In conditions as restrictive as these, it is well-nigh impossible for Russian industry to hold its own, much less prosper and grow. And only the most vigorous and best-organized enterprises in the Empire, like that of the Morozoffs in Moscow, managed to pursue their way unscathed. In Russian Poland, where textile industries flourished, and the total annual production was valued at 294,000,000 roubles, over one-third of these industries belonged to the Germans, whose yearly output amounted to more than one-half of the grand total, _i.e._, to 150,000,000 roubles.[39] In all these industrial and commercial campaigns the German prime movers had carried out their operations more or less openly. But where interests affecting the defences of the Empire were concerned, caution was the first condition of success, and, as usual, the Teutons proved supple and adaptable. By way of levying an attack against the shipbuilding industry, they pushed shaky Russian concerns into the foreground, while studiously keeping themselves out of view. Thus in one case new Russian banks were founded, and old ones in a state of decay were revived by means of German capital and encouraged to form a syndicate with the Nikolayeffsky shipbuilding works and certain foreign banks. An official inquiry, presided over by Senator Neidhardt, lately revealed the significant fact that each firm of this syndicate had bound itself to demand identical prices for the construction of Russian ships, and under no circ.u.mstances to abate an iota of the demand. And it was further agreed that these prices _should be so calculated as to yield to the members of the syndicate one hundred per cent. profit_.

[39] Cf. Duma debates of August 1914.

This allegation is not a mere inference, nor a rumour. It is an established fact. Neither is the proof circ.u.mstantial; it consists of the original agreement in writing signed by the authorized representatives of the inst.i.tutions concerned. The data were laid before the members of the Russian Duma by A. N. Khvostoff.[40] Thus the Russian peasant is taxed for the creation of a fleet, and the Duma votes an initial credit of, say, 500,000,000 roubles for the purpose.

And if the shipbuilding companies and their financial bankers were honest the aim could be achieved. But in the circ.u.mstances what it comes to is that the nation must pay 500,000,000 more, in order to get what it wants. And this tax of a hundred per cent. is levied by German parasites on the Russian people. One might scrutinize the history of corruption in every country of Europe without finding anything to beat this Teutonic device, which at the same time gratified the cupidity of the money-makers and dealt a stunning blow at the Russian State. Half of the shares of the celebrated Putiloff munitions factory are said to have belonged to the Austrian Skoda Works.

[40] Cf. _Novoye Vremya_, August 17, 1915.

At the outset of the present war, when Russia's needs were growing greater and more pressing, the works controlled by Germans and Germany's agents diminished their output steadily. In lieu of turning out, say, 30,000 poods of iron they would produce only 5,000, and offer instead of the remainder verbal explanations to the effect that lack of fuel or damage to the machinery had caused the diminution.

Again, one of these ubiquitous banks buys a large amount of corn or sugar, but instead of having it conveyed to the districts suffering from a dearth of that commodity, deposits it in a safe place and waits. In the meantime prices go up until they reach the prohibition level. Then the bank sells its stores in small quant.i.ties. The people suffer, murmur, and blame the Government. Nor is it only the average man who thus complains. In the Duma the authorities have been severely blamed for leaving the population to the mercy of those money-grubbers whom German capital and Russian tribute are making rich. "Averse to go to the root of the matter," one Deputy complained, "the Government punishes a woman who, on the market sells a herring five copecks dearer than the current price, yet at the same time it permits the Governors to promulgate their own arbitrary laws regulating imports and exports from their own provinces. In this way Russia is split up into sixty different regions, each one of which pursues its own policy unchecked."

The importance of the role played by the banks financed by German capital in Russia can hardly be overstated. They advance money on the crops and take railway and steamship invoices as guarantees--they are centres of information respecting everybody who resides and everything that goes on in the district and the province. I write with personal knowledge of their working, for I watched it at close quarters in the Volga district and the Caucasus with the a.s.sistance of an experienced bank manager. Their political influence can be far-reaching, and the services which they are enabled to render to the Fatherland are appreciable. And they rendered them willingly. As extenders of Germany's economic power in the Empire they merited uncommonly well of their own kindred. Thus of Russia's total imports in the year 1910, which were valued at 953,000,000 roubles, Germany alone contributed goods computed at 440,000,000. These consisted mainly of raw cotton, machinery, prepared skins, chemical products, and wool.

How steadily our rivals kept ousting the British out of Russian markets by those means may be gathered from the following comparative tables. The percentage of Russia's requirements supplied by the two competing nations varied, during the fifteen years between 1898 and 1913, as follows--

_Year._ _Germany supplied._ _Britain supplied._

1898-1902 346 per cent. 186 per cent.

1903-1907 372 " 148 "

1908-1910 416 " 134 "

1911 454 " 122 "

1912 475 " 126 "

1913 496 " 133 "

In the year 1901 Germany supplied 31 per cent. of the total value of Russia's imports; in 1905 her contribution was 42 per cent.; and the increase went steadily forward, reaching over 50 per cent. in the year 1913. If we add to this the net profits of German industrial and commercial undertakings in the Russian Empire, we may form a notion of the appropriateness of the comparison which likened the Tsardom to a vast German colony. The entire economic system of the country was rapidly approaching the colonial type. And to these economic results one should add the political.

It is fair to a.s.sume that at the outset the main motive of this industrial invasion was the quest of commercial profit. Subconsciously political objects may have been vaguely present to the minds of these pioneers, as indeed they have ever been to the various categories of German emigrants in every land, European and other. But in the first instance the creation of German industries in Russia was part of a deliberate plan to elude the heavy tariffs on manufactured goods. It has been aptly described by an Italian publicist[41] as legal contraband, and it supplies us with a striking example of German enterprise and tenacity. It attained its object fully. About three-fourths of the textile and metallurgical production in the Tsardom, the entire chemical industry, the breweries, 85 per cent. of the electrical works and 70 per cent. of gas production were German.

And of the capital invested in private railways no less than 628,000,000 roubles belongs to Germans. Even Russian munic.i.p.alities were wont to apply to Germany for their loans, and of the first issues of thirty-five Russian munic.i.p.al loans no less than twenty-two were raised in the Fatherland.

[41] Virginio Gayda.

The necessity of waging war against this potent enemy within the gates intensified Russia's initial difficulties to an extent that can hardly be realized abroad, and was a constant source of unexpected and disconcerting obstacles. Some time before the opening of the war, a feeling of restiveness, an impulse to throw off the German yoke, had been gradually displaying itself in the Press, in commercial circles, and in the Duma. These aspirations and strivings were focussed in the firm resolve of the Russian Government, under M. Kokofftseff, to refuse to renew the Treaty of Commerce which was enabling Germany to flood the Empire with her manufactures and to extort a ruinous tribute from the Russian nation. Two years more and the negotiations on this burning topic would have been inaugurated, and there is little doubt in my mind--there was none in the mind of the late Count Witte--that the upshot of these conversations would have been a Russo-German war.

For there was no other less drastic way of freeing the people from the domination of German technical industries and capital, and the consequent absorption of native enterprise.

When diplomatic relations were broken off, and war was finally declared, Germany was already the unavowed protectress of Russia. And when people point, as they frequently do, to the war as the greatest blunder ever committed by the Wilhelmstra.s.se since the Fatherland became one and indivisible, I feel unable to see with them eye to eye.

Seemingly it was indeed an egregious mistake, but so obvious were the probable consequences which made it appear so that even a German of the Jingo type would have gladly avoided it had there not been another and less obvious side to the problem. We are not to forget that in Berlin it was perfectly well known that Russia was determined to withdraw from her Teutonic neighbour the series of one-sided privileges accorded to her by the then existing Treaty of Commerce, and that this determination would have been persisted in, even at the risk of war. And for war the year 1914 appeared to be far more auspicious to the German than any subsequent date.

Handicapped by these foreign parasites who were systematically deadening the force of its arm, the Russian nation stood its ground and Germany drew the sword.

Improvisation--the worst possible form of energy in a war crisis--was now the only resource left to the Tsar's Ministers. And the financial problems had first of all to be faced. In this, as in other spheres, the country was bound by and to Germany, so that the task may fairly be characterized as one of the most arduous that was ever tackled by the Finance Minister of any country--even if we include the resourceful Calonne. And M. Bark, who had recently come into office, was new not only to the work, but also to the politics of finance in general. Happily, his predecessor, who, whatever his critics may advance to the contrary, was one of the most careful stewards the Empire has ever possessed, had acc.u.mulated in the Imperial Bank a gold reserve of over 1,603,000,000 roubles, besides a deposit abroad of 140,720,000 roubles. Incidentally it may be noted that no other bank in the world has ever disposed of such a vast gold reserve.

Although one of the richest countries in Europe, Russia's wealth is still under the earth, and therefore merely potential. Her burden of debt was heavy. For at the outbreak of the war the disturbing effects of the Manchurian campaign and its domestic sequel, which had cost the country 3,016,000,000 roubles, had not yet been wholly shaken off.

And, unlike her enemy, Russia had no special war fund to draw upon. As the national industries were unable to furnish the necessary supplies to the army, large orders had to be placed abroad and paid for in gold. At the same moment Russia's export trade practically ceased, and together with it the one means of appreciably easing the strain. The issue of paper money in various forms was increased, loans were raised, private capital was withdrawn from the country, various less abundant sources of public revenue vanished, and the favourable balance of trade dropped from 442,000,000 roubles to 85,500,000.

Germany, on the other hand, possessed her war fund, in addition to which she had levied a property tax of a milliard marks a year before the outbreak of hostilities; she further drew in enormous sums in gold from circulation, and generally mobilized her finances systematically.

But Russia was compelled to improvise, to make bricks without straw.

Her war on a front of two thousand versts long had to be waged with whatever materials happened to be available. j.a.pan--who, I have little doubt, will be found at the close of the great struggle to have benefited largely by her pains--exerted herself to provide munitions for her new friend and ally. The United States, Great Britain and France also contributed their quota. For many of these orders placed abroad gold had to be exported, and as Russia has no other natural way of importing gold but by selling corn, which there were no means of transporting, a sensible depreciation of the rouble resulted. Great Britain and France have also had to make heavy purchases abroad for their military needs, but these two countries can still export wares extensively and keep the payments in gold within certain limits. Even Italy receives a noteworthy part of her annual revenue in the shape of emigrants' remittances from abroad. But once Russia's gates were closed and her corn had to remain in the granaries, elevators, or at railway stations, the shortage in her revenue became absolute. During the first three months of the year 1915 the value of Russian exports over the Finnish frontier and the Caucasian coast of the Black Sea was only 23,000,000 roubles, showing a falling off of about 93 per cent., as compared with the worth of the produce exported during the corresponding three months of the preceding year.

It is a curious fact that part of this reduced trade continued to be carried on with Germany for months after the war had begun. A Russian publicist has remarked that at the opening of the campaign the voice of the nation was heard saying: "Corn we have in plenty, and vegetables and salt. It is we who feed Europe. Germany will therefore starve without our corn. Our armies may retreat, but our corn will go with them; and the more the Germans advance into Russia, the further they are away from their bread." And in this the average Russian saw a pledge of victory. But before six months had lapsed, the everyday man grew indignant. For he learned that his corn was being conveyed through Finland and Sweden into Germany, and in such vast quant.i.ties as had never before been heard of. Here is a street scene ill.u.s.trative of this traffic and the feelings it aroused. A long string of carts laden with flour blocks in one of the Petrograd streets leading to a bridge over the Neva; a General walking with his wife stops one of the drivers and asks: "Wherever are you taking the flour to?" "Where do you suppose? Sure we're taking it to the Germans. We have to feed the creatures. They are a bit faint." "There you see!" exclaimed the General to his wife; "didn't I tell you? And every morning without fail the same long line of carts blocks the streets while our corn is being taken to the Germans!"[42] It is to be feared that this commerce has not yet wholly ceased. For the Russians, like ourselves, are considerate of the Germans.

[42] Cf. _Novoye Vremya_, February 24, 1915.

That that story of trading with the enemy is no idle anecdote is evident from the circ.u.mstance, based on official Russian statistics, that during ten months from August to May, while the war was being waged relentlessly between the two empires, Russia bought from Germany no less than 36,000,000 roubles' worth of manufactures. How much the Central Empires purchased from Russia, I am unable to say. That commerce is one of the almost inevitable consequences of improvisation and one of the most sinister. Some months after the outbreak of the war the Imperial Government levied a duty of a hundred per cent. on all commodities coming from Germany, Austria-Hungary, and Turkey. That was a.s.sumed to be a prohibitive tariff. But it failed to keep out imports from the Fatherland. In the one month of April 1915, Germany sent 3,000,000 roubles' worth of manufactured goods into Russia, and in May 2,500,000 roubles' worth. And the Allied Press was then descanting on the stagnation in German trade and the starvation of the German people. The explanation of this anomaly lies in the unforeseen and enormous scarcity and rise of prices in the home markets. Some metal wares--for instance, various kinds of instruments and of wire appliances, etc.--are not to be had in Russia for love or money, consequently a hundred per cent. duty is but a heavy tax paid by the consumer, not an effective prohibition.[43] Since then, I am a.s.sured, the Government has adopted stringent measures which some people believe to have put an end to that form of trading with the enemy.

[43] Cf. _Utro Rossiyi_, August 28, 1915.

It is hard for foreigners to realize the plight to which Russia has been reduced by the closing of her gates. As the Nile waters were the source of Egypt's prosperity, so the abundant Russian harvests const.i.tute the life-giving ichor which flows in the veins of the Russian nation. Without superfluous corn for exportation, the State would be unable to meet its obligations, maintain its solvency, or provide the motive power of progress. The exportation of agricultural produce was the fountain head not only of Russia's material well-being, but of her moral and cultural evolution: everything, in a word, was dependent upon plentiful harvests and extensive sales of cereals abroad. And, suddenly, the gates were closed, the corn was stored, and the nation left without its revenue. n.o.body but a Russian, or one who has lived long in the country, can realize fully all that this tremendous blow connotes. Parenthetically, it may be remarked that it adds a motive, and one of the most potent, to those which inspire the heroic sacrifices of the people, quickening the flame of devotion to their Allied cause. Russia is now literally fighting for her own liberty, for escape from the iron circle that shuts her off from the sea, and isolates her from the western world in which it is her ambition and her mission to play a helpful part.

One needs no further explanation why the Russian Government put pressure upon M. Delca.s.se and Sir Edward Grey to open the Dardanelles route for the Russian corn. Neither is it to be wondered at that while the Allied Forces in Gallipoli were still grappling with the Turks, the Tsar's Ministers should have thrust into the foreground the question of Constantinople and the Straits, and insisted upon an immediate pragmatic settlement. True, that was not statesmanship; it was anything but political wisdom; but at any rate it was human on the part of all concerned. If this t.i.tanic struggle, in which Russia is perhaps the greatest sufferer, is to bring her any palpable and enduring advantage, this, it was urged, can take but one form--freedom from the preposterous restraints that bar her way to the sea, and through the sea to the outside world. This and other pleas were powerful; but for this very reason and for the purpose of realizing her natural striving I personally would have temporarily negatived the Russian proposal and left nothing undone to ensure its withdrawal. For if I were asked to point to the efficient cause of the Allies' present lamentable plight in the Near East, I should single out this premature arrangement and its necessary consequences. For Roumania and Bulgaria were at the moment as bitterly opposed to Russia's overlordship in the Dardanelles and her possession of Constantinople as were France and Great Britain in the days of yore. And they embodied their opposition in acts.

CHAPTER VI

THE STATESMANSHIP OF THE ENTENTE

One of the most amazing phenomena of Entente statesmanship during the present European struggle, is the offhand readiness with which the Governments of France and Great Britain, yielding to abstract reasoning founded upon gratuitous a.s.sumptions, not only reversed the policy of centuries but committed themselves to a wholly new departure which was certain to raise up enemies to the Entente, to render its task immeasurably more arduous, and to lessen its means of achieving success. However well Russia deserved of her allies, however unquestionable her claim to the city of Constantine, no less suitable a moment could have been selected to press that claim than the spring of 1915. The only evidence we possess that the British statesmen primarily responsible for this capital blunder were conscious of the fateful character of this commitment, is the extreme care they took to have their responsibility shared by the members of the Opposition, which at that time was not represented in the Cabinet. But even with this indication before us, we cannot believe that even now this premature solution of a secular problem on lines suggested by transient episodes of a military campaign, has struck the responsible statesmen in proportion to its specific weight, the depth of its importance, and the nature of its consequences. To take but one of these, we find that towards the end of the second year of the campaign, Turkey is one of the two key-positions of the international situation. To conclude a separate peace with that Power is become a pressing, and would also be a feasible, task were it not that this earmarking of Constantinople for Russia const.i.tutes an impa.s.sable barrier. No Turkish Cabinet would or could conclude a separate peace and strike up friendship with the nations that are making ready to deprive the Caliph of his capital. It would be a mistake, however, to a.s.sume that this premature allotment of Constantinople to Russia is the only obstacle to the conclusion of a separate peace with Turkey.

There are also hindrances of a military nature which would have to be displaced before any decisive move in this direction could be expected of the young Turks.

But it cannot be gainsaid that the most formidable obstacle is that.

Neither can it be questioned that that premature arrangement will, if the Allies emerge victorious from the ordeal, thrust into the foreground of practical politics a whole group of problems the most delicate and dangerous that were ever yet tackled by the inadequately equipped diplomacy of the Allied Governments. It is then that the Entente Powers will fully realize the deluge to which they made such haste to open the sluice-gates in the spring of 1915. And the only way practicable out of this blind alley would be the spontaneous abandonment by the Russian Government of the right it possesses, which however the Allies will certainly never call in question. Whether the Tsar's Government believes such a sacrifice necessary, and whether, if they did, they could summon up the courage requisite to make it, are questions which Russia's loyal allies have neither the right nor the wish to raise. We will carry out our obligations in the letter and the spirit. If the Russian people, in the person of their responsible organ, should renounce for the moment the claims which we have formally recognized and undertaken to enforce, this decision will have been come to spontaneously and without pressure or advice from their allies.

The extent to which the Teuton had his own way among the easy-going Russian people is hardly to be realized. It would be certainly inexplicable in an empire governed on national lines and conscious of its mission. For unlimited pliancy was the quality which German importunity evoked on the part of the highest authorities. One of many examples is worth recording. Among all industrial enterprises the Russian Government is most sensitive about that of high explosives.

The manufacture of these they had always rigorously reserved for their own people, on obvious grounds. Well, the moment the Germans resolved to break down this barrier, they found the means to do it despite the objection raised by the Russian Press that it would be dangerous to confide the production of high explosives to foreigners and superlatively dangerous to confide it to prospective enemies. The prospective enemy carried the point, and the manufacture of high explosives was handed over to a German company, which built works for the purpose near the Russian capital, and had its headquarters and board of directors in Berlin![44]

[44] _Novoye Vremya_, June 24, 1915.

As in Italy, so in the Tsardom, one of the princ.i.p.al levers of Teuton interpenetration was the regulation of the national trade and industry. That is to say, these were allowed to subsist and thrive up to, but not beyond, the point at which they were useful as adjuncts of German enterprise. And the regulators were princ.i.p.ally two: the Treaty of Commerce extorted from the Tsar's Government during the embarra.s.sments caused by the Manchurian campaign, and the German banks, which in the empire paraded as Russian, just as in Italy they were decked as Italian. Many of those financial inst.i.tutions were but branches of German houses, and their methods were identical with those of the Banca Commerciale: long credits and easy modes of repayment offered to all those who agreed to deal with German firms, while discredit, ostracism, and ruin threatened the recalcitrant. And as Italian money and Italian inst.i.tutions were employed as instruments of German interpenetration in foreign countries,[45] so Russian funds and banks were used as helps to German interpenetration in Belgium and other lands.

[45] For example, the Banca Franco-Italiana in Brazil.

A noteworthy instance of the ingenuity with which this intricate mechanism was worked came to light shortly before the outbreak of the war. In Brussels there was a branch of the Petrograd International Bank which purported to be a purely Russian concern. But once the Kaiser had sent his ultimatum to the Tsar's Government, the Russian mask was doffed by the Brussels agency, which forthwith appeared in its true colours as a potent instrument of germanization in Belgium.

There was found to be almost nothing Russian about the bank but the name. The staff, the language spoken, the methods of business, the political sympathies, the aims of the operations were all German. Out of the forty-three permanent members of the staff, thirty were German subjects, six Austrians, two German-Swiss, two Belgians, one was a Dutchman, one Turk, and there was a solitary Russian. The moment Count Berchtold presented his ultimatum to Serbia this "Russian" bank refused to change any Russian banknotes on any terms and let it be understood that they were valueless. A panic on the Belgian market was the immediate consequence. Russian travellers had to deposit their jewellery in p.a.w.n and pay exorbitant rates of interest on loans. The bank itself practised a kind of usury, and advanced only sixty per cent. of the face value of notes issued by the Imperial Bank of Russia. When the Belgian Government, after the declaration of war, began to tackle German espionage, this "Russian" bank was found to be one of the strongholds of the military spies. Certain of the employees were permanent agents of the German Military Attache, and were at the same time inscribed as members of the staff of the Deutsche Bank of Berlin.

All those well-thought-out and successfully executed schemes may bear in upon the British people some notion of what is meant by German organization and co-ordination, and may also help them to gauge the chances of success, military, diplomatic and economic, on which the Allies, with their easy-going ways, their hope of somehow "blundering through," and their lack of combination and of plan--can rely when pitted against a mighty organism, disposing of the most redoubtable forces ever created by human science and skill, directed by a single mind, and served with ascetic self-abnegation and religious ardour by over a hundred million people. The courage and faith of the Allies in gazing for years upon this portentous engine of destruction without making suitable provision for the day when it would be turned against themselves, will fill future generations with amazement.

No bare enumeration of details can convey an adequate idea of the vastness, compactness and potency of the German organization which kept the Russian Colossus partially paralysed at home, while the Kaiser's armies were dealing it stunning blows on the battlefield. It is a revelation which will be followed by a new birth of the whole political world. The German colonists, the wandering German commercial travellers who acted as political spies, the various banks, joint-stock companies, religious sects, journals, reviews, schools, clubs, Lutheran pastors, and other Teuton agents, were but so many wheels and springs of the mighty machine which was set in motion and kept working by the political leaders in Berlin. For all these firms and enterprises and individuals from the Fatherland scattered over the length and breadth of the Tsardom were welded together in one vast organism by far-seeing politicians who ca.n.a.lized every important current of the nation's life and imparted to it the direction which German interests required. No enterprise was too vast, no detail too trivial, for the attention of these moulders of Germany's destinies.

All those activities, commercial, financial, industrial, journalistic, religious, political, the German mind combined into a single idea, the co-ordinate parts of which were studied and regulated, not by party chiefs, but by qualified experts, who, although specialists, subjected them to organic treatment. In this respect the German may be likened to a ma.s.sive sombre figure who, surrounded by a crowd of sprightly shadowy n.o.bodies, discoursing with easy frivolity on grave subjects, is engrossed with the task of destroying a great part of the frame-work of the world in order to rebuild it after his own plan. Unfortunately the extraordinary enlargement of interest which marks the latter-day political conceptions, and inspires the fateful action of Germany's acknowledged leaders, breeds in the allied peoples not so much a stern resolve to tame that revolutionary nation at all costs, as a sentimental longing for the return of the idyllic past, and an illusive hope that by dint of mild Christian charity it may yet be brought back.

CHAPTER VII

TEUTON POLITICS