any material out of which such a Civil Service could be built. A party of workmen and radical intellectuals, they experienced the greatest difficulty in finding men who were even passably qualified to occupy the more important technical administrative posts after the November Revolution. To be sure the Revolution brought out a good deal of latent untested practical ability in some of the Communist leaders. Such men as Trotzky, Rykov, Dzerzhinsky, the head of the Supreme Economic Council, Pyatakov, one of his chief lieutenants, and Sokolnikov, the Commissar for Finance, have made good records.

But a few able and devoted men at the top cannot make a complex economic system work efficiently. And, in picking out candidates for such posts as heads of State trusts, managers of factories, and sales-directors of syndicates, the Soviet Government is again and again compelled to make a difficult choice between appointing an inexperienced Communist, who is likely to wreck the enterprise through technical blunders, and a specialist of the old régime, who is just as likely to wreck it by working out some elaborate scheme for selling out the State property to private speculators at much reduced prices, receiving a share of the proceeds and making up the loss by charging higher prices to ordinary customers. Of course all the State enterprises are not so badly mismanaged. But in general corruption and inefficiency constitute a heavy burden for the Russian State industries.

Moreover, Russia's experiment in State Socialism was carried out under conditions of extreme national impoverishment and disorganization. Especially during the first period of the New Economic Policy, the scarcity of goods was so great that any clever speculator could make a small fortune

by cornering the available supply of sugar or leather or textiles in a city or region. The spoils of trade, under these circumstances, almost invariably flowed to the shrewd, energetic private trader.

Given these two factors, the absence of a competent and experienced personnel for the work of State economic administration, and the conditions of scarcity which acted as a stimulus to speculation, it is not surprising that private capital developed and accumulated in Russia after the introduction of the Nep at a much faster tempo than the various legal and economic restraints and barriers erected by the Communist Government would seem to permit. The Nep has already contributed to the emergence of two definite, comparatively prosperous classes from the grim, hungry equality of the period of military communism. These classes are the Nepmen in the cities and the kulaks, or rich peasants, in the villages.

IV

The Nepman is a familiar figure in Moscow, Petrograd, and other large Russian centres. He goes to the opera in a fur-lined coat in the winter and spends his summer vacation in a villa outside Moscow or in a Caucasian or Crimean health resort. His money is easily made and easily lost, so he is prone to spend it recklessly while he has it.

The Nepmen may be divided into several species, according to social and economic origin. Some of them are former merchants who have reopened their old businesses. A large element is made up of hardened speculators who contrived to escape the severest persecutions of the period of military communism by their uncanny facility for bribing and swindling. These are the men who are quick to spy out the weak

spots in the State economic organization, to tempt corruptible officials in the State trusts and coöperatives with proposals to dispose of their goods at abnormally low prices in return for a bribe. The army of Nepmen also includes an underworld and a semicriminal fringe of successful bootleggers, drug-venders, professional gamblers, and so forth.

How much the Nepmen have made is a subject of heated debate in Communist economic circles. Mr. Preobrazhensky, a well-known economist and one of the members of the Russian delegation to the London Conference, estimated the gains of the Nepmen in trade during the last year at $300,000,000. During the same period the State industries generally showed losses, amounting, as is generally estimated, to a little less than $100,000,000; and these losses had to be made good by means of subsidies from the hardpressed State treasury. Preobrazhensky's figures about the gains of the Nepmen are disputed, and no very accurate statistics on the subject seem to be available. However, it is known that five sixths of the retail trade of the country is in the hands of private individuals, and private capital is more and more penetrating the fields of wholesale and wholesale-retail trade. In any campaign to carry out a plan of coördinated price reduction the Nep trader is a factor with which the Government must reckon seriously.

Of course the Nepmen have no hold on transport, basic industries or natural resources; and they are completely excluded from any share in political power. But within a comparatively short time they have gained a commanding position in the field of trade, and their real economic power is somewhat greater than would appear on the surface.

Side by side with the Nepman in the

city the last three years have witnessed a steady increase of wealth and economic power on the part of the village kulak. The kulak, or ‘fist,' was a familiar figure in the pre-revolutionary Russian peasant village. He was the village usurer, the man who had got many of his poorer neighbors in his debt. The term also came to be applied, somewhat less justly, to those peasants who had the skill or good fortune to accumulate more land and property than their neighbors.

During the Civil War the kulaks, who generally ranged themselves on the anti-Bolshevist side, fared rather badly. Their horses, cattle, and grain were ruthlessly requisitioned; their land allotments were cut down to correspond with those of the poorer peasants. But the introduction of the Nep paved the way for the return of the kulak to something of his old predominant position in the village community. War, requisitions, and famine played havoc with the peasants' supply of live stock. According to figures prepared by Mr. Yakovlev, who has been carrying out an extensive investigation of the peasant problem on behalf of the Central Committee of the Communist Party, 52.7 per cent of the Ukrainian peasants have no horses. Ukrainia, to be sure, suffered especially from civil war and banditism; but figures for other regions also show a large proportion of horseless peasants. The percentages for three other districts in different parts of Russia are 37.7, 34.1 and 42.2. Now, the peasant who has no horse is economically very much at the mercy of his richer neighbor. The poorer peasant is legally entitled to his equal share in the village land allotment, but he cannot harvest his crop unless he can get the use of one of the kulak's spare horses. He must pay heavily for this, and by the time the demands of the tax-gatherer

are satisfied the poorer peasant usually has barely enough grain left to meet the food needs of his family and to exchange for the most necessary articles of household use. So his economic bondage continues from year to year, whereas the kulak, fattening on the rental of his working animals, pays his taxes promptly, thereby securing a reduction in the amount, holds back his grain when prices are low in the fall and gets the advantage of the higher prices in winter and spring. The rapid accentuation of class differences in the villages since the introduction of the Nep is commented on both by Yakovlev and by other students of the agrarian problem.

The leaders of the Communist Party are by no means blind to the growth of the Nep and to the dangers which this growth implies for their political and economic hegemony. They see in the Nepmen and in the kulaks the embryo formations of classes which, if they continue to develop and accumulate wealth, will come to constitute a political as well as an economic menace to the existing régime. To a certain extent, of course, they recognize their helplessness in the face of circumstances. The memory of the desperate conditions which produced the Kronstadt mutiny and the peasant revolts of 1921 is too fresh to permit any responsible Communist even to think of the possibility of doing away with the New Economic Policy; but it is possible, within limits, to take political steps against certain phases of the Nep, and some of the recent actions of the Soviet Government seem to have been designed with this in view. So, during the last winter a large number of Nepmen, estimated at several thousand, were summarily told to leave Moscow. Some were sent in exile to remote parts of the country; others were allowed to go where they chose,

so long as they left the capital. Last March the well-known Communist bank president, Krasnoschekhov, was brought to trial on charges of abusing his position to serve his private interests and received a sentence of six years in prison. Krasnoschekhov was not convicted of any flagrant corruption; and his case was clearly designed as a warning to Communist industrial administrators who might be tempted by their surroundings into living too luxuriously, thereby bringing on the Party the reproach of harboring 'careerists' and bureaucrats. Lately a 'cheestka,' or cleansing has been going on among the Communists employed in such institutions as the State Bank, the Foreign Trade Commissariat, the Supreme Economic Council, and the Centrosoyuz or Central Coöperative Organization. This is avowedly designed to weed out Communists who have succumbed to the temptations of the Nep and are living in 'bourgeois' style. The admission of two hundred thousand manual workers directly from the factories represents another attempt on the part of the Communist leaders to give the Party a more definite working-class revolutionary orientation, as a counter-balance to the relaxed morale that has made itself felt since the introduction of the Nep.

V

It is a tragic and fascinating spectacle, this effort of a small band of fanatical Marxian revolutionaries to apply their theories in a primitive, half-Asiatic country like Russia, which differs in almost every conceivable way from Marx's vision of a thoroughly industrialized society. One constantly returns to the futile but absorbing question: How will it all end? The consequences of the social upheaval in Russia are so complex and far-reaching,

the present phase in the post-revolutionary development is so confused and apparently transitional in some of its manifestations, that one shrinks from anything in the nature of premature dogmatic prophecy. One may, perhaps, venture to sketch two alternative lines along which the Communist dictatorship may develop. The Soviet Government may preserve its present State Socialist organization of industry and finance, maintaining the monopoly of foreign trade and contenting itself with the very modest sums of foreign capital which may flow into the country under these conditions. Some Communists are convinced that the salvation of Russia lies in this direction. The country will be built up, they argue, slowly and painfully but steadily; the economic and administrative measures of the State will keep the Nepmen in a subordinate position; with the passing of time a new generation will grow up under the influence of revolutionary ideals and capable of adjusting itself to the demands of the Socialist State.

The chief obstacle to the reconstruction of Russia along these lines would seem to be the sacrifices which it will demand from the masses of the Russian people in the way of a much lowered standard of living over a very long period. Material hardship breeds political discontent; and the Soviet Government, despite its absolutist political system, may some day find itself confronted with a new kind of opposition - not the dead and buried opposition of the Whites and the Interventionists, but a demand on the part of the Russian masses for better living conditions.

There is also the possibility which has been mentioned by several Americans who have recently been in Russia, notably by Colonel Haskell, the former head of the A. R. A. relief work in Russia, and Mr. Irving T. Bush, former

President of the Chamber of Commerce of the State of New York. This is the possibility that State Socialism, like the military Communism which preceded it, is only a passing economic phase in the history of the Russian Revolution; that the restoration of full-fledged capitalism, symbolized by the recognition of the Tsarist debts and the turning over of many of the State industries to private operation, is a likely development of the near future. This point of view, however, would seem to underestimate the fanatical loyalty of the Soviet leaders to their ultimate Communist ideal. Among the Communist political leaders, such as Trotzky, Kamenev, Zinoviev, and Stalin, there is no division on the issue of yielding to foreign capital. All are committed to holding the bases of economic power to the bitter end.

There is really no historical precedent to enable one to calculate the future prospects of the Russian Communists. By making the compromises with the peasant and the small trader which were implicit in the Nep they have prolonged the term of their existence far beyond that of their historical spiritual ancestors, the French Jacobins. A hostile commentator once spoke of the Nep as 'the economic Ninth Thermidor' of the Bolshevist Revolution; and to some extent the present phase of the Revolution, with its lack of a strong, unquestioned leader, its mixture of old and new social and economic forms, its halfrealized and unrealized ideals, suggests the French Revolutionary aftermath under the rule of the Directory. But no Napoleon has appeared on the Russian horizon, and, if there were such a figure, he would think twice before risking his life in an attempt to substitute personal rule for the Arguseyed dictatorship of the Communist Party Central Committee.

ONE of the most important and least understood factors in the complex politics of the Eastern Pacific is the Dutch island-empire called Insulinde. Writing many years ago Paul LeroyBeaulieu, the far-seeing French economist and political scientist, urged his people 'to dwell attentively upon the rôle of Holland in Asia and on the creation and development of her colonies in that region.' An intimation of the interest of the American government in present developments in the Netherlands Indies may be found in the fact that the chief representative of the United States in the Orient, the Governor-General of the Philippines, recently made the long journey from Manila to Batavia to acquire first-hand information as to the situation there, at a time when political developments within his own jurisdiction might have rendered his absence extremely unfortunate.

America has, indeed, much reason to 'dwell attentively upon the rôle of Holland in Asia.' As the sovereign of more than 11,000,000 Malayan people, for whose future we are in some degree responsible, as a nation with an increasing concern in the general politics of the Orient, and as a people whose industrial future depends in part upon an adequate foreign supply of mineral oil, we cannot safely remain indifferent to events in Insulinde. For under the Dutch flag live more Malays than exist in all the rest of the

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world; the Dutch islands because of position, richness, and the military weakness of their sovereign occupy a peculiar place in the Oriental political system; and Dutch Malaysia contains oil reserves to participate in which the United States has already fought, and apparently lost, one stubborn diplomatic battle.

Recent activities of Japan in Java indicate clearly the interest of that Empire in the Dutch colonies. Last summer a distinguished commercialpolitical mission visited the islands and completed arrangements for a biweekly Japan-Java steamship service to run from Kobe to Sourabaya via Japan's mandated islands lying west of the Philippines. Within the past year millions of dollars have been invested by Japanese corporations in plantations in western Java. Japanese in Java have been capitalizing the present Dutch-Indian distrust of the United States, a sentiment arising from our attitude on Sumatra oil and our wartime invasion of a hitherto virtually closed market, to work up antiAmerican feeling wherever possible. An ably staffed and very active department of the Government of Formosa exists for the sole purpose of keeping Tokyo informed of every event of political significance in southern China and Malaysia. A glance at the map of the Eastern Pacific with especial reference to the long fringe of islands which flanks Asia from Siberia almost

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