Part 8

"The police official is no Russian. He is quite free from national sentiment; he is only an oppressor, a detective. Our ministry of the interior is merely a great detective bureau, a monstrous and costly surveillance institution. When the notorious 'third division' was abolished and subordinated to the ministry of the interior it was considered a step in advance. But it was not the ministry of the interior that absorbed the 'third division,' but the reverse. We no longer have administration, but only surveillance, arrest, deportation. Shall I tell you? Our commission worked honestly. It consisted of noblemen, high-minded patriots, who took part in working out a project for the improvement of economic conditions. Only three hundred copies of the report were printed; it was not meant for general circulation. But the result of the labors undertaken at our instance was the arrest of the outspoken, upright critics. Do you consider that an encouragement for patriotic endeavor? Our merchants and our zemstvos have opened, in the last six years, one hundred and thirty-six schools without one kopek of state aid, and with a yearly expenditure of four million rubles. The instinct for what is necessary is therefore present. Our society should only be let alone and we also might go through the same development, perhaps in a slower measure, which Germany has passed through with such momentous success in the last thirty years--from an agricultural state dependent on the weather to a mighty industrial country. But Germany is a constitutional state and we are a police state. Germany has a middle class; we have none, and the formation of such a class is prevented by every possible means. The commercial schools are subjected to annoying conditions because they are under the jurisdiction of the ministry of finance, where, naturally, a different spirit prevails. The commercial guilds are making enormous material sacrifices, spending annually, besides the four millions for maintenance, five additional millions on buildings, only to retain their autonomy, to keep in their own hands the staffs of instruction and inspection, and to possess a greater elasticity of adaptation to local conditions. This sacrifice is overlooked, and the slightest exhibition of free initiative is jealously suppressed."

"Your excellency, I find that one cannot discuss the least question of pedagogy or economics in Russia without touching high politics."

"Very true. You may see from that to what a pass we have come. We have been going backward uninterruptedly for the last twenty years. The nobility is losing its estates because it has not learned to manage them, and has not recovered to this very day from the abolition of serfdom. But the land does not fall into the hands of the peasants, who need it, but into those of the merchants. The agricultural proletariat remains unprovided for. The peasant cannot raise the taxes. The soil here gives fourfold returns; in Germany eightfold returns. It pays at the same time, this side of the Dnieper, ten to fifteen per cent. annually for tenure; in England two to three per cent.; in France and Germany four to five per cent.; and on the other side of the Dnieper, where long tenures are in vogue, five to six per cent. Remember that this is a yearly tenure. It is a premium on soil robbery. Sixty rubles for the tenure of one desyatin. The peasant cannot raise that amount, and yet he is compelled at the same time to pay taxes. Year after year hunger visits entire governments, for the peasants are utterly impoverished and have not even seed. With an empty stomach and a dark mind the peasant must bear family, communal, and government burdens."

"I read something similar two years ago in a book by an Englishman."

"You mean _The Russian Conditions_, by Lanin, from the _Fortnightly Review_."

"Quite right, your excellency. But I considered the description overdrawn. Moreover, I cannot conceive how abuses could be so clearly painted as in that book, the statements of which your excellency now confirms, without any prospects of redress."

"Who is to give redress?"

"The Czar."

"The Czar is living behind a Wall of China. He has never visited a 'duma' (city council), never a zemstvo (district council), never a village, never an industrial centre. He is kept by the camarilla in constant dread, and is so closely watched that he sees not a finger's-breadth of heaven, much less of earth. He rejoices when an occasional quarrel breaks out among the ministers, for he then has the opportunity to learn here and there a fragment of truth."

"And does no one succeed in representing to him conditions as they are?"

"I will make a confession to you. Not very long ago I myself prepared a paper, not bearing my name--that would have offered certain difficulties--but anonymous, and had it transmitted to the Czar by a trustworthy person. For eight days there was great joy at the court. The Emperor and the Empress were delighted to know where the trouble lay and how it was to be remedied. Then the whole matter, as it were, vanished and was forgotten."

"Then that already is pathological."

A shrug of the shoulders was his answer. "Above all things there is the great anxiety and fear at the responsibility. There is also a weakness on account of conscientious scruples. The Emperor knows nothing thoroughly enough to enable him to overcome the arguments of a skilled sophist, and he is too indulgent to say to one of his counsellors, 'Sir, you are a cheat.' He hears in the reports only praise of somebody, never any censure. For he has a great dread of intrigue, and not without good reason. The atmosphere is a fearful one in the vicinity of every autocrat. The Czar is pathetically well-meaning, and is modesty itself, but he is not the autocrat for an autocracy, who must be equal to his task."

"And what, in your excellency's opinion, should be done to help the country?"

"No more than the rest of the world has already accomplished. Abolition of the police system, security of personal freedom, abolition of the censorship, discontinuance of the persecution of sectarians, who are our best subjects, and--I say the word quietly--a constitution."

"And would the country really be helped thereby?"

"Unconditionally. With these little concessions to-day any political convulsion could be avoided, and the intelligent class freed from its fetters. No one knows what will be offered ten years from now."

"Are there prospects of this concession?"

"Not the slightest. On the contrary, whoever falls under the suspicion of unconditional approval of the present system may be morally destroyed at any time."

"What will then be the end?"

"That the terror from above will awaken the terror from below, that peasant revolts will break out--even now the police must be augmented in the interior--and assassination will increase."

"And is there no possibility of organizing the revolution so that it shall not rage senselessly?"

"Impossible. Our rural nobleman is, to be sure, not a junker; but the strength of the régime consists in the exclusion of any understanding between the land-owners and the peasants because of the social and intellectual chasm between them."

"Your excellency, I remember a saying of Strousberg's, who was a good business man, 'There is nowhere a hole where there once was land.' One learns to doubt that here in Russia. There is not one with whom I have spoken who would fail to paint the future of this country in the darkest colors. Can there be no change of the fatal policy that is ruining the country?"

"Not before a great general catastrophe. When we shall be compelled, for the first time, partly to repudiate our debts--and that may happen sooner than we now believe--on that day, being no longer able to pay our old debts with new ones--for we shall no longer be able to conceal our internal bankruptcy from foreign countries and from the Emperor--steps will be taken, perhaps, towards a general convention. No sooner."

"Is there no mistake possible here?"

"Martin Luther hesitated as long as he had not seen the pope, no longer after that. Whoever, like myself, has known the state kitchen for the last twenty-five years, doubts no longer. The autocracy is not equal to the problems of a modern great power, and it would be against all historical precedents to assume that it would voluntarily yield without external pressure to a constitutional form of government."

"We must wish, then, for Russia's sake, that the catastrophe come as quickly as possible?"

"I repeat to you that it is perhaps nearer than we all think or are willing to admit. That is the hope; that is our secret consolation."

Such was the substance of my long interview with one of the best judges of present-day Russia, from which I have omitted only those places and versions which would render their author easily recognizable. For the rest, I must say here that, with slight variations, the statements of all the other competent persons whom I had the opportunity to meet agreed with those of my present informant. The unwritten public opinion of Russia is absolutely of the same mind in its judgment of existing conditions; it differs only as to the remedies.

"We are near to collapse--an athlete with great muscles and perhaps incurable heart weakness," repeated the statesman at parting. "We still maintain ourselves upright by stimulants, by loans, which, like all stimulants, only help to ruin the system more quickly. With that we are a rich country with all conceivable natural resources, simply ill-governed and prevented from unlocking its resources. But is this the first time that quacks have ruined a Hercules that has fallen into their hands? Whoever shall free us from these quacks will be our benefactor. We need light and air, and we shall then surprise the world by our abilities and achievements."

XIII

THE RUSSIAN FINANCES

It was shortly after the Port Arthur naval catastrophe that I sought out a bank director, with whom I had become acquainted, to talk with him upon the financial effects of the war, that had had such noteworthy results on the floors of European exchanges. To my astonishment, I found the comfortable bank director very calm.

"The system will still help us out," said he, evasively, to my question whether Russia would have to face a financial crisis after the war.

"What system?" said I.

The bank director adjusted his eye-glasses and, with round eyes, gazed at me for a while. Then, with that burst of candor which so often surprises us in the Russians, he began:

"We are not children, after all, and neither you nor I is dancing to the government music to which others are keeping time. We may, therefore, talk it over calmly. Well, we have a great drum, with which there can be no marching out of line. It drums. We have never as yet stopped our payments, like France, Austria, or Turkey. We are, therefore, punctual payers, hence we shall again secure money."

"Is this a serious argument?" I asked.

"God forbid!" was the answer. "We have paid to secure future credit. But it seems that this policy of honest debtor is wiser than the occasional discontinuance of payment, which allows some advance but involves the loss of credit. We can always repeat to the public that wishes to buy our bonds, 'Russia is honest; Russia pays; you need have no fear here of shrinkage.' And so the public buys."

"But the banker must know that the liberality is not real," I rejoined.

"And if he does know it? Is it the banker's business to initiate the public into the secret sciences? Do not forget that no government pays to the world such commissions for loans as we do. Prussia pays one-half per cent., Austria one and a half per cent., we pay three per cent.; and, confidentially, it does not end with that, but the issuing banks also get their six per cent., especially when they appear reluctant at first. For what reason should a commission of three to six per cent. be paid where the business is as bad as it is? It was Offenheim who said, 'You don't build railroads by moral maxims.' And high finance says that dividends and bonuses are not paid with moral maxims."

"According to my perhaps unbusiness-like opinion, this is not much better than stealing."

"Very unbusiness-like, indeed, my friend. The banking world needs no Nietzsche to stand on the other side of good and evil. Ethics, like religion, is only for the masses. Just calculate what a commission of three to six per cent. means on a loan of five hundred to a thousand million rubles that we shall surely need in this war. Let us say only three per cent., officially. That means thirty millions--more than sixty million marks. Do you then think that the banks belong to the Salvation Army, to imagine that they should renounce such a transaction?"

"Slowly, slowly. You said at first that Russia will need in this war about a milliard rubles. That would be contrary to what I have heard from other very reliable sources--namely, that the cash reserve is supposedly equal to about a milliard rubles."

"I will bet you that in three months we shall not have left a single kopek of this milliard, assuming that it exists. In agreement with military experts, who, between ourselves, are not at all optimistic, I estimate the duration of this war at twelve to eighteen months at least. With our management, every month costs us at least a hundred million rubles. Thus you see that a milliard will not be sufficient."

"Well, let us say that the banks cannot reject the business, still they must, in the first place, dispose of the securities, which will not be so easy, since the French are thoroughly satiated with the bonds, and, as the fall in the rate of exchange has recently shown, confidence in these bonds is no longer any too great."

"They may drop still further," said the banker, smiling. "The fall in the rate of exchange would have been still worse had not our banks received a strict order not to turn over the deposited bonds to their owners during these days of convulsion."

"How? I do not understand this. The issue of the deposited securities to their owners is delayed?"

"Yes, my friend, that is being done. You again do me the honor to forget in my office that we are in Russia. Even worse things are done here. At the order of the minister of finance, the owners of the bonds who wish to withdraw their deposits are given only a few hundreds or thousands of rubles for the most pressing needs, but they do not get their bonds. This is in order to prevent, by all means, the bonds being thrown on the market and thus increasing the panic."

"But that can be done only here. You have no such power abroad."

"Well, the first alarm did cost a respectable sum. Then the foreign bondholders came to the rescue and intervened for their own interest. The price of the bonds was maintained, especially in Germany."

"Why particularly in Germany?"

"Because it fluctuates less in France. There it is in the hands of small investors who do not run to the treasury at the first opportunity. It is not as strongly intrenched in Germany, and must be supported there."

"Very well, then, you support my reasoning, and you say that the bond values are maintained artificially alone. How can you say, then, that they may be augmented at will by new issues?"

"I say that, because the buyers are an amorphous mass that crystallizes just as little as a combination of producers is met by a combination of consumers. The masses may be frightened for a while, but in the long run they are irresistibly led to spoliation by the great combinations of capital, and the act of creating current opinion is well known in high financial circles."

"You forget the independent press."

The banker made a very peculiar grimace. Then he said: "That is not nice of you. I am speaking to you as if to a member of the profession--like one augur to another. And when we come to speak of your own profession, you turn out to be a simpleton. How can you speak of an independent press, when under the pressure of the high finance of the Russian and German governments?"

"You will pardon me. I honor your uprightness equally with that of the greatest of my profession. But I must stop at that. Newspapers are still guided by morality. And I am willing to bet anything that among our German papers only a vanishing fraction is susceptible to the arguments of Witte and his associates."

"And what becomes, then, of the millions that our ministry of finance is spending to secure good will in the papers towards our finances?"

"I do not want to suspect any one; but the German papers that I know well are incorruptible."

"Well, let us say that the radical or socialistic press is inaccessible, and cannot be bought either by our ministry of finance or by the German bank combinations. There still remains the influence of the German government, that has its reasons for not allowing the weakening of Russia to too great an extent. For this is still the keystone of the conservative system in Europe, and this influence suffices to keep the unfriendly critics of our financial conditions from all the leading German papers. That is not even an official favor. I consider it quite logical for serious papers not to play mean tricks on their foreign office. But as to the other, the extremely radical writings, they have no significance for the financial world; and you will not doubt, at this day, that Germany is doing her best to keep us in good humor."

"Yes, I see with shame and resentment how the German government has been transformed into something akin to a Russian police ally, with the blessing of Count Bülow."

"Who surely knows what he is doing."

"Perhaps I myself do not believe that Germany has reason to seek Russian security, even though there be certain limits even for friendly services; which limits have long been passed, to the detriment of the dignity of the German empire."

"I am also willing to believe all that you have told me about the influence of the high finance, the Russian noble, and German diplomacy. Yet I cannot conceive how the mass of investors--and after all it is they who are to be considered--will permanently pay a much higher price for securities than corresponds to their intrinsic value, as is the case with the Russian securities, according to the information given me by Russian statesmen."

"Permanently? Some day it will stop. But when? Even the autocracy or the social structure will not maintain itself permanently. But meanwhile there is no power on earth to prevent the great banking institutions from earning thirty million rubles or more, when there is a chance. There will be a great bargaining, especially since the French government will exert itself strenuously to prevent future issue of Russian bonds; for every new issue depresses the value of former issues, and in these a great portion of the French national wealth is invested. In the end, however, German influence will prevail. Germany will advance us the new funds, because Germany wishes to render us a service; for Germany feels itself from day to day more and more isolated in Europe, and we are still not to be despised, either as friends or enemies, in spite of Port Arthur. Hence the German investor must help out; and, after all, he is not making a bad transaction when he buys a four-per-cent. bond at let us say ninety."

"How so?"

"Well, the bank interest is now three per cent. When four rubles are paid on an investment of ninety rubles having a par value of one hundred rubles, then the valuation of Russian government securities is not quite seventy. And that may continue for a long time."

"Do you consider that the real, intrinsic value?"

"The stock exchange knows no intrinsic value. It only knows tendencies. One hundred rubles' worth of Russian government securities can always be disposed of at seventy, if all the strings do not break."

"You are evading me. I asked for your personal opinion on the intrinsic value of the Russian bonds."

"I will give you an answer. As long as our Russian peasant is able to starve and to sell his grain, as long as there are gendarmes to aid the tax-collector, and people who are willing to make further loans to us, so long is the payment of coupons assured. Beyond that the foreign bondholder has no right to inquire."

"Please tell me whether in your opinion there is a hidden deficit in the Russian budget, or whether there is none."

"I am telling you that as long as there are people who are willing to make further loans to us we shall pay the interest. Were our budget a real one, we should not need to contract new debts in order to pay the interest on the old ones."

"That is what I wanted to know. And do you consider Russia a really insolvent country, that cannot really pay its debts, and cannot bear the burdens of modern national life?"

"On the contrary, Russia is intrinsically so rich a land in uncovered treasures that it only needs another and a just régime to pay its debts and to assume still further burdens."

"And this other régime?"

The banker pointed to the east. "Our future is being decided there. If it goes hard with us there, it may become better here more quickly than is suspected."

"Hence, worse for the bankers," said I, jokingly.

"People accustom themselves to honesty when there is no other way," answered the banker, also jokingly. "And when universal honesty comes into vogue, it will no longer be a shame to be honest."

With this I parted from the banker, whose pleasing cynicism always amused me, the more so since I recognized in him the essence of sterling, honorable views. Later interviews with other members of the financial world showed me that my first informant conveyed the generally accepted opinion. Isolated Germany will, for political reasons, and as a favor to the Russian régime, support Russian credit; the great German banks will not renounce the splendid loan-issuing business; and the German investor will permit the imposition upon him of the Russian bonds. "Sheep must be shorn," coolly said one of the brokers to me, when I expressed a doubt that the German imperial government would pay for its political business with the hard-earned pennies of its investors. Your Bismarck did not hesitate for a moment to throw Russian values into the street, and to destroy thereby milliards of German property, when it suited his political convenience. Your present government will not be at all embarrassed in sacrificing again milliards of German property to place us under obligation. And, finally, no one is compelled to it. Whoever is not able to figure sufficiently to see how Wishnegradski prepared the balances to deceive the eye had better keep his money in his stocking and not buy securities. If he does buy them, let him bleed. Another explained, however: "The Germans will buy our bonds. When no other bait is attractive there is still one left to us. When the landowner sells his crops, and is thinking of investing his proceeds, the banker will say to him, 'How about a little of the Russian securities?' 'But those are supposed to be insecure,' answers the good fellow. 'The idea! This is only a Jewish trick. Probably on account of Kishinef.' And the good fellow will hand over his shekels, for he cannot be fooled about Kishinef."

XIV

A FUNERAL

"You are here at an opportune moment," said one of my St. Petersburg friends, who had rendered me important services in my studies. "Mikhailovski died suddenly, and will be buried to-morrow."