Anglo-Russian Economic Relations

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Anglo-Russian Economic Relations

Author(s): Jules E. GaySource: The Economic Journal, Vol. 27, No. 106 (Jun., 1917), pp. 213-237Published by: Wileyon behalf of the Royal Economic SocietyStable URL: http://www.jstor.org/stable/2221979.

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ANGLO-RUSSIAN ECONOMIC RELATIONS.NOT longago an Anglo-Russianconomic approchementaspreached oth n Russia and Englandonlybya limited roup findividuals nd institutions,nd notwithstandinghe sympathyof extensive ircles heseendeavours ttainedbut modiest rac-tical results, emaining,n the whole, n the domainof piousaspirations.The causeof thisundoubtedlyemporaryailureiesprobablyn the fact hattheseendeavours erefor he mostpartbaseduponabstractmutual ympathiesnadequate o divertntoa newchannel urrentsreated like bytraditionnd long-stand-ing habits n the commercial elations f both countries. Theworld-war hichhas broken ut n the nterim as plainly hownthat the idea of the pioneersof an Anglo-Russian conomicrapprochement,esidesobjectsof a purely conomic haracter,is acquiring rofoundolitical ignificance.The war has shownthat German ommercend industry, hilepursuing heirmate-

rial ends,had in viewnot onlypeaceful culturalwork. TheGerman ommercialraveller as thevanguardnd scoutof theGerman rmy,whose ask t was at the fatefulmomentofortifywith the sword hesenew positions nd obtainby force newbeneficialommercialreatyn order oguaranteeo German radeand industry ormany years ahead favourable onditionsforfurtheracific onquest. In view ofthis, t is perfectlyaturalthat until by forceor voluntarygreementsn end is put toGermanmilitarism,ussia,for hesake ofself-preservationnddefence,hould xert very ffortor he elimination fGermaninfluenceponher nternal conomicife. It may be anticipatedthat, hanks o theexperience ainedbyRussia nthiswar,whichhas revealedmany hortcomingsn her domesticndustrial-econo-micorganisation,ewprinciples illbe introducednto thepro-grammefRussiannationalhusbandry ith viewtothepreven-tionof a false courseor errors n this spherehereafter.As weknow, he warhas revealed hehithertonsuspectedmportanceof industryn the taskof imperialdefence,while t has estab-

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214 THE ECONOMC JOURNAL [JUNElishedthatthe machinerynd appliancesof German ndustry,which n peace time servedforthe satisfactionf the culturaldemands f the Russianconsumer,t themomentwhenthewarbeganwere onvertedntomeansfor heannihilationfthemightand resistance fthe Russianarmy. It is quitenatural, here-fore, hatthefuture conomic rogrammef Russia should llotexceptionalttentiono thedevelopmentfexistingndustryndtheplanting f newforms hereof, rotectingarticularlyhosebrancheswhich re ndicated yanalysis fthestatistics f mportandbytheexistencen thecountryothofconditions ormanu-facturendofrawmaterials.Seeing,however,hat venwith hemostbrilliant evelopmentfherownindustryussiafor longtimeto comewillrequire mported oods n largequantityforexample,fortheequipment f newmanufactures),hedesire oeliminate heeconomicnfluencefGermanymustproceed arallelwith heprotectionfthedevelopmentftradewith ther riendlycountries;of course,withoutdetrimento the developmentfRussian industry.There is no doubtthat, concurrently ithFrance,theUnitedStates,Belgium,.and therStates,theprin-cipalr6le n thedislodgmentfGerman radefromRussiamustfalluponEngland as a country isposing otonlyofa very ichindustry,ut, whatis more mportant, avingat her disposal,in conjunction ithher colonies, onsiderablyreater esourcesthanGerniany. The importance f England as a purveyorfforeignommoditiesorRussia is intensifiedythefactthatsheis simultaneouslyveryargeconsumerfrawproductsxportedbyRussia, ndthather rade ndindustryavealwaysbeenaliento the idea ofthepacific onquest fRussia, after hemodelofcontemporaryermany. It is evident hat,thanks o thewar,the idea of an Anglo-Russian ommercial approchementsacquiring freshmomentumbased upon the community finterestsfbothcountries,ndis beingemphasised ytheneces-sityfor solution fbothdailyproblemsfa practical ature ndothers fessential tate mportance.The statisticalablesofRussia's importndexport radewithEuropean ountriesvideTableNo. 1), withwhichRussiamain-tainsmostanimated ommercialntercourse,ffer n amazingpicture f Germany's apidpenetrationntoRussia's economiclife. At thesametimethey how n thecase ofEngland,whooccupies hesecondplace afterGermany,hatthepercentagefhertrade nproportionothetotalvolume f mportsndexportshas beensubject o a constant ecline ince1870. Further tudyofthesestatisticshowsus whatan intricatend wideproblem



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 215confronts s in the realisation f an Anglo-Russian conomicrapprochement.

TABLE No. I.ExportsfromRussia. (See note on p. 222.)Total To TO ToAustria- TO ToExports Germany. Gt.Britain. Hungary. France. HoUand.

fi , 83 jP? 23 ~~~~~~~~~~~~~g '04 0V~~ 00~~~~~ 0 ID0~; aU _ o ~~~~~~Av,..A a o toa. o A2q

0 0 0 0~~0 i-i0 04H 0 4E 4 P41870 419,531 88,005 211 198,217 47 2 16,409 3'9 40,092 9-6 9,787 2-31880 481,718 133,426 27 8 143,380 29-7 31,440 6-5 55,641 1106 27,246 5-71890 753,849 198.777 20 4 221,789 29 4 32,937 4-4 53,759 71 47,413 0631900 710,418187,035 26-1 145,570 20-3 26,260 306 57,450 8 0 69,304 9061905 1077,325 256,312 237 249,206 231 45,060 4-2 04,401 5 9 121,802 1131906 1,094.888284,075 264 225,447 20 7 45,045 4-2 70,506 70 107,959 9 91907 1,053,010 91,041 27 7 228,504 218 42,026 40 73,414 7-0 114,382 10 91908 998,250278,992 27 9 220,514 22-2 48,968 4 9 04,026 605 93,815 9-41909 1,427,675 87,119 27-3 288,855 2041 60,875 4 3 89,061 6-2 189,193 13'21910 1.449,085 90,640 27 0 315,470 218 49,735 3w4 93,640 0'5 195,982 13891911 1,591,411 90,525 30'8 337,032 212 67,930 4'5 90,813 617 188,799 11 91912 1,518,798 53,178 299 327,811 21'5 73,409 48 98,187 065 163,991 1011913 1,420,855 52,637 318 266,864 188 65.256 4 6 100,857 7 1 177,465 12'6Imports ntoRussia. (See nioteon p. 222.)

Total From From m Austria From FromImports. Germany. Gt.Britain. Hungary France amd.

0~~~~~~~~~~~0a XI a

toX| ? eIi0 0 44~0 0- 00 N 4H * 0 0;

1870 402,445 159,020 39 5 124,5691 1 0 12,077 30 22,289 5'5 6,936 1 71880 583,943 204,983 454 145,706 25-0 22,297 3,8 21,051 3-7 7,263 1-21890 453,095 124,838 27 5 101,047 22-4 19,392 4 2 18,790 4 1 6,290 1V11900 020,375216,853 34-6 127,144 20-3 26,983 4-3 81,445 5-0 8,822 141905 635,087240,411 37-8 97,410 15-3 19,053 3-0 20,131 4-1 12,262 1 91906 800,690298,422 37 2 105,726 13 2 21.357 27 28,717 310 13,233 1 719071 847,365337,367 39-9 114,935 13-5 24.108 2-9 29,420 3'5 11,405 1V41908 912651 348,426 38'2 120,286 13-4 26,500 2-9 30,288 4'0 11,490 1-31909 906,339 063,263 02 127,946 14-3 27,315 3-0 49,547 5-5 18,068 2-01910 1,084,446 49,794 41-8 153,8471 4'2 35,026 3-3 60,972 5-6 20,444 1-91911 1,1,682 487,780 42-0 155,081 13-5 34,265 3-0 66,782 4.9 17,513 1-51912 1,171,772 32,346 455 142,350 12 2 32,659 28 56,342 4-8 19,215 171913 1,220,474 42,756 526 170,352 13'9 34,638 2-8 66,015 406 21,540 1-8In general, hese igures how hat he mport nd export radeofGreatBritain bsolutelyndrelatively elloff ppreciablyromRusso-Germanrade,notwithstandinghe fact hatGreatBritainis an industrialountry hichmanufactures,r is able tomanu-facturen abundance, ll thosearticleswhichRussia needs,and,conversely,soneofthemost olidpurchasersfRussianproducts.It is true that the geographical ositionof Germany,which



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216 THE ECONOMIC JOURNAL [JUNEpossesses a common and frontierwith Russia fora greatdistance,has materiallyfacilitatedrapid, regular trade and a verymate-rial development fpassenger traffic etween bothcountries. Thiscircumstance,however, should not be overestimated, eeing thatthe statisticsof Austria-Hungary,who as regardscommunicationis 'situated under the same conditions as Germany, show thatsince 1870 exports from Russia to Austria-Hungary ncreasedonly from 319per cent. to 4'6 per cent.-i.e., by 0'7 per cent.-while her exports to Russia fell from3 per cent. in 1870 to2'8 per cent. in 1913 (see Table No. 1).Before, however, granting the supposition that the funda-mental reason for the falling-offf Great Britain's trade withRussia arises fromdefects n the organisation nd the non-adapta-bility of English trade and industryto the conditions of theRussian market, t should be ascertainedwhetherthis fact is nota directconsequence of the absence of sufficientnterest on thepart of English merchants and manufacturers n the Russianmarket, in view of the preferencegiven to other markets. Itcannot be subject to the smallest doubt that England, who, unlikeGermany, possesses rich and spacious trans-oceanic colonies,found therein exceptional conditionsfor the investmentof hercapital and the surplusof her manufactures, nd before 1908-09was scarcely at all interested n the Russian market on which sheencountered the impetuous onslaught of German enterprise,whereas Germany, who onlyat the end of last centuryobtained afew colonies in Africa, of dubious value in relation to trade,naturally directed her main energies and attention to Europeanmarkets, and especially to the sale of her goods in Russia. Itwould, however,be erroneous to ascribe to the foregoing xcep-tional influenceupon the scope of imports of both countries ntoRussia, inasmuchas togetherwith a politicalrapprochementwithRussia, approximately ince 1909, there began to manifest tselfboth in England and Russia interest n an economic rapproche-ment between the two countries. Nevertheless, the statisticsshow us since 1909 the amazing growthof Russian trade withGermany, concurrentlywith verymodestresults in the develop-ment of trade with Great Britain. For referencewe cite thefollowingfigures:Eports from ussia.Inmilon~sofRoubles. 1909 1910 1911 1912 1913To Great Britain .. ... ... ... 289 315 337 327 266To Germany... ... ... ... 387 390 490 411 452Imports into Russia.

In millioneof Roubles.From Great Britain ... ... 128 154 155 142 170From Germany . ... ... ... 363 449 488 532 642



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1917] ANGLO-RUSSIANECONOMIC RELATIONS 217Fromthesefigurest is permissibleo infer hatthefalling ffofexports rom ussiatoEnglandandthe reverses duetootherserious ausesthe characterfwhichmustbe establishedfwe areto be enabledto findwaysandmeansfor he attainmentfthedesired results n the future. An inquiry nto this questionin 1910among he Russianmerchant odybytheOdessabranchoftheRusso-English hamber f Commerce nfortunatelyur-nished ittlematerial, ecausethereplies or hemostpartshedlight n thequestion rom he narrow tandpointfthe nterestsof ndividual irms. For example,nmanyreplies fcommercial

firmswhichwishedto increasetheir transactionswith GreatBritain herewere xpressedwishesfor hesimplificationfCus-tomsformalities,hereduction fduties, heequipment fports,and eventheorganisationf a freeharbournOdessa. Naturally,the realisation f wishes of this generalcharactercannot beregarded s specificmeasuresfor a decisionof the questionofAnglo-Russianntercourse,or hesimplereason hatwe cannotsuppose these measuresto have been adoptedexclusively nrelation oEnglish ommodities.Moreover,hestatisticaligureswhichwe have examined howus thatGerman radevery uc-cessfully opedwithits task,whilebeingsubjectto the sameduties and Customsformalities,nd overcoming ll difficulties,including he defects f Russian commercialegislation. Inas-much, nthecontrary,s thetradeofGreatBritain,while njoy-ing in Russia the same rights as German, chievedoppositeresults,t is permissibleo assumethatthecausesofthispheno-menon ie in theingrainedmethods ndcustoms fBritish radeandindustry,ndperhaps vendeeper-in several eculiaritiesftheirorganisation hich nterferes iththeiradaptation o theRussianmarket. It will simplifynvestigationfthe justiceofthis uppositionfwe compare heforegoing ith hecorrespond-ingmethods ndorganisationfGermany, ho s England'smostserious ival notonlyon theRussianmarket, uton all worldmarkets.To thisend t willbe appropriatenthefirst lacetoexaminetheRussian mportrade fthetwocountriess offeringoredis-tinctive eaturesndclearer ontrastsnthemethods fEnglish-men and Germans n this arena than the exporttradefromRussia; moreover, greatdeal thatwillbe said abouttheimporttrade characteriseshe businessrelations f both sides in thesphere fexport lso.

Passingto thisproblem,t shouldbe noted hatEnglishgoodson the whole are of better qualitythan German,but are



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218 THE ECONOMIC JOURNAL [JUNEappreciably earer;their ange s smaller,nd improvementsndnovelties re comparativelyew. The Englishnot onlydo notsell theirgoodson credit, utdemandpayment t best on ship-ment fthe goods n England, ndthat, oo, n advance; n suchcases the Russian customermakespayment s a rule one and ahalf o twomonths arlier han thegoods rrive t theirdestina-tion. The Englishvery arely,ndunwillingly,fferheirgoodsincluding ost of carriage o destination,nd almostexcluasivelyquotetheirprices n Englishcurrencynd forEnglishweights.Catalogues re sentto Russia byEnglishfirms lmost olely nthe English anguage, nd are not adaptedto the requirementsof the Russian market. English firms ery rarely end com-mercial travellers o Russia; those who are sent are entirelyuninformed,while often commercialtravellers of GermannationalityourRussia forEnglishfirms. In correspondenceheEnglishmans verypolite,but verybrief nd laconic; littleorseldomgoes intodetails; in the majorityf cases not evincingany desireto adapt himself ven in the distantfuture o thedemands fthemarket nd to acquainthimselfwiththe wishesofbuyers nd theoffersfcompetitors.Demandson thepart ofthe Russian customer,who has paid money n advance, for aguarantee.or atisfactoryxecution f his ordersare refused yEnglishfirms, ecause, s a rule,theEnglishman,who s honestand does not cease to be a gentlemanven n business, oes notwish to lowerhis dignity y the issue ofguaranteesnticipatingthe possibility f non-fulfilmentf obligations hat have beenassumed yhim. Such s a descriptionftherelations fEnglishcommercialnd industrialphereswithcustomersn Russia.The relations f Germanfirms nd factorieswith Russiancustomers re radically pposite. German goods are cheaperthan English, and although n the whole inferiorn quality,neverthelessully atisfy he requirementsf the masses; therangeofGermangoods s enormous,nd novelties r improve-mentsof a practicalnature are constantlyppearing n everybranch. With increasing requencyt is possibleto note thesupply f goodsconstitutinghe. xclusive peciality f Germanindustry.German merchants nd manufacturersndefatigablyflood venremote orners fRussia with theiroffers,irculars,catalogues, nd advertisementsn the Russian language. TheRussiancustomerwho does not respond o repeated ffersnotinfrequentlys favoured ith request oreport hereasonswhichform hindrance o theinclusion fhis respected irm in thecategoryfpatrons. In addition, irms fany size, notcontent



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 219withwritten dvertisementnd propaganda,despatchat leasttwice a year throughout ussia special commercial ravellers,splendidlynformednot onlyabout the demands nd tastesofindividualocalities, ut evenaboutthe detailsoftheprivate ifeofclients,which nablethem o judgethecredit ndtrustwhichthey deserve. Big firms,moreover, ave throughout ussiaoregionalgent-represent-ativeshoseduty t is tonotifyhe firmsthey epresentboutthemovements fcompetition,rospects fsale in thefuture,ndofnewconjunctures;o superintendon-signmentwarehouses, cceptorders, eceivemoney, ettlecus-tomers' laims,and watchtheir redit apacity. For thisobjectit is deemed heduty ftheserepresentativeso sendcommercialtravellers ver the region. The agent-representatives,n theirturn, re visited nnuallyonce or even twice by commercialtravellers entby thefactoriesbroad n order o strengthenhetie betweenfactoriesnd clients, o familiarisehem withnewrangesofsamples,new inventions,nd technicalmprovements,to enlistnew customers,nd control he credits nd actionsofrepresentatives. s regards redit,German irms rant hisevento small concernsworthy f trustwithsurprisingreedomndliberality, n the principle hat credit widely but judiciouslyallotted s the principal everforthe extension f turnover ndsale. It is the same withthe delivery f goods. Just as theEnglishman ellshisgoodsfor hemostpartwithdeliveryt oneof the English ports, eavingthe trouble nd risk of furthercarriage,nsurance,ndpaymentfduty nRussiato hisRussian-customer,o are Germanfirms otafraid o sell even, t wouldseem,to an unknown lient he mostelaborate echnical quip-mentswithpayment fduty, nd evenwithdelivery nd estab-lishment t anyplace in Russia. Settlements ith theRussiancustomer ermanfirmsre alwaysverywilling o effectn Rus-sian currency,mploying ussianunitsofweight nd measure.In correspondence,ermanfirms re not onlypolite,but evenobliging; n so faras thecorrespondenceoes notconcern oodsand waresfullyknown o Russianbuyers,Germanfirms o notstint ither aperor anguage, ndbymeansofcataloguesworkedout to the minutest etailson theirown initiativelucidate headvantages f onearticle ver nother,n all keys ndvariations.The lattercircumstances especiallyvaluableforcustomersnthe case of ordersfortechnical rticles,machinery,r factoryinstallations.

It is quiteeasytounderstandhatthecontrastbovecited nthe relations f Englishmen nd GermanswiththeirRussian



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220 THE ECONOMIC JOURNAL [JUNEcustomers orms heprincipal easonwhythe imports fGreatBritain ntoRussia remain n the shade as comparedwiththesuccesses fGerman mports.Incidentally,owever,n important6le must be assigned othe degreeofdiffusionf both anguages n Russia and thenosmallsignificancef theantiquated ystem fweights,measures,and currencyn GreatBritain. The English anguage, n con-tradistinctiono German, s very ittlediffusedn Russian com-mercial ndindustrialircles. In thenorth,ndthatexclusivelyat the Baltic ports,familiarity ithEnglishis here and thereencounteredn commercial nd industrial ircles; at southernportsveryrarely; and in the remaining arts of Russia almostnowhere. Knowledge f German, n thecontrary,s verywidelydiffusedll overRussia, especially n theJewish ettlement ale.In thewestern artofRussia, divided pproximatelyythe linePetrograd-Odessa, nd in the southern art, by the boundaryKiev-Harkov-Rostov, ignorance f German or absenceof acorrespondentnGerman n individual irmsonstitutesn excep-tion;in theremaining artof Russia,acquaintancewithGermanin commercialnd industrial ircles, lthoughweaker, s never-theless considerable. This circumstance as enormous ignifi-cance,especiailywhen t is rememberedhatthe Englishbeforethewar didnotadoptany measureswhatever or he removal finconveniencesrisingon account of ignorance f English inRussia, eventhrough he employmentfRussian correspondents,the ssueofcataloguesnRussian, r evenofa singlemore r essrespectable ookof referencen Russianrespecting he Englishexport ndustry.Added o this, heextremelyntricate nd anti-quatedEnglish ystemfmeasures ndcurrency,ith he unwill-ingness ftheEnglish o maketheir ffersnroubles nd Russianmeasures, onsummates series of almost nsuperable bstaclesencounteredy the moreenergetic ussianmerchantsn insti-tuting irect elationswithEngland.The above-cited arallel to a sufficientegree betraysthesecretshidden n thefigures f the statisticalables nserted tthe beginning f this report. Nevertheless, or the greaterdemonstrationftheresultswhichboth ides can attain, hanksto theirprinciples nd methodsapplied in intercoursewithRussiancustomers,tmaybe useful ocitethe followingxample.In the argetowns, ndespeciallyn thecapitals, rrespectiveof nationality,re numerous hopsof veryrespectable, orthemostpart,old firmswhich neverseeknoisy advertisementsnwidely-circulatedapers. These shops are often situated n



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1917] ANGLO-RUSSIANECONOMIC RELATIONS 221quiet,but rich,districts r on the secondfloors f the betterbuildingsn central treets; n their how-cases,f there re any,are exhibitedn elegant urroundingsnlya fewarticles fsale,andfrequentlyhe show-casesre drapedwithrich ilkorvelvethangings; the inscriptionst the entrance are modest andrestrained,nd usuallythe name of the firm s givenand itsspeciality s definedn two or threewords. These shops areintended rimarilyorcustomers hoare informedymeansofprivate ecommendationhatthere reno cheappriceshere,but,on the otherhand, elegantgoodsof the best quality; there sneither verchargeorreduction,nd goods are not forced ponone. The stranger hois nota customern shopsof thiskind,andwhohas to consider hequestion fprice, ften eelshimselfout of place therein, nd eventhoughhe buyssomething,oesawaynever oreturn.The staffftheshopdeem tunworthyftheir irmodetain ndentice ucha customer ithvarious ffers,since their patrons re notaccustomedo thisand do not ikeit. These shops are designedfor a limited ircle of customerswithmeans, ndbelong othecategoryfso-called aristocraticconcerns. Concurrently iththem,inevitably n the centralstreets, or hemostpart n prominentorner uildings, re hun-dreds fshopswith how-windowsilled rom optobottomwithgoods. These shopsresort o all kindsof expedients o attracttheattentionfthemasses;bigadvertisementsnthePress, llu-minated dvertisementsn theroofs fhouses, iving dvertise-ments n the streets, dvertisementsn the theatres nd publicplacesservethem or heattainmentfthisend. In theseshopsarewaresfor ll tastes n abundance, t prices ccessible ventoverymodestpurses; the goods,according o theprice,are notalwaysgood,butthey atisfyherequirementsfthepoorer ndmedium lassofthepublic,whoflockhitherecausenotonly retheirtastes entertained, ut anticipated.To the direction ftheseshops s appliedmuch abour,nitiative,nergy,hedesireto please customers,o satisfy s faras possible ll, and nottopermit customero go away withemptyhandsand, whatisstillworse,applyto a competitor. Everyseason these shopstender heir lients omethingewwhichexcites he interest fthe crowd. These shopsare designed orthemasses; in shopsofthiskindthere remillions fcustomers; hither lock very-body,bothpoorand well-to-do, homaketheirpurchaseswitheconomy. These shops may be termed democratic. Theexamplecitedof thesetwo typesof shopspretty ully xhibitsall the contrasts fmethod f the Englishand German mport



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222 THE ECONOMIC JOURNAL [JUNNEtrade n Russia. The followingmayserveas a generaldescrip-tion. Englishfirms isposing f all the qualificationsor widescope are restrainednd passive; theiractivitys wrapped ncoldroutine nd inflexiblerinciples fancienthabitsand tradi-tions. German irmsn their elationswithRussia, on the con-trary, re fullof enterprisend activity,nd do not spareanyefforts,rouble, nd deliberate acrifices orthe conquest ftheRussianmarket. Further omment s hardlynecessary.Nevertheless,t willbe useful o cite data showingn roundfigures hecomparativealueoftheimportsntoRussiaof bothcountries,nd to dwell upon the big itemsof commoditiesnwhich Great Britainespeciallyfalls behindGermany. Fromthese it will be seen thatGermaanyas monopolisedn entireseries fcommoditieslmostntheir ntirety,r to a large xtent.This fact is comprehensible ith regardto chemicalandpharmaceutical roducts,dyes and dyestuffs,everal specialmachines,pparatus, hysical ndmathematicalppliances,musi-cal instruments,rinkets,notions, ndproducts fmanyotherbranches f industry. t is due to the careful pecialisationnGermany fcorrespondingranches f industry hich,workingon wideprinciplesfwholesale roduction,aveallotted n theirfactories dulyrespectful lace to science,confidingo it thesolution f practicalproblems ut forward y the demandsofcommerce nd industry,nd by theunrestrainedesireto over-takenotonlyall foreign,utalso German ompetitors.It is moredifficulto justifyhepreponderancef GermanyoverEnglandin imports f dressedhidesand machinebelting,unwroughtmetals of all kinds,alloys, ron,cast-iron nd steelware,stationery,nd the big itemofmanufacturesspecially nwoollens,whichbranches of industryhave always been thespeciality fGreatBritain.Quite ncomprehensible,owever, rethecomparative iguresofimport ntoRussia ofthefollowingoodsfor1913:(In thousands fRoubles.)1Germany. GreatBritain.Rice ... ..1,850 ... 500Cloves, epper, pices ... ... ... ... 1,400 ... ... 500Coffee.. ... ... ... ... 5,400 ... ... 600Tobacco ... ..9... ...5 90 ...... 150Fertilisers,uano,bone,phosphatesndnitre 6,300 ... ... 900Fossilwax,refinedaraffin,ees'andvegetablewax. 6,600 ... ... 500Undressed ides .. ... ... ... ... ... ... 17,100 ... ... 334W7hiteesin, allipot ar. ... ... ... ... 2000 ... ... 100Copper, luminium,ickel, nd othermetals 6,000 ... ... 1,700Tin... 3,600 ...... 3,500Raw cotton 30,000 ... ... 9,500Silk,rawsilk, ilkwaste,dyed ndundyed 13,700 ... ... 200HHere it mustbe pointedut hat he tatisticalables,Nos. . and I. (p.215)draftednaccordance ithdata oftheReview f theForeign rade ofEuropean



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1917] ANGLO-RUSSIANECONOMIC RELATIONS 223TABLENo. IL.

ValueofthePrincipalGoodsExported o the RussianEmpirefromGreatBritain nd Germany.PromGreat ritain. FromGermany.ThousandsfRoubles. ThousandsfRoubles.

I.-Food p,roducts. 1911 1912 1913 1911 1912 1913Wheat............... 44 3 10 1,339 671 1,285Rye................. 80 5 42 6,182 5,386 11,037Ilulled ice............. 305 252 492 1,395 1,607 1,873Fresh ruit............. 27 47 69 583 759 870Orangesnd emons......... 16 17 21 862 870 1,079Dried ruitsndberries......... 61 16 10 872 860 1,040Cloves, epper,nd otherpices . .. 392 377 480 1,271 1,408 1,406Coffee,aw nd ngrain .. .. .. 759 515 601 4,681 5,761 5,375Tea of llkinds........... 597 886 987 246 204 160Tobacco ............ . 207 289 142 860 837 952Spirituous iquorsand grapewine .. 864 298 397 6,101 5,719 7,612Mineralwaters,natural and artificial 76 19 30 1,004 1,085 1,177Cheese .. .......... .. 9 4 6 272 281 319Fish: fresh,ickled,;salted. .. .. 9,252 8,748 9,212 5,532 6,796 7,603II.-Raw and semi-manufacturedmaterials.Hops................. 1 13 6 541 883 784Fertilisersj............... 1,093 1,111 879 4,107 5,565 6,275Animal rease............. 9,332 7,696 6,175 2,700 3,072 4,787Fossil, ees' ndparaffinax .. .. 1,045 411 476 4,109 6,009 6,595Undressedides........... 1,005 222 334 10,,316 11,444 17,097Dressed ides ndmachineelting . 1,026 823 1,079 17,677 14,391 19,302Poultry............... 228 121 174 8,057 7,798 8,396Timber............... 256 126 903 2,782 1,706 1,406Seeds ndplants ......... 3,039 2,566 2,889 9,087 9,'538 13,065Buildingmaterial1..... . . ,074 1,093 812 2,266 3,442 3,026Unwroughttone ......... 382 303 369 1,458 1,580 1,842Polishing aterials......... 254 171 222 1,766 1,884 2,215Coal................. 18,631 24,454 39,971 13,092 19,345 31,307Coke .. .. .. .. .... .... 1,058 1,103 1,810 2,682 3,375 4,789White esin, alipot itch....... 732 533 116 2,236 1.520 2,388Gum, esin, um osin .. .... ... 6,817 6,068 13,203 9,937 12,011 11,263Chemicalndpharmaceuticalroducts 2,309 2,402 2,253 13,791 17,189 18,864Vegetable il and glycerine .. .. 1,028 1,089 608 1,573 2,092 1,914Tannin............... 620 371 361 2,867 2,452 3,352Dyestufisnddyes........... 839 531 569 8,860 9,421 10,530Unwroughtast-iron......... 856 1,536 278 1,453 2,495 1,795Unwroughtronrails......... 774 532 828 877 1,405 2,270Uawroughtteel ails,26 24 38 55 8 ,3Copper,luminium,ickel, ilir &t~is 8 64 38 57 8 ,3andtheirlloys ......... 1,813 2,006 1,652 3,791 3,998 5,976Tin npigs ndbars......... 3,098 3,182 3,459 1,912 3,960 3,611Lead, itharge............. 2,184 2,919 2,359 2,111 3,564 5,196Leadn rolls nd heets .. 78 26 54 137 240 320Zinc npigs nd crap......... 451 330 294 3,667 4,009 4,491Ppe pup6 7 8 387 351 416Cto,rwcotton.11,434 9,365 9,503 17,348 15,964 29,928Juteraw.738 915 442 2,612 1,545 714Silkraw, ilkwaste.28 122 216 8,783 12,364 13,717Wolandncombedown........ 2,954 444,1 5,636 18,702 17,814 24,322Cotton arn............. 6,652 5,231 3,575 5,005 5,919 5,076Wound ilk ndsewingilk....... 124 116 391 1,495 1,982 2,619Wool, ombed,pinning,nd wound . 14,939 7,431 7,396 7,652 7,111 9,944Russia, occasionally differvery widely f om the Customs statistics of otherStates. The same thing, of course, in varying degree takes place in theCustoms statistics of any country. Thus, the German statistics over-estimateby almost double our exportsto Germany,and under-valuealImostbyhalftheirowni exports to Russia. The reason is that the German statistics regard asexports to Russia only the exports of goods of German manufcture, whereasthe 1lussian Customs regard as imported f om Germany both German goodsand those passing throughGermany n transit; forexample,cotton. In importsinto Germanythe opposite takes place : Germanyr-egards s Russian not onlygoods directly crossing the Russo-German f ontier, but also those importedin transitthroughothercountries; for example, Holland ; whereas the Russianstatistics note them as exportedto Holland and not to Germany.N O. IO06.-VOL. XXVIT. Q



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224 THE ECONOMIC JOURNAL [JrUNEMTABLE No. II (continued).

From GreatBritain. FromGermany.Thousandsof Roubles. Thousandsof Roubles.I11.-WVares. 1911 1912 1913 1911 1912 1913Trunks,portmanteaux,nd otherleatherware.........18 22 23 3991 536 559Machinebelting, ewn and others... 58 46 46 322 349 402Joiner's nd lathework......... 756 614 1,357 2,868 3,665 6,603Firebrick, iles........... 204 172 224 618 719 1,305Keramicand potteryware....... 202 184 204 1,147 1,708 2,240Falence and porcelainware....... 152 118 162 1,222 1,312 1,453Glasware............. 213 152 142 2,319 2,659 4,795Guttaperchaware........... 133 121 231 1,841 1,512 1,795Gold,silver, nd platinumware .... 15 27 9 2,988 2,873 2,916Copperand alloyware......... 337 200 220 8,164 8,948 8,991Cast-ironware............. 385 350 479 2,130 2,473 3,013Iron and steelware........... 1,611 1,462 2,338 9,270 11,275 15,329Tinware ............. 271 169 177 4,501 4,277 4,825Wire of all kinds........... 808 419 508 1,113 1,072 1,345Wireware............... 336 345 287 2,770 2,780 3,432Various metalwares......... 1,063 802 1,123 8,048 7,834 8,443Machineryand apparatus of cast-iron,iron and steel...........15,085 10,271 13,163 55,211 56,347 75,482Parts ofmachinerynd apparatus, ast-iron, ron, nd steel ....193 160 187 595 8771,0Agriculturalmachinerynd implements 193 160 187 595 877 1,0without teammotors......... 1,013 2,591 2,280 7,365 9,403 9,661Made-up agriculturalmachinery..... 4,343 3,986 3,728 3,679 6,944 2,991Mathematical nstrumentsnd appliances 517 313 355 11,714 14,876 18,010Clocks ............... 4 2 8 1,992 2,265 1,651Musical nstruments......... 199 98 168 7,868 6,283 5,759Carriages nd partst.hereof....... 1,094 1,203 2,038 9,695 11,215 17,201Coachesfor ailway nd roadtraffic .. - 5 - 479 489 313Ironvessels............. 690 775 2,807 876 916 1,242Stationery............... 378 265 357 4,581 5,214 5,934Pictures nd books........... 87 60 63 3,255 3,382 3,500Cottongoods............. 747 1,030 1,593 11,162 9,586 10,559Flax and hempware......... 744 1,125 576 2,316 2,294 2,766Silk and half-silk oods......... 108 114 96 4,043 4,254 5,687Wool and half-woollenoods .... 2,250 1,958 2,496 11,166 11,449 11,737Knittedand trimmed oods....... 44 46 72 7,864 7,111 8,829Lace and lace goods......... 133 118 175 2,181 2,807 3,056Buttons............... 15 17 14 1,380 1,789 1,924Ordinary rinkets........... 59 97 73 2,465 2,955 2,961Drawing nd w-ritingccesisories... 89 61 76 1,279 1,204 1,009Miscellaneous.........7,888 7,156 8,585 43,050 45,338 51,488

TOTA-L..... 153,875 139,250 170,352 476,839 519,114 642,756

However,forall theseratw roducts, rimarily f foreignorigin,whichare turned utby thepoorGermancolonies nlyin smallquantities,Germany erself refers hugedemand ntherichBritish olonaies,orherownrequirements. et concur-rentlywiththis,England,who possesses hesecolonies nd thefirstmerchantnavy in the world,has attainedwith Russiamerely modest urnovern these samegoods, s shownbythestatistical atagiven bove. The principal ause of this stateofaffairsiesevidentlynthefact hatGerman ransit rade injoyedthe priceless ervices f its freeharbours,Hamburg,Bremen,andothers,whichwere ble toconcentrateconsiderableortionof the world niternationalrade primarily f so-called exoticgoods.The influencefGermany's reeharboursxtended ver nor-



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 225mousregions nd, for xample, here s a seriesof Far Easterngoodswhichreach the Mediterraneannd Black Seas almostexclusively hroughHamburg. To this it mustbe added thatpossession fan enormous ortion fworld radewas facilitatedbythefact hatthe German reeharbours,eceivingmanygoodsin a raw,so to speak,crudeform, orted nd madethemup athome and thenplaced on themarket heproductn a formnwhich t could be directly fferedo customers. Incidentally,this plan also helpedto accustom he purchaserto a specificexternal ppearanceof the particular ommodity hich,as weknow, s a factor fno small mportancen trade.Passing to a reviewof export rade fromRussia to GreatBritain ndGermany,n analysisustifieshefollowingemarksand conclusions.For large temsofexport romRussia of cerealsandherbs tshouldbe notedthatpracticehas so stereotyped ommercialcustomsnthiswidebranch fworld rade hatconditions fpur-chase, acceptance, nd payment n the part of Great Britainand Germany o notoffermaterialdifference.All the same,itshouldbe noted hatRussianexport irms reatlyomplain boutthe extraordinarytrictnessf arbitrage orcerealsexported oGreatBritainncomparison ith rbitrageor ales toGermany.This circumstanceorces ussianexportersnmany asestogivepreferenceo German ustomers.Passing to several ndividualtemsofthisgroup, t mustbenotedthat in the exportfromRussia of rye,barley, nd branGermany aturallyccupies preponderantosition yvirtue fconditions f consumptionf theseproducts n Germany; asregardswheat, tcannot e doubtedhatwith mutual ndeavourboth on the part ofRussia and GreatBritain to regulatethequestion farbitrage,heexport fwheattoGreatBritainmightrestorehepositionoston theEnglishmarket incetheprohibi-tionof theexport fwheatfromRussia in 1891,whileconcur-rentlyherewithxport rom ussiaofother rainproductsmightincrease.Underthegroup ffoodstuffsnd timberthestatisticshowthepreponderancefGreatBritain,withthe cleartendencyofurtherrowth f export o thatcountry. n thisconnectiontmay be notedthatfor he export f butter, oultry,nd bacontheEnglishhave establishedn manypartsofRussia their wnpurchasingfficesnd agencies,whileseveralbig Englishflimshaveevenengaged n theslaughterfpigsandpoultryn a largescale,and for hispurpose n manypartsofRussia have set upQ 2



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226 THE ECONOMIC JOURNAL [JUNJEimprovedquipmentor hestoragendfreezingfsupplies. Thisinitiative n the partof the English,who in thisrespecthavegone ahead of the Germans, s probably ue to the factthatEnglishfirms, iscoveringbigdemand or hiscategoryffood-stuffsnd an exceptionallyrofitable arketn their wncountry,have found t possibleto depart o a certaindegreefrom heirtraditions,referring,owever, he institutionf ocalofficesndbranches o the Germansystem f agent-buyers.There is nodoubt hat thesemeasureswillgivea new and powerfulmpetusto thefurtherevelopmentfexport o Englandof goods n allthis ategory,speciallyftheRussianGovernment,ypromotingtheestablishmentf bigcold storage epots t port owns ndbyorganisingn an extensivecale transportyrefrigerator-car,illfacilitate he task ofRussian co-operativend commercial irmswhichwish to disposeof theirgoods direct n the consumingcentres fGreatBritain.Passing to the group f raw andsemi-manufacturedroducts,it shouldbe notedthatwithrespect o oliveoil seed,residueofflax ndtow,manganese nd ironore thestrictnessf arbitrageand conditions f acceptance f goods n relationswith Englishfirmsmaterially inder he increase f transactions.Moreover,before he war the export f ironore from ussia was admirablyorganised y theGermans; for xample, btaining rom he dif-ferentmines of the Donetz basin ore of varying ompositionunsuitable or heWestEuropean oundries,erman irms arriedout at Nikolaiev, he point f shipment,heproportional ixtureoforefrom arious tations, hus stablishingypes fore answer-ing the requirementsf the correspondingoundries s regardsanalysis nd quantity.For the carrying ut of theseoperationswiththeoreandfor oading n the steamersthe Germanfirmserectedat Nikolaiev arge special buildings. Thanks to thIisorganisation,lmost ll the export f iron ore fromRussia, notonlyto Germany, ut to othercountries,was monopolised ytheGermans. In the export f themajority f remaining awand semi-manufacturedroducts-as, for example, bristles,undressed ides, peltry, altedand dry gut,cork sawdust, ndothercommodities,speciallygoods requiring orting, pecialknowledge, nd experience-German irmshad fully adaptedthemselves o Russianconditions, oth in regard o acceptancepractised nthe spot ndpayment, hereas nglishfirms renotdisposed o depart rom onditions f acceptance nd deliverynEngland, n accordancewiththe weight stablished here,withpaymentn Englishcurrency.



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 227In the groupof exports f livestockthe predominance fGermanys due to thegreater onveniencef a land frontierorthiskindof trade.Onthewhole,both n importndexport frawproducts romRussia,there houldbe noted characteristiceature fGermantrademanifestingtself n the endeavour o capture nd retainoperationsonnected ith hesortingfunmanufacturedroductsbought n a rough,raw shape,forfinalestablishment f theexternal ppearance nd quality f thecommodityn accordancewith the demandsof the worldmarket. In the case of exoticgoods, orting,making-up,ndre-packing,s alreadymentioned,werecarried utat theGerman reeharbours, hilewithrespectto Russianrawmaterialxportedrom ussianports ftheBaltic,theGermansdopted ery nergetic easures opreventheestab-lishmentfsimilar perationst Russianports,with heobject fconcentratingheseoperationsn Germany, rimarilyt Konigs-berg. All effortso establish t Russianports f shipmentort-ing and standardisationf goods met withinsuperable pposi-

tion,which venassumed heform fdiplomaticction.Nevertheless,he Germansystem bove described,rrespec-tive of the chief eproach, ully eserved ndpointed ut at theverybeginning f thisreport,meets with the objectionthatalthough t justifies tselfby results from the standpointofGerman nterests, t cannot, of course, serveas an ideal andpattern or mitation orothernations.With thisobjection f a generalnature t is possibleuncon-ditionallyoagree,butunfortunatelynEnglandopponentsftheGermansystem,withoutpointing ut otherpracticalways forthe better ttainment f theirend, confine hemselves nlytoreproaches gainstthe Germans hat although heirgoods arecheaper hey reofinferioruality, ndthat the system feasycreditdebauchestrade. These inferences,f course,are veryweak and resemble he usual complaints f solid,conservativefirmsgainstthe operations fyoung nd enterprisingompeti-tors. Indeed, it is out of the question o be short-sightedndone-sided. It is impossible o forget conomic ruths nd thepsychologyfcustomers, hich re identical or ll peoples, ndto lose sightof factorswhich,withthe exception f accidentaland temporaryhenomena, nderlie ll results ttainedby thecompetingparties. A purveyorwho supplies goods of lowqualitynot correspondingo requirements aydeceivehis cus-tomer nce ortwice;but t is unthinkablehat,whilefurnishinghis bad wares on credit,he should duringmany years have



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228 THE ECONOMIC JOURNAL [JUNEreceivedpunctualpayments nd have conquered he markets.Germany uring orty-fiveearsannuallydumped larger ndlarger uantity fgoods on the worldmarkets, nd evenif, onthewhole, ommoditiesfGerman riginre worse hanEnglish,nonethe esscustomers hoyear fter ear ncreased heir rderscouldnot have been verydispleasedwiththe execution f thesame. It is evident hat German ndustry nd trade adaptedthemselves o the lower evel of demands of the less affluentmasses,and thatconsumers erequitesatisfied.As regards hesecond eproach,t cannotbe doubted ha-t heconsequences f debauching clientelemust, n the first lace,have negatively ffectedhe affairs f the creditor. It seems,however, hatnotwithstandinger system fallottingxtensivecredits n all exportmarkets,Germany, eginningn 1870withalmostnothing, rewncrediblyich, olely hanks o her ndustryand commerce. In general, oo,we mustnot lose sightofthefact hat,howevertrongmaybe their atrioticeelingsndtheirsympathy iththeEnglish, heRussianpeasantwill obtain hecheaper lough nd theseamstress er ewing-machinefGermanmanufacture ith deferred ayment ormonths nd even foryears, f theirmeans are insufficiento invest the entirecostright way ntheEnglishmachine, nd ifpurchase ythe nstal-mentplan arranges heirbudget nd preserveshe family romprivation;while theirwell-to-do eighbourwill buy the samemachine ecause t has beenrecommendednd is cheaper. Thus,face to facewithreality, hereproach fdepraving he Russianmerchantody nd theconsumer ith ong-termredits ollapsesentirely,nasmuch s forverymanythis self-same ondemnedmethodconstitutes boon, and will be so regardeduntil,ofcourse, n Russia the co-operativesnd other redit nstitutionsoccupy heplacesofthe nowuninvited enefactors.In view oftheforegoing,t cannotbe doubted hatEnglishtradeand industry,f they are really nterestedn theRussianmarket,mustgive the Russian consumer, f not greater, henat least thesamebenefits hich ther ompetitors ill give. Inthe oppositeevent,the tradeof England withRussia cannotenjoythebestfuture rospects.From all that has heretoforeeen said, it follows hatthesuccess of an Anglo-Russian conomicrapprochementan beattained nlyon condition: 1) that the EnglishappropriatentheirbusinessrelationswithRussia the system ested by theGermans, r (2) that hey stablish new ndividualystemmorecorrespondingo their wnnational haracter, ithoutosing ight



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 229of thefactthatthe Russianmerchantnd consumer,whatevertheirwishes,cannot forthe sake of sympathywithEnglandsacrificeheirmaterial nterests.Passingto considerationf the first roposition,t shouldbeascertainedwhether r not it is possibleto expectso materialandrapid n evolutionn the viewsand methods fEnglishcom-mercial and industrial ircles in intercoursewith Russia aswould lead to the adoption f the German system f tradebythe English,a systemwhichmany believe would not corre-spondto theextensiventerests fRussia. Consideringhecon-trast xistingn the character nd psychologyfthe inhabitantsofGreatBritain,nthesystem feducation, pecialisationn thedomainof populareducation, nd industry,nd equally n theorganisationppropriated y the industry, rade, and banks inEngland on the one hand, and in Germany n the other, heanswer othisquestionmust, n thewhole,be inthe negative.Withoutentering nto a detailedconsiderationf intimateaspectsof internal rganisation nd the peculiaritiesf the lifeofGreatBritain, he doubtingmay be referredo sobervoiceswhich have repeatedly ealt withthis subject in the leadingEnglishPress. On the otherhand,we can refer o theopinionsandwritinasftheformer renchAmbassadorn Berlin,M.JulesCambon,who very minutely epictedfor his countrymenhepsychologyf the Germans n their ndeavour owards eacefulpenetrationnd the conquestof foreignmarkets, nd withhisauthoritativeordreinforcedruthswhich erve s theprincipalleverfor xpansion f Germannationalhusbandry, hichmanyhitherto ad not wished orecognise.All the same, the systemadopted by the banks in Ger-many n thebusiness f financingndustry nd tradeoffersuchunusual nterest nd explains omuch hat t is impossible ot totouchuponit, if only n passing. Floatingcapital and credit-theseare thenerves nd nutritiveorces n everymodern om-mercial nd ndustrial oncern.With ll their rudence ndcalcu-lation,Germanbanks fulfil heirr6le in this spherewithsuchastonishingcope and breadth fview that their ctivitymay belikened o a wisegardener ho avishly rovidesmoisture or hoseplantswhich, hanks o this,willbloom nd yield xcellent ruit;while,on theotherhand,stintinglyoling he samemoisture oplantswhich re in a sickly tateand rotting t the root.The sales for millions f roubles effected y Germancom-merce nd industry hroughoutussia on long-termreditwereactually heworkofGermanbanks. Without heir-- otcasual



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230 THE ECONOMIC JOURNAL [JUNEassistance, utactiveand systematico-operation-but eryfewGermanfirms, ithall their nterprise,ouldhavegonefartherthan the well-knownnglishcondition f cash againstdocu-ments, which ies in parton theconservativeonscience ftheEnglishbanks. Here we impinge ponone of the chief ecretsofthesuccessofGermanndustryn Russia andother ountries,which onsists n this-thatthe balance-sheetf enterprisesndconstant ontrol f theirdemandfor credit erve as the basisof the credit llotted y Germanbanks. The bank's detailedknowledgeftheposition ftheentire ndertakingeads to con-fidencen thelatter,which s oftenunlimited;whereasEnglishbanks allot credit o theircommerce nd particularlyndustryprimarilyn thebasis of actual solidsecurity.At the same time, t shouldbe statedthatEnglishbanks,while verystrictly ixing ommercial nd industrial redit ntheir ative ountry,romhefree esources hich heyhadaccu-mulated, eforehewarallotted ast credits oGerman anks, nthismannerndirectlyromotingheprosperityf German om-merce nd industry.An industrialnterprise,lthoughyoung,whichenjoysthetrustof Germanbankscan continuouslybtain argemonetaryadvancesforthe acquisition frawmaterials nd the expansionofproductionn thebasisofdocuments hichserve s proof facceptance orexecution f solidordersn Russia or any othercountry, hereas heEnglish ndustrialist ustsecurehis bankcreditwithactualguarantees,xtract is floatingesources rom

the actual valuablesof his fortune,nd not fromthe moralappraisementfhispersonalityythebanks.Fromtheforegoingtmaybe concludedhat daptationftheEnglishto the conditionsnd demandsof the Russianmarketcreated yGerman ompetitionn manyrespectsiesbeyond hesphere fthewillandopportunityf ndividual irmsndpersons.Incidentally,onsideringhe strongndividualityf the Anglo-Saxon character, o advise slavish imitationof the Germansystem,which n manyrespects oesnotenjoythesympathyftheEnglish, annot eadto a practicalolution fthequestion.In viewofthis,proceedingrom hefundamentalropositionthatEnglishcommercend industry ishto affordheRussianconsumer he same benefitsnd indulgences hatthe Germanscouldgive,we mustdefine hepath eading o realisation ftheprojected im, adapting urselves s faras possible o thepecu-liarities fthe financial,ndustrial,nd commercialrganisationofGreatBritain. The dataabovecitedwillfacilitateonsidera-



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1917] ANGLO-RUSSIANECONOMIC RELATIONS 231tion of the necessity nd propriety f the measuresproposedbelow.In so faras the existing nglishbanksfind t impossible odepartfrom heirtraditions nd pass from he principle f theallotment f crediton the basis of actual guarantees o creditbasedupona moral spect-i.e., trust--an utlet rom hesitua-tionwouldbe theinstitutionn Englandofa seriesof industrialregionalbanks withbranches n all the industrial ocalitiesofEngland. The latterconditions justifiedn thatforregionalbanksthere s accessiblea closerand more ntimate ie withinterestedndustrial nterprises hichpermits f morecarefulcontrol ndgreater lexibilityn realisation fthe task ofprovid-ing extensive redits n conformityithconditions f trade nRussia. For this object also a certainspecialisationf banksin morecharacteristicrancheswouldsubsequentlye desirable.It mustbe supposed hatpractical ealisationfthis deawillnotencounter pecial obstacles,seeing that the same banks willbring riceless enefitoBritish ommerce nd industryn tradenot onlywithRussia, but withall the countries f. he world.The foundationfthiskindofbanksmust ffordhemore nter-prising lements ftheEnglishcommercialndindustrialpheresan opportunityf departing rom he traditionalnd incontro-vertible uleof cash againstdocuments.Concurrently ith the foundation f the above-mentionedbanks, t is essential o establish an Anglo-Russian ransportCompany,hetaskofwhichwould onsistnthecarriagefgoodsin thewidest ense ofthewordfromRussiatoEnglandandvicevers4. This company,working n commercialprinciplesandenjoying he co-operationf the Governmentsf bothEnglandandRussia nthesenseofsatisfyingheneedsofsuccessfulradebetweenbothcountries,houldtake upon itself he carriage fanygoodsfrom nyplace in one ofthetwoStatesto anypointoftheother,witha guarantee fminimumreight,othrailwayand maritime,f all expenses, nd evenof Customs mport rexportduties. This measuremustput an end to the secondimprescriptibleormula, f.o.b. any English port of almosteveryEnglishcommercial roposal. The above-mentionedom-pany,however,mustnot in any way enjoyspecial privileges,excluding hepossibilityf the inatugurationf an entire eriesof transportnterprisesf the same kind,which n theirturnwould pecialise n theconveyancefcargoesn themostdiversedirections, itherto ractised nd possiblehereaftern the tradeoftwo Stateswhichpossessalmost wo-thirdsf the surface f



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232 THE ECONOMIC JOURNAL [JUNEthedry and of theglobe. On thecontrary,n view ofthe capitalimportance f thisquestion, t is desirable hat the above-men-tionedcompany houldform nucleus for the institution f aseries of otherorganisationsursuing he same object. In theprojected ompany houldparticipate oth Russianand Englishnavigation,nsurance, nd perhaps everal f theexisting ussiantransport ndertakings.A description f the practicalrealisa-tion fthis dea, ofcourse,wouldbe too complicatednd technicalto enlarge ponfurther ere,but t is necessary opoint ut thatit s fully ttainable,while vennow t wouldbepossible o decidethebases of suchan organisation. n order o derive he maxi-mumutility rom he servicesof the proposed ransport om-panies, heir rganisation ustbe so complete hateveryRussianorEnglishfirmwillbe able in notmore han two orthreedaysto obtain recise ata enabling t to offerts goodsfree o destina-tionto itsforeignonsignee,with guaranteen thepartofthetransport ompaniesof normaloutlaysfor all carriage, rans-shipment,nd every ther peration,ncluding uties.

However deal,nevertheless,heorganisationftheproposedindustrial anks in England, and of transportnterprises, emust not lose sight of the fact that many English firms,owingto insufficientcquaintancewithRussia,will notbe ableindependentlyo organise he sale of their ommoditiesn prin-ciplesthathave alreadybecomecustomaryn Russia, as men-tioned bove.There s stillgreater eason o fear hatBritish ndividualismfrequentlyill notreconciletself otheGerman ystem frepre-sentationinkedwith he allotmentfcredits y foreignactoriesto thousands f arge nd smallcustomers,heverificationftheircredit apacity,ndall the vexatiouswork oreignothemajorityof English factories,s alreadydescribed. Nevertheless,hereis an outlet romhis situationhroughhesubstitution,fneces-sary,ofthe system frepresentationy big regionalpurchaserson theirown accountfrom mongexistingRussianfirmswhowill assume certainobligations ccording o the annual turn-over.Analogousagreementswith foreign actories re willinglypractised yRussianfirms,ndorganisationfsaleontheseprin-cipleswill notprove n any waydifficult,specially orfactorieswhichseriously esireto adapt themselveso the requirementsofthe Russianmarket, oth s regards rices nd classofgoods,withtheobjectofdeveloping largesale in Russia.Simultaneously,heEnglishbanks,thedesirabilityf whose



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 233foundation iththeobject of financingndustrial nterprisesnEngland has alreadybeen mentioned,hould participate, on-jointlywith Russian capital, in the establishmentf a Russo-English Export nd ImportBank. The tasks of the latter,withbranchesnall thebig towns fRussia, wouldbe in the first lacecontrol, iscount,nd inkasso of billsof exchange ssuedto themby Russian distributingirmsn payment or the deliveries fEnglish purveyorsnd factories. This bank would keepwatchoverthe credit apacityof distributing irms, ecommend hechoiceof such,and regulate elations etween oth ides. Seeingthat not every nglish factory ouldbe destined o interesthebiggerfirmsn all the more importantommercial entresofRussia in the capacity f distributinggents, nd that n manycases evensmallerRussianfirms ntitledo confidence ayprovemoredesirablemiddlemen,ccordingo speciality,hanthe argerones, heduty fthebankwouldbe toguarantee heconscientiousactivityf thesefirmso the Englishfactories. Special attentionmust be paid to consignment arehouses nderthe supervisionof this bank and its branches. Fromthese warehouses hebankcould ssueconsignmentoodsto distributingirmsn proportionto receipt romhem fpayments r therelease f utilised redit.Incidentally,his bank with its brancheswould co-operatewith operations orthe purchase fraw materials n Russia forthe needs of Englishfactories y meansof the financingf, andthe issue of advances to, agriculturistsnd solid customers.Properorganisationfthebankin the shapeofcomplete ami-liaritywithEnglishrequirementss to quality, ndwithregardtosources fsupply,oupledwithknowledgefRussian onditions,could be of inestimable enefit,nd in a short imesmooth verandevenwholly bliterateontradictionsnmethods ndcustomsat present xisting wingto the inadequatemutualknowledgeofbothparties. Nevertheless,heroleofa Russo-Englishxportand ImportBank wouldbe farfromimitingtself o theafore-saidfunctions.On the favourableonclusion fthewar,Russia,guided notonly by purelypolitico-economiconsiderations,utalso thoseof State defence,will have to exert ll hereffortsoengendert home powerfulndustrymbracinghe mostdiversi-fiedbranches. The realisation fthistaskwithout heparticipa-tionofforeignapitalwill be difficult.Unadoubtedly,t will beextremelyesirable orRussiathat, oncurrentlyith hefurtherdevelopmentfundertakingsithFrenchcapitaland thecapitalof resuscitated elgium,there shouldappear enterpriseswithEnglish capital, n view of the assurance hatby virtue fthe



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234 THE ECONOMIC JOURNAL [JUNEspirit fEnglishculture heseenterprises illpursue xclusivelycultural-economicnd notpolitical ims,which atterlyharac-terisedGerman nterprise.

At the same time,the Russo-EnglishExport and ImportBank's acquaintancewithRussian conditionsf manufacturendsalemust erve s theprincipalinkofthat hainwhichwilluniteEnglishcapital seekingnvestmentwith ndustrialnterprise,ntheworking fthe hithertoselessly ormant iches fRussia.The same bank could create a soil for the foundationfkindrednstitutionsn Russia by existingbig industrial nter-prises n England,promotingheirdevelopment ith apitalandtechnical xperience.This would also be appropriate rom hestandpointf Russian interests, ince it is knownthat manyundertakingshich have arisen n this manner-in the electricbranch, or xample-havebroughtboutno smallbenefit uringthe war.Lastly,theRusso-English xport nd ImportBank can playa big role in the institutionn Russia of largecommercialom-paniesfor heexport feggs,butter, rain,herbs, or hebreed-ing of cattle,poultry,he slaughter hereof, reezingnd ship-mentto England,and for heexploitationfother nnumerableresources fthe RussianEmpire.Of course, heprogrammeerenoted s onlyputforwardngeneraloutline, nd is merely starting-pointn the practicalrealisationfthe projectednds.Irrespective f measures n the creative phere lready nu-merated, he followingteps are also indispensable:-1. That British rade, ndustry,nd the banksshould bandontheirroutine nd conservatismn business elationswithRussiaand offerhe Russian producer nd consumer,f not greater,thenat leastthe same benefitswhichthe competitorsfGreatBritainwillgive them,bothon account fexport nd import oRussia.2. The discontinuancef the ssue byEnglishbanksof thebigcreditswhichbefore hewar they gave to Germanbanks,andconcurrentlyheorganisationn GreatBritain f ong-termom-mercial ndindustrialredit n broadprinciples.3. The establishmentf the custom fmaking ffers,s faras possible,n Russiancurrency, ussianweights ndmeasures,and in theRussian anguageforpurchases nd sales in Russia;while the introductionf the metric systemof weightsandneasures both in Russia and England would be still moredesirable,



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1917] ANGLO-RUSSIANCONOMICRELATIONS 2354. Revisionof theEnglishcerealcontractn principles on-formingothe nterestsf Russianexport.5. The institutionfregular xpress ervices etweenRussianports,both northern nd southern, nd portsof the UnitedKingdom.6. The establishmentt Russianportsof standardisationfRussianrawmaterials or xport,nconformityith hedemandsof the British onsumingmarket.7. The revision f Russian commercialegislation o as toadapt it to the requirementsf the time,p6ying pecialatten-

tion o lawsstandardisinghe iquidationfbankruptcies. ritishcreditors, avingthus greaterguarantees,will more willinglyand freelyxtend redit o theirRussiancustomers.8. The engagement y English commercial nd industrialinstitutionsfpersons amiliarwiththeeconomic onditionsndhusbandryf Russia in thecapacity fcolleagues,ndviceversd.9. The issueof works f referencenddirectoriesn EnglishandRussian,embracingll the commercial nd industrialifeofthetwocountries, iththeaddition f an agriculturalection nthecase ofRussia.10. The institutionn Russia of informationureauxwithpermanentxhibitions f articles he sale ofwhich t wouldbedesirableforEnglishindustryo carryon in Russia, and theinstitutionf similar ureaux n Englandwith amples farticlesofexport o Russia.11. Increaseof tuition n the English language n Russianmiddle chools ndofRussian n Englishschools.12. The despatch fRussianyouths o England forpracticaltraining n commercialnd technicalprofessions,nd similarlyofEnglishyouths oRussia.13. The largest ossible eduction fparcelpostage nd tele-graph atesbetween nglandandRussia.14. Constantmutual tudy ndinvestigationfboth ountriesby means of the organisation f professional,cientific,ndtourist xcursions.15. The purchase yRussianandEnglishbanksofthesharesofRussianbanks n Germanhands.Nevertheless, rom he standpoint f Russian interests,heprincipalelement in the effort o emancipateRussia fromGerman nfluencemustbe thedevelopmentfnativeproductiveforces nd the creation f a counterpoiseo the competitionfGerman industry n the country tself. Russia is a youngcountrywithweaklydevelopedndustry hich, n the presence



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236 THE ECONOMIC JOURNAL [JUNEof incalculable atural iches, njoys hemostfavourableppor-tunities f flourishingfter hewar, giventhe extensive nlist-mentofthe capitaland technical xperiencef friendlyations,in a shapeandwithinimits,however,whichdo notmenacethefundamental ational asks. For this,of course, t is essentialto removevoidsand prevent reshmistakesn the future om-mercialpolicyof Russia, on whichwe cannotenlarge n thenarrowimits fthisarticle.In connectionwiththe forthcomingevision f commercialtreaties, questionof capitalimportances the amendmentfCustoms ariffsn accordancewitha firmlyrojected nd care-fully tudiedprogramme.By meansofthedetailed nalysis fstatistics fimport f ready-madeoods, he export f rawpro-ducts,and withregard o richesas yetunworked,t is neces-sary to determine: 1) whichof the existing r of the lackingbranches f Russianindustry, ith a capacityfordevelopment,ought to be protected nconditionallyy means of increasedduties; 2) in whatbranches f already evelopedndestablishedindustry ughtthe rivalry f foreign mportto be allowed,through radual, autious owering f duties,withthe objectoffurthermprovementnd cheapening f basic materials ndis-pensable for new categoriesof manufacture; 3) upon whatforeignwares,primarilypecialmachinery,pparatus, nd agri-cultural mplements,s it undesirable o imposehigh dutiesin view of non-correspondenceetweenthe benefits ccruingfrommanufacturef suchwithin he countrynd detrimentothe developmentfother xtensiveranchesfpopular usbandryrequiringhesearticles; 4) on whatrawmaterialsndispensablefor ndustry,acking n the countrynd irreplaceable y otherdomesticmanufactures,houlddutiesbe rescinded ltogetherrreduced o a minimum.Simultaneouslyhe future pplication f the mostfavourednationprinciplemustbe submittedo serious onsideration.

Conclusion.The elements f economic evelopmentn Russia and GreatBritaindifferundamentally. oth countries upplement achothern much. In viewof this ircumstance,hilepursuingherealisationf theabove-mentionedeasures or n Anglo-Russianeconomic approchement, ubject o observationf theprinciples

we have just mentionedn the domainof Russian nationalinterests,herecannotbe anydoubtthat the morerapidly he



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1917] ANGLO-RUSSIAN ECONOMIC RELATIONS 237independent conomicdevelopment f Russia proceeds, andtogetherherewithhe increase fthewealthofherpopulation,thegreater heprospects orEnglishtrade; Russia, too, in herturn,willderive nestimable enefitrom loser ommunity iththenobleBritish ulture.

JULEES E. GAY(Member ftheCommitteefthe OdessaBranchtftheRusso-English hamber f Commerce.)

Anglo-Russian Economic Relations

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