Russian Realities and Problems/Past and Present of Russian Economics

by Peter Berngardovich Struve

Layout 2

PAST AND PRESENT OF RUSSIAN
ECONOMICS

(Dedicated to Sergei Dmitrievich Sazonov, formerly Russian Minister of Foreign Affairs, who worked with zeal and wisdom to create the Anglo-Russian alliance.)

 

I^[1]

THE HISTORICAL FOUNDATIONS OF
RUSSIAN ECONOMICS

I must ask your pardon for my bad English, but in deciding to accept the very kind invitation of Cambridge University to speak before you I was only impelled by the conviction that at a time like this, so fateful to the allied countries, there lies upon each one of us the obligation to promote, to the measure of our feeble powers, spiritual intercourse and friendship between our peoples. For, as was said by one of the most powerful English thinkers, "the distances of nations are measured not by seas, but by ignorances; and their divisions determined not by dialects but by enmities." Looking back on the intellectual history of the University of Cambridge and of its members, we should not find it difficult to demonstrate how greatly even distant Russia is obliged to the work of your Cambridge men. But, personally, I feel just now especially urged to recall and to honour with you one name, the name of J. R. Seeley, that great teacher of historical insight and political wisdom. To this Regius professor of Cambridge University I myself owe very much, and that of great importance. And this led me a good many years ago to have his Expansion of England published in Russia, and every year I recommend my students at the beginning of their course to read this masterpiece, which makes it possible for every thinking man to enter into the spirit of English history, and to realise the political genius of the English people.

Now let me pass on to my special subject.

In the whole field of Russian economic history perhaps the most interesting subject of study is the relation between the native and the extraneous elements in the process of economic and social development. Russia is a connecting link between the Western and the Eastern worlds. This statement of Russia's position is vague enough to be incontrovertible, but, when applied to different historical periods, it means very different things. In the early days of the Russian State, the military intruders from Scandinavia, who are usually looked upon as its founders, were never more than a thin layer on the surface of the general population. Yet the Eastern-Slavonic elements which formed the bulk of that population stood far closer to the western world of culture than to the eastern barbarian periphery of Europe. Kiev and Novgorod were at that time the uttermost outposts of western culture, turned to the East but facing the West, and themselves of western make. A very characteristic expression of this fact is to be found in the Ecclesiastical History of the famous mediaeval writer, Adam of Bremen, who, in speaking of the Russians of Kiev, distinguishes them from the barbarians by calling them Greeks, and describes Kiev as "Aemula sceptri Constantinopolitani, clarissimum decus Graeciae"—a rival of the sceptre of Constantinople and the brightest ornament of Greece^[2]. The Tartar invasion changes all this, isolating the Russian population from the West and plunging it into another, an Asiatic world. The distance between Russia and Western Europe increases, and Russia becomes if not a part of Asia at least a world by itself. This change is curiously reflected in the character of Russian historical sources. Russia becomes a wonderland, and travellers who visit it are afterwards able to tell things strange and incredible that strike the imagination. Travel literature, from the time of Herberstein in the sixteenth century up to the beginning of the nineteenth, bulks far more largely in the sources of Russian history than it does in the historiography of other European countries, a fact which has called forth many bibliographical and historical studies on the part of Russian and foreign scholars^[3].

It would be a tempting task to distinguish the various elements of Russian economic life as they lie before us at the critical moment when Russia became a great power and definitely entered the European world on equal terms with other nations. It has been contended that the economic evolution of Russia before Peter the Great did not lead to a development of town life in the forms characteristic of Mediaeval Europe. It has also been said that feudalism never existed in Russia. These and other statements of the same sort are at once too absolute and too vague. Now we see clearly enough that Russia had some rudiments of the feudal system, which in a marked manner embodied the principles of feudalism^[4]. Again, the town institutions and the regulation of commerce and industry had in Russia before the time of Peter the Great very conspicuous points of resemblance to the more developed forms of Western Europe^[5]. We should obtain rather misleading results if we confined ourselves to contrasting the rude, primitive conditions of Russia with the complexity prevailing in Europe. What is really interesting is not the general contrast, but the determination and delineation of the far more subtle points of resemblance and dissimilarity. But that is not my task in the present lecture. I wished merely to allude to this and to emphasize its importance.

I shall now pass straight on to the period when Russia, becoming one of the European "Great Powers," forced an outlet to the Baltic. In order to appreciate Peter the Great's work one must bear in mind that at the beginning of the seventeenth century, at the epoch of so-called "confusion," Polish troops inundated large regions of Russia and that at this epoch there were plans, partly effectuated, to submit the region of Novgorod to Swedish domination; and there arose an even more strange project, to make Russia an English dominion under James I as Protector and Emperor. The documents concerning this project were recently examined scientifically by a learned Russian woman, Madame Lubimenko^[6], who, I should like to remark, has made some valuable contributions towards our knowledge of earlier Anglo-Russian relations. From such a political downfall characterized by projects nearly annihilating Russia as an independent State, what an uprush under Peter the Great!

The moment when this occurred is, when regarded from the purely economic point of view, marked by no fresh departure. Changes occur only in certain methods and measures of state-interference with economic life, and the speed of the development of that life is accelerated. The economic and political evolution of Russia, as indeed in no less measure the general cultural development of the land, is marked by one original distinguishing trait. In order clearly to understand this originality, one fundamental all-determining peculiarity of Russian history, and above all of her economic evolution, must be steadily kept in mind. Russia has never ceased to be a land which continues to colonize and be colonized within its own bounds. The word "bounds" must here be taken in the sense not of political but of geographical or sociological boundaries. In this connection the Tartar invasion is of little moment.

I have here pointed out the fundamental fact in Russian economic history. Russia is building up her culture not in a confined space already occupied and settled, but in a free colonial area which is continually expanding, and at the same time is constantly connected territorially with the centre from which it expands. When the Russian State was being formed, the Moscow region was such a centre. The process we have outlined was in the making of Russia as fundamental and as decisive for her destinies, as were for Great Britain the growth of her maritime power and her overseas colonial expansion, as was for France the creation of political and cultural unity out of the diverse forms and relations of the Middle Ages. For all other European countries the process of colonization either came to an end long ago, or has assumed the form of the foundation of overseas colonies. For Russia, on the other hand, colonization is still going on within her own bounds, somewhat after the fashion of the German colonizing process between the twelfth and fourteenth centuries, which created a great part of present-day Germany, and destroyed Slavonic peoples and Slavonic states which have now passed into oblivion. But it must here be noted that Russia has never destroyed other peoples, as the Germans, for instance, destroyed the Baltic Slavs, a brother-people to the Poles of the present day.

The making of Russia is at once a centripetal and centrifugal process. The most fertile provinces or governments of European Russia, those situated in the south, are called New Russia; for these are regions of steppes, of which agricultural colonists took possession only at the close of the eighteenth or at the beginning of the nineteenth century. While the Russian Lancashire is the centre of Russia, the region adjoining Moscow, the chief Russian coalfields are situated in new, colonial Russia. Moreover, the most thickly peopled governments of Russia (excluding Poland) bore and still bear the name Ukraina. This term is now often used in a racial or national sense. But the original and literal meaning of the word, that which, from the present point of view—that is to say, historically—presents most interest, is as follows: Ukraina or Okraina—i.e. "limits," or, if one may borrow the old Roman expression, "Limes" Rossicus or Polonicus,—referred to colonial lands which were still in process of settlement, colonies and outposts at once of both states, Russia and Poland. Now these are the most densely populated governments of Russia. Still a few more examples: Odessa, the largest town on the Black Sea, which is twelve hours by express train from Kiev the "mother of Russian towns," is far younger than New York. Saratov, the chief commercial centre of the lower Volga, acquired serious economic importance only in the second half of the eighteenth century.

The foundation of St Petersburg, or Petrograd as it is now called, also really bears a colonial stamp. Petrograd is not to be compared with other new towns which owed their origin to the wish or to the caprice of enlightened absolute monarchs. The artificiality of St Petersburg, founded in 1703, is quite different in kind from the artificiality of—shall we say, Karlsruhe, founded in 1715—quite apart from the impossibility of drawing comparisons in point of size between the Duchy of Baden and the Empire of Russia. Petrograd, considered both historically and economically, is a town colony on a gigantic scale, deliberately set down "on the banks of the desolate waters"—so run the words of Pushkin, the greatest of Russian poets, who sang the praises of the mighty founder of the Empire. St Petersburg was built in the midst of war by the methods of war. Few there are among those who admire the magnificent "Nevsky Prospekt," who know that this, the finest of the central thoroughfares of our capital, was laid down by the hands of Swedish prisoners of war, who, in the year of the conclusion of the Peace of Nystad, which brought to an end the great Northern War, had every Saturday to sweep clean the street they themselves had built.^[7] At present there is much talk of the artificiality and even of the harmfulness of Petrograd. Not long ago a well-known Russian writer wrote a striking article in which he contended that Petrograd was fated to disappear from the face of the earth. Nowadays talk of this kind is but irresponsible chatter, and comes either from people who have become absorbed in over-profound thought on the political themes of the past and of the present, or from those who have given their fancy too free a rein in the same political sphere of thought. But at the time of the foundation of Petrograd—Petrograd, which was not the result of organic growth but was created by the will of the State and of the Monarch—it was in very fact a matter of doubt whether the newly created city could continue to exist. On the occasion of one of Peter the Great's festivals there was erected a triumphal arch with two pictures representing respectively St Petersburg and its harbour. Under the one there was the inscription: "urbs ubi silva fuit" (the city where a forest was); under the other, in which Neptune was depicted standing before the harbour, there appeared the words: "videt et stupescit" (he sees and is amazed)^[8]. It was this that made so acute an observer as Vockerodt, the secretary of the Prussian Embassy, writing in 1737, twelve years after the death of Peter the Great, express, and not without good reason, doubts as to whether Petrograd would maintain its position^[9],—so artificial in a sense and so fragile was this creation of Peter's. His doubts were based on solid economic grounds, but now Petrograd is the first commercial and industrial city of the Empire, with great and varied industries, and with an immense political, social, and economic past which no power can blot out from Russian life.

I have dwelt on the colonial character of Russian economic development. Russian economic culture, being colonial, must needs be "extensive." But this is not all. At one time the economic culture of the United States was very "extensive" and it remains so in part up to the present. But the special feature of Russia as contrasted with the United States in this respect is the peculiar combination in her "extensive" colonial culture of the new with the old, of a certain freshness, so to speak, with a certain ancientness. The famous dictum of Goethe which was originally used by him with reference to the United States—"America, you are better off than this old Continent of ours.…In the pulsing hours of life you have no inner qualms of useless recollection or vain strife^[10]"—was once applied with great emphasis to Russia by the most brilliant Russian political thinker of the days of Alexander II, Alexander Herzen. Nevertheless, when applied to Russia the words are historically untrue. For in the development of Russia the Middle Ages and the Modern Period are so to speak simultaneously present, combining to form a strange amalgam. But this statement in its turn needs correction and limitation. The Middle Ages are less complex, more featureless and more colourless in Russia than in other European countries.

This combination of the colonial and the ancient, which has just been described as the peculiar feature of Russian life, may be traced through all fields of economic activity. As our first example, let us take agriculture. At the present day it may be taken as firmly established that the typical Russian village community, with its periodical redistribution of land to secure fair partition, is not an early or primitive institution, but a comparatively late adaptation of the peasant group on whose shoulders lay the burden of paying the taxes and performing the labour-services exacted by the landowner or the State. And if we are to assume that there was some spontaneous element in the life of the village community, the assumption can in general be admitted only for colonial conditions. But however that may be, there are two great facts in Russian economic history which, so to speak, lie side by side. On the one hand we have the colonial advance of the agricultural population ever seeking to reach 'free land. On the other, we have the institution of serfdom, the historical meaning of which consisted in part precisely in its binding to the land this mobile, continually escaping population. Russia is, too, the land where serfdom continued to exist after it had disappeared from all other European countries, and this in spite of the existence of free land to which the agricultural population could escape. Here we have an example of precisely that commixture of old with new which characterises the whole economic development of Russia. One naturally asks oneself the question: How could serfdom maintain its hold in Russia till 1861; serfdom, moreover, in the most extreme form known in Europe, in the form of slavery, existing within the confines of a single nation? In answering this question there is one fact which must be clearly understood. The legal institution of serfdom was an envelope, and the actual relations which existed within that envelope were extremely varied. In particular, in so far as the serfs drew the greater or a considerable part of their income from industrial or commercial pursuits, serfdom meant for the peasant population chiefly dependence of a financial character, the obligation to pay sums of money or taxes to the landowners. A peasant in such cases paid the "obrók" as this money tax was called, but beyond that was free to do as he pleased. This is why there existed in Russia, long before the abolition of serfdom, a class of persons free to dispose of their labour although socially, and in the eyes of the law, slaves. The peasants, without ceasing to be serfs, not only built up the elements of a free working class but created from amongst their own ranks the elements of a commercial and industrial bourgeoisie. In Russia of course there had long existed a class of town merchants and manufacturers, but the building up of Russian industry—of the domestic as well as of the factory type—was not the work of this ancient town class. The real builders of Russian industry were the obrók peasants of Northern Russia, who, in spite of the fetters of serfdom, were yet full of the spirit of industrial enterprise. This fact accounts for the peculiar feature of Russian industrial development which is common also to the industrial evolution of England. In England as in Russia industry is a child, not of the town but of the country. As a matter of fact the parallel drawn between the two nations is after all not so surprising. For England, looked upon as an industrial country, is as compared with other European nations a young country, and one in which industrial evolution has been far less closely connected with town life than in Italy, Germany, and France. In Russia, as a country still younger industrially than England, this is perhaps even more clearly in evidence. Even the very foundations of industrial development in the two countries are alike. Adam Smith clearly saw the connection between the development of English industry and the commercial expansion of England. In the case of Russia, in spite of the prevailing system of "natural economy," the enormous size of the State, which readily divides itself into an industrial and an agricultural region, has long meant the existence of a very large and growing internal market. By supplying the needs of this market Russian industry is enabled to grow and to develop.

If it may be said that the Russian textile industry—in part too the hardware industry—is of country and of peasant origin, yet in the history of that industry the State, the landowners, and the town handicrafts all played a certain, and no unimportant part. The whole of the eighteenth century is marked by the attempt to create factory or large scale industry in Russia at a blow. Perhaps nowhere else could one find at that period so many units of the factory type of so large an average size as in Russia. At a time when the domestic system was still being developed in England, large factories were being founded in Russia both by the State and by private persons and based on semi-compulsory labour. What part is played by this factory-industry, thus artificially created, imposed on Russia from above and not built up from below? The part it plays is that of a special system of technical training. The Russian peasants who followed industrial pursuits, before creating their own "domestic system" on the basis of which the true factory system was to develop, first of all passed through the school of the large factories which were based on Government privileges, on the utilization of serf labour, and on the industrial skill of other more advanced countries. On leaving these factories they took with them to their villages and communicated to the masses of the people a considerable body of technical knowledge and skill. The same happens in the case of the town handicrafts^[11]. In the eighteenth century it was a common practice for landowners to apprentice young serfs to the town handicraftsmen, who were then mostly foreigners^[12]. Thus the foreign craftsmen in the towns, who had found their way into Russia as early as the sixteenth century, exercised an influence on Russian industrial development.

In the industrial life of the Moscovite State foreigners in general occupied relatively speaking a very prominent position. Most of the foreigners were, however, in those days persons in the service of the Tsar, invited by him to manage his industrial undertakings. Some of them afterwards left the service of the Tsar and themselves founded private industrial establishments. Finally, we occasionally find foreigners who were allowed to enter Russia for the special purpose of carrying on some commercial or industrial venture. In this last-named group the pioneers were the English with their Moscow or Russian Company. The notable historical fact that the first private factory in Russia was founded by the English is little known in England, of indeed even in Russia. The factory in question—the rope factory established at Vologda and later transferred to Kholmogory (Colmogro)—provides one of the first recorded cases of observations being made regarding the relative productivity of the labour of workers of different nationalities, and regarding the relation between wages and labour productivity. Observations of this very kind have in recent years been generalised into an entire scientific theory^[13]. Thus Gray, the Company's agent, reports in 1558 that, according to his observations, the work of five Russians corresponds to that of three Englishmen, but that five Russians require less wages than a single Englishman^[14].

Look at the map of Europe. European Russia lies between the Baltic and the Black Sea. The whole economic history of Russia from the beginning of the process which led to the formation of a single Russian State is determined by this fundamental geographical factor, and, in considerable measure, consists in the advance of Russia towards those two seas. The two movements—advance to the Baltic and advance to the Black Sea—were parallel, nor can we say that one of them was more important than the other. All that can be said is that the cultural and political importance of the process is more evident in the northern movement than in the advance to the Black Sea. But on the other hand, this southern movement is of enormous economic importance. The European shores of the Black Sea, consisting of the most fertile provinces of European Russia, are in the economic sense the genuine creation of the Russian people, conquered by them from nomads and Nature. The relation which exists between the part of Russia which economically gravitates towards the Baltic and that which gravitates towards the Black Sea may be roughly compared to that existing between the Eastern and the Western States of the great American Commonwealth.

From the time of Catherine the Second, the Russian State clearly conceived and consistently strove to carry into effect the policy of advance towards the South. Catherine, by securing the freedom of navigation in the Black Sea, made Black Sea trade possible. The colonisation of the shores of the Black Sea laid the foundation of the agricultural production of the region, the free outlet of agricultural products to the sea being again the necessary consequence of the colonisation.

Often when one speaks of the traditional struggle carried on by Russia with Turkey, the conqueror of the Byzantine Empire, it is forgotten that this struggle has been waged in reality not by armies, not by the fleet, but by the agriculturist, who has turned steppes periodically laid waste by nomadic invaders into an extremely rich agricultural region, with a large Russian population. Without any offence to our gallant army, we can say that not by her infantry and artillery, but by her agricultural colonisation followed in the nineteenth century by the industrial development of the colonised area, has Russia defeated Turkey on the Black Sea. And in consequence Serbia was freed from the Turkish yoke and Bulgaria was called to life—this is a fact which must be borne in mind—by the Russian peasant as well as by the Russian soldier. This fact is a striking confirmation of the deep saying of your Ruskin: "The true history of a nation is not of its wars but of its households." The Russian peasant in less than a century built up a great Russian settlement on the Northern Pontus, whilst centuries of Turkish dominion in parts of Pontus still more blessed by Nature have yielded almost nothing in the shape of economic culture.

It is a remarkable fact that apparently no one has described with such power and insight the great cultural work which has been done here by the Russian people and the Russian State, as one German writer, Kohl, a traveller and geographer of some merit. Kohl (1808–1878) travelled in the Ukraina and in New Russia in the thirties and forties of last century and afterwards related the results of his personal investigations. He tells how in the space of 60 years Russia changed a land of Scythians and Cimmerians—"the Siberia of the Greeks and Romans," to use his apt expression—into a temple of Ceres, "denomadised" and civilised it^[15].

It is for this reason that the memorable period which ushered in the reign of the Emperor Alexander the First is, from the Russian point of view, notable in the field of foreign relations, not only for the struggle with Napoleon, but also as carrying on Catherine the Second's policy of Russian organic expansion towards the South. The Ministry of Commerce, which was then founded, first of all directed its attention to New Russia, to the development of its trade and its general economic life. Generally speaking, this was a period when new economic ideas—ideas coming from different sources and widely differing in character—penetrated Russia and penetrated with great force of impact. At this time Adam Smith's famous work was by Imperial Command translated into Russian, and in St Petersburg there appeared a French translation of the work of the Spanish free-trader Jovellanos. Then too under French and American influence the foundations of Russian protectionism were being laid, and in the same first decade of the nineteenth century, along with the translation of Adam Smith's masterpiece, there appeared a Russian translation of Alexander Hamilton's Report on Manufactures, the manifesto of American protectionism, written many decades before the beginning of Friedrich List's propaganda.

At this time too there appeared at St Petersburg—and in German—a review, with the special object of bringing Russia into closer relations with the Near East, and with the characteristic title Konstantinopel und St Petersburg. Der Orient und der Norden^[16]. This review, written in the tongue of our present foes, set before Russia very definite political and cultural aims. Subsequently the armed resistance shown by Germany to the realisation by Russia of these very aims was in no small measure responsible for the present great European War. The Near Eastern question would perhaps have been finally solved at the time of the struggle with Napoleon, if the Russian Emperor had not considered it necessary to continue the struggle on foreign soil, after the enemy had been driven from the Russian territory he had invaded. Many Russians, it is well known, including the Chancellor Rumyantsev and the famous soldier Kutuzov, then considered the Emperor's decision a mistake. However that may have been, the Napoleonic period brought forward for solution the same problems with which Russia has now once more a full century later been brought face to face, through the combined German-Austrian and Turkish attack on us and on our Allies, and for which a solution is now demanded with all the inexorable force of historical necessity. Germany allied with Turkey decided to throw Russia back from the path we have been treading for the past two centuries, in the course of which we have settled and called into life a whole enormous region. At this solemn moment, so critical for Russia, the position of Russia in the struggle which foes have forced upon her is based upon a living historical right, that is to say, on an historical right which is combined with real strength and living necessity. The historical right in question is the great civilizing work, chiefly economic in character, which has been accomplished by the Russian people on the shores of the Black Sea. The real strength is embodied in the enormous Russian population which lives in that region, and which desires, in order to be able to breathe freely, to receive into its own hands the keys of its own house. This Russian population of Russian lands, which economically gravitates towards the Black Sea, is probably at least twice as great as the combined population of Asiatic and of European Turkey. Not in vain did the fathers and forefathers of that population create out of "the Siberia of the Greeks and the Romans" a new Temple of Ceres: their work it was that won for them the right to breathe freely in their own home.

 

II

THE ECONOMIC PROSPECTS OF THE
RUSSIAN EMPIRE

In my first lecture I endeavoured to give an historical account of the colonial character of Russian economic life. I shall now try to sketch, as before, in the most general outlines, what this colonial character means, when considered, not historically, but from the point of view of the present day. Every State of any size represents a considerable variety of natural and historical conditions. This variety it is which determines the division of a nation into different economic regions. The extent, however, to which such individual regions differ from each other is different in different countries. It perhaps reaches its maximum precisely in the case of Russia. Here the population, while under one government, and while the predominance of the Russian element, in point both of numbers and of culture, is overwhelming—and I am leaving out of account such regions as Poland and, Finland which constitute entirely separate entities from the cultural point of view^[17]—the population, I say, lives on an enormous territory which presents the utmost variety as regards the fundamental conditions which determine economic life. Forming for customs purposes a single territory—with the exception of Finland, an exception which is really an anomaly, to be explained by purely historical reasons, simply because at the time of the annexation of Finland it was impossible to establish a proper customs control over the long coast line of the new territory—and with a population the vast majority of which lives under the same code of civil law, Russia is yet a complex of territories in different economic conditions and in different stages of economic development. It is just this which makes Russia at the present moment an Empire from the economic point of view, no matter what the aims of her State policy may be, and quite independently of any "Imperialism."

The building up of this enormous State was no matter of chance: it is no chance that in that State there should be a single national nucleus to which the hegemony naturally belongs. It was the consequence of the fact that only as a politically united whole could the land make progress in all respects, and that only a single ethnical element—that which formed the Muscovite State—possessed the political talent required. But this political structure,—a complex of widely differing economic regions united in the form of an Empire,—and the predominance of the Russian element, impose, and particularly in the economic sphere, an enormous burden of responsibility. To whom much is given, of him will much be required.

And much has been given. In the first place, as regards the more important of the cereals which are used for food by the inhabitants of the temperate zone who belong to European culture, Russia produces more of these—speaking absolutely and not relatively—than any other country in the world. In respect of maize, which is mainly used as fodder, Russia, of course, falls short of the United States. In respect of potatoes, Russia again takes second place to Germany. But in any case Russia is responsible for more than one-fifth of the world's total production of wheat, rye, barley, maize, and oats. Russian agriculture, being distinctively extensive as opposed to intensive, offers possibilities of enormous further development, starting from its present enormous absolute dimensions. I shall note only three more facts in this connection.

1. Russia is the greatest flax-producing country in the world;

2. Russia is one of the world's greatest producers of sugar-beet, although her climatic conditions are less favourable for this branch of agriculture than those prevailing in Central Europe;

3. The forest wealth of Russia is undoubtedly greater than that of any other country.

Taking these facts into account, even without any exhaustive survey of the agricultural production of Russia—a survey which I cannot give at present—it is evident that Russia occupies a very important place amongst nations producing food-stuffs and vegetable raw material, standing in this respect, generally speaking, on a level with the United States and in many cases even in advance of that country.

There is, however, one peculiarity of Russian economic life, which, although it is almost certainly of a temporary character, is yet extremely important for the present day and for the near future. The period in which we live is in one respect a direct contrast to that in which our forefathers lived a hundred years ago. In those days, under the influence of contemporary facts and of the doctrine which we associate with the name of Malthus, people dreaded a large population and its rapid increase. In the intervening century mankind has found out how to rationalise reproduction on purely individualistic lines, and now all are more alarmed by the danger of a stoppage in the growth of population, which threatens the most highly civilized part of the world to-day. Russia is the only large country where the birth-rate has in recent years shown practically no tendency to diminish. Since, too, there is abundant room in Russia for a diminution in the rate of mortality, a very considerable growth of population enters into any estimate of the economic prospects of Russia as a very essential factor. This is a fundamental fact of our present economic position, and, in no less measure, of our political, social, and economic future. We in Russia have not yet been gripped by the individualistic rationalism so typical of countries pf older economic culture, which, though in another form, was recommended by Malthus, but which as a real potentiality entered so little into his calculations.

We are going on multiplying, and if we succeed—and evidently we are already beginning to succeed—in lowering the death-rate through the increase in material well-being which accompanies the spread of education, the rate of growth of the population of Russia ought to continue to show an upward trend for a considerable time to come, or in any case not fall below the fairly high level at which it stood in the years immediately preceding the war.

In Russia there are large resources of human energy, and we are now well aware that the existence of so large a quantity of energy stored in the form of human beings is not due to some inexorable law of nature, but is historically determined by definite psychological factors. But we economists also know that the quality of the constituents of a population is of enormous importance to its economic life. Further, there is such a thing in human beings as "economically essential quality," if I may be permitted to use the phrase.

If one were to believe certain representations of the Russian people which have recently been given currency in England, such economic qualities are entirely foreign to that people. In these representations the Russian people is depicted as a religious anarchist caring nothing for the things of this world, as an Eastern people of contemplators, with no aptitude for the "bourgeois" life and conduct of Western peoples. I must say that it is impossible in any way to agree with such hasty generalisations which ignore the actual facts alike of the past and of the present. The Russian people in its Great Russian branch—the most prominent, I think, both politically and culturally—possesses very decided economic gifts. Our late great historian, Klyuchevsky, showed—to my mind in very convincing fashion—that the Russian State was itself in considerable measure of commercial origin and bears an evident commercial stamp at the very beginning of its history. The peasant of Northern Central Russia is, one might say, a trader and industrialist (manufacturer) to his finger tips. His history and his own nature have made him what he is. No one who travels and is in the least observant can help noticing that not only in the Baltic Provinces, but even in Finland, certain branches of trade (namely, small retail trade in all kinds of food products) are to a considerable extent in the hands of Russians, who have made their way hither from Yaroslav, Tver and other "trading" provinces of Old Russia.

None the less it cannot be denied that at present the Russian is on the average inferior to the Western European in respect of "economic qualities." His labour is less intensive, the economic virtues (power of constant application, thrift, and a sharp sense of the distinction between meum and tuum) are less developed than among Western peoples. What is the explanation of this fact? The sole explanation which most people are inclined to give is that the national defects in this respect are due to the insufficient spread of education (i.e. of schools and other forms of educational instruction) in Russia. I will not attempt to deny the importance of this circumstance, but the cause we are seeking lies deeper, and at present our understanding of the historical process goes far enough to enable us to determine the historical causation of the phenomenon in question. The qualities which impart to the modern European his special economic strength are the products of a complicated historical process. The changes which produced these qualities were somewhat as follows. The Reformation and the so-called counter-reformation, so far as the latter aimed at overcoming the dogmas of the reformers by adopting as its own the strongest points in the reforming movement, meant—and this constitutes their importance from the point of view of economic history—the wide spread of certain religious ideas in their direct application to daily life; and these ideas took firm hold of the masses of the people. Now these ideas as applied to morals and manners have to a large extent become detached from their roots in religion, have become quite profane, if one cares to use the term, and have been, so to speak, secularised by bourgeois morality^[18]. This has been the case least of all, I think, with the Anglo-Saxon race. I regard it as a great happiness for Great Britain that in this country more than in any other country of Western Europe religion has retained its power over the mind of the nation.

In Russia the Church exercised no influence in such a direction and in such a sense. The Church has in Russia played a very important part in the development of Russian culture, but such work she has hitherto accomplished only to a quite insignificant extent. The deeply permeating religious education which serves, so to speak, as a subconscious primary foundation for economic culture, and which has been so important a factor in the economic development of the West (in Russia this statement would include Finland and the Baltic Provinces; Poland shared Russia's fate in this respect), is lacking in the present economic equipment of the peoples of Russia. You will understand now why it is so important for Russia to increase what I have once named the "personal fitness," that is, to improve the "form" of the average working man, which is the foundation of economic efficiency in the whole nation. And you will understand, too, why for the sake of the war it was necessary to prohibit the sale of alcoholic liquors and of what enormous importance that prohibition is for the whole future of a country like Russia. It means the preservation and the elevation of the chief agent in economic life—of man himself.

Once again we find here illustrated that combination of backwardness and ancientness with a certain impulsiveness and freshness, to which I referred in my first lecture. Without the heroic effort that was implied in the full and decisive renunciation of alcoholic liquors, which proceeded from the moral will of the whole nation, Russia could not have overcome her backwardness, that low level of the individuals who make up the mass of the nation which is our historical heritage. The progressive and collective impulse embodied in the command of the State overcame the backwardness and inertness of a multitude of weak individuals.

And in this connection I should like to touch on the tremendous revolution in the sphere of agrarian structure, which took place in Russia after the political revolution of 1904–1905. Allow me once again to speak of contemporary life as a historian. When in my lectures on economic history I speak to my students of so-called enclosures in England, a fact and a process of which you have of course a far better knowledge than I or my students, I say to them: "Imagine Stolypin's agrarian reform stretching over whole centuries, so to speak, split up into a great number of separate local measures and carried to a large extent by the initiative and in the interests of the landlord in each particular case." And in the same way, ladies and gentlemen, I would say to you: that which in England in the form of enclosures came about in the course of several centuries, and which expressed itself in elemental economic processes, at times of a cataclysmic character, happened in Russia—or rather is being evolved—as an integral reform or revolution systematically carried through from above.

This revolution, moreover, was effected within the peasantry without any participation of the landlord, and altogether without any bearing on his interests. By this process the land of the Russian peasants comes into agricultural use under full individual control.

The sentence I have just spoken, is, with the exception of the words "Russian peasants," taken nearly literally from the preface to Professor Gonner's well-known book on enclosures in England. You understand that this process, although in certain cases it may be painful, is of enormous positive importance to the whole economic and social development of Russia^[19]. Russia is becoming more and more a country of peasants, that is, a country of small land tenure, which is growing invincibly at the cost of big estates. And this agrarian reform creates the conditions for transforming these small holdings from the mediaeval form of "common," or "common cultivation," into a new form of independent and rounded-off individual holdings. Thus are being laid the economic foundations of that Russia which must by its nature be a great peasant democracy, based on free co-operation of a multitude of small cultivators, working on their own land.

It is a country of a peasant democracy growing in all respects—both in quantity and in quality—and at the same time it is a whole world in itself. I shall simply note a few points. Russia may calculate on solid grounds that she will be able to produce within her own borders a sufficient quantity of cotton for herself, and now she produces nearly all the amount she needs. For this purpose irrigation is necessary, and the execution of this work is only a question of time.

Russia throughout her territory has an enormous deposit of coal. Some geologists hold that the Kusnezki coal area in the Altai Region is the richest coalfield in the world. And this wealth is as yet almost untouched. Further if we remember that in Siberia and in the Urals Russia possesses a practically inexhaustible supply of iron ore, you will realise what a great economic future awaits her as a whole. In speaking of the economic future of Russia, it should never be forgotten that Russia should be taken as a whole, that is, European and Asiatic Russia together. For instance, European Russia, in the matter of coal supplies, stands lower than Great Britain and Germany, but it is just in this respect that Siberia is an inexhaustible store; and that many-sided Russian genius of the eighteenth century, Lomonossov, of whom you have heard from my colleague, Dr Lappo-Danilevsky, with marvellous sagacity predicted that "Russian power will receive its plenitude from Siberia and the Arctic Ocean." That the expansion of Russia would also attain to Central Asia (Turkestan), our great scholar of the eighteenth century did not anticipate.

All this means that Russia, taken economically, is an empire which may become self-sufficient within its own borders on the largest scale. But this self-sufficiency or αὐτάρκεια does not in the least exclude the most animated exchange with other countries. It must be borne in mind that various countries stand at any given moment on various planes of economic evolution. And these differences, which are historical but daily perpetuated through all changes, make it inevitable that various countries should be in need of one another at any moment. Thus, a certain international division of labour has a tendency to strike deep roots and to establish firmly certain special functions. Even Russia has such specialities in the field of industry. All countries can manufacture rubber galoshes, but in Russia an enormous number of people use galoshes, and Russians are so accustomed to wear them, that Russia, having created a large production of this article, has also been able to develop a considerable export of galoshes. Before the war the only sight in the streets of Berlin that gave some encouragement to our pride in our national industry was the display in the shop windows of Russian galoshes, which occupied a place of equal honour with Russian caviare, a natural speciality of Russia.

But in old industrial countries there must be many more industrial specialities. And thus the economic self-sufficiency of Russia does not mean her economic isolation from the rest of the world, just as such self-sufficiency does not mean isolation for the British Empire or for the United States of America.

Russia and England can very well supplement each other, and, given the requisite energy on the part of the English, the importance of Russia as a market for English goods may very greatly increase.

It is twenty-five years ago since I maintained that the economic development of Russia is in essence like that of the United States. Now this is acknowledged clearly enough in Russia herself and in other countries. With great insight this thought was recently put forward by an American economist, who wrote: "In an economic sense Russia and the United States are more alike than any other two great countries of the world. Underneath their wide differences of language, government and religion, these two countries show fundamental similarities. Russia includes the eastern portion of the great plains area of the northern hemisphere; America the western portion. Both have had a history of agricultural pioneering. Both have great natural resources of fertile land, forests, and mines, which have been drawn upon with the pioneer's inevitable prodigality. Russia and America are the two wings, so to speak, of the great movement in economic development, which originated in Western Europe a little over a century ago, and thence has spread eastward and westward. They both borrowed from this centre the new technical equipment of machinery and power for production and transportation, and adapted it to their similar needs^[20]."

I will summarize. Russia is a country of immense agricultural forces and possibilities. And this place occupied by agriculture in the economic life of Russia at the same time secures her industrial development. The agricultural Russia is that steadily growing market on the basis of which Russian industry will develop. The Russian peasant democracy is still in swaddling clothes, and its development in the atmosphere of economic independence and political freedom will mean the growth of industrial culture throughout the Empire. In spite of the many defects inherent in us Russians, there are in Russia no signs at all either of degeneracy or senility.

All our energies must be directed to one end: to the elevation of the masses of the people through the improvement of the "personal fitness" of the individuals composing these masses. This is the task, in the execution of which the paths of economics, ethics, and religion, meet and cross. For man is the chief agent in the economic life. Economic fitness can only rest on moral qualities, and moral qualities as living energy issue in the long run from the religious consciousness. Your great thinker once said that it is open to serious question whether among national manufactures that of souls of a good quality may not at last turn out a quite leadingly lucrative one.

I at any rate am firmly convinced that the production of souls of a good quality is the most lucrative national manufacture. And therefore the favourable external conditions under which, as I have explained, Russia lives, are from my point of view important above all as conditions of the production of that which Ruskin again called "human worth."

Terrible are the sufferings and the sacrifices of war, but, if amidst this horrible bloodshed any consolation is possible, it is the faith that sufferings and sacrifices will yet lead to the uplifting of human nature and so will provide a basis for true welfare in every respect, in economic life as in everything else.

1. I must thank my friends William Peters, M.A., and Dr Harold Williams for help in expressing my thoughts in English form, and my friend Professor Bernard Pares for encouraging me to address an audience in an unfamiliar language.
2. "Oddara flumen…in cujus ostio, qua Scyticas alluit paludes, nobilissima civitas Jumne celeberrimam praestat stacionem barbaris et Graecis qui sunt in circuitu….Ab ipsa urbe vela tendens quartodecimo die ascendes ad Ostogard Ruzziae. Cujus metropolis civitas est Chive (Kiev), aemula sceptri Constantinopolitani, clarissimum decus Graeciae." Adam Bremensis in Migne, Patrologiae Cursus Completus, vol. CXLVI, Parisiis, 1853, pp. 513–514.
3. I mention here only the elaborate bibliographical work of Friedrich von Adelung, Kritisch-litemrische Uebersicht der Reisenden in Russland bis 1700, deren Berichte bekannt sind, St Petersburg, 1896 (1427, K. 6); and the well-known monograph of Vasily Klyuchevsky, сказанія инострандевъ о московскомъ государствѣ, Moscow, 1866, 10291, f. 19.
4. It is the merit of the prematurely dead Russian historian Pavlov-Silvansky to have shown this.
5. As I have shown in my Russian book on Economy and Prices, Part I (Moscow, 1913).
6. Cf. Madame Lubimenko, "A project for the acquisition of Russia by James I," in the English Historical Review for April, 1914.
7. Friedrich Wilh. von Bergholz, grossfürstl. Oberkammerherrn, "Tagebuch, welches er in Russland von 1721 bis 1725 geführet hat," in S. F. Büsching's Magazin für die neue Historic und Geographie, 19-ter Theil, Halle, 1785. Russian translation by Ammon (Moscow, 1902), pp. 28– .
8. Bergholz, l.c., pp. 40–41.
9. Russland unter Peter dem Grossen. Nach den handschriftlichen Berichten von Johann Gotthilf Vockerodt und Otto Pleyer, herausgegeben von Dr E. Herrmann. Leipzig. 1872. SS 98–99 "In der Tat kann man der russischen Nation die Prädilection so sie vor die Stadt Moskau heget, nicht verargen. Wer die Öconomie eines russischen Edelmannes kennet, wird leicht begreifen, dass ihm der Aufenthalt in St Petersburg notwendig sehr ruineux sein müsse. Seine grosse Depense bestehet nicht in kostbaren Kleidern nnd Meublen, oder in einer leckeren Tafel, und fremden Weinen, sondern in der Menge der Speisen und Getränke, die sein Vaterland produciert, einer grossen Anzahl Domestiken beiderlei Geschlechts, und Pferden. Alle diese Dinge hat er in Moskau entweder umsonst, oder doch um einen sehr geringen Preis. Seinen Bedienten, die insgesammt seine Leibeigene sind, darf er weiter nichts als Proviant geben, und dieses sowohl als die übrigen Provisiones vor seinen Tisch, und die Fourage vor die Pferde, liefern ihm seine nahe gelegene Landgüter im Überfluss. In so naher Nachbarschaft verrichten ihm seine Bauern die nötigen Fuhren ohne Murren und ohne Abgang seiner übrigen Einkünfte, und die Consumtion seiner Vivres hat er um so weniger zu regrettieren, da dieselben, das Getreide ausgenommen, auf dem Lande fast gar nicht zu versilbern sind, allwo ein jeder so viel zieliet, als er zu seiner Haushaltung vonnöten hat. In St Petersburg hingegen, in dessen Nachbarschaft wenig oder nichts wächset, muss er alien seinen Proviant und Fourage von sehr weit entfernten Orten anführen lassen und dabei den Hazard laufen, dass die Bauern, wann ihre Pferde fallen, die Fuhren stehen lassen, und selbst flúchtig werden, oder Alles vor baar Geld und zwar in sehr hohen Preisen ankaufen, welches einem Russen, dessen Revenuen mehr in Frúchten des Landes, als in Baarschaften bestehen, und der selten viel Contantenliegen hat, sondern seine Gelder lieber in Landgütern anlegt, ungemein schwer und widerwärtig vorkommt."
10.  
    "Amerika, du hast es besser, als unser Continent, das alte….
    Dich stört nicht im Innern
    
    Zu lebendiger Zeit
    Unnützes Erinnern
    Und vergeblicher Streit."
    (Goethe.) 
    
    
11. For the large factory-industry, this is shown by Jugan- Baranovski in his Русская Фабриа, for the small industry, by the writer in his Крѣпостное Хозяӥство.
12. Compare Travels in Poland, Russia, Sweden and Denmark, by William Coxe. (Fifth edition, London, 1802.) "The mode adopted by many landholders with their peasants, reminds me of the practice among Romans. Atticus, we are told, caused many of his slaves to be instructed in the art of copying manuscripts, which he sold at a very high price, and raised a considerable fortune. On similar principles some of the Russian nobility send their vassals to Moscow or Petersburgh, for the purpose of learning various handicraft trades: they either employ them on their own estates, let them out for hire, sell them at an advanced price, or receive from them an annual compensation for the permission of exercising their trade, for their own advantage." (Vol. III, p. 157.) William Coxe (1747–1828), fellow of King's College, Cambridge, died as Archdeacon of Wiltshire.
13. This theory is mainly associated with three names: (1) of the great English "captain of industry" Thomas Brassey (1805–1870), (2) of the well-known German economist Lugo Brentano, and (3) of the American economist Jacob Schoenhof, author of The economy of high wages (1892).
14. "Master Richard Gray…to Master Henrie Lane at Mosco, written in Colmogro the 19 of Februarie 1558:

    "'Therefore I would have three Russians at the least to spinne; fiue of them will be as good as these three, and will not be so chargeable all, as one of these would be.'" In Hakluyt's The principal navigations, voyages etc. of the English nation, Edinburgh, 1887, vol. III, p. 179.

15. "Vor 140 Jahren hatte das Schwarze Meer ausser den Booten der Kosacken noch kein russisches Kriegssegel gesehen. Die ersten russischen Kriegsschiffe liess Peter der Grosse von Voronesch aus den Don hinabschiffen. Jetzt dagegen beherrscht eine imposante russische Flotte mit siegreicher Flagge den ganzen Pontus, und der russische Pavilion ist der allein respectirte in diesen Gewässern. Vor 70 Jahren besassen die Russen noch keinen einzigen Punct an der Küste des Pontus. Jetzt haben sie hier—das Azow'sche Meer nicht einmal eingerechnet—250 Meilen Küste gewonnen. Zieht man von den Mündungen der Donau bis zu denen des Phasis eine gerade Linie, so teilt diese Linie den Pontus gerade in zwei Halften. Die eine Hälfte ist jetzt ganz russisch, die andere gehorcht kaum noch den türkischen Paschas. Freilich besitzt Russland einstweilen nur erst die rauhesten Provinzen des Pontus, doch macht es schon jetzt mit diesen minder wertvoUen mehr als die Türken mit ihren herrlichen Ländern. Die trefflichsten Anlande des Pontus bleiben den Russen noch zu nehmen und werden für sie eine leichtere Beute sein als Taurien und der Kaukasus. Die Russen werden ihren Periplus um das Eirund des schwarzen Meeres vollenden, wie Dschingis-Chan den seinigen um das Kaspische Meer.

    In den Steppen gahrt, treibt und gestaltet es sich still, aber gewaltig. Die Seidenwürmer spinnen, die Bäume erheben ihr Haupt, das Getreide wachst und greift um sich. Alles drängt und ringt nach Luft und Licht. Das einzige Fenster, wodurch diesen Gegenden Beides zufällt, ist der Bosporus von Konstantinopel. Die Steppen können es nicht wünschen, dass ein Anderer, wenn es ihm einfällt, ihnen dieses Fenster verschliesse. Sie müssen danach streben, selber den Schlüssel zu dieser Tür, durch welche ihnen ihr Reichtum, ihre Lebensluft, alle ihre Nahrung zuströmt, in die Tasche zu bekommen. Von jeher waren diese Gegenden dem Bosporus in politischer Beziehung eng verbunden und ihm entweder untertan oder gaben ihm die Herrscher, und dies wird so lange so bleiben, als die geographischen Gestaltungen der Länder und Meere dieselben bleiben. Gegen diese still, aber unwiderstehlich wijkenden geographischen Verhältnisse, gegen diesen Naturdrang der Bevolkerung ist die jetzt scheinbar friedliche Politik der russischen Kaiser für nichts zurechnen. Selbst die unumschränktesten Autokraten werden auf dem Strome der Ereignisse mit fortgerissen und ihr Wille halt nur schwachen Stand gegen die Bestimraung des Schicksals." T. G. Kohl, Reisen in Siidrussland (second edition), Dritter Teil. Dresden und Leipzig, 1847, S. 306.

16. Konstantinopel und St Petersburg. Der Orient und der Norden, eine Zeitschrift herausgegeben von H. von Reimers und F, Murhard. St Petersburg und Penig, 1805–1806. There appeared of this curious periodical four volumes, P.P. 4848 (Press-mark of British Museum).
17. In passing I should like to state that in the matter of Russian-Polish relations I agree almost entirely with Mr Dmowski, just as I did when both of us were members of the second Duma of the Empire.
18. This has been demonstrated by Max Weber in his acute and well-known essay on the spirit of capitalism.
19. The well-known political aims, conservative or even reactionary, of Stolypin's agrarian reforms matter little in comparison with their significance for the economic and social development of Russia.
20. Edwin Francis Gay, Dean of the Harvard Graduate School of Business-Administration, in Russia, America's Greatest Export Opportunity, May, 1916, p. 5.