# Siberia (Price)/Chapter 10

CHAPTER X
MONGOLIA, IN ITS PRESENT ECONOMIC AND POLITICAL RELATION TO THE RUSSIAN AND CHINESE EMPIRES
IT is my object in the following chapter to indicate in a general way the economic and political condition of the great tract of North-West Outer China which immediately borders on Siberia, and to show the relationships and intercourse existing between the two countries at the present time. In 1910, in company with Mr Douglas Carruthers and Mr J. H. Miller, I crossed the part of the North-West Mongolian plateau bordering Southern Siberia. We were almost the last Europeans to see that part of Mongolia as it was before the revolution of 1911. Since then I have been able to collect information from Russian traders and officials in various parts of Siberia which throws further light on the economic problems. I have also had the privilege of consulting Professor Michael Soboleff, the Professor of Political Economy at Tomsk University, whose extended travels and studies in Mongolia have been of great assistance to me. Some of the statistical information contained in his book, "Russo-Mongolian Trade " (in Russian), I have set forth in the following chapter. The kindness and help of Professor Soboleff I herewith most gratefully acknowledge.
1. PHYSICAL CHARACTERS OF MONGOLIA
The southern border of Western and Central Siberia marches with that of the Outer Chinese Empire along the north-west edge of the Central Asiatic plateau. South of the Siberian-Mongolian frontier with its fur-bearing forests, Alpine meadows and open steppes, lies a stony desert tableland, studded with irregular chains of snowy mountains, the moisture from which drains away into plateau lakes and saline evaporating basins. These physical features stretch far away south-eastward across the Gobi, a stony plateau desert, beyond which hes the Great Wall and Inner China.
All this country is the north-western part of Outer China, sometimes called Outer Mongolia, against which Russia's Empire in Northern Asia abuts. Some idea of its vastness may be gathered from the reflection that the territory outside the Chinese Wall, excluding Manchuria, Tibet and the new province of Sing Kiang, but including Mongolia and the mountainous plateaus between the Siberian and Chinese Altai together with the Gobi desert, covers an area roughly of 1,200,000 square miles. The population, which is very difficult to estimate, is believed by certain Russian authorities to be no more than 2,500,000.
ALPINE MEADOWS AND LARCH FOREST ON THE PLATEAUX OF NORTH-WEST MONGOLIA
MONGOL WOMEN MAKING FELT OUT OF WOOL AND HORSE-HAIR
2. EARLY RUSSO-CHINESE RELATIONS
Theoretically, the geographical frontiers and the economic relations between Siberia and Mongolia have been settled by a series of treaties, of which the oldest dates back to 1689, when Russia in her eastward advance received her first check at the hands of China. For, strange as it may seem from the standpoint of modern international politics, it was the power of China which first called a halt upon the Russian advance in Asia. The process of subjugating the Tartars on the Southern Siberian steppes was swift and sure. Less than half-a-century after Yermak had crossed the Urals, the Russians had swept across Northern Asia to the Pacific. In the Far East, however, the advance of the Russian arms was very different, and, on coming face to face with the outposts of the Chinese Empire on the Amur River, the Cossack suddenly met his match.
The early relations between these two great political powers in Asia I must here briefly describe. By the overthrow of the khanate of Sibir in the sixteenth century the Cossacks subdued the Turkish races of that country, and by the conquest of the Buriats round Lake Baikal in the seventeenth century overcame their Mongol kinsmen farther to the east. But as they advanced eastward yet a third race remained to be subdued. On both banks of the Amur River, and in the country now known as Manchuria, lived a race physically related to their Mongol ​and Turkish kinsmen on the west, but politically separate from them. Collectively they were known as the "Tunguse," and covered a widespread area, varying much in habits and culture. Their northern branches lived a wild nomad life in the forests north of the Amur River, while those in the fertile plains of Southern Manchuria, who were known as "Manchus," were more civilized and cultured. About the beginning of the seventeenth century this Manchu tribe of Tunguses began to rise from obscurity. By agriculture they had become wealthy; they possessed a literature influenced by Chinese culture from the south; and, being a northern race, they were skilled in the art of war. It was not long before they made themselves masters of what is now Manchuria, thus laying the seeds of the Manchu race, or, as it was soon to be, the Manchu dynasty of China. In 1644, chafing under Chinese misrule, their ruler, Thai tsu, by a remarkable train of events, overthrew the tottering Ming dynasty at Peking and made himself ruler of the great Chinese Empire with its teeming millions and its highly developed civilization. Thai tsu was succeeded in 1662 by the Emperor Kang-hi; and shortly after his ascent to the Dragon Throne there was a revolt of some of the Tunguse tribes on the Amur River against their own kinsmen who were ruling at Peking. An expedition was accordingly sent to reduce them, and a dramatic incident in the history of North-East Asia now took place.
The Cossacks were at this moment pushing their forces into the Amur country, and they too began operations against these same Tunguse tribes of North Manchuria. The two expeditions joined hands, ​and so there was the curious spectacle of the Russian Cossacks co-operating with the Chinese forces of the Manchu dynasty at Peking, in subduing the unruly elements of its own tribe. But this co-operation was short-lived, and when it had accomplished its object, the Chinese troops and the Cossack bands stood facing each other in the land which both coveted. Amicable relations between the Emperor Kang-hi and the Cossack Ataman were not likely to continue in such circumstances, and it is not surprising that in 1680 we hear of Chinese attacks upon Cossack forts on the Amur, and of desultory fighting between the two powers during the remaining years of the seventeenth century.
Meanwhile the Tsar of Moscow, seeing that the Chinese power was one to be reckoned with, sent Golovin as ambassador to Manchuria with a force, and in 1689 the two representatives met at Nerchinsk on the Upper Amur River. But the Chinese ambassador had a large military force at his command, while Govolin had but a comparatively small band of Cossacks. He was therefore compelled to agree quickly with his adversary, and the resulting Treaty of Nerchinsk, contracted in fear of the Chinese power, marked the first serious check that the Russians received on their eastward march across Siberia. By Articles 1 and 2 of the treaty a large tract of country lying to the north of the Amur River, which had been won by the Cossacks, was given back to China, and the frontiers of the two countries were delimited by a line running from Kamschatka over the barren plateaus of North-Eastern Siberia to the upper waters of the Amur. This was a serious blow to the Russian advance. The hopes of the Cossacks ​in establishing relations with Kamschatka and the dreams of a warm-water port on the Pacific were rudely nipped in the bud, for, without the right of navigating the Amur River, communication with the Pacific was well-nigh impossible. On the other hand, the treaty allowed for the first time complete freedom of trade between Russians and Chinese, and the Cossacks were from henceforth permitted to send caravans of furs and other Siberian merchandise to Peking for barter. This is the first recognition of Russo-Chinese trade, which is such an important factor in the economic history of Asia to-day.
For some thirty years the relations between the Russians and the Chinese continued upon the basis of this treaty. Merchants who had during the previous fifty years set up businesses in Western Siberia sent Caravans to Peking, and emigrated over into Eastern Mongolia to barter with the Mongol tribes. A sort of annual fair took place on the Orkhon River, where Mongol, Siberian and Chinese merchants met each year to exchange their wares, but it soon became a seat of disorder and riot; and a dispute between the Russians and the Chinese about the suzerainty of a Mongol tribe near the frontier ended in 1822 in the expulsion of all Russian traders from Chinese territories by order of the Emperor.
In 1727 embassies were again exchanged between the courts of Moscow and Peking. The two ambassadors met on the Bura, a small river on the East Mongolian frontier not far from Khiakta, which was a Cossack town, separated by a little brook from the Chinese town of Maimatsin, and the Treaty of Khiakta was made, and signed in the following year. By this treaty the previous frontiers on the Amur, ​as settled by the Nerchinsk Treaty, were maintained, and the frontier westwards from the sources of the Amur River to the Shabin-daba Mountain in the Upper Yenisei basin, just north of the junction of the Kemchik and the Ulukem, was established. The country south of this natural line was placed under Chinese influence, and the country to the north of it under Russian. Trade was allowed under restriction and supervision, and all promiscuous trading in Mongolia was stopped. Caravans sent to Peking were limited in number and provided with escorts, and Khiakta was assigned as a special place on the frontier, where Russians and Chinese merchants could meet and carry on their barter trade without restriction.
These last two treaties established the relations between Russia and China firmly for the rest of the eighteenth century, and were not seriously modified till the middle of the nineteenth century, when the relative weakening of Chinese influence in the Far East, and the consequent strengthening of Russian influence, enabled the latter to enlarge its privileges by a further series of treaties.
The treaties of 1851 and 1860 established the right of free interchange of commercial wares between Russian and Chinese subjects at specified posts along the frontier and at certain places in Outer China, including Urga, Uliassutai, Kobdo, Tarbagatai, Kuldja and Urumtsi. In 1881, by the "Ili" treaty, Russia secured further economic concessions and privileges in the provinces of China bordering Siberia and Turkestan. The provisions of this treaty are very complicated, obscure, and even contradictory, but in the main they admit certain general principles which can be set forth as follows:—
​(1) No tariff is to be imposed by either Russia or China, unless trade attains "such development as to necessitate its establishment."
(2) Free Trade to be maintained between all Chinese and Russian subjects in the principal towns and "trading areas" of Mongolia and Chinese Turkestan.
(3) An old custom that Russian and Chinese subjects can settle permanently, trade, and acquire land and houses within fifty versts on either side of the Russo-Chinese frontier, is confirmed.
(4) Russian subjects have the right to settle and acquire houses, for the purpose of carrying on trade in all "trading places" on either side of the Tian-Shan ranges and in the country outside the Great Wall.
It can be seen without further comment that the ambiguity and confusion of ideas in these provisions have been profitable to the interests of those who do not desire to see Chinese political influence firmly established over the Tartar tribes outside the Great Wall. The ambiguity, moreover, of the clause relating to the future imposition of customs leaves a wide field for speculation as to the limit which commercial development should reach before necessitating customs!
In practice, therefore, the treaty of 1881 has proved useful as a diplomatic lever, which Russia can apply to China whenever occasion requires it. Moreover, the isolation and complicated geographical features which prevail over a large area of the Siberian-Mongolian borderland has rendered the provision for a fifty-verst neutral zone very elastic, and in the past the zone has been extended far beyond its ​legal limit, especially in Manchuria and the Upper Yenisei plateau.
To sum up, therefore, it can be concluded that although mountain ranges, plateaus and uninhabited areas have created a fairly well-defined geographical and political frontier between Southern Siberia and North- West Outer China, nevertheless no real economic or fiscal barrier exists between the people inhabiting either side of the borders.
3. ADMINISTRATIVE AUTHORITIES IN MONGOLIA
Chinese authority in Mongolia has up to the time of the recent revolution been represented by two military governors, known to the world as Tartar generals, and to the Chinese themselves as "Dzan Dzuns." One of them ruled Eastern or Inner Mongolia, residing at Koko-Hotu, and the other ruled Western or Outer Mongolia residing at Uliassutai. Up to the present time these Tartar generals have all been Manchus, for the highest military posts outside the Great Wall have always in the past been monopolized by the ruling caste in China. Since the revolution many of these Manchus have been forcibly replaced by Republican leaders who have assumed powers as arbitrary as those of their predecessors. On the other hand, such is the vastness of Outer China that certain areas seem as yet to have been unaffected by the revolution, and the Manchu generals are still in possession of a few posts outside the Great Wall. The two military governor-generals of Outer China devolve their administration upon five so-called "Hebee Ambans" residing at Kalgan, Senin, Koko-Hotu, Uliassutai and Kobdo. Beneath ​them come smaller Ambans, generally Chinamen, but sometimes Mongol khans or princes, who are allowed to rise to this rank through influence. Thus a so-called Amban-Naion, who is a Mongol khan with suzerainty over most of the Urian Hai tribes north of the Tannu-Ola Mountains, resides on the Tess River south of those mountains in North-West Mongolia. Again at Urga, both a Mongol and a Chinese Amban reside, for the special purpose of watching the great ecclesiastical dignitary, or Hutuchtu Lama, who is the chief of the Buddhist religion in Mongolia, and who resides there. Although nominally a spiritual ruler, in January 1912, with the connivance of the Mongol khans and in defiance of Chinese authority, he declared himself the Great Khan of Mongolia, and has been duly crowned, after having expelled the Chinese Amban.
A TYPICAL MONGOL ENCAMPMENT, SHOWING "YURT" OR ROUND FELT TENT
A MONGOL "CARUOLE" OR FIXED ENCAMPMENT TO DEFINE THE BOUNDARIES OF THE TRIBES IN MONGOLIA
4. THE NATIVES OF MONGOLIA
The Mongols are a branch of an Asiatic race which presents many ethnological features common also to the Turks and Tartars farther to the west, and the Manchus and Tunguses farther to the east. Once politically united in a great Mongol Empire, they have been scattered and crushed under the domination of China, and their princes reduced to tributary vassals of Peking. Society is feudal and very similar to what it must once have been in the Middle Ages in England. The hereditary khans in Mongolia, descended from the sons and generals of the great Mongol emperor of the thirteenth century, have absolute power of life and death over their subjects, whom they hold down in a condition of feudal serfdom. Besides being bound to recruit the Chinese banner corps, the khans are responsible for yearly tribute to the Chinese Tartar generals. This tribute is arbitrary and oppressive and is levied both in silver and in kind. Professor Soboleff mentions instances from personal observation of tribute levied by the khans on their ​serfs amounting in silver to fourteen per cent. of the capital value of their stock per annum, and instances are given below by the writer where a ten-per-cent. tribute was levied in kind on the capital stock of the "Dorbot" Mongols by their hereditary khan. But, in addition to the levy of tribute, the khans compel their subjects to work for them whenever their service is required as personal attendants or as custodians of their numerous flocks and herds. Besides being thus bound down as serfs under the khans, a certain number of the Mongol kinsmen in each Hoshun are held under the feudal authority of the Buddhist Lamas, who co-operate with the khans. The Lamas, who are said by some to number one-third of the whole population of Mongolia, and by others five-eighths of the male population, have by ancient custom a right to acquire feudal power over one male member of every Mongol family, who thereby becomes bound to a monastery. Moreover, the Lamas can exact from each Mongol flock-owner tribute, which often amounts to fifteen per cent, of the capital value of their live stock per annum. They also receive large silver grants from the khans, as offerings to the deities. Grants formerly made voluntarily are now extracted forcibly by the Lamas from the tribesmen. Thus in Mongolia, as in Europe during past centuries, voluntary contributions to religious bodies have become under feudal social conditions legal exactions.
Moreover, the Mongols have been ear-marked by the Chinese for particularly oppressive treatment, and this is no doubt due to old standing jealousies and revenge for the former suzerainty of the Mongols over the Chinese. The authorities at Peking have ​had the acuteness to utilize the Mongol khans as their chief instruments of oppression, by making them responsible for tribute and conscripts, and by allowing them to retain absolute power over their subjects. The livelihood of the Mongols depends upon the natural growth of their stock and its products, which of recent years have commanded a value upon the Siberian and Chinese markets. Being typical Asiatic nomads, they live in portable felt tents, and their sole capital consists of horses, cattle and camels. They subsist upon mutton and mare's milk, and the wool and hair of their flocks provide them with the felt necessary for the coverings of their tents. Their only requirements, therefore, consist of cotton cloth for their clothes, tea and small ironware, and the means of obtaining these is found by the sale or barter of the surplus produce, consisting mainly of wool, horse hair, hides and skins.
But the purchasing power of the Mongols has become impaired by the tyrannous rapacity of the authorities both temporal and spiritual who exploit them. Indeed, signs of economic exhaustion are not wanting, for in bad seasons summer droughts and bitter winters curtail the natural growth of their flocks, while in good seasons the whole of that increase is absorbed by high tribute. They are thus reduced to a condition of social and economic serfdom.
The recent revolution, although it has made the Mongol khans practically independent, has created no guarantee that the Mongol tribesmen will receive less oppressive and differential treatment than in the past. The struggle has been that of Chinese tyrant versus Mongol tyrant rather than that of Mongol tyrant versus Mongol tribesman. In some respects ​the present position may be worse, for, unless the Republic is able to regain its prestige over the khans, the tribesmen will not receive the benefit of any financial and fiscal reforms which the new regime in China may introduce.
5. MONGOLIA AS AN ASIATIC MARKET
(1) Its External Trade.—Like all primitive countries Mongolia exports large quantities of raw material, which is exchanged for cheap manufactures from the industrial centres both of the East and of the West. Economic relations are thus maintained with Inner China on the south-east and Siberia on the north, and the main routes along which this commerce flows are three in number.
There is first the south-eastern caravan route from Eastern or Inner Mongolia into Inner China, which runs from Urga across the Gobi desert to Kalgan and Peking. Secondly, there are the north-eastern caravan routes running across Outer Mongolia from Uliassutai and Urga and converging on the Siberian frontier town of Khiakta, through which commerce passes into Eastern Siberia. Thirdly, there is the north-western caravan route which runs from Uliassutai and Kobdo across the north-west plateau of Mongolia to Biisk in Western Siberia.
The raw export trade in Mongolia is influenced by two factors—namely, the markets of Siberia and European Russia on the one hand, and those of Inner China on the other. The trade figures for 1908 are as follows:—
Imports from Mongolia to China, 35,000,000 roubles (£3,888,888).
​Imports from China to Mongolia, 15,000,000 roubles (£1,666,666).
Imports from Mongolia to Siberia, 8,500,000 roubles (£944,444).
Imports from Siberia to Mongolia, 1,800,000 roubles (£200,000).
The China-Mongolian trade, therefore, is by far the greatest of the two, amounting as it does to 50,000,000 roubles a year in imports and exports, and this shows that the main natural trend of Mongolian trade, especially in the east and south-east, is directed towards Inner China. In this connexion it is interesting to note what the probable effect of a proposed railway from Khiakta to Peking via Urga and Kalgan would be upon the economic status of this part of Outer China. The cheapening of the cost of transport from Mongolia, both towards the north and towards the south, would probably stimulate the southern traffic towards Inner China, at the expense of the northern trade to Siberia. It has even been rumoured that foreign wool agents in China have recently begun to discover that the export of Mongolian wool to Europe via Urga and Kalgan is 70 kopeks per poud (½d. per lb. approx.) cheaper than if it were sent via Khiakta and the Siberian railway. While, however, the railway would probably stimulate the China-Mongolian raw material trade at the expense of the Russo-Mongolian, in other respects it would bring Russian and Inner Chinese markets nearer together, and would probably facilitate the import of more Chinese wares, especially tea, into the markets of Siberia and Western Russia.
It has become of recent years apparent that Russian and Chinese economic influence have been drawn ​more and more into conflict with one another in Mongolia, and figures will show that the influence of the Chinese markets has been making itself felt at the expense of the Siberian markets, more particularly in regard to cheap manufactured goods sold in Mongolia. Thus, while the imports of raw material into Siberia along the north-western trade route via Koshagatch have increased from 552,263 roubles in 1900 to 4,021,906 roubles in 1910, the exports of Russian manufactures into Mongolia along the same route have increased from 373,408 roubles in 1900 to only 775,962 roubles in 1910. The north-eastern trade route also via Khiakta shows signs of decline over the same period both for Russian imports and exports. According to Professor Soboleff, between 1901 and 1906 Russia's manufactured exports from Siberia to Mongolia increased by twenty-two per cent. only, while Mongolian raw material imports into Siberia over the same period increased by 566 per cent.
Everywhere it is apparent that there has been greater activity among the Chinese traders in Mongolia since 1900. Chinese firms from Koho-Hotu and Kalgan have now got branches in every important trading station in Mongolia, and by their political influence with the Mongol khans, and their better organization, have succeeded in underselling and partially ousting Russian manufactures from the Mongolian markets. In former days Russian economic influences predominated in Mongolia. There was then little or no demand for Mongolian raw material in Siberia, and consequently, the exports from Russia to Mongolia being in excess of the imports from Mongolia to Russia, a silver balance ​was paid to the Siberian merchants by the Mongols. Within the last five years, however, Mongolian raw material has come into greater demand on the Siberian markets, while the sale of Russian manufactures has suffered severely from Chinese competition. Silver, therefore, has begun to flow the reverse way—namely, from Siberia into Mongolia—in payment of the balance of Mongolian raw material in excess of the exported Russian manufactures. Russian firms have their agents in the Siberian frontier towns of Biisk, Minusinsk and Irkutsk. These agents despatch their previous season’s wool and skins by the first steamer after the ice on the Siberian rivers has melted to the markets of European Russia via the Siberian railway, and during May and June they set out in carts or with pack-horse caravans for Mongolia, where they remain all the summer trading with the Mongols. They bring with them consignments of Russian manufactured goods which they have bought from the wholesale firms, and lump silver which they have borrowed from the Siberian banks to enable them to carry out the next season's purchases. But the Siberian wool merchant, who formerly obtained Mongolian wool in exchange for tea and cotton manufactures, is now more and more forced to buy his wool for silver, and to see the Chinaman undersell his Russian manufactures at his very door. Thus on the Kemchik steppes of the Upper Yenisei plateau Siberian wool merchants, who formerly obtained wool and skins from the Mongols by giving them tea and cotton manufactures in exchange, now have to buy their wool from the Chinese traders, paying cash in lump silver. In Ulankhom, a trading station in North-West Mongolia, the Siberian wool ​traders in 1905 bartered 50,000 roubles' worth of wool for Russian manufactures, but in 1910 only 8000 roubles' worth. It is estimated by the Siberian traders that the Mongols now exchange by barter only one-fifth of their raw material for Russian wares, the remaining four-fifths being bartered to the Chinese merchants or given in lieu of tribute to the khans, who in return sell this raw material for lump silver to the Russians. Professor Soboleff, writing on Russia's Mongolian trade, says: "Our trade with Mongolia is becoming passive in character. We are compelled to cover the value of our imports by ready money or cash, and only if we resell any part of this raw material beyond our frontiers does this money return to us. Thus we export silver to Mongolia which we buy in Hamburg, and pay for it by raw material imports to Germany. This Russian silver exported to the East goes partly to the Chinese traders, and partly to the Mongol khans, as tribute for their subjects, and much of it also finds its way into the hands of Chinese officials. The Lamas also hold silver in the monasteries, which they have squeezed out of the tribesmen."
The only comment necessary on this excellent summary of the present economic position is that, while it is true that silver may now find its way into China in payment of Mongolian raw material, it should be remembered that this metal balance, as is so often the case, may be made good in many ways. For instance it is known that China imports manufactured goods from countries in Western Europe, to which Russia sends annually large quantities of timber and grain from the large reserves of her natural resources. These combined transactions ​might quite conceivably therefore complete the economic circle, which is invisible on the surface, thereby cancelling the so-called adverse balance.
(2) Currency.—Where goods are not directly bartered the following media of exchange are generally in use throughout Mongolia:—
a. Lump or shoe silver, which is provided by the Siberian banks and is based upon the one-ounce unit of weight.
b. The Chinese silver lian, which is divided into ten units and varies much in value according to the supply of silver in Central China. Its equivalent in Russian money varies from 1 rouble 20 kopeks to 1 rouble 30 kopeks. Ten years ago it was equivalent to 1 rouble 70 kopeks, and it has been decreasing in value slowly ever since.
c. The Chinese silver dollar which, according to Soboleff, is at present current in the town of Urga only, and in 1910 was equivalent to 85 Russian kopeks.
d. The Russian silver and paper rouble. This currency is everywhere very popular and much confidence is placed in it, especially by the Mongols, because it is the purest of all the currencies. It is not usually accepted by the Chinese traders, however, who generally require lump silver in settlement of balances. The rouble is therefore chiefly in use between the Russians and the Mongols.
e. Chinese brick tea. This is a very important article of domestic economy among the Mongols, and, being fairly free from fluctuating value, is capable of use as a medium of exchange. It is the monopoly of certain Chinese firms from Inner China, who retail it in Siberia and Mongolia in return for lump silver.
In this connexion it may be interesting to note ​that such is the commercial integrity of both Russian and Chinese merchants in Mongolia, that although racial and religious antagonisms are strongly developed between them, they nevertheless often leave their balances outstanding for twelve months. Thus, when I was on the North-West Mongolian plateaus in Ig10, I frequently found Russian and Chinese traders who meet perhaps once a year in some wild spot in Mongolia, and exchange wool for silver or brick tea. If the accounts did not quite balance, they were left over for settlement till next year, and meanwhile there was nothing except mutual honour to ensure the fulfilment of obligations. The Russian traders who had also been in Manchuria told me that they could do this with a Chinaman but never with a Japanese.
(3) Russtan and Chinese Systems of Credit.
a. Chinese Hoshun Credit.—Transactions in cash, credit, and barter are carried on in Mongolia by the Russian and Chinese merchants in their dealings with the Mongol flock-owners and with each other. Of recent years credit terms have been largely induced by the heavy silver tribute levied on the Mongol khans by the Chinese officials through the medium of their Hoshuns. A system has therefore come into existence known as the Hoshun Credit System. The khan of the Hoshun, who is responsible for the tribute to the Chinese authorities, frequently obtains from the Chinese merchants an advance of silver with which he pays his tribute. In return for this he gives them the right to exploit his subjects, and to recoup their loaned capital with whatever interest they can get during that period. The debt is therefore paid off by the Mongols in the produce ​of their flocks, generally at most exorbitant rates of interest, and thus the Chinese traders take the place of the khan as feudal lords and slave-drivers. Instances have come to light in which a loan to a Mongol khan of six lian per head of each of his subjects has only been satisfied by the payment of 100 lbs. of wool by each flock-owner to the Chinese merchant. This is equivalent to sixty-six per cent. interest. In fact all credit transactions with the Chinese merchants are transacted under very harsh conditions. Thus one brick of tea on loan for one year is frequently repaid by a one-year-old ram the next year, and by a two-year-old ram the following year. This is equivalent to one hundred per cent. interest. The sale of a brick of tea on credit in exchange for wool is carried on at rates varying from forty to one hundred per cent. interest. Therefore, since the advent of the Chinese traders, whole tribes of Mongols have sunk more and more into the condition of economic serfdom. The loans of the Chinese traders are backed by the feudal authority of the khans, the Lamas and the Chinese authorities, all of whom are interested in oppressing the tribesmen. Russian traders, who have not the same political prestige with the Chinese officials and the Mongol khans as the Chinese traders, are by this system of Hoshun credit utterly debarred from direct dealings with the Mongols. But in the forested regions of the Siberian-Mongolian frontier, where this oppressive system of Hoshun credit does not exist, the influence of the Russian traders is decidedly beneficial for the Mongols, since the legal rate of interest chargeable through the Russian Empire is never more than twelve per cent., and this holds good over Russian subjects in Mongolia.
​b. Russian Banking Facilities.—In spite of Hoshun Credit there is no inconsiderable field for banking facilities in Mongolia, and the Russians, by dint of their commercial treaties with China, might profitably develop sound banking business in the principal Mongolian commercial centres. There were formerly banks at Urga, Uliassutai, and Kalgan, but of late years these have been unable to face the competition of the Chinese merchants and moneylenders, and so they have been closed. It is probable that their failure has largely been due to their lack of study of the economic conditions under which the Russian traders have to carry on their business. Most Russian traders now borrow lump silver from the bank in the spring of each year, and with this silver they trade in Mongolia during the summer, and return in the late autumn or early winter with the produce they have bought. The Siberian banks only allow nine months before the silver loan is to be discharged, and thus they often cause the values of Mongolian raw material to be depreciated by forcing them on to the Siberian markets in the autumn, when better prices might be realized later. If, for instance, the terms of credit were extended to twelve months, much greater facilities would be afforded to the Russian traders in Mongolia. The chief difficulty lying in the way of Russian banking enterprise is, of course, the Hoshun credit system, and in such countries as Mongolia, where racial antagonisms are strong, the Russians, in spite of the privileges obtained by their special treaties with China, are immensely hampered by lack of political influence with the Mongol khans. The revolution may assist the Russian traders in ​Mongolia by drawing the sympathies of the Mongol khans towards them, for the khans realize that in them they have a guarantee against the arbitrary economic exploitation of the Chinese.
(4) Mongolian Exports and Imports.
a. Cotton Manufactured Goods.—Cotton goods are among the most important domestic articles used by the Mongols. It is estimated by Siberian traders that each Mongol requires for his rough cloth tunic and linen underwear from four to five roubles' worth of cheap cotton manufactures a year. Until recent years Russian goods have had almost complete predominance. Thus the imports of Russian cotton prints and textiles into North-West Mongolia by the route from Biisk to Kobdo steadily increased after 1892, till in the year 1902 they rose to a maximum of 688,000 pouds, about 11,000 tons; from 1903 to 1910, however, there has been a steady decline, until now Russian cotton exports in Mongolia along this route are in the same position as they were in 1892. Along the north-eastern route via Khiakta, a similar increase and decrease can be observed in Russian cotton exports, which reached a maximum of 14,863 pouds in 1906, and have fallen rapidly since. Besides the competition of the Chinese cotton goods of recent years, the fall in the value of silver has hit the Russian trader in Mongolia very hard. According to Professor Soboleff, in 1890 silver was worth 1200 roubles (£310) per poud (36 lbs.) and the Chinese lian was equivalent to 1 rouble 90 kopeks (4s. 1½d.). A piece of cotton textile, however, which was formerly worth 1 lian 2 tsen in Mongolia, and 2 roubles 25 kopeks in Siberia, is now only worth 1 lian in Mongolia and ​1 rouble 20 kopeks in Siberia. Russian traders have raised their prices lately to recoup themselves, but they have to meet the heavy competition of the Chinese. The Chinese cloths and cotton prints are of great interest, because many of them are simply cheap English cotton goods that have travelled all the way from Manchester to MongoUa. During 1910, the writer found in several places along the north-west plateaus Manchester cotton goods and prints which had been imported by sea to Eastern China, where they had been dyed and coloured to suit the Mongolian market and had then travelled all across the Gobi to Mongolia. These cheap cotton goods have been exported for years from England to China, but have apparently only recently found their way into the Western and North-Western parts of China, through the medium of enterprising merchants. Besides being cheaper than the same class of goods imported from Moscow, which the Russian traders sell, they are of better quality. On the testimony of the Mongols themselves, Chinese linen of English manufacture lasts twice as long as a similar piece of Moscow linen. In addition to English and Russian cotton goods, there are also linens of a somewhat inferior quality and some thin American cloth.
In 1910 I found that the cash price of Chinese (that is English) cotton prints in North-West Mongolia was 16 to 20 kopeks per archine, or 7d. to 9½d. per square yard, while that of Russian (Moscow) cotton prints was 21 to 28 kopeks per archine, or 9½d. to 1s. per square yard. Professor Soboleff speaks of Russian linen being sold in Kobdo at 18 to 20 kopeks per archine and English and American linen at 16 to 20 kopeks per archine.
​It is interesting to observe how the Chinese merchants can sell Manchester cotton goods, which have travelled at least 18,000 miles by sea and land, cheaper than the Russian merchant can sell his Moscow tariff-protected wares only 3000 miles from the industrial seat of Empire.
b. Miscellaneous Manufactures.—The chief item under this heading is hardware and crockery, and up to now the market has been largely monopolized by cheap Moscow and German goods. These, moreover, seem to be holding their own against similar articles from Western China. The principal articles required by the Mongols under this heading are iron bars for horses' shoes, nails, spades, axes, spring traps, tea cans and China cups.
c. Tea.—As explained above in dealing with currency, tea, in the form of bricks, is an important article of consumption among the Mongols. These bricks are made by compressing tea dust, and are the monopoly of certain Chinese firms in central provinces. The green article, being cheapest, is consumed largely by the Mongols, and costs roughly 50 kopeks (1s. 1d.) per brick in North-West Mongolia.
d. Wool.—This is the principal article of export from Mongolia, and a considerable and increasing demand has developed of late years in European Russia. The best quality is found in the Uliassutai district, where the wool is less hairy than in most other parts. It appears that good summer pasturage constitutes the condition most favourable for the growth of good hairless wool, and this is found at an altitude of from 5000 to 8000 feet on the plateaus. In the main, however, Mongolian wool is hairy in quality, and is fit only for the manufacture of the ​cheaper classes of woollen goods, which are chiefly made in European Russia.
The Mongols bestow no care on the improvement of the wool from their flocks. They keep the best wool for themselves, and, mixing it with horsehair, manufacture it into felt for their tents, while they sell only the dirtiest and hairiest qualities. The Russian and Chinese wool merchants in Mongolia, therefore, are compelled to wash all the wool they purchase, and this wool-washing is the only industry which the Mongolian plateau produces.
The price of wool in Mongolia has risen steadily for many years past, and the amount exported has more than doubled since 1900. In 1910, 97,142 pouds (1561 tons), valued by the customs at 8¾ roubles a poud (8½d. per lb.), passed the Koshogatch post by the north-western caravan route. Professor Soboleff states that prices in Uliassutai have risen from 1 rouble 70 kopeks per poud (½d. per lb.) in 1908 to 5 roubles per poud (3⅔d. per lb.) in 1910. In the same year the writer saw wool in North-West Mongolia offered by Mongolian flock-owners in exchange for manufactured goods and silver advances at the rate of from 2 to 4 roubles per poud (1½d. to 2½d. per lb.). The price of Mongolian wool in Biisk during 1910 ranged from 8 roubles 57 kopeks to 9 roubles 10 kopeks per poud (5¾d. to 6½d. per lb.), including the cost of transport from Mongolia.
The development of the Australian wool trade, which has so long affected the European wool markets, and has kept down wool prices throughout the world, seems to have had no adverse effect on Mongolian wool. On the contrary, it appears that the cheap​ness of wool throughout the world has only increased the demand for it in Russia, and, by bringing more wool-producing districts into activity, has actually increased prices in Russia and Western Europe.
In addition to the export of North-West Mongolian wool to Siberia, the wool trade from Eastern and South-Eastern Mongolia to Central China is of even greater importance. The wool trade in China has increased steadily of late years, and from Urga twelve times as much wool now goes via Kalgan to China than via Khiakta to Siberia. As was pointed out above, the proposed Chinese railway from Urga to Kalgan would probably cheapen the cost of transport from Mongolia to Central China and stimulate this wool trade at the expense of the export of Siberia.
Meanwhile the Russian wool merchants in Mongolia have found it more and more difficult to compete with the Chinese wool merchants, who get between them and the Mongols through political influence and their intimacy with the Mongol khans. But although the prosperity of the Russian wool traders in Mongolia has suffered severely of late, still the wool trade itself shows every sign of successful development. The decline of sheep culture in European Russia and in the immigrant parts of Siberia, owing to the gradual change from nomad life to settled agriculture, will be more than compensated for by its development in Mongolia, since nomadic stock-raising is the only industry that can ever exist on a large scale over the greater part of those desert plateaus.
e. Live Stock.—Besides wool Mongolia also exports live stock. The principal markets for this industry are in Siberia, where the Mongolian horned ​cattle and horses are used to replenish the Siberian herds. The former also are killed for meat in the principal Siberian towns. The Russian traders, who come especially for this purpose, collect large herds of cattle, horses and sheep, during the summer in Mongolia, and drive them into Siberia in the autumn along the chief trade routes. Here they are sold at the principal Siberian autumn fairs. Many are slaughtered at places such as Biisk or Novo-nikolaevsk, and the skins forwarded to European Russia for tanning, while tallow is made in Siberia from the Mongolian fat-tailed sheep. The export of live stock from Mongolia shows a steady increase. Thus in 1905, 1298 cattle and 4350 sheep, and in 1910, 20,729 sheep and 1678 cattle were exported by the north-western route. Mongolian cattle are larger and hardier than the Siberian type. The former give from 11 to 21 pouds (396 to 432 lbs.) and the latter only 7 to 8 pouds (252 to 288 lbs.) of meat per carcass. Mature cattle in North-West Mongolia cost from 20 to 40 roubles, according to age, while sheep can be exchanged for Russian silver at from 2 to 4 roubles a head. As with the wool trade, the development of the live-stock trade must depend largely upon the condition of the Siberian markets, and as Siberia is colonized with agriculturists, the demand for Mongolian live stock is certain to increase.
f. Furs.—The chief fur produced in Mongolia is marmot, and to a smaller extent fox, squirrel and sable. The two latter being denizens of the sub-Arctic forests, it is only in a few spots, where sub-Arctic conditions exist along the Siberian-Mongolian frontier, that they are obtainable in any large quantities. Here on the Amur and the Upper Yenisei ​plateau both black and brown sable is found. In 1911, 1000 Mongolian sables were sold in Siberia, their average value at Irbit being from 40 to 60 roubles each.
Marmots inhabit the high plateaus between 5000 and 8000 feet. The plateaus of the Chinese in Altai in North-West Mongolia are the principal marmot grounds. The price of marmot in Urga and Uliassutai varied in 1910 from 1 rouble 50 kopeks to 2 roubles each.
Fox is also found all over North-West Mongolia on the plateaus, but the fur is rather coarse and of a light yellow colour. Squirrels are found chiefly in the sub-Arctic forests on the Siberian-Mongolian frontier, and in 1909 the Upper Yenisei plateau produced 200,000 squirrel-skins, some of which went as tribute to Uliassutai and some to the Siberian fur markets. The Russian traders barter these squirrel-skins on the basis of 30 kopeks (7½d.) a piece.
(5) The Future of Mongolia's Trade Relations.—We have seen above that the north-western portion of the Chinese Empire, between the Great Wall and the Siberian frontier, is becoming the battle-ground where the industrial centres of Europe contend with those of Central China for the raw materials of that great region. Formerly the Western influence through Russia and Siberia predominated both in import and export to and from Mongolia. Latterly, however, the Eastern influence has made itself felt through the greater economic and political activity of the Chinese, who have been drawing Mongolian raw material more and more toward Central China in exchange for their manufactured wares. Thus, ​although the North-West Mongolian trade still remains chiefly influenced by the Siberian markets, the whole of the East and South-East Mongolian trade, which is by far the most important, trends more and more towards Central China.
But not only is the economic influence of Inner China extending more outside the Great Wall than formerly, but the influence of the Siberian markets has correspondingly begun to decline within the last ten years. As I have shown above, the Mongolian raw material trade is gradually passing into the hands of the Chinese traders, and its exchange is effected almost entirely through the medium of silver, which passes from the Siberian wool trader into the hands of Chinese and Mongol officials, and the Lama monasteries. Cheap Chinese manufactures, moreover, are everywhere beginning to overrun the land and to undersell the goods which the Siberian wool traders have to offer in return for the raw material of the Mongol. The cause of this phenomenon is not far to seek.
The industrial system of the Russian Empire is still backward, and, although it is developing steadily, its imperfect condition can be judged by the fact that it only very partially supplies even its own home markets. Any export of manufacture, therefore, from Russia can only be carried on successfully, under present conditions, to those countries across her eastern frontiers, where an even lower standard of industrial development exists than within the Russian Empire itself. Mongolia and similar countries, such as Persia and Chinese Turkestan, have provided these markets in the past. Russia's export trade to these countries is, however, on an insecure basis, and the ​political and industrial awakening of China and Japan has in the last ten years seriously affected her economic influence in the Far East. Moreover, Western European manufactures, notably English cotton goods, have recently, by reason of their low cost of production, been able to compete successfully with Russian manufactures right under the very frontiers of Eastern Russia. Thus, in spite of her political prestige, backed by a military force superior to that of China, Russia is squeezed economically between East and West. Much undoubtedly could be done to strengthen her economic position in these Eastern markets by better commercial organization, and especially by better banking facilities. At present, however, Russia's attention can well be concentrated upon the development of her own internal resources, where she has an unlimited field. Meanwhile she necessarily suffers from her backward industrial system, her high tariffs and high cost of production, whenever her manufactures meet the open markets beyond her political frontiers.
6. THE PRESENT POLITICAL SITUATION IN MONGOLIA
The political horizon both in Inner and Outer China has undergone such rapid changes during the closing months of 1911 and the early days of 1912, and the future is still so obscure and problematical, that the task of reviewing the political situation is no easy one. Nor will the writer here attempt to present more than an indication of the political conditions governing the relations between Mongolia and Outer China.
The watchword of the Chinese colonial policy in ​Mongolia has been "alien domination of a subject race." The ruling Manchu caste at Peking, which has in the past placed itself in privileged positions both socially and politically above the other races of the empire, has always, in spite of the fact that Manchu and Mongol originated once from a common nomad ancestor, adopted a particularly hostile attitude towards the non-Chinese population of North-West Outer China. Partly in revenge for their former conquest of China, and partly in fear of a national awakening, the Manchus imposed upon the Mongols special social and political disabilities, which within the last decade have been increased, till they have at last become intolerable. When the writer was in North-West Mongolia, in the summer of 1910, he was one of the last Europeans to see the country under its old Manchu domination. The most oppressive tribute was being levied from the Mongol tribes through the khans, amounting in many cases to more than the whole annual increase of the native flocks. Among the Dorbot Mongols several sub-tribal sections had been mortgaged by the khans to Chinese moneylenders as a return for advances of silver, with which to pay the Chinese tribute. In addition to this, the Mongols were subjected to military service for the formation of Chinese banner corps without remuneration. They had been dispossessed of considerable areas of their most fertile tracts by Chinese immigrant colonists. Although no large area of Mongolia is capable of cultivation, nevertheless what land of this description there was had been already mortgaged in great part to Chinese immigrants. The khans in the eastern "Kalkas" Hoshuns were compelled in 1910 by the Chinese ​authorities to set apart for Chinese colonization 4,500,000 desyatines (11,250,000 acres) of land in their territories, and similar territorial concessions have been made by some of the smaller Hoshuns of the western tribes. The colonization of the low-lying lands, surrounding the rivers and evaporating basins in Mongolia, for the purpose of cultivation by irrigation has been having the effect of depriving the Mongols, the original inhabitants of the country, of their most fertile valleys, and of forcing them to remain on the high grazing land throughout the year.
Thus it is everywhere apparent that within recent years the Chinese authorities have been making great efforts to bring Mongolia more directly under Peking, and to stamp out all embers of Mongolian local autonomy and national life. The last effort of the tottering Manchu dynasty was an abortive attempt to consolidate the empire. Everywhere the Mongol khans and Chinese officials were in a sort of political union with one another, and the combined tyranny of both, assisted by that of the Buddhist Lamas, was crushing the Mongol tribes under a serfdom which recalled the days of mediæval Europe. But the Mongol khans themselves, although to some extent in league with the Chinese officials and dependent for their powers upon them, have been viewing with grave alarm the Chinese economic and military expansion in their territories and the colonization of their best lands. They regard these movements naturally as an attack upon their historical autonomous rights and a menace to the existence of the Mongols as a race. The situation is further complicated by the fact that many of the Mongol khans ​have intermarried with the Manchu Imperial family. Since the outbreak of the recent revolution, however, ending in the downfall of the Manchu dynasty, the Mongol khans have taken the opportunity to regain that autonomy, which has been threatened during the last decade. The expulsion of the Chinese Amban and his followers from Urga and the coronation of the "Hutuchtu" Lama in that city as "Great Khan of Mongolia," was followed by an appeal to Russia to guarantee the Mongol rights of local autonomy.
And so Russia becomes a factor in the revolution of Outer China. She informed China by note, and by an official communiqué issued by the St Petersburg Foreign Office on 10th January 1912, that she would regard Mongolia as an autonomous province under Chinese suzerainty only. Moreover, she indicated her desire that China should control only the external relations of Mongolia, leaving all internal administration to the local khans; that Chinese military exactions on the Mongols should cease; and that Chinese immigrants should not deprive the tribesmen of their best land in future. The moral rôle which Russia, perhaps somewhat unwittingly, has played in this scene should arouse the sympathy, if not the approbation, of those who desire the protection of weak and struggling nationalities.
Russia has in fact undertaken to protect the Mongols against Chinese aggression, which, if continued in the recent manner, would eventually have threatened them with extinction.
The Russian Government's position was rendered all the more convincing in January 1912 by the comparison of the Russian policy in Mongolia with ​that of the British in Tibet. These two provinces of Outer China, as was pointed out, are of special importance to British India on the one hand and to Siberia on the other, through the geographical position of each respectively. A condition of political stability in Mongolia is to the Siberians as much a matter of interest as a similar condition in Tibet is to British India. M. Sasonoff's speech in the Duma in May 1912 confirmed the popular belief in a pacific Russian policy in Mongolia. "We should not forget," he said, "that Russia is a European Power; that our State was put together not on the banks of the Black Irtish, but on the Dnieper and the Moskva. The expansion of Russia in Asia cannot constitute our aim and policy."
On the other hand, it would be a mistake to assume that Russia has no material object in view in her Mongolian policy. She saw clearly in 1911 that the continuance of Chinese arbitrary methods would sooner or later have caused social unrest among the Tartars in Mongolia, sufficient to threaten her commercial interests in that country.
The fear of Chinese competition, moreover, which, as we have seen, has caused such serious loss to Russian traders within the last decade, has also caused Russia to look with no favourable eye upon Chinese colonization in Mongolia.
Herein is the danger of Russia's action in Mongolia—a danger arising not from the policy of the Russian Government, but from the chauvinistic section of the Russian Nationalist Press. In the spring of 1911 their organs, apparently on their own responsibility, enunciated a policy of aggression in Mongolia and of sympathy with the supposed interests of the ​Siberian traders, who have been suffering from Chinese competition there. Thus the Novoye Vremya declared in May 1912 that "Russia, in spite of her history of a thousand years, is still on the road to her geographical and political boundaries." And again: "The desert of Gobi is a better frontier for Russia than the present one." Coming down to practical considerations, the same paper, in discussing the effect of the Chinese revolution on the commercial treaty of 1881, intimated that it was of more importance to settle the trade relations along the Russo-Chinese frontier on a basis satisfactory to Russia than it was to insist on the freedom of trade and the open door in Outer China.
This significant remark illustrates the attitude of a certain body of Russian opinion on the question of the open door in Mongolia and Chinese Turkestan. Let us see what this would mean, if it were carried out. The imposition of customs dues preferential to Russian commerce in the provinces of Outer China would enable that commerce to regain artificially the ground which, by the inferiority of its industrial development, compared with that of the Chinese, it has lost in the last ten years. Moreover, this will be not without its effect on British trade. In 1910 the writer came upon many trading stations on the North-West Mongolian plateaus where British cotton goods were being sold by Chinese merchants. These goods had been brought by sea from England to the treaty ports, and from there had been taken over the Gobi desert to the Russo-Chinese frontier. Here they were underselling the Russian cotton goods from Moscow, which had not travelled half the distance. The margin of difference ​by which the Chinese merchants in Mongolia undersell the Russian merchant in cotton goods might easily be covered by a preferential customs or excise due levied on all but Russian wares. This is an illustration of the extent to which British commercial interests will be affected in the Far East, if Russia forces China to violate the principle of the open door in Inner or Outer Mongolia or Eastern Turkestan.
If Russia only insists upon the recognition by Young China of Mongolia's autonomous rights, Great Britain, after sending an expedition to Tibet for a very similar purpose, cannot reasonably object, especially if such recognition will save the wretched Mongols from oppression. But if the Russian Government is going to be forced by the Russian Nationalist party into securing special privileges in Outer China, Great Britain and the other four powers will be justified in looking upon her as pursuing aims and methods wholly opposed to the principle of the open door.
It must not be forgotten, also, that Russia's policy, in the Far East, as elsewhere, always tends to be actuated by a desire to secure material advantages for her subjects. As I have shown above, her commercial interests in many parts of Outer China have suffered by Chinese economic expansion in recent years. Russia's economic policy in neutral markets is exclusive and protective and hostile to the open door. On the other hand, British trade has recently found a new market through the medium of enterprising Chinese merchants in Mongolia. However sympathetic, therefore, Russian and British high policies may be in Central Asia, the same cannot be said of the economic policies of the two ​powers; and this fact must be borne in mind in reviewing the political situation.
Although the Russo-Japanese War is still recent, events have moved rapidly since then. In those days Japan purported to be fighting for the open door, and Russia was regarded as the aggressor against China's integrity. Recent events have clearly indicated that the two powers who fought over Manchuria have discovered that their aims and policies in the Far East may not, after all, be irreconcilable. It is significant that the Russo-Japanese agreement almost coincided with the rejection by those two powers of the American proposal to internationalize the Manchurian railways. In the summer of 1910 came the annexation of Korea by Japan, and in March 1911 the Russian ultimatum to China over the commercial treaty of 1881. Each event, taken separately, may be regarded as of little importance, but taken together they are a clear indication of the policy of the two powers in the Far East at the present time. Moreover, recent events in connexion with the Six Power Loan to the new Chinese Republic have confirmed the suspicion that Russia and Japan are attempting to utilize the financial straits of China in order to secure the recognition of their so-called rights in Mongolia and Manchuria respectively. The world may well be astonished at the spectacle of bankrupt Russia and Japan anxiously rushing to force money upon China at five or six per cent., which they would have borrowed at four per cent. from London and Paris, and then withdrawing their doubtful favours at the last minute, unless their obscure privileges in Outer China were recognized. Recent exchanges of views, moreover, said to have taken place between ​the Russian and Japanese governments over the respective rights and reversionary interests in Outer and Inner Mongolia respectively, are not without significance. It cannot be too strongly emphasized therefore that the policy of the open door and the integrity of China is as important to-day for British commercial interests in neutral markets, and for our moral prestige in the East, as it was fifty years ago. It is not therefore wise for England to blind herself to the fact that there are two powers in the East, with whom she is on the friendliest terms, but who by economic necessity pursue objectives which are not altogether in keeping with her traditional ideas. To connive at a subtle infringement of the open door in any province of China is equivalent to assuming the responsibility of closing it, and unless extreme caution is exercised by British representatives at home and abroad, England may be unwittingly drawn in the Far East into the "orbit" of a certain diplomatic group, pursuing aims and policies at variance with her own. Once allow such an infringement over any part of Mongolia, Manchuria or Turkestan, and a precedent may be set up which will apply equally to other parts of those little-known mountainous regions of Far Western China.
It must be recognized that the economic policies of both Russia and Japan in the Far East are both fundamentally exclusive, and should be watched with considerable care. The price of British co-operation in China, as elsewhere, must always be the maintenance of the open door for foreign commerce; and the integrity of China, and the interpretation of the open door, must include no connivance at the closing of that door by any other power. But adherence to ​these principles need not prevent Great Britain from co-operating with Russia, for the purpose of setting up in Mongolia and Outer China a stable regime based on Mongolian autonomy under Chinese suzerainty. As joint-guarantors with Japan of the integrity of China, England could not morally agree to any attack on the suzerain rights of Chinese authority in Outer China, whether in Tibet, Chinese Turkestan, or Mongolia. But events of recent years show that the Chinese have tried to consolidate their sovereign rights, and have made oppressive attacks upon the autonomy of the Mongol tribes. In fact since 1900 Chinese policy outside the Great Wall has been directed towards the forcible breaking down of all racial barriers, and the absorption of subject nationalities into the vortex of Chinese civilization. Broadly speaking, the same policy has been pursued by China in Mongolia as in Tibet, and its fruits have been seen in the revolt of the latter province during 1910 and the recent peaceful revolution in the former province during 1911. This was the situation, therefore, in Mongolia in January 1911, when Russia intervened in the political affairs of Outer China, and intimated her preference for a policy of creating Mongolia an autonomous province of China, whereby Mongolia would act as a buffer to prevent Russian and Chinese civilization from coming in contact with one another. It is not improbable, however, that the financial question is likely to prove the chief difficulty, and the solution of the problem of Outer China on an autonomous basis can, in my opinion, only be found in a scheme, whereby the revenues drawn from Outer China will be apportioned between a nominal Imperial tribute due to the ​Chinese Government and local grants for expenditure on internal reforms and the development of Mongolia.
At present the revenues of Outer China are drawn partly from direct tribute levied on the Mongol princes, and partly from small customs duties levied on Russo-Chinese commerce along the Siberian-Mongolian frontier. The latter revenues are, however, insignificant, and are, moreover, controlled by the Russo-Chinese commercial treaties and cannot be modified without the consent of Russia. The matter, since March 1911, has been under consideration in connexion with the Russo-Chinese commercial treaty of 1881. It is to be hoped that some arrangement may be arrived at, whereby all the customs duties on Russo-Chinese commerce, and a proportion of the direct tribal taxation of the Mongols, may provide all the revenue needed by the Chinese Government for an equitable Imperial contribution from Mongolia, leaving the balance of the direct taxation in the hands of the local Mongol khans to dispose of as they think fit for their purely local needs. An agreement should also be made between the Chinese Government and the Mongol khans whereby the tribute is reassessed, and an equitable system of direct tribal taxation on the basis of the "Kibitka" or poll tax should be instituted by the Chinese in Mongolia. In this respect the Chinese might take a lesson from the Russian administration in Turkestan, and thereby do much to prevent arbitrary exploitation by corrupt Chinese officials. Some such arrangement as that outlined above would solve at once both the problem of Mongolian local autonomy, and the ​problem of the revision of the Ili treaty on the existing Free Trade basis.
Bearing these factors in mind, there is no reason why British and Russian political interests in Outer China should not work sympathetically together. The writer is confident, from his experience, that no attempt is being made to extend the Siberian frontier southward by any really responsible Russian, either in Siberia or in St Petersburg. Nor does it appear reasonable to surmise that the annexation of any part of the inhospitable plateaus of Northern Outer China would ever pay Russia either directly or indirectly. In Southern Siberia, Russia has already found her geographical frontier. There is a danger, however, that she may acquire special economic privileges in Outer China, which, if once admitted, can be easily extended over that loosely governed and vast area of Outer China.
As to the future of the Mongols it would be futile to speculate. A race never very high in culture, even in the days of their imperial power, they have in the past century been crushed under the oppression of the Dragon Throne. By the geographical features of their country they naturally come under Chinese influence, but it is too early yet to say whether the gulf, which separates these primitive nomad tribes from the laborious cultured Chinaman, can ever be successfully bridged. The absorbing power of the "sons of Han" has always been a prominent feature in the history of the Middle Kingdom, and there is no reason why the two races should not ultimately merge.
Meanwhile the policy of crushing the Tartar nomad races of Outer China by violence is a policy ​fraught with grave danger to Chinese civilization and political influence. Although the Mongols are too weak to stand quite alone, there is nothing to prove that they are not capable of peaceful development if left to themselves, and meanwhile Chinese influence through the medium of commerce may gradually prepare the way for their ultimate absorption.
But now a new regime has arisen in China. The "Son of Heaven" and his "Dragon Throne" are no more, and a young republic guides the destinies of the four hundred millions of the Middle Kingdom. What effect will this change have on Chinese policy towards the smaller nationalities of its Outer Empire? The abdication edict declared the equality of Chinese, Manchus, Mongols, Turkis and Tibetans, and clearly indicated that the ideal before the eyes of Young China is that of freedom for all races and privileges for none. But the world must not be too sanguine. The subject races of Outer China are still very far removed in custom, race and religion from those of Inner China, and these differences have been accentuated by the oppression of the Manchu days. For while Young China, with its semi-European education, is thinking of phrases of Liberty and equality, the Mongol nomad in his tent beyond the Gobi dreams of the days of Dengiz Khan again, and the Turki cultivator on the plains of Eastern Turkestan sees visions of another Mahommedan empire of Timur or Yakab Beg.
What will Young China's answer be to those ideals? History has shown us more than once, of late, that the reforming elements in the State after their first flush of victory direct their energies along the paths ​of national consolidation. Rigorous nationalism thus follows on the heels of social revolution. Whether Young China will follow the same policy as Young Persia and Young Turkey, or whether they will learn wisdom from the mistakes of their brothers in the Middle and Near East, it is impossible to say. Many grave problems confront the Chinese Republic, and not the least is that which relates to the tactful and sympathetic government of the non-Chinese races beyond the Great Wall.