2.5 Russia’s Economic Interests
in the Orient

Of eminent significance for the question we are dealing with, finally, is the new direction in Russian foreign economic policy that has become evident in the last ten years. Up until that time, Russia’s efforts were directed to satisfying its needs for manufactured goods and raw materials through its own production and emancipating itself from foreign imports. Today its efforts go further; today Russia wants to venture out into the world market and challenge the other capitalist nations on foreign ground. To be sure, this tendency does not stem from the Russian bourgeoisie; because of the peculiar economic-political development of Russia, politics frequently grasps the initiative of economic progress out of its own interests.

While industry in most capitalist countries, to the extent that the boundaries of the internal market are too narrow, pushes the government to acquire new markets by conquest or treaty, in Russia, on the contrary, Czarist policy sees in industrial exports a means of bringing the countries of Asia chosen as political booty into, first, economic dependence on Russia. Therefore, while the Russian industrialists for the most part do not lift a finger to win a place in the world market, the government spurs them incessantly in this direction. Everything has been used to impart energy and a thirst for exports: exhortations, invitations, expeditions to investigate new market areas, the construction of colossal railways such as the Siberian and East Chinese, rebates on customs and taxes on exported goods, finally, direct subsidies to this end. The countries first in consideration here are: China, Persia, Central Asia, and the Balkan states. In 1892 an expedition under the direction of Professor Pozdneev, which was to serve scientific as well as commercial ends, was sent to Mongolia. Even earlier the Russians had introduced the post-wagon system there, which was also run by them. In the following year the official of the Finance Ministry, Tomara, was sent to Persia to investigate the trade situation there and, particularly important, the reconstruction of the Persian port of Enseli was begun in order to support Russian trade. In the same year the Finance Ministry worked out a draft regarding the improvement of the routes from the Russian border to Teheran, Tauris, and Meschhed and the establishment of a Russian bank in Persia. To monopolize the market in East Siberia for its own merchants and knock the English out of the field, Russia decided to abolish the free port on the Amur river and in the port of Vladivostok, which has extended to all goods except those on which an excise had been levied in Russia. However, the most important measure by which the government hoped to give a leg up to Russian trade in Central Asia was the costly construction of the Trans-Caspian Railway.

No less, or more correctly, even more attention did Russia direct toward China. A short time ago China’s trade with foreign countries was taken care of by German, French, and some English banks. Therefore, in 1896, the Russian government hurried to found a Russian bank in Shanghai. “One task of the bank,” wrote the organ of the Russian Finance Ministry at the time, “is to consolidate Russia’s economic influence in China and to thereby create a counterweight to the influence of other European nations. From this standpoint it is particularly important that the bank try to draw as close to the Chinese government as possible, that it collect taxes in China, undertake operations that will bring it into contact with the Chinese treasury, pay interest on the Chinese state debt,” etc. The other Russian measures, for example the construction of the East Chinese railway, are well enough known.

The result of these efforts so far was recently officially examined and has shown itself to be an almost total fiasco. In every country where the government wanted to set it up, the Russian market would have had to overcome stiff competition from German, French, but above all English industry, and the Russian entrepreneurs had not yet shown themselves to have sufficiently grown to the part. Russia was no match for other nations even in its own national territory in East Siberia, as long as it had to face them in free competition. Imports in the most important Siberian port, Vladivostok, amounted to:

A consequence of this state of affairs was the above-mentioned decision by Russia to take East Siberia into the Empire’s tariff zone.

Russian exports to China are likewise hardly worth mention in comparison to those of other nations. Out of total imports of nearly 330 million rubles, Russia participated with only approximately 4.5 million:

A similar picture has been provided by the uproar about trade with central Asia. The Trans-Caspian Railway built by Russia, on which such great hopes were set, proved itself to be a really first-rate trade route – for the English, who now have obtained a way of getting around the high transit duty in Afghanistan. Russian exports to the Trans-Caspian, Khiva, Bukhara, and Turkestan have, after a brief upswing, begun to sink again in the last few years. Of the most important articles registered, the following were transported:

English imports from India, on the contrary, grew rapidly during the same period thanks to the Russian railway, as has been officially confirmed from the Russian side. Bukhara, for example, received from the four main stations on this line:

Russia’s exports to Afghanistan are in just as bad a way. Imports of products of the Russian textile industry amounted to 163,245 poods in 1888-1890 (25 months), 10,000 poods in 1893 (12 months), that is, approximately eight times less per year.

Russian trade in Persia has succeeded the best, relatively. Russian cotton products make up approximately 30 per cent of Persian consumption, and imports of these products amount to 48,000 poods per year in 1887-1890, 73,000 poods per year in 18911894.

In the northern provinces of Gilan and Masenderan, the Russian textile industry has almost supplanted the English, but, in total Persian imports, Russia – according to official evidence – plays a very small role for the meantime. This despite the fact that the Russian industry finds itself in the most advantageous situation, since the Persians and Armenians living in the Caucasus, carrying on trade at their own risk, serve Russian industry as the most suitable agents, while the merchants of other nations must take recourse to business on commission, and that only in Persia’s larger cities.

The total picture of Russia’s exports to its most important Asian markets looks as follows:

We see that the Russian government’s program in Asia is still far from being realized, and that, in any case, the result attained corresponds in no way to the amount of effort made in this direction. It would be an error to trace this back to the technological backwardness of Russian industry alone. Certainly Russia is behind other industrial states in this regard, in a whole series of important branches of industry – such as the metal and wool industries, etc. – and in order to be able to take up the competitive battle successfully on the world market it would have to unconditionally improve its methods of production. But there is a further and no less important factor involved, which has largely frustrated the government’s plans in Asia up until now. For even where Russian industry could have easily won a victory over the English, according to the competent testimony of individual researchers and even the British consuls in Persia – for example, in the production of lower grades of cotton cloth – the Russian industrialists up until now have not been able to go very far.

The reason is the entire habitat of the Russian and especially the Moscow entrepreneurs, which was formed by years of Russia’s prohibitive tariff policy. Pampered by the government with all sorts of gifts and patronage, spoiled by enormous monopoly profits, spoiled further by a colossal domestic market and the immunity from outside competition, the Moscow entrepreneurs felt neither the desire nor the need to expose themselves to the rough weather of the world market and content themselves with normal profits. It is, so to speak, profit-hypertrophy which makes the Muscovites so sluggish and apathetic in the search for possible new markets; they see foreign trade as, at most, a means to either pocket higher export subsidies or to get a huckster’s one-time profit by fraudulent goods deliveries and the clumsiest cheating. If neither the one nor the other is in the offing, then the Moscow manufacturer answers the orders that might pour in from outside with stubborn silence.

This method of doing business is clearly shown in connection with Asia. Thus, for example, the Russian calico massively imported to Bukhara and Khiva in 1890 and 1891 was manufactured in such a way that the Moslems could have used it much less for clothing than for dyeing New Year’s eggs. In subsequent years the population understandably turned back to English products, and this, more than the cholera epidemic and the bad harvest, brought about the precipitous fall in Russian imports in the years 1892 and 1893. Just as telling is the story of the sugar trade with Asia. So long as the excise was rebated on the export of sugar, these exports went rapidly to Persia and Bukhara; when the rebates were suspended, the business once more seemed pointless to the Russians, and exports sank suddenly from 1,047,996 poods in 1891 to 516,021 poods in 1892 and 150,128 in 1893. Another interesting side of the Muscovites’ commercial spirit is revealed in their trade with Siberia, where they managed to first send out travelers with samples to win orders, then afterwards declined to fill these orders. Finally, the Muscovites’ energy comes to the fore most glaringly in their business with China; approached from there with requests for the establishment of trade relations, they retorted to this importunate demand with silence.

After exhaustive examination of the outcome of Russia’s Asiatic trade, the organ of the Finance Ministry likewise came to the following conclusion: “The characteristic traits of the noncommercial Slavic (meaning here: Russian) race and the absolute apathy and indolence of the Moscow entrepreneurs are expressed as crudely as they are completely in our trade with Central Asia.” The causes of the failure of the Russian market in Asia are formulated in almost the same words by other papers of different viewpoints – the Novosti, Novoe Vremya, St. Petersburg News, among others. And recently the organ of the Finance Ministry happened to speak once again on the same theme: “Only Persia,” it wrote in January 1897, “can be called a market for the products of our cotton industry; the attempts to conquer the Chinese and Central Asian markets for ourselves can so far not be viewed as successful, and what is responsible is in part our inability to adjust to the demands and customs of the customers, but above all the fact that our entrepreneurs at the moment have it too good at home to want to bother with foreign markets.”

Thus it appears that the very essence of the Moscow entrepreneurs, and particularly their efforts to maintain a privileged place by means of a totally artificial Chinese wall, are incompatible with the current tendency of Russian foreign policy and in fact go directly against it. It is clear that the most effective remedy for all Moscow’s indolence and its trade practices, as well as for technological backwardness, would be Russia’s transition to a liberal tariff policy, which would tear the Moscow district out of the hot-house atmosphere of monopoly and confront it with foreign competition in its own country. To us there is little doubt that the interests of absolutism in Asia on the one side, on the other the expansion of capitalist agriculture and the interests of the landowners, will sooner or later pull Russia down the road to a more moderate tariff policy. But above all a remedy can be created only in one way, namely by sharpening competition within the Russian customs borders, i.e., so that Moscow is ruthlessly abandoned to the unlimited competition of the progressive industrial districts of Poland and St. Petersburg. This viewpoint is also that which the more influential Russian press, such as the Novoe Vremya, stressed explicitly in connection with the debate over the Czarist Empire’s interests in Asia. That the government, for its part, is now in fact preparing to do away with Moscow’s economic rut and to force the Muscovites toward modern production and trade methods is best proved by the most recent law on the maximum work day, which indicates the most abrupt break with Moscow’s present methods of production, while it also appears as a realization of the Polish project of 1892.

To the same degree to which Moscow’s economic conservatism is a drag on current Russian policy and becomes more so every day, Polish industry appears once more as Czarism’s comrade in arms. We have shown by the comparison between the competitive conditions of Polish and central Russian production how far ahead of Moscow Poland is in terms of technology. For this reason alone, capitalist Poland, as the most progressive industrial district in Russia, which, through competition, unceasingly spurs the others, particularly Moscow, toward technological improvements, realizes the Russian government’s current program. But the Polish industrialists are also running ahead of the Russians specifically in the opening up of Asian markets. We have seen how seriously and thoroughly they prepared themselves for this task. Without awaiting the invitation of the government, they themselves seize the initiative and with their own hands forge trade links with foreign countries.

In the only country where Russian trade is relatively flourishing – in Persia – the products of the Polish textile industry make up nearly half of the total textile imports from Russia – approximately 40 per cent of the imports via the most important junction, Baku. To Poland also belong the initiatives toward trade relations with Persia, in many respects: already in 1887, thus before the government had turned its attention to this country, Poland had set about opening up its own trade agency and warehouse in Teheran. Lodz also immediately made use of the Trans-Caspian Railway to advance into Central Asia with its goods along with St. Petersburg and Moscow. It is the Warsaw district that provides the largely immigrant strata of the populations of Bukhara and Turkestan with glassware, faience, and porcelain, while the inferior Moscow products are bought by the poorer natives. Lodz is, at this point, the only industrial district in the Empire whose textile industry’s products have found entry into Constantinople and the Balkan countries. Already in 1887 Poland had taken up trade relations with Rumania and Bulgaria. Recently Lodz began to send cotton products directly to Sofia. Indeed, the Polish bourgeoisie, through use of the Siberian railway line, may make Warsaw the center of the new, large European-Asian trade routes. “The British manufacturer,” wrote the English consul in Warsaw, “may be prepared to find in them (the Polish entrepreneurs) formidable rivals in the markets of the East.”

In this way Polish capitalism in Asia works directly into the hands of Czarist policy.

From these so diametrically opposed attitudes of Moscow and Poland toward the aims fixed by Russian policy, there also follows a totally different current in the public opinion of the two districts. Stronger and stronger grows the party favoring domestic free trade, favoring technological progress, the party that opposes the official guardianship and defense of backward industries, and therefore is sympathetic toward the Polish district; and the Moscow entrepreneurs stand more and more isolated with their ancestral belief in the Trinity: guarantees, bonuses, subsidies. The anti-Moscow temper clearly expressed itself on the occasion of Moscow’s petition to the 1893 annual fair in Nizhni-Novgorod for the imposition of a tax on Polish traveling agents. Thus we read in Novosti:

“During the same fair ... these same representatives of protectionism composed and sent to the Finance Minister a petition regarding a special tax on the traveling salesmen of the Lodz factories, with the unconcealed intention of liberating the Moscow industrial district from Lodz’s competition. According to healthy common sense, the Moscow manufacturers should, in the interests of Russian industry and of Russian consumers, merely follow the admirable example of the Lodz manufacturers and employ traveling salesmen, bring the producers closer to the consumers, and so cheapen and make easier the market for its own products. But not nearly so much entrepreneurial spirit lies with the customs and habits of these protection-coddled practical men; they prefer to try various pranks against their competitors.”

And, finally, a characteristic excerpt from the official government organ Warsaw Tagesblatt on the general tasks of Russia’s industrial foreign policy:

“With the opening up of these new markets in Central Asia and Persia, we reckon on the flourishing of our industries, and we repeat that it is very much to be deplored that the lion’s share of the profits go to foreign countries, while only the crumbs remain for our poor workers (!). Our trade with Central Asia and Persia has not yet struck deep roots, and the representatives of Russian trade still have many victories to win over English competition to conquer those markets for Russia. In view of the common enemy, the Moscow and Polish entrepreneurs should join forces in order to strive together toward the same goal ... Russia’s main goal in the Asian market is at this moment to exclude English goods. It would be a subsidiary question which of the Empire’s industrial districts contributes more to the achievement of this goal, if only the profits of industry on the banks of the Vistula went exclusively to the native population and not, as is the case, to increase the capital for German entrepreneurs, employes, and workers. Were those industries in the hands of Russia or Poland, then we would be far stronger in our battle with England, and our dominance in central Asia would be secured.”

Understandably, the government organ does not neglect to deal a blow in passing to the German industrialists, who are heavily represented in Polish industry; it charges them with ignoring Russian national interests, exclusive, egotistical concern for the “German” interests of their own pockets, etc. But in the main, we find here the actual situation of the moment, pointedly expressed: In view of the present tasks in the world market, the domestic rivalries of the Polish and Russian entrepreneurs stand completely in the background. Insofar as differences exist between them, the blame will be pushed onto the Germans, an element hated just as much by the Polish bourgeoisie, as we have seen. Polish industry in itself, its development, its flourishing, appear here in a new light, as lying directly in the interests of the Czarist government: Once it has served to additionally consolidate the Russian conquest in Poland, Czarism is now assigning Polish capitalism the flattering role of serving in Asia as the harbinger of Czarism’s coming appetite for conquest. Indeed, Poland now plays the leading role, as we saw, in the realization of this lofty task, while Moscow’s star, i.e., the special Muscovite economic policy, is slowly waning. The new Russian law on the maximum work day signifies that even in the Russian Empire the lovely days of Aranjuez – the days of primitive capitalist accumulation – are almost past.