vaal war, the too rapid industrial development in Russia, the Chinese troubles, the German financial panic, and the recurrent bad harvests in Russia. Probably each one has contributed to the result, but whatever the cause, it seems clear that if sufficient capital flowed into Russia, by means of a foreign loan or otherwise, to enable the railway programme to be recommenced, a large proportion of money so spent would flow to the Southern iron industry, and would bring to it a renewal of prosperity which would probably last for some years. At present the revival awaits this influx of capital.

From the most accurate information which the author was able to obtain, the following railways have actually been decided upon by the Government, some or all of which will probably be commenced as soon as the financial situation admits of it.

1. Trans-Siberian Railway, completion. 2. Trans-Siberian Railway, completion of relaying with heavier rails.

3. St. Petersburg to Odessa, direct line. 4. St. Petersburg to Viatka.

5. Moscow to Kazan and Kishtimsk.

6. Orenburg to Tashkend.

7. Odessa to Donetz Coalfield.

8. Krivoy Rog ore region to Donetz Coalfield.

9. Kief to Kovel.

The total estimated cost of above is about £66,000,000.

The crisis in the coal industry is, perhaps, more acute even than in the iron and steel industries, owing to the added effects of overproduction, and consequent increase of stocks. Owing to the extensive and almost reckless manner in which Belgian capital has been invested in South Russia, the former country has suffered very heavily from the present crisis. Belgium being a small but rich country, with much greater wealth than can be profitably invested at home, has been a large investor in the South of Russia, which, thanks to the high profits made in former years, seems to have exercised a peculiar fascination for its financiers. It must be remembered, however, that much so-called Belgian capital is really French capital, companies being formed therewith in Brussels owing to the somewhat laxer regulations there existent.

Recent quotations from the Brussels Bourse of Russian securities show that steel works debentures average 73 per cent. of par value, and ordinary shares 30 per cent.

The Russian Government is using every

endeavour to introduce foreign capital, and especially English and American, and for this purpose makes copious publications in the English language, dealing with the industrial possibilities of Russia.

The present situation, however, contains some encouraging features. Signs are not wanting that public confidence is being restored in Russia, and prices have already shown a tendency to increase and inquiries to become more numerous. Again, the trying period through which the iron industries are passing, doubtless has done, and will do, much to teach the salutary lesson of economy of management, to which too little attention was paid during the preceding prosperous years. Cost of production in general, and in particular that item with the comprehensive title of "General Expenses," has, under the stress of stern necessity, undergone sensible reduction. Superfluous officials have been discharged and numerous leaks stopped up, with the result that in one case that came under the author's notice a company which during the prosperous times found it difficult profitably to sell steel for £10 per ton, make it pay, after the introduction of such economies, with the price reduced to £8 per ton.

Coinage.-Again the coinage of the country has during the past few years been placed on a gold basis. The amount of gold coins in circulation has increased enormously, while the use of paper money, except of large denomination, has practically ceased. This has tended to make the rate of exchange fixed, and has obviated the disadvantages and uncertainties of fluctuating values. Thus, whereas between 1877 and 1896 the value of the rouble varied from 1s. 7d. to 2s. 9d., since the reform of the coinage it has been practically fixed at 2s. 1 d. The Emperor's Rescript (see Appendix VIII.) will show that the value of sound currency is fully appreciated by the Government.

In Russia, where money is scarcer than in Western Europe, it is doubly desirable to have ample working capital for operating iron and steel works. Long credit is the rule, three months being usually expected by customers. If three months' bills are received from debtors and discounted at banks, a high rate of discount is charged, and it is, therefore, economical to have sufficient working capital to render such discounting unnecessary. This can be set off to some extent by demanding three months' credit from those who supply the raw materials, but the same reasons make

this undesirable. On the other hand, ready cash must always be found for wages and railway charges. The interest paid by banks on deposits is usually 3 per cent.

Labour.-The native labourers in Russia are cheap, patient, and obedient, but they are less energetic and efficient than the more highly paid workmen of Western Europe, which tends to counterbalance the advantage of cheapness. They are also lacking in mechanical instinct and initiative and are somewhat servile, as might be expected from a people liberated from serfdom only 40 years

ago.

Education is, from a Western point of view, somewhat primitive, and the village commune system, involving a peasant ownership of land, by discouraging a peasant from moving about, tends to narrow his ideas and prevent his mental development.

Russian villages are sometimes of great size, one called Tomatovka, passed through by the author, being no less than 10 miles long, and rather in the nature of a town than a village. The houses are, however, spread out evenly, each with its own garden, and not, as would be the case with a similar town in England, crowded together in the centre. Each peasant owns, in addition to the garden attached to his house, a share of the common land in the village, the amount per peasant varying from 8 to 27 acres. If he leaves the village and goes to another, he resigns his share of the land, while he is unlikely to be admitted to equal privileges in his new home. He must, therefore, either stay where he is, or emigrate, for which an official permit is required, or go to the large towns, where he is handicapped by his lack of education. To add to his troubles, while the amount of land available has not increased, the number of peasants is increasing, so that each man's share has become smaller. The village commune system, which was established to ensure the peasant against want, is not by any means universally successful in its working.

In former years the Russian peasant was very drunken, and often after he had spent all his money, would pledge his future crops or labour to the publican. After failing to remove these abuses by numerous laws, the Government took the bold step of taking over the manufacture and sale of spirits, which was accomplished between 1895 and 1898. The result was that the consumption of spirits per head, which in 1867 was 1.66 gallons, fell in 1897, even before the reform was completed, to 093 gallons per head. The corresponding

figures for the United Kingdom and United States are 103 and 101 respectively.

The greatest benefit that could befall the Russian iron industry would be the growing up of a steady public demand for iron and steel, which would make the Government orders of secondary importance. Russia would then be able to make the most of her marvellous natural mineral resources and cheap labour, and the iron industry would become a great source of national wealth to a country which is at present too purely agricultural. So long as the importance of agriculture is relatively overwhelming, so long will the recurrent bad harvests mean grave financial and political embarrassment to the Government. The growth of public demand for iron and steel is, however, a thing of the future. It must be remembered that the old-time division of Russian society into two classes, i.e., nobles and peasants, still obtains to some extent, 80 per cent. of the population being peasants, while the middle classes, which in the Western nations comprise the enterprise and virility of the community, are in Russia only 9 per cent. of the total, and are largely confined to the cities.

For centuries Russia has looked abroad for, and has welcomed to her shores, men of energy and brains, to initiate and carry on the enterprise and manufactures, which in other countries would spring up naturally from within. This is testified to by the fact that so many Russians in leading positions have non-Russian

names.

Railway Rates.-The system of railway rates in Russia is worthy of imitation by the rest of Europe; it is a modified Hungarian zone system, and was introduced about 1895. It is based on the logical principle widely recognised in commerce, of giving a reduction for quantity. Both for goods and passengers the mileage rate varies inversely with the total distance. Thus to convey iron ore from the Krivoy Rog Mines to the iron works in the Donetz district, a distance of 260 miles, costs only 0.23 pence per ton-mile, while for short distances up to 66 miles, the rate is 0.316 pence per ton-mile. In the passenger tariff, the rates are still made in favour of the long journey, with the result that since the new system was introduced, the passenger traffic has increased largely.

Conclusion. In conclusion, the South Russian iron industry cannot, in the opinion of the author, be considered at present as other than an artificial one, depending as it

does on the high tariffs to keep out foreign competition, and to a large extent on Government activity in railway construction for the demand. Both are unnatural conditions; and though a protective policy is often of long duration, and, as in the United States, not inconsistent with great national prosperity, the single customer condition, involving a demand varying with the resources of the Government for the time being, is somewhat hazardous.

Until the check received in 1900, the growth of Russian manufacturing industries, i.e., other than agriculture, was remarkable, the turnover increasing from £54,000,000 in 1887 to £181,000,000 in 1897. The author refrains from dogmatising as to whether this is because of or in spite of protection.

Although the South Russian district is now very much depressed, it has had periods of great prosperity, and will doubtless have them again. The market for its iron and steel products is, however, likely to be purely internal for some time to come, and in the author's opinion the time when Russia will compete with other countries for the neutral markets of the world, is as yet far distant.

[The thanks of the author are due to the following gentlemen for kindly furnishing information and data-Messrs. C. Foniakoff, E. Durrant, J. M. de Zoltynski, E. Carez, V. Tahon, B. de Szyszkowski. F. C. Moorwood, and F. Taylor, of the New Russia. Company.]

Iron and

The limits allowed in manganese ores are 0-18 per cent. of phosphorus, and 8 per cent. of water, with a fine of 4d. per ton per 1 per cent. of water above 8 per cent. The price obtainable for ore is 8d. per ton per 1 per cent. of manganese up to 45 per cent. and Is. 4d. per ton per 1 per cent. over 45 per cent., which would place a value on Richische ore of the above analysis of £2 per ton delivered at blast furnaces in the Donetz district.

I

8

7 9

13

I

Taking the market value of ferro-manganese at the exceptionally low figure of £16 10s., this yields a profit of £7 10s. 5d. per ton.

APPENDIX VIII.

IMPERIAL RESCRIPT FROM THE EMPEROR OF RUSSIA TO M. WITTE, MINISTER OF FINANCE. Sergei Julievitch, in fulfilment of my order, duly applied for by you, the Financial Committee discussed the present state of the money market in connection with the communication on this subject made by the Ministry of Finance, and, after careful examination, presented to me the following unanimous conclusions:-

"I. Our money market has of late been greatly influenced by a combination of unfavourable circumstances, the principal being the universal tightness in the money market, increased by the present war between England and the Transvaal. The position has been further complicated by our bad harvests of late years, and the consequent unfavourable balance of payment, and likewise by the unusually rapid growth of our industries during the past few years. Although in itself this industrial development is advantageous to the country, yet under existing conditions, it considerably increases the tightness in the money market.

“II. Of course, the concurrence of such extremely unfavourable conditions cannot but cause some embarrassment in our money market, but the embarrassment would be much greater, were the country not in a position to withstand it by a well-organised monetary system. Our financial policy must therefore be directed towards the preservation of the stability of the currency-a stability which is one of the most important conditions for the proper development of State and national economy.

"III. The present state of affairs does not call for any universal extraordinary measures, while the particular measures, taken by the Ministry of Finance and the State Bank for the purpose of tranquilising the money market and supporting certain respectable firms, should, if necessary, be continued, without overstepping the limits of the regulation of existing and firmly established relations.

"IV. The suggestions of the Minister of Finance with regard to the necessity of revising the antiquated laws affecting the Bourse and Joint Stock Companies, are decidedly opportune."

Approving of the Financial Committee's conclusions which endorse the expedience of the measures taken by you, I feel assured that in the present temporarily embarrassed state of affairs, you successfully guard the interests both of State and national economy.

This is guaranteed by the enlightened experience, untiring energy, and skill which have always distinguished your management of the financial department, and which have won my confidence in you. I remain ever favourably disposed to you,

And sincerely grateful, NICHOLAS. Given at Zarskoe Selo, December 8 (20), 1899.

DISCUSSION.

Professor C. LE NEVE FOSTER, F.R.S., said that he had been for some time in Russia during the past year, and he had listened to the paper with great interest. In speaking of the iron deposits in the Krivoy Rog district Mr. Head had said they were "boat shaped." For his own part he thought the word lenticular was more appropriate. He was sorry that the iron ore deposits of Kertch were not mentioned by the author. He thought that those deposits might be larger than those at Krivoy Rog. With regard to the coal in the Donetz basin, Mr. Head said it was friable and suffered from the weather. Now, was that due to frost, or was it found to be the same at other periods of the year when there were no frosts? Then was he accurate in his remarks with regard to the percentage of ash in the coke when he said that the percentage was 10 while the coal used only showed from 3 to 7 per cent. Seeing that 73 per cent. of coke was got from the coal it seemed to him that the percentage of ash ought not to be so large as was mentioned. Mr. Head had given a very good illustration of a very large Portland-cement factory, thoroughly up-to-date. Would he explain whether the Russians were using any dust-preventing apparatus? One great fault in this country was the terrible dustiness in connection with cement factories. In Germany he had seen certain appliances used for keeping down the dust. He had hoped to hear something about the wonderful manganese deposits in the Southern Caucasus. With reference to the manganese described in the Ekaterinoslav, Mr. Head stated that owing to the absence of water the mineral was treated dry. Then later on he said it was washed. He could not reconcile the two statements. The views of the pit shafts were interesting, but he thought that shafts seven feet square, divided into four compartments, two of which were used for cages, must be exceedingly small. The views shown of the "baraban" reminded one of the horse whims one often saw in Wales. The "baraban was an interesting example of a mining word which did not possess a German origin. In German the horse whim was called "pferde-göpel." Probably the appliance was in use before German miners were brought into the country. Speaking of the small rainfall in the Steppes, they were told that it amounted to only II inches per annum, and that that was due to the treelessness of the district. Did not the want of trees mean that there was a want of rain? He did not see why the absence of trees should necessarily cause a small rainfall. From what Mr. Head had said, the Russian employer looked upon the Government inspector of mines with totally different eyes from those of the English employer. He had been an inspector of mines for nearly thirty years in this country, and in many cases he had found that his visit, after a fatal accident had occurred, had been welcomed by the em