Russia till Lately a Peasant Empire—Early Efforts to Introduce Arts and Crafts—Peter the Great and His Successors—Manufacturing Industry Long Remains an Exotic—The Cotton Industry—The Reforms of Alexander II.—Protectionists and Free Trade—Progress under High Tariffs—M. Witte's Policy—How Capital Was Obtained—Increase of Exports—Foreign Firms Cross the Customs Frontier—Rapid Development of Iron Industry—A Commercial Crisis—M. Witte's Position Undermined by Agrarians and Doctrinaires—M. Plehve a Formidable Opponent—His Apprehensions of Revolution—Fall of M. Witte—The Industrial Proletariat.

Fifty years ago Russia was still essentially a peasant empire, living by agriculture of a primitive type, and supplying her other wants chiefly by home industries, as was the custom in Western Europe during the Middle Ages.

For many generations her rulers had been trying to transplant into their wide dominions the art and crafts of the West, but they had formidable difficulties to contend with, and their success was not nearly as great as they desired. We know that as far back as the fourteenth century there were cloth-workers in Moscow, for we read in the chronicles that the workshops of these artisans were sacked when the town was stormed by the Tartars. Workers in metal had also appeared in some of the larger towns by that time, but they do not seem to have risen much above the level of ordinary blacksmiths. They were destined, however, to make more rapid progress than other classes of artisans, because the old Tsars of Muscovy, like other semi-barbarous potentates, admired and envied the industries of more civilised countries mainly from the military point of view. What they wanted most was a plentiful supply of good arms wherewith to defend themselves and attack their neighbours, and it was to this object that their most strenuous efforts were directed.

As early as 1475 Ivan III., the grandfather of Ivan the Terrible, sent a delegate to Venice to seek out for him an architect who, in addition to his own craft, knew how to make guns; and in due course appeared in the Kremlin a certain Muroli, called Aristotle by his contemporaries on account of his profound learning. He undertook "to build churches and palaces, to cast big bells and cannons, to fire off the said cannons, and to make every sort of castings very cunningly"; and for the exercise of these various arts it was solemnly stipulated in a formal document that he should receive the modest salary of ten roubles monthly. With regard to the military products, at least, the Venetian faithfully fulfilled his contract, and in a short time the Tsar had the satisfaction of possessing a "cannon-house," subsequently dignified with the name of "arsenal." Some of the natives learned the foreign art, and exactly a century later (1856) a Russian, or at least a Slav, called Tchekhof, produced a famous "Tsar-cannon," weighing as much as 96,000 lbs. The connection thus established with the mechanical arts of the West was always afterwards maintained, and we find frequent notices of the fact in contemporary writers. In the reign of the grandfather of Peter the Great, for example, two paper-works were established by an Italian; and velvet for the Tsar and his Boyars, gold brocades for ecclesiastical vestments, and rude kinds of glass for ordinary purposes were manufactured under the august patronage of the enlightened ruler. His son Alexis went a good many steps further, and scandalised his God-fearing orthodox subjects by his love of foreign heretical inventions. It was in his German suburb of Moscow that young Peter, who was to be crowned "the Great," made his first acquaintance with the useful arts of the West.

When the great reformer came to the throne he found in his Tsardom, besides many workshops, some ten foundries, all of which were under orders "to cast cannons, bombs, and bullets, and to make arms for the service of the State." This seemed to him only a beginning, especially for the mining and iron industry, in which he was particularly interested. By importing foreign artificers and placing at their disposal big estates, with numerous serfs, in the districts where minerals were plentiful, and by carefully stipulating that these foreigners should teach his subjects well, and conceal from them none of the secrets of the craft, he created in the Ural a great iron industry, which still exists at the present day. Finding by experience that State mines and State ironworks were a heavy drain on his insufficiently replenished treasury, he transferred some of them to private persons, and this policy was followed occasionally by his successors. Hence the gigantic fortunes of the Demidofs and other families. The Shuvalovs, for example, in 1760 possessed, for the purpose of working their mines and ironworks, no less than 33,000 serfs and a corresponding amount of land. Unfortunately the concessions were generally given not to enterprising business-men, but to influential court-dignitaries, who confined their attention to squandering the revenues, and not a few of the mines and works reverted to the Government.

The army required not only arms and ammunition, but also uniforms and blankets. Great attention, therefore, was paid to the woollen industry from the reign of Peter downwards. In the time of Catherine there were already 120 cloth factories, but they were on a very small scale, according to modern conceptions. Ten factories in Moscow, for example, had amongst them only 104 looms, 130 workers, and a yearly output for 200,000 roubles.

While thus largely influenced in its economic policy by military considerations, the Government did not entirely neglect other branches of manufacturing industry. Ever since Russia had pretensions to being a civilised power its rulers have always been inclined to pay more attention to the ornamental than the useful—to the varnish rather than the framework of civilisation—and we need not therefore be surprised to find that long before the native industry could supply the materials required for the ordinary wants of humble life, attempts were made to produce such things as Gobelin tapestries. I mention this merely as an illustration of a characteristic trait of the national character, the influence of which may be found in many other spheres of official activity.

If Russia did not attain the industrial level of Western Europe, it was not from want of ambition and effort on the part of the rulers. They worked hard, if not always wisely, for this end. Manufacturers were exempted from rates and taxes, and even from military service, and some of them, as I have said, received large estates from the Crown on the understanding that the serfs should be employed as workmen. At the same time they were protected from foreign competition by prohibitive tariffs. In a word, the manufacturing industry was nursed and fostered in a way to satisfy the most thorough-going protectionist, especially those branches which worked up native raw material such as ores, flax, hemp, wool, and tallow. Occasionally the official interference and anxiety to protect public interests went further than the manufacturers desired. On more than one occasion the authorities fixed the price of certain kinds of manufactured goods, and in 1754 the Senate, being anxious to protect the population from fires, ordered all glass and iron works within a radius of 200 versts around Moscow to be destroyed! In spite of such obstacles, the manufacturing industry as a whole made considerable progress. Between 1729 and 1762 the number of establishments officially recognised as factories rose from 26 to 335.

These results did not satisfy Catherine II., who ascended the throne in 1762. Under the influence of her friends, the French Encyclopedistes, she imagined for a time that the official control might be relaxed, and that the system of employing serfs in the factories and foundries might be replaced by free labour, as in Western Europe; monopolies might be abolished, and all liege subjects, including the peasants, might be allowed to embark in industrial undertakings as they pleased, "for the benefit of the State and the nation." All this looked very well on paper, but Catherine never allowed her sentimental liberalism to injure seriously the interests of her Empire, and she accordingly refrained from putting the laissez-faire principle largely into practice. Though a good deal has been written about her economic policy, it is hardly distinguishable from that of her predecessors. Like them, she maintained high tariffs, accorded large subsidies, and even prevented the export of raw material, in the hope that it might be worked up at home; and when the prices in the woollen market rose very high, she compelled the manufacturers to supply the army with cloth at a price fixed by the authorities. In short, the old system remained practically unimpaired, and notwithstanding the steady progress made during the reign of Nicholas I. (1825-55), when the number of factory hands rose from 210,000 to 380,000, the manufacturing industry as a whole continued to be, until the serfs were emancipated in 1861, a hothouse plant which could flourish only in an officially heated atmosphere.

There was one branch of it, however, to which this remark does not apply. The art of cotton-spinning and cotton-weaving struck deep root in Russian soil. After remaining for generations in the condition of a cottage industry—the yarn being distributed among the peasants and worked up by them in their own homes—it began, about 1825, to be modernised. Though it still required to be protected against foreign competition, it rapidly outgrew the necessity for direct official support. Big factories driven by steam-power were constructed, the number of hands employed rose to 110,000, and the foundations of great fortunes were laid. Strange to say, many of the future millionaires were uneducated serfs. Sava Morozof, for example, who was to become one of the industrial magnates of Moscow, was a serf belonging to a proprietor called Ryumin; most of the others were serfs of Count Sheremetyef—the owner of a large estate on which the industrial town of Ivanovo had sprung up—who was proud of having millionaires among his serfs, and who never abused his authority over them. The great movement, however, was not effected without the assistance of foreigners. Foreign foremen were largely employed, and in the work of organisation a leading part was played by a German called Ludwig Knoop. Beginning life as a commercial traveller for an English firm, he soon became a large cotton importer, and when in 1840 a feverish activity was produced in the Russian manufacturing world by the Government's permission to import English machines, his firm supplied these machines to the factories on condition of obtaining a share in the business. It has been calculated that it obtained in this way a share in no less than 122 factories, and hence arose among the peasantry a popular saying:

The biggest creation of the firm was a factory built at Narva in 1856, with nearly half a million spindles driven by water-power.

In the second half of last century a revolution was brought about in the manufacturing industry generally by the emancipation of the serfs, the rapid extension of railways, the facilities for creating limited liability companies, and by certain innovations in the financial policy of the Government. The emancipation put on the market an unlimited supply of cheap labour; the construction of railways in all directions increased a hundredfold the means of communication; and the new banks and other credit institutions, aided by an overwhelming influx of foreign capital, encouraged the foundation and extension of industrial and commercial enterprise of every description. For a time there was great excitement. It was commonly supposed that in all matters relating to trade and industry Russia had suddenly jumped up to the level of Western Europe, and many people in St. Petersburg, carried away by the prevailing enthusiasm for liberalism in general and the doctrines of Free Trade in particular, were in favour of abolishing protectionism as an antiquated restriction on liberty and an obstacle to economic progress.

At one moment the Government was disposed to yield to the current, but it was restrained by an influential group of conservative Political Economists, who appealed to patriotic sentiment, and by the Moscow manufacturers, who declared that Free Trade would ruin the country. After a little hesitation it proceeded to raise, instead of lowering, the protectionist tariff. In 1869-76 the ad valorem duties were, on an average, under thirteen per cent., but from that time onwards they rose steadily, until the last five years of the century, when they averaged thirty-three per cent., and were for some articles very much higher. In this way the Moscow industrial magnates were protected against the influx of cheap foreign goods, but they were not saved from foreign competition, for many foreign manufacturers, in order to enjoy the benefit of the high duties, founded factories in Russia. Even the firmly established cotton industry suffered from these intruders. Industrial suburbs containing not a few cotton factories sprang up around St. Petersburg; and a small Polish village called Lodz, near the German frontier, grew rapidly into a prosperous town of 300,000 inhabitants, and became a serious rival to the ancient Muscovite capital. So severely was the competition of this young upstart felt, that the Moscow merchants petitioned the Emperor to protect them by drawing a customs frontier round the Polish provinces, but their petition was not granted.

Under the shelter of the high tariffs the manufacturing industry as a whole has made rapid progress, and the cotton trade has kept well to the front. In that branch, between 1861 and 1897, the number of hands employed rose from 120,000 to 325,000, and the estimated value of the products from 72 to 478 millions of roubles. In 1899 the number of spindles was considerably over six millions, and the number of automatic weaving machines 145,000.

The iron industry has likewise progressed rapidly, though it has not yet outgrown the necessity for Government support, and it is not yet able to provide for all home wants. About forty years ago it received a powerful impulse from the discovery that in the provinces to the north of the Crimea and the Sea of Azof there were enormous quantities of iron ore and beds of good coal in close proximity to each other. Thanks to this discovery and to other facts of which I shall have occasion to speak presently, this district, which had previously been agricultural and pastoral, has outstripped the famous Ural region, and has become the Black Country of Russia. The vast lonely steppe, where formerly one saw merely the peasant-farmer, the shepherd, and the Tchumak,* driving along somnolently with his big, long-horned, white bullocks, is now dotted over with busy industrial settlements of mushroom growth, and great ironworks—some of them unfinished; while at night the landscape is lit up with the lurid flames of gigantic blast-furnaces. In this wonderful transformation, as in the history of Russian industrial progress generally, a great part was played by foreigners. The pioneer who did most in this district was an Englishman, John Hughes, who began life as the son and pupil of a Welsh blacksmith, and whose sons are now directors of the biggest of the South Russian ironworks.

Much as the South has progressed industrially in recent years, it still remains far behind those industrial portions of the country which were thickly settled at an earlier date. From this point of view the most important region is the group of provinces clustering round Moscow; next comes the St. Petersburg region, including Livonia; and thirdly Poland. As for the various kinds of industry, the most important category is that of textile fabrics, the second that of articles of nutrition, and the third that of ores and metals. The total production, if we may believe certain statistical authorities, places Russia now among the industrial nations of the world in the fifth place, immediately after the United States, England, Germany, and France, and a little before Austria.

The man who has in recent times carried out most energetically the policy of protecting and fostering native industries is M. Witte, a name now familiar to Western Europe. An avowed disciple of the great German economist, Friedrich List, about whose works he published a brochure in 1888, he held firmly, from his youth upwards, the doctrine that "each nation should above all things develop harmoniously its natural resources to the highest possible degree of independence, protecting its own industries and preferring the national aim to the pecuniary advantage of individuals." As a corollary to this principle he declared that purely agricultural countries are economically backward and intellectually stagnant, being condemned to pay tribute to the nations who have learned to work up their raw products into more valuable commodities. The good old English doctrine that certain countries were intended by Providence to be eternally agricultural, and that their function in the economy of the universe is to supply raw material for the industrial nations, was always in his eyes an abomination—an ingenious, nefarious invention of the Manchester school, astutely invented for the purpose of keeping the younger nations permanently in a state of economic bondage for the benefit of English manufacturers. To emancipate Russia from this thraldom by enabling her to create a great native industry, sufficient to supply all her own wants, was the aim of his policy and the constant object of his untiring efforts. Those who have had the good fortune to know him personally must have often heard him discourse eloquently on this theme, supporting his views by quotations from the economists of his own school, and by illustrations drawn from the history of his own and other countries.

A necessary condition of realising this aim was that there should be high tariffs. These already existed, and they might be raised still higher, but in themselves they were not enough. For the rapid development of the native industry an enormous capital was required, and the first problem to be solved was how this capital could be obtained. At one moment the energetic minister conceived the project of creating a fictitious capital by inflating the paper currency; but this idea proved unpopular. When broached in the Council of State it encountered determined opposition. Some of the members of that body, especially M. Bunge, who had been himself Minister of Finance, and who remembered the evil effects of the inordinate inflation of the currency on foreign exchanges during the Turkish War, advocated strongly the directly opposite course—a return to gold monometallism, for which M. Vishnegradski, M. Witte's immediate predecessor, had made considerable preparations. Being a practical man without inveterate prejudices, M. Witte gave up the scheme which he could not carry through, and adopted the views of his opponents. He would introduce the gold currency as recommended; but how was the requisite capital to be obtained? It must be procured from abroad, somehow, and the simplest way seemed to be to stimulate the export of native products. For this purpose the railways were extended,* the traffic rates manipulated, and the means of transport improved generally.

A certain influx of gold was thus secured, but not nearly enough for the object in view.* Some more potent means, therefore, had to be employed, and the inventive minister evolved a new scheme. If he could only induce foreign capitalists to undertake manufacturing industries in Russia, they would, at one and the same time, bring into the country the capital required, and they would cooperate powerfully in that development of the national industry which he so ardently wished. No sooner had he roughly sketched out his plan—for he was not a man to let the grass grow under his feet—than he set himself to put it into execution by letting it be known in the financial world that the Government was ready to open a great field for lucrative investments, in the form of profitable enterprises under the control of those who subscribed the capital.

Foreign capitalists responded warmly to the call. Crowds of concession-hunters, projectors, company promoters, et hoc genus omne, collected in St. Petersburg, offering their services on the most tempting terms; and all of them who could make out a plausible case were well received at the Ministry of Finance. It was there explained to them that in many branches of industry, such as the manufacture of textile fabrics, there was little or no room for newcomers, but that in others the prospects were most brilliant. Take, for example, the iron industries of Southern Russia. The boundless mineral wealth of that region was still almost intact, and the few works which had been there established were paying very large dividends. The works founded by John Hughes, for example, had repeatedly divided considerably over twenty per cent., and there was little fear for the future, because the Government had embarked on a great scheme of railway extension, requiring an unlimited amount of rails and rolling-stock. What better opening could be desired? Certainly the opening seemed most attractive, and into it rushed the crowd of company promoters, followed by stock-jobbers and brokers, playing lively pieces of what the Germans call Zukunftsmusik. An unwary and confiding public, especially in Belgium and France, listened to the enchanting strains of the financial syrens, and invested largely. Quickly the number of completed ironworks in that region rose from nine to seventeen, and in the short space of three years the output of pig-iron was nearly doubled. In 1900 there were 44 blast furnaces in working order, and ten more were in course of construction. And all this time the Imperial revenue increased by leaps and bounds, so that the introduction of the gold currency was effected without difficulty. M. Witte was declared to be the greatest minister of his time—a Russian Colbert or Turgot, or perhaps the two rolled into one.

Then came a change. Competition and over-production led naturally to a fall in prices, and at the same time the demand decreased, because the railway-building activity of the Government slackened. Alarmed at this state of things, the banks which had helped to start and foster the huge and costly enterprises contracted their credits. By the end of 1899 the disenchantment was general and widespread. Some of the companies were so weighted by the preliminary financial obligations, and had conducted their affairs in such careless, reckless fashion, that they had soon to shut down their mines and close their works. Even solid undertakings suffered. The shares of the Briansk works, for example, which had given dividends as high as 30 per cent., fell from 500 to 230. The Mamontof companies—supposed to be one of the strongest financial groups in the country—had to suspend payment, and numerous other failures occurred. Nearly all the commercial banks, having directly participated in the industrial concerns, were rudely shaken. M. Witte, who had been for a time the idol of a certain section of the financial world, became very unpopular, and was accused of misleading the investing public. Among the accusations brought against him some at least could easily be refuted. He may have made mistakes in his policy, and may have been himself over-sanguine, but surely, as he subsequently replied to his accusers, it was no part of his duty to warn company promoters and directors that they should refrain from over-production, and that their enterprises might not be as remunerative as they expected. As to whether there is any truth in the assertion that he held out prospects of larger Government orders than he actually gave, I cannot say. That he cut down prices, and showed himself a hard man to deal with, there seems no doubt.

The reader may naturally be inclined to jump to the conclusion that the commercial crisis just referred to was the cause of M. Witte's fall. Such a conclusion would be entirely erroneous. The crisis happened in the winter of 1899-1900, and M. Witte remained Finance Minister until the autumn of 1903. His fall was the result of causes of a totally different kind, and these I propose now to explain, because the explanation will throw light on certain very curious and characteristic conceptions at present current in the Russian educated classes.

Of course there were certain causes of a purely personal kind, but I shall dismiss them in a very few words. I remember once asking a well-informed friend of M. Witte's what he thought of him as an administrator and a statesman. The friend replied: "Imagine a negro of the Gold Coast let loose in modern European civilisation!" This reply, like most epigrammatic remarks, is a piece of gross exaggeration, but it has a modicum of truth in it. In the eyes of well-trained Russian officials M. Witte was a titanic, reckless character, capable at any moment of playing the part of the bull in the china-shop. As a masterful person, brusque in manner and incapable of brooking contradiction, he had made for himself many enemies; and his restless, irrepressible energy had led him to encroach on the provinces of all his colleagues. Possessing as he did the control of the purse, his interference could not easily be resisted. The Ministers of Interior, War, Agriculture, Public Works, Public Instruction, and Foreign Affairs had all occasion to complain of his incursions into their departments. In contrast to his colleagues, he was not only extremely energetic, but he was ever ready to assume an astounding amount of responsibility; and as he was something of an opportunist, he was perhaps not always quixotically scrupulous in the choice of expedients for attaining his ends.

Altogether M. Witte was an inconvenient personage in an administration in which strong personality is regarded as entirely out of place, and in which personal initiative is supposed to reside exclusively in the Tsar. In addition to all this he was a man who felt keenly, and when he was irritated he did not always keep the unruly member under strict control. If I am correctly informed, it was some imprudent and not very respectful remarks, repeated by a subordinate and transmitted by a Grand Duke to the Tsar, which were the immediate cause of his transfer from the influential post of Minister of Finance to the ornamental position of President of the Council of Ministers; but that was merely the proverbial last straw that broke the camel's back. His position was already undermined, and it is the undermining process which I wish to describe.

The first to work for his overthrow were the Agrarian Conservatives. They could not deny that, from the purely fiscal point of view, his administration was a marvellous success; for he was rapidly doubling the revenue, and he had succeeded in replacing the fluctuating depreciated paper currency by a gold coinage; but they maintained that he was killing the goose that laid the golden eggs. Evidently the tax-paying power of the rural classes was being overstrained, for they were falling more and more into arrears in the payment of their taxes, and their impoverishment was yearly increasing. All their reserves had been exhausted, as was shown by the famines of 1891-92, when the Government had to spend hundreds of millions to feed them. Whilst the land was losing its fertility, those who had to live by it were increasing in numbers at an alarming rate. Already in some districts one-fifth of the peasant households had no longer any land of their own, and of those who still possessed land a large proportion had no longer the cattle and horses necessary to till and manure their allotments. No doubt M. Witte was beginning to perceive his mistake, and had done something to palliate the evils by improving the system of collecting the taxes and abolishing the duty on passports, but such merely palliative remedies could have little effect. While a few capitalists were amassing gigantic fortunes, the masses were slowly and surely advancing to the brink of starvation. The welfare of the agriculturists, who constitute nine-tenths of the whole population, was being ruthlessly sacrificed, and for what? For the creation of a manufacturing industry which rested on an artificial, precarious basis, and which had already begun to decline.

So far the Agrarians, who champion the interests of the agricultural classes. Their views were confirmed and their arguments strengthened by an influential group of men whom I may call, for want of a better name, the philosophers or doctrinaire interpreters of history, who have, strange to say, more influence in Russia than in any other country.

The Russian educated classes desire that the nation should be wealthy and self-supporting, and they recognise that for this purpose a large manufacturing industry is required; but they are reluctant to make the sacrifices necessary to attain the object in view, and they imagine that, somehow or other, these sacrifices may be avoided. Sympathising with this frame of mind, the doctrinaires explain that the rich and prosperous countries of Europe and America obtained their wealth and prosperity by so-called "Capitalism"—that is to say, by a peculiar social organisation in which the two main factors are a small body of rich capitalists and manufacturers and an enormous pauper proletariat living from hand to mouth, at the mercy of the heartless employers of labour. Russia has lately followed in the footsteps of those wealthy countries, and if she continues to do so she will inevitably be saddled with the same disastrous results—plutocracy, pauperism, unrestrained competition in all spheres of activity, and a greatly intensified struggle for life, in which the weaker will necessarily go to the wall.*

Happily there is, according to these theorists, a more excellent way, and Russia can adopt it if she only remains true to certain mysterious principles of her past historic development. Without attempting to expound those mysterious principles, to which I have repeatedly referred in previous chapters, I may mention briefly that the traditional patriarchal institutions on which the theorists found their hopes of a happy social future for their country are the rural Commune, the native home-industries, and the peculiar co-operative institutions called Artels. How these remnants of a semi-patriarchal state of society are to be practically developed in such a way as to withstand the competition of manufacturing industry organised on modern "capitalist" lines, no one has hitherto been able to explain satisfactorily, but many people indulge in ingenious speculations on the subject, like children planning the means of diverting with their little toy spades a formidable inundation. In my humble opinion, the whole theory is a delusion; but it is held firmly—I might almost say fanatically—by those who, in opposition to the indiscriminate admirers of West-European and American civilisation, consider themselves genuine Russians and exceptionally good patriots. M. Witte has never belonged to that class. He believes that there is only one road to national prosperity—the road by which Western Europe has travelled—and along this road he tried to drive his country as rapidly as possible. He threw himself, therefore, heart and soul into what his opponents call "Capitalism," by raising State loans, organising banks and other credit institutions, encouraging the creation and extension of big factories, which must inevitably destroy the home industry, and even—horribile dictu!—undermining the rural Commune, and thereby adding to the ranks of the landless proletariat, in order to increase the amount of cheap labour for the benefit of the capitalists.

With the arguments thus supplied by Agrarians and doctrinaires, quite honest and well-meaning, according to their lights, it was easy to sap M. Witte's position. Among his opponents, the most formidable was the late M. Plehve, Minister of Interior—a man of a totally different stamp. A few months before his tragic end I had a long and interesting conversation with him, and I came away deeply impressed. Having repeatedly had conversations of a similar kind with M. Witte, I could compare, or rather contrast, the two men. Both of them evidently possessed an exceptional amount of mental power and energy, but in the one it was volcanic, and in the other it was concentrated and thoroughly under control. In discussion, the one reminded me of the self-taught, slashing swordsman; the other of the dexterous fencer, carefully trained in the use of the foils, who never launches out beyond the point at which he can quickly recover himself. As to whether M. Plehve was anything more than a bold, energetic, clever official there may be differences of opinion, but he certainly could assume the airs of a profound and polished statesman, capable of looking at things from a much higher point of view than the ordinary tchinovnik, and he had the talent of tacitly suggesting that a great deal of genuine, enlightened statesmanship lay hidden under the smooth surface of his cautious reserve. Once or twice I could perceive that when criticising the present state of things he had his volcanic colleague in his mind's eye; but the covert allusions were so vague and so carefully worded that the said colleague, if he had been present, would hardly have been justified in entering a personal protest. A statesman of the higher type, I was made to feel, should deal not with personalities, but with things, and it would be altogether unbecoming to complain of a colleague in presence of an outsider. Thus his attitude towards his opponent was most correct, but it was not difficult to infer that he had little sympathy with the policy of the Ministry of Finance.

From other sources I learned the cause of this want of sympathy. Being Minister of Interior, and having served long in the Police Department, M. Plehve considered that his first duty was the maintenance of public order and the protection of the person and autocracy of his august master. He was therefore the determined enemy of revolutionary tendencies, in whatever garb or disguise they might appear; and as a statesman he had to direct his attention to everything likely to increase those tendencies in the future. Now it seemed that in the financial policy which had been followed for some years there were germs of future revolutionary fermentation. The peasantry were becoming impoverished, and were therefore more likely to listen to the insidious suggestions of Socialist agitators; and already agrarian disturbances had occurred in the provinces of Kharkof and Poltava. The industrial proletariat which was being rapidly created was being secretly organised by the revolutionary Social Democrats, and already there had been serious labour troubles in some of the large towns. For any future revolutionary movement the proletariat would naturally supply recruits. Then, at the other end of the social scale, a class of rich capitalists was being created, and everybody who has read a little history knows that a rich and powerful tiers etat cannot be permanently conciliated with autocracy. Though himself neither an agrarian nor a Slavophil doctrinaire, M. Plehve could not but have a certain sympathy with those who were forging thunderbolts for the official annihilation of M. Witte. He was too practical a man to imagine that the hands on the dial of economic progress could be set back and a return made to moribund patriarchal institutions; but he thought that at least the pace might be moderated. The Minister of Finance need not be in such a desperate, reckless hurry, and it was desirable to create conservative forces which might counteract the revolutionary forces which his impulsive colleague was inadvertently calling into existence.

Some of the forgers of thunderbolts went a great deal further, and asserted or insinuated that M. Witte was himself consciously a revolutionist, with secret, malevolent intentions. In support of their insinuations they cited certain cases in which well-known Socialists had been appointed professors in academies under the control of the Ministry of Finance, and they pointed to the Peasant Bank, which enjoyed M. Witte's special protection. At first it had been supposed that the bank would have an anti-revolutionary influence by preventing the formation of a landless proletariat and increasing the number of small land-owners, who are always and everywhere conservative so far as the rights of private property are concerned.

Unfortunately its success roused the fears of the more conservative section of the landed proprietors. These gentlemen, as I have already mentioned, pointed out that the estates of the nobles were rapidly passing into the hands of the peasantry, and that if this process were allowed to continue the hereditary Noblesse, which had always been the civilising element in the rural population, and the surest support of the throne, would drift into the towns and there sink into poverty or amalgamate with the commercial plutocracy, and help to form a tiers etat which would be hostile to the Autocratic Power.

In these circumstances it was evident that the headstrong Minister of Finance could maintain his position only so long as he enjoyed the energetic support of the Emperor, and this support, for reasons which I have indicated above, failed him at the critical moment. When his work was still unfinished he was suddenly compelled, by the Emperor's command, to relinquish his post and accept a position in which, it was supposed, he would cease to have any influence in the administration.

Thus fell the Russian Colbert-Turgot, or whatever else he may be called. Whether financial difficulties in the future will lead to his reinstatement as Minister of Finance remains to be seen; but in any case his work cannot be undone. He has increased manufacturing industry to an unprecedented extent, and, as M. Plehve perceived, the industrial proletariat which manufacturing industry on capitalist lines always creates has provided a new field of activity for the revolutionists. I return, therefore, to the evolution of the revolutionary movement in order to describe its present phase, the first-fruits of which have been revealed in the labour disturbances in St. Petersburg and other industrial centres.