Siberia (Price)/Chapter 9
CHAPTER IX
THE ECONOMIC FUTURE OF SIBERIA
GENERAL PROSPECTS FOR FOREIGN CAPITAL IN
SIBERIAN COMMERCE, INDUSTRY AND FINANCE
IT is most essential for the foreign trader and investor in Siberia to bear in mind that the success of his undertakings depends upon the degree with which he adapts himself to the social and political conditions prevalent in the country. Siberia and Canada, which in their physical aspects so closely resemble one another, exhibit, nevertheless, considerable differences in the peoples by whom they are inhabited. This divergence in the social atmosphere of the two continents is accompanied by a corresponding divergence in economic progress, and it is natural, therefore, to assume that the methods pursued by foreign capitalists and commercial pioneers in the Canada of Asia must differ from those pursued in the Canada of North America.
A short survey of the economic status of the Siberian peasants, who comprise all but a small fraction of the population of Siberia, cannot then be out of place in this chapter.[1] Speaking generally, their condition is very satisfactory, and in this respect they enjoy no inconsiderable advantages over their fellow-citizens in European Russia. As one would expect, the basis of all the Siberian peasant's wealth is his land, and even most of those peasants who hunt for furs, prospect for gold, or trade with the native Finns, only use these occupations to supplement the returns from their land. The usual allotment for a peasant living in a village commune is forty acres, with additional allotments for each adult son who remains with the head of the family. The system of continual wheat cropping is generally in vogue, whereby the land after exhaustion is fallowed while fresh is being broken up.
Some of the peasants have adopted a rough rotation system, whereby out of these forty acres about eighteen are sown with oats, rye, and sometimes wheat, ten are laid fallow, and twelve kept under grass. Manure is never used, and is generally piled up outside the village to be swept away by the spring floods. The land, however, is so rich that it yields in favourable places an average of thirty bushels of cereals to the acre without any manure. Villages near the forest zone grow less wheat and more rye and oats than those nearer to the steppes. In the former case the severe climate causes the wheat yields to average no more than twenty bushels to the acre and sometimes to fail altogether in the autumn frost.[2] In the Southern Yenisei Government the writer found that the live stock kept by a peasant householder usually amounted to about two horses, five cattle and ten sheep. The peasants here generally utilized the products of their fields as follows. All the hay and oats were kept for the winter use of the stock, while the product of the wheat and rye was used in part for household consumption, and in part for sale at the annual fair at the nearest town. A portion of the live stock, corresponding roughly with the average rate of increase of the herd during the year, was sold annually. The combined sales of cereals and live stock for a peasant with a forty-acre holding amounted in a case under the writer's notice to a sum of 170 roubles (£19) gross annual return. Out of this the peasant had to pay his direct taxes, which seemed extraordinarily low, amounting to no more than 15 roubles (30s.) a year. The direct taxes are 10s. a year house tax, 5d. per head for each horse and cow, from 2d. to 1s. per acre for tillage land, according to quality, and 1s. per annum for the right to cut timber. The total contribution for 1907 in direct taxation paid by the peasants of the Yenisei Government amounted to 900,000 roubles per annum, which is equivalent to a tax of only 3s. per head of the population. There are, of course, indirect taxes on tobacco, tea and matches, which are not inconsiderable. I estimated that each family in a certain village in the Southern Yenisei Government spent about 50 roubles (over £5) annually for the purchase of household necessaries and small luxuries. The chief articles of food—bread, meat and cabbage—cost the peasant nothing more than the tax for the ground on which they have grown, while his sheep-skin coats, felt boots, and rough flax clothes were all made by the women. The Central Siberian peasant is therefore more than self-supporting, and his principal outside purchases consist of tea, sugar, tobacco and small hardware, which he can easily obtain with his balance of 155 roubles after paying his taxes. He is also assisted by co-operative societies, which exist in many villages for the supply of household necessaries, and in some places, chiefly in Altai and Western Siberia, for the disposal of butter and dairy produce. These societies are generally worked and owned by the commune—i.e. the village authority elected by popular vote. Besides this in many districts the Government has started an agricultural supply store, for selling seed corn and implements to the peasants at reduced prices.
The above is typical of the economic conditions under which the Siberian peasants live in the more favourable districts of Western and Central Siberia, particularly in such places as the Kurgan steppes, the Altai foothills and the southern parts of the Yenisei Government. The condition of the peasant under these circumstances, where the land is rich and practically unpopulated, is everywhere very satisfactory, and this condition is aided by the fact that the standard of living among the peasants is simple, although by no means low. In fact the enormous latent energy which lies in Siberian peasant life awaiting development strikes the traveller very forcibly in these remote parts of Eastern Russia.[3]
On the next page is seen a table published in Tyan Shansky's book on Western Siberia (in Russian), giving figures as to the economic conditions of the immigrants in certain parts of Siberia after a few years' settlement in the country.
Turning now to the openings for private enterprise in this land of peasant communes, it must first be remembered that the raw material of all industry is in Siberia owned by the State, and the only private property in any appreciable quantity is that belonging to the Tsar and Cabinet Ministers in the Altai district. While the Government does not in theory object to the recognition of private property in Siberia, its administrative policy, unlike that in European Russia, is aimed at retaining the ground value of the land as a State property. A foreigner, however, can acquire property in Siberia, except in
| Provinces | Average head of live stock per family | Area of land sown per annum by each family | Percentage of families owning live stock | Percentage of families cultivating land under the commune | ||
| Horses | Cattle | |||||
| Tomsk Government | State land | 2·5 | 2·5 | 11½ acres | 93% | 90% |
| Cabinet | 3·7 | 3·9 | 13½ acres | 94·5% | 87% | |
| Tobolsk Government | 2·8 | 3·3 | 12½ acres | 91·5% | 90% | |
| Semipalatinsk and Yenisei Governments | 2·8 | 3·3 | 12½ acres | 91·5% | 90% | |
the Far East, and along the Manchurian frontier, but can hold it for the purpose of residence or for carrying on business only. Thus foreign companies can acquire real estate only if they prove to the local officials that they are acquiring such property for the purpose of carrying on some particular enterprise, for which permission must previously have been obtained from the Central Government authorities.
Thus in practice the only landed properties held by foreigners or foreign companies in Siberia are those on which minerals are worked or houses built for residence in towns. All the agricultural land is let out in large tracts to the Siberian peasants. Even the peasants only rent the land from the State on a perpetual lease, and the policy of the Government, if not actually opposed, is at all events indifferent to the creation of peasant proprietorship in Siberia at present. In this respect its policy differs from that pursued in European Russia. Siberia thus exhibits perhaps the most extensive scheme of land nationalization in the world. In a young country this is not hard to accomplish, and it has, moreover, many points in its favour, since it effectively blocks land speculation and prevents the amassing of large fortunes by private individuals at the expense of the public. Well had it been if the Canadian Government had learnt a lesson from the Russian Government in this respect, before it was too late. On the other hand, it encourages the communal system of agriculture among the peasants, which in turn is not conducive to industry and thrift. At present, however, the disadvantages of the commune are not felt in a young growing country of which the wealth has hardly begun to be exploited. When the country becomes more densely populated the importance of higher cultivation will be more felt, and the Stated will probably begin to create peasant proprietorship by administrative means. Foreign investors must therefore realize that there is no opening at present for investment in real estate in Siberia.
But if the foreign investor has no outlet in land exploitation, he has an ample field in other directions, such as public works, both of a national and local character. Thus the construction of the proposed branch lines of the Siberian railway system will from time to time call for foreign capital from the European money markets. The richness of the areas which will be tapped by the proposed branches is in itself a good guarantee of the financial success of these railways, especially if the interest on the loans is backed by the security of the Imperial Government. On the other hand, the corruption of the local officials, which still exists, especially in the remoter parts of the empire, militates against the proper expenditure of capital loaned for public works, and St Petersburg has no little difficulty in exercising effective control over such large areas. The security for loans for public works in Siberia must, therefore, even if guaranteed by the Imperial Government, depend very much upon the political conditions of the empire, and may be generally regarded as about equal to that of the Russian Government bonds already on the market.
As regards public works of a local nature, in the growing Siberian towns there will in time be great opportunities for profitable concessions. As yet, however, few of these urban centres have reached the stage at which their local authorities are prepared to enter upon public water schemes, electric light or tramways. These will appear in due course.
Perhaps the largest amount of foreign capital invested in Siberian industrial undertakings is locked up in the mining industry. Considerable foreign capital is indirectly invested in Siberia in this industry, and the growth of foreign mining capital is encouraged by the Government. But it should be borne in mind by prospective investors that the best of the mining concessions have already been taken up, and, until further developments in railway communication are made in the mineral-producing area, profitable mining concessions are likely to be few and far between. Foreign investors must especially guard against mining concessions which have been tried before and have failed. In most cases failure has been due to some natural cause, which will probably never be remedied. As explained later, foreign companies, including mining companies, are not legally recognized in Russia unless they are represented by a responsible agent.
The easier and the safer field for foreign capital lies more in commercial than industrial enterprises. The exploitation of the import and export trade to and from Siberia is now attracting much foreign capital, and the only limit to this development is that imposed by the lack of communications and the as yet sparsely inhabited country. Commercial enterprise in Siberia has a much freer hand than industrial enterprise. Since 1888 Russian law has allowed foreign companies which are engaged in buying Russian goods or selling foreign manufactures to do so without special permission from the Government. Danish, German and English syndicates and firms now export butter and eggs to Western Europe from the steppes of Western Siberia, and have depots with storage plants in such places as Kurgan, Büsk and Barnaul. Other firms are beginning to export meat by rail from Omsk and Petropavlovsk, where they have refrigerating plants. Dairy and meat produce are, however, the only agricultural products the export of which is likely at present to require the assistance of foreign capital. Wheat, timber and other produce will follow in due course, but their time is not just yet, on account of high rail freights.
As regards the import trade, the first condition of success for foreign capital is a proper knowledge of the conditions under which trade is carried on in Siberia. The bulk of the import trade is already in the hands of Russian firms which, sheltered under tariff walls, have acquired a monopoly and can undersell foreign goods. Thus the provision trade, the cotton piece-goods trade, the iron hardware and earthenware trade and the manufactured leather trade are all in the hands of small Siberian firms, which act as agents for the big manufacturers in European Russia. The manufacture of these articles in Russia is highly protected against foreign competition, and thus Siberia is kept as a closed preserve for the agents of these manufacturing Russian firms. The field for foreign imports in Siberia is therefore restricted to the products of those industries which are as yet poorly developed in European Russia. Here the possibilities are by no means inconsiderable. The fundamental industry of the country is agriculture, and although the organization of this industry is still primitive, nevertheless, as the country develops, agriculture will be better organized, and the demand for machinery, binders, separators, etc., will steadily grow. At present the trade in reapers and binders is largely held by the American Trust, which is firmly established and which employs Russian, German and Danish agents. Ploughs are chiefly supplied by certain Russian firms, which are favoured by protective duties and consequently succeed in extorting high prices for comparatively inferior articles from the Siberian peasants. The best field for British enterprise can be found in the importation of dairy and thrashing machines. Already a considerable trade in these articles has been developed between England and the steppes of Southern European Russia, whence they are now beginning to penetrate into Western Siberia. There is an enormous field for the disposal of dairy machinery also, especially separators, in the districts of Western Siberia and the Altai. Already competition is keen between English, Swedish and German firms for the introduction of this class of goods on the Siberian markets.
In addition to the above, mining machinery is now being imported into Siberia in considerable quantities. The mining industry in the past has been considerably handicapped by inferior machinery, but as improved methods become general in the country, so will the demand for the latest gold-dredging and ore-crushing apparatus increase also. In this branch of trade British firms are well to the fore.
The above are the principal articles of foreign import which are most in demand in Siberia at the present time. The amount of capital required for the placing of these goods on the Siberian markets is of far less moment than efficient management and administration. Commercial success in Siberia is above all else dependent upon the selection of the representatives who buy and sell the goods on the spot. In fact the foreign export trade to Siberia can be developed and retained only by the possession of "representatives." English firms trying to do business in Siberia through "agents" are far less likely to succeed than if they possess their own "representatives." The latter, moreover, must live on the spot and know the Russian language and deal direct with the Siberian peasant, for it is useless to try to carry on business without being personally in touch with the Siberians. Newly settled immigrants without capital cannot easily be persuaded to try expensive machinery, and it is thus essential that the representatives of foreign agricultural machinery firms should watch the more prosperous, and induce them by degrees to take their goods. An English traveller in Siberia frequently hears complaints about his country's business men. It is said that although their goods are the very best on the market, the most efficient, and in the long run the cheapest, nevertheless English firms lose business through not endeavouring to suit their customers, and through their refusal to deal on anything but a cash basis. It is obviously useless to offer these terms to the Russian peasant, who has no capital; indeed an agent must also be prepared to finance the peasants on a small scale. Many German representatives combine their sales of machinery with the purchase of such articles as butter for export, and are opening credit and debit accounts with the peasants. The conditions of payment usually in vogue in Siberia are twenty per cent. cash on delivery; forty per cent. after twelve months; and the balance in two years. Merchants and manufacturers must therefore make good allowance for these conditions. Also the heavy import duties on machinery, although they are now somewhat lighter on certain classes of machinery, tend to make prices high for the consumer, and high prices are not attractive to the peasant without capital. Under such circumstances the manufacturer should aim at the cheapest article that it is possible to produce.
Legal Rights of Foreign Companies in Siberia
The legal position of foreign companies in Siberia is in all respects similar to that in European Russia, and has caused no few difficulties and inconveniences in the past. While this legal position requires reform, if foreign capital is to be further attracted, it is nevertheless quite possible to carry on business in Siberia under existing conditions with reasonable security. Briefly stated, the position is as follows. Foreign commercial enterprises, having for their object the buying and selling of goods in Russia, can operate without permission from the Government, on condition that they sell only foreign goods. Foreign industrial undertakings, on the other hand, having for their object the working of such enterprises as mines and factories, must obtain special permission through the Minister of Commerce and Industry. A foreign industrial company, before it can operate, must apply for permission, stating the amount of its capital, and submitting its Articles of Association, and must appoint a responsible agent with power of attorney to act on its behalf in Russia. Permission may be taken away at any time, and the responsible agent must have full powers of attorney. Foreign capital invested in industrial undertaking in Russia is therefore much at the mercy of the local and central officials, and also of the responsible agent who represents it. As a rule the latter is required by Russian law to be a Russian subject and not of Jewish religion. He has large powers and may act independently of his principals abroad, because the Russian Government recognizes him alone as representing the company. There are thus, as it were, two authorities controlling foreign companies in Russia—the principals in the foreign country, representing the interests which supply the capital and receive the profits, and the responsible agent in Russia, who in the eyes of the Russian Government is responsible for the management and administration of the undertaking. It is not always easy for a foreign board of directors to control the Russian responsible agent, and this is one of the most unsatisfactory features of the legal position of British companies in Russia.
So far has this system of representation through "responsible agents" developed that there are now Russians who make it their sole business to represent foreign firms in Russia. This method is clumsy and inconvenient, but at present all foreign firms holding a concession in Russia must conform to these conditions before they can work in safety.
As regards taxation, foreign companies are treated in exactly the same manner as Russian companies. There is first the State Guild Tax, paid by all companies before they obtain their certificates of right to work. Subsequently there is an annual tax, levied upon the paid-up capital of the company, irrespective of profits. When a company is working, all accounts must be published, and shown to the Government official in charge of the district where the company is operating. A third tax is then levied on the profits of the company according to the rate of profit.
The position of debenture holders is one to be considered in reviewing the rights of foreign companies in Russia. They are not placed in a very favourable position as regards the priority of their claims over the assets of a company, since debentures issued abroad by a foreign company trading in Russia have no legal recognition in that country, and a holder of such debentures has therefore no priority over any other debtor. In order that debentures may receive official recognition in a Russian Bankruptcy Court they must be issued in Russia and entered in the books kept by the responsible agent of the company.
In general, it may be said that the existing law has been held by eminent Russians to be unsatisfactory, and reform has been urged for many years past. One of the worst features of the system is the absence of definite and universal regulations, and the dependance of the foreign trader or investor on the attitude of local officials, which is always an unknown factor, and difficult to estimate. Moreover, the "responsible agents" or local boards may become the media through which British capital is unwittingly made responsible for acts over which it has no control. It will doubtless be remembered by the reader how, in the spring of 1912, a riot and massacre took place in the Lena goldfields, as the result of certain grave abuses which had been perpetrated by the mining company's officials. Contrary to the Russian law, these officials had systematically underpaid and ill-housed their employees, bribing the local police authorities to keep quiet. At last a strike took place, and the company's officials succeeded in commanding the local military forces to crush the revolt against their own cruel and illegal actions. Everyone who knows Siberia is aware that such a case as this is rare at the present day, but the fact that it has occurred in spite of all Government regulations to the contrary in some of the remoter parts of the country, where local officials are almost uncontrolled, is a reminder to the foreign investor of the need of extreme caution. It is most essential that the British public should be aware of these facts and recognize its responsibility in financing enterprises in Siberia, over which its control is limited. The system is so arranged that it works well whenever the interests of the Russian authorities, as reflected through the responsible agent, coincide with the views of the foreign board of directors. When, however, there is disagreement, the foreign board has little real control over the responsible agent, who may become the tool of questionable and even illegal influences. This was certainly the case in the Lena goldfields. Here there were two boards of directors, one in England and one in Russia, the latter being in place of the "responsible agent," who is usually appointed by the foreign board. While the English board supplied the capital, the Russian board only was legally recognized by the Russian authorities, and was thus actually responsible for the management; moral responsibility for that management, however, rested with the English board as well, which supplied the capital and took the profit, although in Russia it had no legal status. By ambiguous laws that are capable of various interpretations, foreign capital is often placed at the mercy of local officials and managers; and it is to the interest of unscrupulous officials that the system should continue. London city financiers may perhaps be able through political influence to protect their own interests, when the necessity arises, but the investing public has no such power, and, as far as investments in Siberian mining enterprises are concerned, are absolutely at the mercy of conditions over which they exercise no control. Moreover, the moral responsibility, although it may not appeal to Lombard Street, probably appeals to British public opinion. In a word, Anglo-Russian friendship is not fostered by an unholy alliance between the British private investor on the one hand, and local or central officials in Russia on the other. Only by bringing the former into contact directly with the Russian people themselves, can the interests of both be mutually served. One of the best means of bringing this about is by a reform of the Russian company laws which has been urged by enlightened Russian officials for many years past. Such reform would sweep away the clumsy barriers against commercial and financial enterprise, which are now only the harbouring-places of abuse, and thus would create free intercourse between European capital and the Siberian industries in need of it.
Mining Rights in Siberia
In spite of the above system of company formation, a wide field is open for the foreign mining prospector in Siberia, if he cares to risk capital in these undertakings, and realizes that situations may arise over which he has no control.
Prospectors having found a likely spot are entitled to peg out a claim which may extend for 5 versts (3⅓ miles) up the main valley and 2 versts (1⅓ mile) up any side valley. A mining prospector must first register his claim with the Government mining official in the nearest town.
The mining laws of 1902 marked a great advance in this industry throughout the empire. Gold production, which had hitherto been a monopoly of the Government smelting depots, was opened in that year to free competition. Moreover, regulations were issued by the Government providing for the proper remuneration and treatment of mining labour, and employers are now bound to find on the mining premises food and clothing, which must be sold to the workmen at a specified Government tariff, varying according to districts. This is an item of expense which must be borne in mind by all mining syndicates.
Mining wages vary according to the distance from the urban centres. Thus in some of the mines in the north-eastern territories labour cannot be obtained under 170 roubles a month, or 10s. per day, while in certain Altai districts near the railway, or on the northern side of the Mongolian frontier, peasant labour can be obtained at only 17 roubles a month or 1s. per day. In some districts the tribute system of working is still in vogue, whereby the workman is bound to sell to the mine-owner at a fixed price all the ore and minerals that he wins, but otherwise is free to work as he pleases.
Thus mining labour is carefully protected by the State in Siberia, and the troubles which have occasionally arisen with labour, such as those on the Lena mines in the north-east, are due to infringement of these laws by Russian managers, who have succeeded in enlisting the aid of the local officials, and under the cloak of the responsible agents have committed acts unknown to the foreign board of directors. As far as the mining laws themselves in Russia and Siberia are concerned, there is in fairness nothing to be said against them. Indeed they are in many ways advanced and even enlightened.
British Consular Representation
The inadequacy of British consular representation in Russia is a matter of common knowledge to all and of no small inconvenience to the British trader who is endeavouring to establish businesses in Russia. Not least is this inconvenience felt in Siberia, where young commercial enterprises, breaking the ground for the first time, stand in special need of assistance from their national consular representatives. Up to the present time the Russian Government has not permitted consular representation in the eastern parts of the empire, and Siberia has been included in this regulation. Now, however, it has been notified that by special permission the right of consular representation will be granted in those parts of Siberia where political and strategical circumstances will permit.
It is a matter of very great importance to British trade not only that consular representation in Russia should be improved, but that its scope should be extended into Siberia and other eastern parts of the empire, wherever economic conditions are suitable. Moreover, the farther east one goes the more important becomes the value of prestige, and the closer becomes the connexion between political influence and commercial interests. The necessity for consular representation in Siberia is greater in the western than in the central part of the continent, since the proximity to the markets of Europe affords to the former the greatest immediate possibilities for the development of the import and export trade. The towns on the Siberian railway at the points where it crosses the principal waterways are the chief centres for collecting exports and distributing imports. Thus at Petropavlovsk, Omsk, Novonikolaevsk and Krasnoyarsk growing towns have sprung up, through which the products of the Altai region and the south-western steppes pass on their way to European Russia. In return there also pass from Europe through these points numerous manufactured articles and other imports into Siberia. These are the points where foreign trade is likely to develop in the near future, and where agricultural implement manufacturers, dairy produce importers, and mining syndicates are now stationing their agents and representatives. Until recently English firms had no one to refer to at these places. Now, however, there is a British vice-consul (unpaid) at Omsk and recently one has been appointed at Krasnoyarsk, the only two in the whole of the vast territories of Western and Central Siberia. If anything is done to improve British consular representation in Russia, it is advisable that attention should be turned to Western Siberia especially, and it is indispensable that there should be at least one paid consul, who should also be in touch with two or three subordinate vice-consuls in the more outlying centres.
As a central spot, Omsk would be a suitable place where a paid consul for Western Siberia might reside, while Kurgan, Novo-nikolaevsk, Tomsk, Krasnoyarsk and Petropavlovsk would be suitable places for the subordinate unpaid vice-consuls. The towns of Tiumen, Tobolsk and Tomsk, although they are the seats of considerable local industry, besides being centres of administrative areas, are not likely to develop with such rapidity as the towns mentioned above along the main Siberian railway. The economic importance of Tiumen and Tobolsk, however, will probably be increased when the Omsk-Tiumen railway is completed, but for the present it will probably remain secondary to that of those growing centres where the Siberian railway crosses the principal waterways.
The future success of British trade in Siberia must in no small measure depend upon consular facilities for British trade in these regions. The activity of the German Government in this direction shows that it is keenly alive to the fact that in young developing countries such as Siberia, assistance by the consular representatives must be afforded to all pioneers.
Railways and Communications in Siberia
(1) History of the Great Siberian Railway.—By far the most important factor on which the development of Siberia depends is the improvement of transport facilities. At present the vastness of the country and the inaccessibility of large tracts of it to a great extent neutralize its richness and fertility and prevent speedy development. On the other hand, nature has given to Siberia a great system of waterways, which, although they all flow northward to the frozen sea, nevertheless are all navigable and are admirably adapted to act as feeders to the railway system, as the latter grows. Formerly the communication between European Russia and Western Siberia was effected by pack horses from the headwaters of the Kama River in European Russia across the Urals to the tributaries of the Obi and Irtish rivers, whence traffic went by boat along the river systems of Western and Central Siberia. This costly and clumsy system of transport was, of course, done away with when the railway was brought from Ekaterinburg in the Urals to Tiumen in the Obi watershed. This line enabled goods from Western Siberia to tranship from water to rail at Tiumen, and to go from there direct to European Russia. Early in the last half of the nineteenth century the great trans-continental line began to be talked about. The earlier projects aimed at the extension of the then existing line from Tiumen eastward across the continent. This route would have traversed mainly forested lands, and would have left the fertile black earth zone far to the south. It was then proposed to carry the line from Orenburg across the Kirghiz steppes and the Akmolinsk province to the Altai foothills, and thence across the southern part of the Yenisei Government near Minusinsk. Although this route would have tapped the most fertile tracks in the whole of Siberia, there would have been considerable difficulty in taking the line across certain outlying ridges of the Altai system. Nor would its strategical value have been as great as that of a direct line to the far eastern territories, where Russia's political prestige was known at the time to be in danger. The last project, which was ultimately adopted, proposed to take the railway from Ufa in European Russia across the Urals, through Chelyabinsk and Kurgan across the rich steppe of south-western Siberia into the pastoral zone of Omsk and the Baraba steppe. From the Irtish and Obi watershed it was proposed to carry the line north-westward, skirting the foothills of the Altai, and so make a direct course across the Yenisei Government eastward to Lake Baikal.
While this plan obviated construction through difficult country by keeping the line on level or undulating ground, it had no inconsiderable disadvantage in the fact that it left a large tract of fertile land in the foothills of the Altai far to the south. As a result, therefore, this district in the neighbourhood of Biisk and Barnaul, which is one of the most fertile tracts in all Siberia, has been hindered in its development by lack of rail communication.
The section of the railway from Chelyabinsk to Krasnoyarsk in Central Siberia was begun in 1892 and finished in 1897, but it was not until some five years later that it was carried to the east of Lake Baikal, while communication with the Far East was established only just before the Russo-Japanese War. That part of the line which crosses Western and Central Siberia, although it fails to tap the fertile districts of the Altai, is nevertheless of the utmost value for developing the steppes of Western Siberia. The eastern section of the line, on the other hand, cannot at present be said to have more than a military and strategical value and a certain utility for passenger and mail communication by rail to the Far East.
The line cost 200,000,000 roubles (£22,200,000), or nearly double what was estimated, and was marked by much wasteful expenditure and no little corruption among the engineers and officials engaged in its construction. Since those days, it has been found necessary to relay the whole line with heavier rails, and much of the line has recently been double-tracked.
The completion of the trans-Siberian railway scheme is nevertheless one of the marvels of the last century—more wonderful in many respects than the construction of the Canadian Pacific Railway—and to the Russian Government belongs the credit of carrying out one of the most daring railway projects of history. It is a monument of what autocracy can perform in spite of public apathy and natural obstacles. By it the Russian Government anticipated the economic development of its eastern empire, and also strengthened its strategical position in the Far East.
(2) Projected Railways in Western Siberia.—The great trunk railway having been built across the continent, the next problem lies in the construction of branch railways to tap the most fertile districts, which the trunk line failed to reach. At present the waterways of the Obi, Irtish and Yenisei perform the functions of branch feeders. Steamship communication has developed of late years, especially on the two former rivers, along which all traffic to and from the Altai is now borne to the railway. But while the waterways are valuable for heavy traffic, such as grain and timber, they are nevertheless unsatisfactory as a means of communication for light perishable articles, such as butter, eggs and meat, and on the export of these three products the economic activity of Western Siberia and the Altai very largely depends for the present. The construction of branch railways, as feeders to the trunk line, is therefore indispensable to the development of Western and Central Siberia. It is most important for the Altai region, that the Biisk, Barnaul and Semipalatinsk districts should in the near future be linkedup with the Siberian trunk line. With this object in view, therefore, a railway has been sucveyed which will probably leave the trunk line at Novo-nikolaevsk, and traverse the fertile black earth belt along the north-west foothills of the Altai. Touching the towns of Barnaul and Semipalatinsk, it will probably have branch lines to Biisk and Kuznetsk. Besides crossing the most fertile agricultural zone in Siberia, this railway will also pass through the richest mineral area in the empire, for immediately to the south of Sudjensk on the Siberian railway, and extending southward and eastward as far as Kuznetsk and Barnaul respectively, lie the great coal and iron and copper deposits of the Altai. The development of this area is only awaiting railway construction, and it is no exaggeration to say that this projected Altai railway will traverse one of the richest regions in the world. Its importance, moreover, will be enhanced by the fact that it will link up at Semipalatinsk with the projected Turkestan railway from Tashkent to Vierny across the Semiretchensk steppes, it will thus have strategical importance in connecting Turkestan with Siberia; and economic importance in connecting the undeveloped districts of Western Siberia with Europe. Construction will probably begin simultaneously from the Siberian railway at Novo-nikolaevsk and from the Central Asian railway near Tashkent, and extend respectively southward and northward till the lines meet eventually at Semipalatinsk.[4]
The second important railway project, which will have much effect on the development of Western Siberia, is the extension of the North Siberian line. This line runs at present from Perm, the last provincial town in European Russia, across the Urals, to its terminus at Tiumen. It offers by far the shortest route from Western Siberia to the White Sea, and now that there is direct rail communication between Perm and Archangel, via Kotlass, this line will before long recapture some of the traffic, which at present goes along the Siberian line via Chelyabinsk. This tendency will be still more assisted if the North Siberian line is extended beyond Tiumen to Omsk, thereby providing the districts of Yalutorofsk, Ishim and Tyukalinsk with a short route to the sea at Archangel. This North Siberian line will therefore in the future carry most of the heavy traffic, such as wheat and timber, from Western Siberia across the Urals to the nearest seaport at Archangel, leaving the present Siberian trunk railway to provide the quickest communication to the Baltic ports and to transport such articles as butter, meat and other perishables from the Western Siberian steppes and Altai foothills. Thus the extended North Siberian line from Tiumen to Omsk will, when completed, have the effect not only of opening up a good region in the southern part of the Tobolsk Government, hitherto untouched, but will provide also a shorter route to the White Sea for timber and grain form Western Siberia.
A third railway scheme which had been discussed for some years past has actually materialized, and the railway is now in course of construction. The contract was given in 1911 for the building of a branch line from the existing North Siberian railway in the Urals across the rivers Nitsa, Tura and Tavda. The line will ultimately be carried to Tobolsk, and will traverse some great forest tracks hitherto untouched in the north-west of the Tobolsk Government. The railway, when completed, will provide the forested areas in this district with cheap transport to the White Sea ports, and thus make the export of timber possible from these regions. It will also open up further possibilities of mining development on the east of the Urals, and thus give additional impetus to the development of this region of the province of Perm.
(3) Central Siberia and its Communications.—The Siberian railway crosses the south of the Yenisei Government, the most central province of Siberia, by way of the towns of Achinsk, Krasnoyarsk and Kansk. It is by far the most important means of communication between Central Siberia and Europe. Navigation on the Yenisei River provides communication between Krasnoyarsk on the railway, the Minusinsk steppes on the south, and the Yeniseisk region in the north. At present no schemes for branch railways have been projected in Central Siberia, for public attention must be absorbed by the development of Western Siberia for some time to come. Moreover, the great distance of the Yenisei Government from Europe must cause its growth to be much slower than that of Western Siberia.
In addition to the railway, however, there is the Obi-Yenisei Canal, connecting the two rivers of those names, and running from a point north of Yeniseisk to the Ket River, a tributary of the Obi. This water route only effects communication between the northern part of the Yenisei Government and the Tomsk Government, and is not of much importance in the economic development of Central Siberia, for it leads to no point where there is direct communication with Europe.
(4) The All-Sea Yenisei Route: its Possibilities and its Difficulties.—There is yet another project which aims at opening up communication between the outside world and Siberia, and is well deserving attention at this time. It is generally admitted that the establishment of the so-called "All-Sea Yenisei Route" would have great effect in stimulating the commerce between Central Siberia and Western Europe by the Arctic Sea. The possibility of navigating the estuary was proved by Captain Wiggin some years ago and by Captain Webster in 1911. The latter succeeded in bringing a ship with a general cargo round the Kara Sea to Krasnoyarsk on the Yenisei, landing there in the summer of 1911. The obstacles in the way of the establishment of this route are, of course, the ice difficulties in the Kara Sea, which greatly increase the risks of navigation, and the shortness of the open water season in the estuary of the Yenisei. This estuary is generally open for about two and a half to three months in the summer, but the Kara Sea, through which a ship must pass on its way from the north-east coast to European Russia, is only free from ice floes for a few weeks. A ship, therefore, which would have to unload and reload at Krasnoyarsk in the centre of Siberia, although it may be able on its return successfully to navigate the Yenisei estuary, may be too late to cross the Kara Sea before the winter ice sets in. To remedy this, Captain Webster has proposed to establish a port of transhipment at Novo Zemlya, just outside the so-called Iron Gates of the Kara Sea, where incoming ships from Europe can discharge, pick up freights and depart again without delay, leaving the farther journey of the Yenisei estuary to be accomplished by Siberian ships during the three months that the water is open.
More important perhaps than the navigation problem is the special attention which must be given to the kind of cargo for import into Central Siberia, so as to secure the readiest sale without difficulties with the customs authorities. All projected attempts have failed hitherto to take sufficient precautions on this point, and often trouble with the customs authorities on the Yenisei estuary and at Krasnoyarsk has ensued. At present the customs duties levied on the mouth of the Yenisei in accordance with the Imperial Tariff, added to the freight charges, would make the goods which are sent by the All-Sea Route so expensive on the Siberian markets, that they would not be able to compete with those sent by the direct route from Moscow by the Siberian railway. If, however, some of these duties were remitted or abated, a handsome profit on the transport of certain goods by this route would result. Sugar, for example, costing in European Russia 14 kopeks per lb. wholesale, of which 9 kopeks per lb. is excise tax, could, if the duty were remitted, be sold at such a price as to leave a profit after paying 9 kopeks for freight. Profits could also be made on tea transported from European Russia or Western Europe to Siberia by this route, if excise and customs duties were remitted. But the opening of the markets of Central Siberia to free importation from Western Europe, would be opposed to the interests of certain great manufacturing trusts in Moscow and St Petersburg, which fear the extension of this principle to other parts of the empire. The Russian sugar refiners and cotton printers of Moscow and the Polish towns would not endure the importation of competitive goods from Western Europe into markets where they at present enjoy undisputed monopoly.
These powerful interests, which the Russian Government is afraid to ignore, are opposed to lowering the customs duties at any Siberian port, or of admitting anything like the principle of Free Trade in the relations of Siberia with the outer world. The Siberians, on the other hand, are anxious to develop the new route, which would open up trade with some of their most fertile districts in the interior, and also relieve them from the domination of Moscow monopolists, who force them to pay high prices for inferior manufactures and goods. As, however, they have only eight members in the Duma, they have little influence at St Petersburg. This, then, is the political situation which dominates the economic relationship between Siberia and European Russia, and any large trade in general goods from Western Europe to the Yenisei can only be encouraged by the lowering of the Siberian customs duties. The obstacles, therefore, in the way of bringing about rebates on these duties are considerable under present political conditions in Siberia, and unless English shipowners and capitalists realize the position, they will meet with failure when they attempt expeditions to the Yenisei.
Certain goods, however, might be profitably imported by this route. Such articles are iron rails for the railway, mining machinery, certain classes of agricultural machinery on which the tariff is low, such as thrashing machines, reapers, binders, dairy implements, and in fact all classes of machinery which are not manufactured at present in Russia, and which do not therefore compete with any vested interests. All these would make profitable cargoes to Krasnoyarsk. The return cargo would be grain, which in the autumn is phenomenally cheap (1s. 6d. per bushel), timber, of which there is an endless field for export at cheap prices, and hides.
An expedition with such a cargo as this in a 1500-ton vessel drawing fifteen feet of water ought to be successful financially on this Yenisei route. But any idea of a successful voyage with an import cargo of general goods from Western Europe, in competition with the manufacturers of European Russia, should be discarded as altogether impracticable under the conditions, which at present control the economic relations between Siberia and European Russia.
- ↑ See also Chapter V., p. 132.
- ↑ This occurred in 1911, and a famine resulted in some parts, as a consequence.
- ↑ For an account of the Siberian peasant commune see Chapter V.
- ↑ Recent developments have led to the actual commencement of the Novikolaefsk-Barnaul line, while the Omsk-Semipalatinsk section has been abandoned. Instead, a survey has been started for a South-Siberian trunk line connecting Oralsk, Akmolinsk and Semipalatinsk across the Kirghig steppes.