Part 5 (1/2)

Our troops are numerous and well equipped. The vastness of our country, her poor roads, and her severe climate are her defenses. The French frontier is strongly fortified. A quick surrender is unthinkable, and there is no reason for surrender, for the war will continue to the bitter end.

But a long campaign threatens Germany. She is a country with highly developed industry and with a tremendous foreign commerce, the breakdown of which cannot be compensated by any territorial conquest. A war of Germany against England, France, and Russia will stop her commerce entirely. It will be impossible for her to export her goods and to import foodstuffs. Her manufactures and her commerce will come to a deadlock, and unemployment will threaten her cities. All the victories of her army will be of no avail. If her enemies draw out the war for a year or two Germany will be exhausted. We are not talking of the possibility of a German defeat, although Germany is not invincible.

The gold reserve of Russia, France, and England amount to about 350,000,000 rubles, ($155,000,000,) while the gold reserve of Germany, Austria, and Italy is only about 160,000,000 rubles.

The gold currency of the first three countries amounts to about 7,000,000,000 rubles, ($3,500,000,000,) while the gold currency of the other three is only $1,500,000,000.

The food supply of Russia is inexhaustible. Her industries are working chiefly for the home market. They can only win by the campaign. The curtailing of food and raw material exports may benefit her home industries by cheapening production.

In case of a shortage of war supplies Russia will be able to get them from neutral countries--for example, from the United States. But where will Germany get them? What shall she do when her stock of saltpetre runs out? For the time being saltpetre is obtained by all countries from Chile only.

France is an agricultural country which has large supplies of food. Her manufactures are poorly developed, and they are working for a foreign market which will not be closed. Her resources are so large that she will be able to stand the campaign with comparative ease.

Owing to her insular position, England will lose but very little through this war, provided she is able to maintain the supremacy of her navy over the German fleet. The British merchant marine and her manufactures will gain quite considerably.

The public credit of France and Great Britain is inexhaustible, and it will not be restricted to Russia, while she is an ally of these countries.

Proposed Internal Loans of Russia

[Russkia Vedomosti, No. 222, Sept. 27, (Oct. 3,) 1914, P. 3.]

Prof. Migoulin has submitted to the Russian Minister of Finance a scheme for new internal loans to meet the extraordinary expenditures caused by the present war.

It is proposed to enlist the support of various groups of capitalists and of small property holders and to obtain from them about 2,500,000,000 rubles, ($1,500,000,000.)

Four different loans are contemplated. Persons desiring to invest their savings at a small but sure interest rate will be able to buy the certificates at a 5 per cent. loan. These certificates will have a face value of 100 rubles, and they will sell at $90. The interest rate will not be changed within the next fifteen or twenty years. Therefore, the actual interest rate will be 5.56 per cent. on the original investment.

A 6 per cent. loan will cater to those investors who like to place their loans at shorter terms. The certificates of this loan will be sold at premiums. Five-year certificates will be sold at ninety-six for a hundred rubles face value, four-year certificates at ninety-seven, three-year certificates at ninety-eight, two-year certificates at ninety-nine, and one-year certificates at par. This loan will be free from the interest (coupon) tax, but not from the income and inheritance taxes. In case of success one billion worth of these certificates will be issued.

For persons interested in the changes of values upon Stock Exchange different loans will be issued. In the first place, no interest-bearing ten-ruble certificates with a large number of winners will be issued. A considerable number of these certificates will be redeemed each year. It is proposed to have one winner of 200,000 rubles, one of 100,000, two of 50,000, one of 25,000, about fifty of 10,000 rubles each, some 3,950 ”chances” of from 100 to 500 rubles each. The whole loan may amount to 100,000,000 rubles. It is to be redeemed within fifty years.

Should this loan prove a success it will be followed by another of equal amount.

Finally, Prof. Migoulin proposes to obtain about 200,000,000 rubles by selling 4 per cent. Government bonds in fifty-ruble denominations. This loan, too, will be equipped with the winners at the annual draw for the redemption.

The first of the proposed loans will be realized soon. The Government has decided to obtain 500,000,000 rubles at 5 per cent. This new loan will increase the present debt of the Russian Government of 8,838,000,000 rubles ($4,500,000,000) to 9,338,000,000 rubles. Russia has to pay 370,000,000 rubles annually for the interest on her debts.

About one-half of her indebtedness is due to railroad building and to other more or less productive expenditures. But the other half of her indebtedness has been spent on armaments, wars, and other unproductive items.

Russia's new budget is about 3,500,000,000 rubles ($1,800,000,000.) The interest on the new loan will increase this budget only 6 per cent. But this new loan increases again her unproductive debt and places a heavy burden upon the taxpayer for whom the Government has prepared many ”surprises” this year.

The possibilities of _internal_ loans are not very great. During the first month of the war about 380,000,000 rubles of savings were withdrawn from the banks. Of this sum only 76,000,000 were redeposited later when the first excitement had pa.s.sed. The rest of the money evidently was either used up for production, for consumption, or for private storing of ready cash. How much of this money will come forth to buy the various short-time loans no one is able to tell beforehand. But the big manufacturing interests are craving for _foreign gold loans_, not for internal paper money loans.

How Russian Manufacturers Feel

[Digested from Russkia Vedomosti, No. 266, Nov. 18, (Dec. 1,) 1914, P.