A history of commerce

by Clive Day

Russia at this time was still almost exclusively agricultural. The serfs had learned to supply their simple needs for clothing and implements by domestic industries, but nothing like the western factory organization, with its extensive use of power machinery, had as yet appeared. Attempts to stimulate such an organization, by privileges and protection, had resulted in failure. The Russians are not a people with a gift for mechanism. It has been said of them that their only invention is the samovar, their apparatus for making tea. The world exposition of 1867 displayed samples of Russian industry, but most of these were the products of village craftsmen, and the few samples of modern manufacture came from factories owned for the most part by Germans. The exports of the country were still almost entirely raw products, and the manufactured wares which the country contributed to the commerce of the world were of the most simple description: yarn of flax and hemp, cordage, string, and sacking.

552. Recent history of the tariff.—In spite of these conditions the government pursued since about 1870 a policy of protection, which grew constantly more strict with the passage of time, and which furnished at the end of the century the most extreme example of protection to be found among civilized states. Comparing the tariff of 1868, which was comparatively liberal, with the tariff of 1891, we find that duties on some important manufactures rose in the following measure: on cotton goods and glassware, to double; on rails and locomotives to quadruple or more. Even more striking and more serious was the increase on partly manufactured wares. Duties rose on leather and yarns to twofold or more; on petroleum and wrought iron to threefold; on sulphuric acid to four or seven fold; on cast iron to tenfold. This is the period in which Germany was seeking commercial advantage by bargaining in tariff rates with other countries, and in which occurred the tariff war with Germany that has been noted above. At this time and again later Germany was able to bring her eastern neighbor to terms by financial pressure; Russia was a great borrower and needed the support of the Berlin money market. Russia raised still more, however, the rates of the tariff in a revision in 1903, and even after these had been reduced by treaty bargains they left the general level higher than before.

553. Development and cost of manufactures.—The protectionist policy in Russia gained its object, an increase in the manufacturing industry of the country. The product of home manufactures rose greatly in value, and the importation of foreign manufactures declined in proportion. This object, however, was attained at a great cost. Russia was even less suited to the modern system of manufactures than Italy or other states which we have considered. It lacked capital, technical knowledge, leaders, laborers of steadiness and intelligence—practically everything except raw materials, which were present in abundance. Manufactures, therefore, were conducted at an expense far above that common in other countries, and could be maintained only by forcing the people to pay far higher prices for their wares. A person could not get so much as a sewing needle without contributing an extra sum to the support of the home manufactures. The policy was the more questionable, as the profits of these manufactures went in large part to foreign stock holders, who utilized an opportunity for which the native Russians were still unprepared. Even from the political standpoint the policy of protection in Russia was attended with danger; many events indicated that the factory laborers would be the first to turn against the autocracy which had brought them into being.

554. Effect of the tariff on agriculture.—The most serious aspect, however, of the Russian tariff was its effect upon agriculture. The great plains of the country were peculiarly adapted to the use of modern cultivating and harvesting machinery, such as contributed so much to the progress of agriculture in America. The tariff made such machinery so costly, whether it were imported or manufactured in Russia, that it was introduced to only a slight extent. A Russian estimated that the farmers of the United States found it profitable to spend nearly twenty times as much for agricultural implements and machinery as the Russians. The peasants could not afford even plows, harrows, or scythes of a modern type, and still used antiquated makeshifts. The mass of the people, at best, were ignorant and bound by custom, showing still the bad effects of the servile condition from which they had so recently emerged; and needed every encouragement to be induced to advance to better methods of cultivation. Even artificial fertilizers, however (superphosphates, etc.), were burdened with a duty, because there seemed a chance to manufacture them in the country; the result, naturally, was an increase in price, and a restriction in the use of this important aid to production.

555. Effect on railroads.—We must note further the effect of the tariff on the railroad system. Russia has never gone through the period of transportation by highroads. It passed from conditions described above as existing during the first part of the century, to the use of the railroad, without the transition such as was marked by the use of turnpikes in England. Even in 1914 the highroads of the country were of the crudest character, and internal trade depended mainly upon the waterways and railroads, contributing nearly the same tonnage to each. The railroads, therefore, had peculiarly important functions to perform in Russia. They served agriculture, moreover, to an unusual degree; the cereals supplied in 1897 more tonnage than any other ware carried on Russian railroads. Yet if we measure the development of railroads by comparing their length with the area or population of the country, we find that even at the close of the century the Russians had made but a beginning, and took the lowest rank among all important peoples. Taking merely Russia in Europe, and contrasting it with the United States, a country which also has a vast area and great vacant spaces, the Russian railway system in 1913 had not reached one ninth the development of the American in comparison with population, not one tenth in comparison with area. An important reason for this backwardness was the increased expense of the construction, equipment, and operation of railroads due to the high tariff on railroad supplies. Iron may be said, roughly, to cost double or more of what it cost in other countries. The government has not always been blind to these facts, and has made concessions from time to time, but the general tendency of its policy has been made only more glaring by these occasional exceptions.

556. Commercial reasons for Russia’s eastern movement.—Preceding sections have sketched some of the historical influences which prevented Russia from taking a part in world commerce commensurate with the space she covered on the map. This great state, which in the sixties took only sixth place in commerce among European countries, rose above Belgium and the Netherlands in the early part of the seventies, and secured fourth place, only to be passed again by these little states and for a time even by Austria-Hungary. In 1912 Russia still ranked sixth among European countries, eighth among all countries of the world, in the value of foreign trade.

This decline in commercial importance was due largely to the conscious and voluntary action of the government, which restricted commerce between its people and the people of the West. No government, however, regards all commerce as injurious, and the Russian government endeavored to atone for losses in the West by expansion in the East. In that direction Russia met people who were her industrial inferiors. By trade with them she hoped to secure imports which would not compete with her own products, and sought to win a market for her newly founded factories. The manufactured products which were too high in price to compete in European markets could be sold in the East so long as the cheaper wares of western Europe did not reach the field. As commerce extended, however, in the last decades of the century, Russia saw that her eastern markets were threatened unless she could apply to them the same policy of protection which she had established in the West; and the government was forced into the policy of military and political expansion, designed to close the doors of eastern markets to other powers, which received its check in the the war with Japan.

557. Course of the Asiatic trade.—In no period of the nineteenth century has Russian commerce across her Asiatic frontier formed any important fraction of her total foreign trade. At the beginning and end of the century it was about one tenth of the total; in the intervening time it was rather less. The difficulty of transportation over the great stretches of almost trackless territory confined the trade with the Far East to objects comprising great value in small bulk (tea, cloth, etc.), and directed Russian commerce rather to the Asiatic countries on her southeastern frontier (Persia, etc.). In the second half of the century, for reasons noted above, the government showed an increased interest in this branch of trade, and lent liberal aid in furthering Russian interests in the East. The most striking evidence of the determination of the Russian government to extend its influence toward the Pacific Ocean was the construction of the Siberian Railway (1891). This was rather a political than an economic undertaking; it was enormously expensive, and failed to develop sufficient traffic to pay its way as a commercial enterprise. Its failure also in the field of international politics was signalized by the victory of Japan in the war with Russia in 1905, which checked definitely Russia’s ambitions to play a dominant part in the Far East and put in her place an Asiatic power.

558. States of the Balkan Peninsula.—If the reader will examine a map of Europe about 1800 he will find that at that date the state of Turkey occupied the whole of the Balkan Peninsula, and included considerable territories even to the north of the Danube. The nineteenth century has witnessed the liberation of most of this land from Turkish rule; and some half dozen independent states have emerged and taken their place in the European system. These states, however, have neither in their political nor in their economic organization reached maturity. Like the Russians, the peoples of southeastern Europe belonged for centuries to Asia rather than to Europe, and the period of Turkish misrule, lasting down into very recent times, has effectually checked their development. Their states were still in the making, constantly disturbed by racial, religious, and dynastic quarrels. Their economic organization was still, in large part, medieval. Roads were scarce, and good roads were almost unknown. The implements and methods of agriculture were of the most primitive description. Some cultivators still used for a plow a crooked piece of wood with a single handle, and threshed their grain on the open ground by driving horses over it. Manufactures were still in the stage of the handicrafts, and were, in some cases, exercised by gilds like those of the Middle Ages.