fense is that for the construction and main- owned and subsidized by the state rose from tenance of railroads. Railroad-building in 107,235,964 rubles in 1889 to 399,694,006 Russia began in 1836 with the construction in 1900, while, according to another excelof a short line connecting St. Petersburg lent authority, the state's outlay upon lines with Tsarkoe Selo, the summer residence of exclusively its own increased between the the Czar. The first road of importance was same years from 36,900,000 rubles to 283,that from St. Petersburg to Moscow, begun 600,000. In the budget of 1906 the Minin 1843 and opened for traffic in 1851. This istry of Ways of Communications was set road was built by the state at the enormous down for an expenditure of 474,885,120 cost of nearly 100,000 rubles per kilometer rubles, of which 377,955,625 rubles were to (as was also a line in Poland connecting cover the working expenses of the state railWarsaw with the Austrian frontier), but ways and 71,535,266 to provide for the imwith the new era of construction that set in provement of lines and the purchase of rollafter the Crimean War the work passed al- ing stock. The expenditure of the Ministry most entirely into the hands of private com- in 1907 rose to 502,800,000 rubles and the panies, although the government often ex- operating expenses of the state-owned roads tended loans to these companies and regu- to 382,500,000. larly stipulated that after a certain interval, usually twenty years, the crown should have the right to purchase the roads at a fair price. January 1, 1889, the railway system of the empire comprised 27,458 versts,* of But most of the time there has which 762 per cent. was owned by private been a deficit, and since 1900 the indebtedcompanies and only 231⁄2 per cent. by the ness of the empire on account of capital sunk government. In this year the government in railways has been steadily increasing. It undertook definitely the unification of the various lines, first by prescribing a common tariff, and secondly, by buying up the separate roads and concentrating their management in the hands of the government and of a few large railway companies.

In the capacity of Finance Minister after 1892 M. Witte pushed the policy of state ownership, with the result that in his report on the budget for 1900 he was able to show that at this date the state owned 60% per cent. of the 55,286 versts within the empire. Witte's ministry was distinctly an era of railway construction, and he left office in 1906 urging that the work be continued. Since 1902 the government has continued its activity both in the purchase of old roads and the building of new ones. The aggregate system open for traffic on January 1, 1907, comprised 40,748 miles,-32,743 in European Russia and 8005 in Asiatic Russia.

Of the total, the government owned and operated 26,816 miles, or 651⁄2 per cent.

SOME RESULTS OF STATE OWNERSHIP OF
RAILROADS

The outlay of the state upon railways since 1889 has been very large. Figures on the subject given out from various sources fail totally to agree, but as summarized in the annual budgets the expenses entailed by lines

A verst is approximately two-thirds of an Eng

lish mile.

Since the government embarked seriously upon the railway business there have been some years, especially in the nineties, in which the receipts from the roads fully covered all expenses.

is estimated that down to 1908 the government has spent upon railways the aggregate sum of 4,000,000,000 rubles, of which something like a quarter has been drawn from the ordinary revenues and the remaining 3,000,000,000 rubles has been obtained by loans costing at present, for interest and amortization, not less than 129,000,000 rubles per year.

There can be no doubt that through its policy of railroad exploitation the Russian Government has stimulated commerce (especially the export of agricultural produce), and great industries, such as those of iron and steel, thereby contributing to the general economic betterment and, indirectly, to the increase of the state's revenues. And, of course, the railway system has been developed at every stage with reference to military advantage and the necessities of strategy, so that a great project like the Amur Railway becomes essentially a military enterprise.) But at any rate, state railways in Russia are not a source of profit to the Treasury. Quite as often as the needs of the army and navy, they drive the government to the negotiation of loans and in the fiscal problems of the future they promise to play an increasingly embarrassing part.

WHAT ARE RUSSIA'S SOURCES OF REVENUE?

What are the revenues at the government's disposal with which to meet the enormous

GOVERNMENT CONDUCT OF THE LIQUOR
BUSINESS

and varied costs of civil service, army, navy, rubles accrued from the postal service, 28,railways, pensions, debts, and famine relief? 246,077 from telegraphs and telephones, The budget classifies them under nine heads, 5,257,302 from the mint, 35,843 from mines, as follows: (1) Direct taxes; (2) indirect and 697,503,834 from the sale of spirits. taxes; (3) stamp and other duties; (4) state monopolies; (5) state domains; (6) sales of domains; (7) redemption of land; (8) reimbursement of Treasury expenses; and (9) Since as early a date as 1601 the taxation miscellaneous. The direct taxes of the em- of alcohol, in one form or another, has conpire fall into three groups. The first com- stituted a bulwark of Russian finance. The prises imposts upon land, real estate, and in- manufacture and sale of spirits has passed dividuals. The land tax was imposed in through many and varied régimes in the em1875, but owing to the poverty of the peas- pire, but along with the desire to check ants it must be kept very low, and its yield drunkenness and to promote the health and is insignificant. The tax upon real prop- economic welfare of the peasantry has always erty in the towns is similarly unimpor- gone the idea of increasing the resources of tant. Poll taxes, which were once an the Treasury. The present system of govinvaluable reliance of the Treasury, were ernment monopoly was really initiated by abolished by a series of measures promulgated between 1882 and 1885 for the relief of the impoverished peasantry. There is no general income tax. A tax of 5 per cent. is, however, levied on incomes from interestbearing papers and bank deposits, and this comprises the second class of direct taxation. The third, and most productive, are the taxes upon industrial certificates or licenses and upon joint-stock companies. The aggregate yield of the direct taxes in 1906 was 163,182,406 rubles.

Czar Alexander III., who in 1885 requested the Finance Minister (Bunge) to draw up a plan for an experimental monopoly. The existing excise system had, however, so increased in productiveness that neither Bunge nor his successor, Vishnigradski, cared to tamper with it. It remained for Witte, in pursuance of his monopolistic policy, to introduce the system in operation to-day, which not only brings the government a vastly increased revenue (697,503,834 rubles in 1906, as compared with 287,000,000 in 1894, the last year of the general excise), but transfers a vast mass of political and economic influence from the local authorities to the central administration.

A SUCCESSFUL FISCAL EXPERIMENT

Under indirect taxes are included customs duties, yielding in 1906 241,270,464 rubles, and excise duties on spirits, tobacco, sugar, naphtha, and matches, yielding in 1906 252,976,206 rubles. Throughout the larger part of the past hundred years Russia has maintained a protective tariff. Until 1824 the The business of distilling is left entirely rates were practically prohibitive; from 1824 to private enterprise. The amount of liquor to 1850 they were high, but not prohibitory; to be produced is, however, fixed by the govfrom 1850 to 1877 they were distinctly moderate; but after 1877, and particularly with the tariff of 1891, they became once more very high. The ministries of both Vishnigradski (1887-1893) and Witte (18931906) were completely dominated by the ideals of protectionism. In the past two decades there has been a considerable increase in the yield of the customs duties, but the effect of the protectionist régime upon domestic industry has been of at least doubtful value.

66

ernment. Two-thirds of it is bought by the government at a price arranged in advance; the remainder is disposed of at auction. The retail traffic is carried on in shops conducted by government agents or by private individuals especially authorized. This system, introduced experimentally in four eastern provinces in 1894, was gradually extended, until in 1902 it was applied even to Siberia. Though there has been endless discussion of its moral and social consequences, there can' be no doubt that from the standpoint of the imperial Treasury it has been a glowing success. The expense of administration is considerable; but in 1903 it was only 167.517,598 rubles, as compared with receipts of 529,327,000 rubles, and in recent years it has

The third general division of revenues includes duties on stamps, transfers of property, express" railway traffic, fire insurance, and miscellaneous items. The yield in 1906 was 113,268,466 rubles. The fourth division, that of state monopolies, is the most important of all. Its yield in 1906 was 777,048,- been proportionally decreasing. 028 rubles.

Of this amount 46,004,972 the spirits monopoly and the state railways

furnish more than half of the total revenue harassed have threatened again and again to of the nation. bring down her fiscal system in utter ruin.

RECEIPTS FROM THE STATE DOMAINS

CREDIT STILL UNIMPAIRED

The fifth division of revenues comprises Yet in no period of her history has her the income from the state domains, aggregat- credit suffered prolonged impairment and not ing in 1906 602,610,240 rubles. Here the once has she failed to meet her obligations to most important item by far is the receipts the full satisfaction of her creditors. As a confrom the government-owned railroads,-490,- sequence of so honorable a record, and by rea884,687 rubles in 1906,-although, as has son of the untold resources of the empire in been pointed out, this does not represent any forests, minerals, and agricultural produce, net profit to the Treasury. The crown for- Russian securities command a ready market ests (aggregating 950,534,491 acres) yielded to-day at good prices in France, Holland, in 1906 57,533,920 rubles, and by reason of Belgium, Germany, and England. Even the growing demand for lumber this resource the diplomatic defeat which the imperial govgives promise of indefinite development. ernment suffered in the recent Balkan setCrown mines and crown banking operations tlement had no adverse effect upon the maradd considerably to this division. Other ket estimate of the empire's credit. Such sources of revenue,-sales of domain lands, confidence would unquestionably be mispayments in redemption of land by former placed but for one fundamental consideraserfs, obligatory repayments from railway companies, and a variety of odds and ends, go to swell the total, but are singly of slight importance. They may aggregate in a year something like 100,000,000 rubles.

By the utmost pains the ordinary revenue during the past ten years has been kept abreast of the aggregate of ordinary expenditures. It has been raised from 1,416,386,096 rubles in 1897 to 2,031,800,814 in 1903 and 2,271,669,948 in 1906; and the estimate for 1909 is 2,476,900,000. Unfortunately, this does not signify much, for the method seems generally to have been to save appearances by throwing everything that the revenues will not cover into the catch-all category of "extraordinary." If the ordinary and extraordinary budgets are lumped, as in the final analy-, sis they have to be, it turns out that there have been only two years since 1897 in which there has not been a considerable, deficit. The budget for the year 1909 contemplated a storage of 159,200,000 rubles, which was to be met by the portion remaining from the recent French loan after the 300,000,000 rubles of 1904 Treasury bonds had been duly converted.

ALWAYS A DEBTOR NATION

Financially Russia occupies a position among the world-powers that is unique. For a century and a half she has never been other than a debtor nation, able but rarely to pay even so much as the interest on her accumulating indebtedness save through the floating of fresh loans. The political and economic disorders by which she has been periodically

tion, namely, that despite the lingering economic backwardness of the Russian state and people the resources of the nation as a whole, not alone in the gross output of agriculture, industry, and trade, but in the tax-paying abilities of the people,—are steadily increasing.

A thing that most of us do not realize is that the population of Russia is actually growing at a rate (11⁄2 per cent. a year) not equaled in any important country on the globe. Another thing is that not even in France does so large a proportion of the population belong to the land-owning class, providing a necessary condition for the agricultural prosperity of the coming generations. Since 1877 the amount of arable land held by the nobility has diminished by a third; yet the price of land has risen in every part of the empire. In 1888 the total of savingsbank deposits was 60,000,000 rubles; at the beginning of 1908 it was 1,090,000,000. In fifteen years the consumption of tea, tobacco, brandy, petroleum, and cottons has increased by from 20 to 30 per cent., and the per capita consumption of sugar has been exactly doubled. These are a few casual considerations which tend to relieve the blackness of the picture presented by Russia's finan- ! cial condition to-day, because they indicate that slowly, painfully, the great Russian people is coming to its own. With increased ability to pay taxes and with ultimate control over the public purse, these same Russian people may yet be able to solve the vexing problem of the balance-sheet with which the bureaucrats have so vainly wrestled.

BY HENRY A. PRESSEY

(Consulting engineer)

MOST of the large water powers in the

Southeastern States are located near the fall line," which marks the junction of the Piedmont Plateau with the sandy coastal plain. This fall line extends from Weldon, N. C., on the Roanoke, almost parallel with the coast, to Augusta, Ga., on the Savannah. The river valleys near the fall line are all of similar character, with broad, shallow river beds of solid rock and with open." bottom lands," which include some of the best agricultural tracts of the South. The rocky, irregular hills approach the rivers at intervals, forming natural abutments for the construction of dams, as well as quarries for the making of concrete and rubble masonry.

rivers, and electric-light companies and rail

roads have come into life without the construction of steam plants to provide power. Water powers which for generations have remained idle are now being utilized, with splendid returns upon the money required for their development.

The wonderful industrial growth of the Southern States has been partially due to the development of the water powers. South Carolina, which formerly had practically no mills, now stands second only to Massachusetts in the number of its spindles, while North Carolina and Georgia stand, respectively, fourth and fifth in rank as cottongoods manufacturers. During the last fifThe dams required are usually long and teen years, for which figures are available, expensive. The power house is generally lo- while Massachusetts increased her output of cated at one end of the dam, or in some cases cotton goods 490 per cent. and Rhode Island a short distance down stream, the water 19 per cent., South Carolina has increased being carried from the dam site to the power 730 per cent., North Carolina 580 per cent., house by an artificial canal. But the foun- and Georgia 233 per cent. In 1880 there dations are usually available in the solid rock, were 667,000 spindles in operation in the over which only a foot or two of water South. In 1890 the number was 1,712,flows during the low period, thus making ooo, and in 1905 it had increased to the construction of coffer-dams economi- 9,205,000. In 1880 the capital invested cal and safe. The long dam has a very in cotton mills in the South was $21,- . decided advantage, in that during flood pe- 000,000, in 1890 $60,000,000, and in 1905 riods, which are sure to come, the additional $225,000,000, while the value of the cotlength gives a spillway for the flood waters, ton crop has increased over $350,000,000. thus relieving the danger to the power house During the same period the capital invested and the lands above it. The expense of in manufacturing has grown from $257,000,maintaining such dam is small, as the re- 000 to $1,500,000,000. pairs required by crib dams or long canals are almost entirely avoided.

a

RECENT INDUSTRIAL DEVELOPMENT IN THE

SOUTH

Water powers have been developed on nearly every river of any size from the Potomac to the Gulf, and nearly all of the larger Southern cities now have either electric energy delivered to them from Fifty years ago practically no water water powers, or have in conteinplation plans powers of any size were utilized in the for the utilization of such power, the cheapSouth, but the growth of the textile indus- ness and convenience of which will enable tries in the Southern States, and the advance them to compete with their neighbors. Great in the knowledge of transmitting electric plants are now in operation on the James, power have given a wonderful impetus to Cape Fear, Yadkin, Catawba, Broad, Savantheir development. This growth has been nah, and other streams, and the cities of especially marked during the last five or ten Charlotte, Augusta, Atlanta, Richmond, Rayears, the increase during that time being leigh, Greenville, and many others, are many fold. To-day many of the cotton mills utilizing electric energy developed by water and other factories of the South are operated power to a very large and rapidly increasing by electric power from the neighboring degree. Already water powers aggregating

CLOSE TO THE WATER SURFACE

more than 500,000 horsepower have been de- small in flow, but make up in value by their veloped and are being utilized.