The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-09-04
Russia s Credit in War.

Q . .
It is rather remarkable rumor
which has come out of the treaty nego-
tiations at Portsmouth that President
Roosevelt advised the Japanese ENJOYS
that they ought to make peace because
Russia beaten was considered better
financial risk than Japan victorious.
While it is true that Japan. is almost
unknown in the money markets of the
world, it is also true that Russia is al
most too we'll known. Russia has been
a steady and persistent borrower since
the days of Catherine, when the court
paid the expenses of the army, and
when Russia had practically no national
budget.
Then came the Napoleonic era, which
increased Russia s debt a billion rou-
bles. The Russian debt was illfunded
and the only thing which gave Russia a
morsel Of credit was the rapid advance
Of trade. The country continued to
show an advancing balance in its favor
until the Crimean war, which threw
Russla's credit back to a rather low
plane. Progress was again made until
the Turkish war, which swallowed up
immense sums. Within twenty-five
years Russia had contracted foreign
loans to the tune Of one and one-half
billions in gold. In 1887 Wishnegrad'
sky became finance minister, and from
him dates the Russian modern financial
system. He found a national debt of
1850, 100000 roubles eating up annually
262 100000 in interest. He also foun0
$50 100000 of gold reserve. The trade
balance was, however, the wrong way
and he applied the tax screw to raise
the revenues and readjust the balance
of trade. He succeeded, but at fear
full expense to the peasants of Russia
who were ground to the earth with
taxes. In one year, 1891, when there
was a partial failure Of crops, famine
stalked thru the land. The peasants
who had been obliged by the tax grind
ing process to sell all they had as soor
as it was harvested, were without re
source and the government was obliged
to sacrifice l62,000,C00 Of it's surplus
to feed them.
Wishnegradsky' successor in tn
finance office was M. Witte, whose pol
icy was to borrow more money, built
more railroads and force Russia int
the position Of a manufacturing nation
Under his administration the debt o:
Russia increased by leaps and bounds
In 1902 Russia owed at home ant
abroad, according to M. Whites owl
reports, something over 8,500,000,OO
roubles. Against these he placed pri
vate liabilities and deducted safe gov
ernmental investments and reduced tn
unsecured debt to 1882, 100000 roubles
But in making his deductions he pu
the railroads in at their cost instea
Of at their earning capacity. Inasmuc
as they were not earning anything, bu
were a charge on the treasury, the fal
lacy of his figures on the net debt
readily seen. The operations in tn
orient have enormously increased Rus
s debt, and If it is true that she
today considered a better financial ris
than Japan, then there must be some
thing seriously wrong with the japan
ese financial system.
1t is true that Japan has only sma
revenue compared with Russia, but sh
has also a comparatively small deb
The only other fact which could max
Russia better risk is that Russia
certain to pay her interest, while th
Japanese have reputation for repl
diation Of their obligations. Foreign
ers have often remarked that betwee
the Chinese and the Japanese me
chants there is the wide margin b.
tween men absolutely honest and me
almost absolutely dishonest. It is ne
to be supposed, however, that the pr
vate characteristics of the Japanes
could govern the imperial treasur:
especially when the exchequer had
deal with such countries as England.