HE Publications Committee of the
Victoria League, which is endeavoring to enlighten the general public on the origin and issues of the war, has suggested to me that, as Russia is now in alliance with us, I might write an article on her recent advance in civilization and the ideals of her people. To condense satisfactorily such a big subject into a few pages seems to me hardly possible; but, considing that we are embarking on a great national undertaking in which it is the sacred duty of every loyal subject to lend a hand according to his abilities, I cannot refuse to comply with the committee's suggestion.
To many thoughtful observers of current events it must seem strange that in the present worldwide convulsion we should be fighting vigorously on the same side as Russia, who has long been regarded as one of our natural enemies. Some worthy people may even feel qualms of conscience at finding themselves in such questionable company, and may be disposed to inquire how far we are politically and morally justified in thus putting aside, even for a time, our traditional convictions. It is mainly for the benefit of such conscientious doubters, who deserve sympathy, that I have undertaken my present task; and I propose to place before them certain facts and considerations which may help them in their difficulties. For this purpose I begin by examining the grounds on which the traditional conceptions are founded.
If we were to question a dozen fairly intelligent, educated Englishmen why Russia has usually been regarded as a hereditary enemy and an impossible alley would probably give two main
reasons: First, that she is the modern stronghold of barbarism, ignorance, and tyrannical government, and, secondly, that she threatens our interests in Southeastern Europe and Central Asia. Let us examine dispassionately these two contentions.
As to barbarism, there is no doubt that in the general march of civilization Russia long remained far behind her West European sisters and that she has not yet quite overtaken them, but it should be remembered—and here I appeal to the Englishman's proverbial love of fair play—that she did not get a fair start. Living on an immense plain which stretches far into Asia, her population was for centuries constantly exposed to the incursions of lawless, predatory hordes, and this life-and-death struggle culminated in the so-called Mongol domination, during which her native Princes were tributary vassals of the great Tartar Kahn. Under such circumstances she could hardly be expected to make much social progress, and she was further impeded by difficulties of intercourse with the more favored nations of the West, from whom she was separated by differences of language, customs, and religious beliefs. It was as if Europe had been divided into two halves by a formidable barrier, which condemned the unfortunate Russians to isolation. The herculean task of demolishing this barrier was, as we all know, begun by Peter the Great. He built for himself a new capital on the northwest frontier of his dominions -the beautiful city on the Neva, recently christened Petrograd-in order to have, as he expressed it, a window through which he might look into Europe. He looked into Europe with very good results, and his successors have
done likewise; but the demolition of the barrier proved a very tedious undertaking, and it was not completed till comparatively recent times.
The laudable efforts of the Russians - to make up for lost time have been particularly successful during the last fifty years. Immediately after the Crimean War, which some of us are old enough to remember distinctly, a new era of progress began. The Czar of that time, Nicholas I., whose name is still familiar to the present generation, was a patriotic, chivalrous, well-intentioned man, but unfortunately as a ruler he belonged to the mailed-fist school, delighted in shining armor, and put his faith largely in drill sergeants. Even in the civil administration he fostered the spirit of military discipline, and he was at no pains to conceal his contemptuous dislike of the self-government and constitutional liberties of other countries. By unsympathetic critics he has been not inaptly described as "the Don Quixote of Autocracy," and for thirty years he remained faithful to his principles; but toward the close of his reign, in his struggle with England and France, he learned by bitter experience that true national greatness is not to be found in militarism. This salutary lesson was happily laid to heart by his son and successor, Alexander II., and the more enlightened of his subjects. The period of triumphant militarism was accordingly followed by a period of national repentance, which was also a memorable epoch of beneficent reforms and genuine progress.
No sooner was peace concluded in 1856 than premonitory symptoms of the new order of things became apparent in St. Petersburg, in Moscow, and throughout the country generally. To all who had eyes to see and ears to hear, the war had proved that if their country was to compete successfully with its rivals, it must adopt a whole series of administrative and economic reforms; and there was a general desire that those reforms should be undertaken as speedily as possible. The young Czar took the lead in the work of national
regeneration, and he had the good fortune to find sympathy and co-operation among the educated classes. For the first time in Russian history-for on previous occasions the efforts of reforming Czars had always encountered a good deal of passive resistance the Government and the people were anxious to aid each other, and the main results may be described as eminently satisfactory. Three great reforms deserve special mention the emancipation of the serfs, the radical reorganization of the civil and criminal courts, and a great extension of local self-government.
By the emancipation decree of 1861, which had been carefully prepared by liberal-minded officials in conjunction with local committees of the landed proprietors, the millions of serfs, who had been habitually bought and sold with the estates on which they were settled, and who had known no law except the arbitrary will of their masters, were transformed suddenly into a class of free and independent citizens! Next came the reorganization of the judicial administration, by which a similar beneficent change was effected. In the old times the civil and criminal tribunals had been hotbeds of bribery and corruption to such an extent that a satirical author had once ventured to write a comedy with the significant title, " An Unheardof Wonder; or, The Honest Clerk of Court! Now they were thoroughly cleansed, and during some half a dozen years, when I traveled about the country in search of information, I never heard of a Judge suspected of taking bribes. The lawsuits, which were previously liable to be prolonged for a lifetime, were curtailed by simplifying the procedure; trial by jury was introduced for criminal cases; and the condition of the prisoners was greatly improved both materially and morally. the new prisons were quite excellent. A big reformatory, for example, founded by a benevolent society in Moscow and largely supported by voluntary contributions, seemed to me the best institution of the kind I had ever seen.
Regarding the new system of local
self-government, I may say briefly that I was very favorably impressed by the results. The first time I followed, as an attentive spectator, the proceedings of a Provincial Assembly I was fairly astonished. It was in 1870-only nine years after the beginning of the great reforms-and already the local affairs were being discussed, on a footing of perfect equality, by noble landed proprietors in fashionable European costume and emancipated serfs in sheepskins. Some of the peasants were very able, unpretentious speakers, and in one respect they had an advantage over some of their former masters - they knew thoroughly what they were talking about. While the frock-coated young gentlemen who had finished their education in a university or agricultural college were often inclined to deal in scientific abstractions, their humble colleagues, who had come direct from the plow, confined themselves to thoroughly practical remarks, and usually exercised a very beneficial influence on the discussions.
The favorable impressions which I received from this Provincial Assembly were subsequently confirmed by wider experience, especially when I worked regularly during a Winter in the head office of the local administration of the Novgorod province. The chief defect of the new institutions seemed to me to be the very pardonable habit of attempting too much, without duly estimating the available resources. This illustrates a very important national characteristic -intense impatience to obtain gigantic results in an incredibly short space of time. Unlike the English, who crawl cautiously along the rugged path of progress, looking attentively to the right and to the left, and seeking to avoid obstacles and circumvent opposition by conciliation and compromise, the Russian dashes boldly into the unknown, keeping his eyes fixed on the distant goal, and striving to follow a bee-line, regardless of obstacles and pitfalls. The natural consequence is that his moments of sanguine enthusiasm are frequently followed by hours of depression border
By bearing in mind this national peculiarity the reader will more easily understand the strange events which followed close on the heels of the great reforms which I have just mentioned. Alexander II. was preparing to advance further along the path on which he had entered so successfully when his reforming ardor was suddenly cooled by alarming symptoms of a widespread revolutionary agitation. Many members of the young generation, male and female, had imbibed the most advanced political and socialist theories of France and Germany, and they imagined that, by putting these into practice, Russia might advance by a single bound far beyond the more conservative nations and set an example for imitation to the future generations of humanity! The less violent of these enthusiasts, recognizing that a certain amount of preparatory work was necessary, undertook a campaign of propaganda among the lower classes, as factory workers in the towns and school teachers in the villages. The more violent, on the contrary, considered that a quicker and more efficient method of attaining the desired object was the destruction of autocracy by revolvers and bombs, and several attempts were accordingly made on the lives of the Czar and his advisers. For more than ten years, undismayed by these revolutionary manifestations, Alexander II. clung to his ideas of reform, but at last, in 1881, on the eve of issuing a decree for the convocation of a National Assembly, he fell a victim to the bomb throwers.
The practical result of all this was that for the next quarter of a century no great reforms were initiated, but those already effected were consolidated, and some progress was made in a quiet, unostentatious way, especially in the sphere of economic development. A new period of reform began after