The Russo-Japanese War

MR. PRESIDENT,--The subject is so very extensive that I feel obliged to confine myself to two or three points. I shall try to convey to you some idea as it appears to me, of the situation, economical and financial, of Russia, and of the situation, economical and financial, of Japan, and then I shall endeavour to suggest inquiry as to how far Great Britain and her Colonies are interested in the outcome of the struggle.

In the first place, as regards Russia, it is impossible to go into the details of a history so long as that of Russia; we must assume some knowledge of it, of how the Grand Dukes of Muscovy waged war with the Tartars on the one side and with the Poles on the other, and how after centuries of struggling, at a comparatively late period the Muscovites subdued the Cossacks, conquered their traditional enemies, the Tartars, and then at a later date succeeded in the partition of Poland with Germany and Austria. It is necessary to recall these remote events in order that one may realize how a nation that has been pent up in a small area and has then, not suddenly, but by long military campaigns, succeeded in extending its frontiers, is very apt to continue this extension by a kind of irresistible influence for which nobody in particular is to blame. Russia must develop her frontiers, she must extend them just as all nations in the particular stage of civilization in which she is at present, have found it necessary t o extend their frontiers when they could. Let me endeavour to explain what has occurred since Russia became a great nation. In the first place, one must not consider Russia as a unit. She consists of a vast number of races. Ethnologists tell us there are two hundred in Caucasia alone, and additional divergent races in other parts of Russia. The feudal system is not a primitive system in Russia; it was established only in the seventeenth century, but it acquired very speedily authority over the whole country as it then was; I mean that the various constituents of the Russian Empire settled down under feudalism in a very remarkable way and probably that was the only system which would have consolidated the people so effectively and so rapidly. The feudal system was abolished in 1860. In 1860 the serfs were emancipated; they had been attached to the land. The proprietors of the land, the Barins, had complete power over the serfs. They had no power to put them to death as was the case in Normandy, but they had complete powers otherwise. They could punish them and they could send them into the penal battalions of the army for the rest of their lives if they chose to do so. That was done away with and the rights of the Barins over the serfs were bought by the Government, a very substantial compensation being paid for these rights, and then the Barins were left in possession of their properties with peasants as tenants, under this condition, however, that the tenants could not be dispossessed of the land.

The land does not belong to the tenants; it cannot be sold by them; it belongs to the Barins, but the Barins cannot dispossess the peasants. That left this peculiar condition of matters, that the old system was destroyed without any very definite or positive system being put in its place. The only point was that the peasants were not actually disinherited. The result of that has been on the whole, I should not say disastrous, but has resulted in a situation which has been extremely difficult to manage, because the peasants deprived of the authority of the Barins and unaccustomed to organize their own labour, have not cultivated the land, even perhaps so well as they did before their emancipation. The result has been in many cases the peasants have sunk into poverty, while the Barins who got the compensation from the Government on the deprivation of the feudal rights went to Ems, Homburg and Paris, and spent the money in gambling there, and thus had no money left to improve their estates. That is practically the situation at the moment. The Barin is poor, the peasant is very poor, and in spite of the enormous natural resources of the country these are only in places being seriously developed. The governments of Russia in which, on the whole, the best economical conditions are to be found, are those governments under the control of a disinterested and honest military authority. This statement I make on the authority of the most experienced people in Russia, who are not in sympathy with the military regime. Where there is a thoroughly honest and able military administrator who takes the law into his own hands and manages things in the way he thinks best for the people, there, on the whole, the best results come out.

Now, one word so far as the industrial situation is concerned. Russia has been developing with tremendous rapidity, especially during the past twenty years; her industries, particularly in cotton and iron, are growing very rapidly, and the same may be said to a smaller extent in regard to other industries. The largest cotton mills in the world are near Moscow. The output of cotton in Russia is enormous. The development of the cotton and wool industry has resulted in drawing the peasants into the towns. Owing to the peasant having the right to occupy his land he retains an interest in his lands, even when he goes into the town. This practice places him in an extremely strong economical position. He does not require to strike for higher wages. Should anything occur he takes his pack and goes home to his farm and lives with his family. This causes very often. serious disturbance in business; yet the population is so great and there are always so many men seeking employment that the industries continually increase.

Since the Crimean War, Russia has extended her borders tremendously in Central and Eastern Asia especially. Forty-four years ago she took over maritime Manchuria from China. She has developed that country with very great energy and has poured a great deal of capital into it. She has developed it to such an extent that the country has been gradually filling with Coreans for some time. Schools have been established for them and she is educating the Coreans, on the whole, rather better than she is educating large numbers of her own people in Europe. Since 1860 Russia, of course, has had her mind upon continental Manchuria. Some years ago, before the present difficulties arose at all, a Russian officer drew for me on a map the course of the preliminary surveys of the railways which have since been made in Manchuria. These preliminary surveys had been made about 1874. So that thirty years ago Russia had made up her mind to build these railways into Manchuria before a single mile of the Trans-Siberian Railway was laid, and when the Chinese Government was, of course, totally unaware she had any intention of taking any more than maritime Manchuria.

You must realize that although the Russian Government has the reputation abroad of being persistently aggressive, that is hardly the case. There is no Russian Government in the same sense in which there is a Dominion Government or a British Government. The Czar is supreme, all the rest are equal, and the Czar being supreme can select any persons he chooses to aid him in the government of the country. He has what is called a Council of State, but that is not a Cabinet; it sits, and no doubt occasionally as a whole, but it is not in our sense of the word a Cabinet; it does not result in any collective action. Each individual minister is responsible for his own department alone. There is never a ministerial crisis. When a minister becomes dissatisfied with his position he resigns, and when the Czar becomes dissatisfied with a minister he dismisses him, and thus there can never be any collective Cabinet crisis.

The Council of State, or what we may call the Government of Russia is sometimes dominated by one faction and sometimes by another. At times, Mr. Pobiedonostsoff, the Procurator of the Holy Synod, controls everything, because he has the ear of the Czar and he obtains Imperial mandates to do this, that and the other. At times, Mr. Witte, who represents the mercantile interests, has the ear of the Czar, and at times that strange and curious personage who is now at the head of the affairs in Manchuria, Admiral Alexieff, who is the son of an Armenian father and Russian mother. The fluctuation of these and other influences prevent any continuity of policy. Now the clerical party, now the military party, and now the commercial interests of the Empire attempt to control the Czar. The personality of the men about the Czar counts for a great deal. The Government of Russia is thus an extremely uncertain government. This must always be remembered in diplomatic correspondence with Russia. No diplomatist ever expects that two documents, of different dates, will entirely cohere with one another. It is not that Russia is treacherous, it is not that the nation means to betray; that is not the case at all.

The reason is simply that at one moment a despatch will be determined by one set of peculiar influences and at another moment by another. There is no continuity in the foreign policy of Russia, and that is true in spite of the irresistible tendency which I have spoken of to increase her borders and increase her influence. Why does she want to increase her sphere of influence in Manchuria? Remember, in the first place, that as she organized eastern Siberia, she came gradually down the Amur, and when ultimately she occupied the port of Vladivostock, on the Pacific, she found what she knew before,--because her engineers are extremely intelligent,--that Vladivostock was not a good winter port, and she determined that some time or other the rest of Manchuria should be under her control.

China is a very difficult country to deal with because in many ways she is like Russia. She has no strong central government which may be depended upon; the Viceroys of the different Provinces are practically independent potentates, and it is a dangerous thing to raise some questions because one never knows exactly what will happen. In 1860 when the allies, France and England, were occupying Pekin, the Russian Ambassador, knowing very well that it had been arranged between England and France that they were to evacuate Pekin at a certain time, went very cunningly to the Chinese Imperial authorities and told them that if they gave certain concessions to the Russians, Russia would see that the Allies would evacuate by a certain date. It fell out exactly as was expected. The Russian Ambassador secured the concession of maritime Manchuria and that was how that part of Manchuria fell into the hands of Russia. Following upon that there came the organization of that part of the country and the industrial development of the rest of Russia. Russia is a great wheatproducing country, especially in the south, but there are as yet no wheat fields in eastern Siberia, and Manchuria is a great wheat field. The vast central plain of Manchuria, which is very densely populated-there are about ten million people in it-is a wheat country, and Russia wanted that wheat for the development of eastern Siberia, and also wanted to send to Manchuria-and this was really more important than the wheat consideration-the cottons which she was making in vast quantities in Moscow and for which she had inadequate outlets among her own population.

You see it was very necessary for trade reasons for Russia not necessarily to possess Manchuria, but to possess such a control over it as to be able to introduce her cottons and get out the wheat, and in addition to provide a route for tea and silk importations from China. I need not say very much more about the Russian side of it, excepting that during the past few years, while the Trans-Siberian Railway was being built, and in consequence of the very great industrial development which Russia has been engaged in, which has been to some extent assisted by the Government, she has incurred an enormous national debt, approaching that of Great Britain. When you consider the different stages of development of the two countries you can see that Russia can very ill afford to carry an enormous debt. The people are ground down by taxation; they are extremely poor; there are widespread diseases which are not merely epidemics, which are more or less chronic diseases over a great part of her frontier population, probably the result of contact between different races widely divergent in ethnical character. These diseases keep the people in a depressed condition, and are responsible for a large part of the loss of life during those periodical famines which occur in Russia.

Tow, let us look of the other side--at Japan. Japan as you know up till 1868 was also a feudal country, and about ten years later than Russia she also threw off feudalism. Japanese feudalism was very much more ancient than that of Russia and was very much more deeply impressed in the character of the people. I need not go into the details of the results of the revolution. From 1860 till 1880 the Japanese authorities devoted themselves to the study of European affairs. They sent a number of Commissions to England, France and Germany and to other countries for the purpose of discovering which was the best kind of constitution they could adopt and for the purpose of discovering also which was the best kind of religion, and the best educational and military systems. The study of these questions was made with very great intelligence. The upshot was that in 1889 the Japanese adopted a new system of government, a constitutional system, which was closely modelled upon that of Prussia. They rejected the English system and adopted the quasi-constitutional system of Prussia. The Emperor of Japan is in very much the same position as the Emperor of Germany and has very similar powers. A number of curious experiments have been tried in Japan in imitation of European methods. They have thought they could mingle American, English, German and Japanese ideas altogether. They developed a kind of party system which did not work at all and they have recently practically abandoned it.

Japan is in a very serious economical condition. Those of you who are familiar with English economic history will recall the situation of England about 1830. For about thirty years after a series of exhausting wars taxes were very high and the necessity for increase of production was very urgent. Under these circumstances the employers were more or less remorseless. Women and children worked in factories for long hours, which seriously injured not only their individual health, but the future of the working people. The end of that came with the Factory Acts. It came gradually. The Factory Acts gradually diminished the hours of labour and an upward movement in the standard of comfort of the people was one of the results. England still inherits the consequences of the human exploitation of those first thirty years of the century. Japan is in the position now in which England was in 1830. It is in a position with regard to human, labour that is more serious than has perhaps been experienced by any other country. The system is almost too atrocious for full description, and I hardly venture to give it to you because I have not seen it for myself. I rely for my information upon French correspondents of very great intelligence and insight.

The general upshot of it is that the country population is being denuded, not of its grown up people, but of its children. The young girls are enticed into Tokio for the purpose of being put into the factories and worked at extremely low wages. In the country districts in Japan they never see any money at all, so that the mere mention of money is a particular attraction for them. They are at the same time relieved from the rather irksome parental control and they are brought into the cities with promises of wages. They come in and they are put into the factories and receive wages which are quite incredibly low. I mean that children of six years of age are working in the factories of Osako at a wage which would be represented in our money by one and one-half cents a day. I do not mean to say that the whole system is characterized by that extreme of exploitation. That is a detail in a particular case; but wages have been extremely low, work has been extremely hard, the number of hours has been very great, the cost of living has been steadily advancing, taxes have been increasing, and the whole situation is very grave indeed.

The fundamental reason for the war between China and Japan in 1895 was that Japan wished to interpose a serious check upon Russia. The Japanese statesmen thought that it was necessary for Japan to fight China first and then afterwards to fight Russia. About ten years ago they looked forward to a war with Russia about this time, and that is one very quaint and curious reason for the war occurring now, because they had more or less looked for it for so long. In 1894 Russia had been exhibiting symptoms of a desire to get continental Manchuria, although she had not got it at that time, and Japan wished to check any possible advance by Russia upon Corea. In fact, Japan was rather more anxious at that time for Corea than Manchuria, because Corea lies immediately to the south of maritime Manchuria; it constituted a buffer state between Russia and Japan. The Japanese determined to foment disturbance with China. They knew perfectly well that China was absolutely unprepared for war. They knew they could easily defeat her and they did defeat her. As you know Japan was deprived of the fruits of her victory by the intervention of the European powers. The Powers were extremely afraid of the history of China being completely altered and of China following under the tutelage of Japan a course exactly the same as Japan. Under these influences China might modernize herself, and might speedily become a great eastern power. These points were impressed very strongly by Russia upon .the European Governments, and the Powers forced Japan to submit to the abandonment of Port Arthur.

Then followed, after a number of discussions with China, an ultimate lease of Manchuria, including Port' Arthur to Russia. The situation in Japan, in brief, is this: industrially, she is in a very precarious state; financially her condition is equally precarious, because after the close of the war between Japan and China the Chinese indemnity was paid and expended chiefly for military purposes; indeed what is known as the post bellum programme has cost more than the Chinese indemnity. The cost of living rose very rapidly during the Chinese War and it has remained relatively high since; wages have in general increased, but not in proportion to the cost of living, with the result that a large number of people are more or less on the verge of poverty, and in addition to this there were and are increased taxes for further military expenditure.

Japan has developed, industrially, very much in the same way as Russia. Japan, like Russia, is obliged to get an outlet for her cotton. It is also necessary for her to import wheat, and advisable that she should import Manchurian wheat. Owing partly to governmental influence arising from reports of medical inquiries into the effects of rice as a diet, the Japanese people have increased the consumption of wheat very largely. They have been importing to a considerable extent from the United States. I noticed that last year a considerable quantity of wheat had gone from the United States, both into Japan, and even into Wiju, a port in the north of Corea,* which is now familiar to everybody. The United States farmers have been able to send their wheat over there, because, upon the Russian occupation, Manchuria was practically closed as a supply area for Japan. Japan had been buying wheat in Manchuria for a great many years. Of course it was very provoking to have her trade impeded, especially because she cannot pay for her wheat excepting by exports. Japan is in that condition. If you look at the balance between her exports and imports, and into her currency conditions, you will see she cannot pay for her wheat excepting by exports, and she must export practically to the same countries she imports from. So that to shut Manchuria to her was to shut the door at once against the supply of wheat and against the consumption of cotton.

Then Japan also feared, although this was a less important matter, further Russian encroachment in Corea when the Trans-Siberian Railway should be completed. From an European point of view I am bound to say it would look as if it would have been better policy for Japan, if she were readyand she really was ready within a very short period after the close of the Chinese war-for her to have attacked Russia then before the Siberian Railway was completed, when there was a considerable gap and when it would have been somewhat difficult for Russia to get her supplies. But Russia temporized and afforded no excuse for war. Japan could not find any reasonable excuse and she was afraid if she attacked Russia that European powers might be embroiled in the struggle and that Japan would, as she did before, suffer. That, perhaps, explains why it was that

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See Mr. James J. Hill's remarkable address in St. Paul, reported in St. Paul Globe, January 14th, 1904. Japan did not force the situation at an earlier period. She could not have done it without very serious risks.

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Now, as to the effect of all this upon our Empire. It appears to me, and I can only state it as a conclusion without giving you the detailed argument to support it, as though the interests of the Empire, and indeed the interests of the civilized world, were best likely to be promoted if the result of this war is a draw. That is to say that it would be, on the whole, very dangerous to England if Japan should win, because it would mean an immense stimulus to the ambitions of all the Oriental peoples, in China, in India and elsewhere. France would certainly have trouble in Indo-China. She is apparently already strengthening her position there in anticipation. England might very likely have serious trouble in India, because, after all, the Asiatic has a certain common interest against the white races. You must remember that Japan in spite of a thin veneer of western civilization is fundamentally Oriental, and one cannot be misled by superficial appearances into believing that there is any real sympathy either intellectually or morally between Japan and England. There can never be in the nature of things.

On the other hand, should Russia win it would be also rather dangerous to Imperial interests, because the Chinese governing class being peculiarly susceptible to the effects of victory, Russia would then acquire diplomatic predominance in China. That would be a dangerous situation. I should say also that it appears as though it would be well alike for England and for Europe and America that the war should not be a prolonged one. Russia may prolong the war indefinitely-Japan is in rather a different position, because she will be in the market requiring money immediately; but if the war should be prolonged indefinitely it would cost both countries a huge amount of money. Russia has not been an indiscriminate borrower. She is a concentrated borrower. At this moment she owes about two-thirds of her national debt in France, or through French bankers. If there were to be even a temporary default in the payment of Russian interest, or if there should be any breath of suspicion upon Russia's credit it would not only be a serious thing for France, but for the rest of the world. Those who are familiar with financial affairs can follow the effects of it much better than I can; but I may make some suggestions. What would be likely to occur would be the immediate sale or hypothecation in other European centres of American securities, which are just now very largely held in Paris; or the money which Paris has on loan in America would be called upon in order to make up the loss incurred by a possible Russian defalcation. In either event the value of American securities would fall sharply in Paris and in London, and, of course, in New York, with very widespread effects, including financial panics and industrial dislocation.

On the whole, then, it seems to me that the general interest of the world lies in not only restricting the war to its existing area, but in restricting the war, if possible, to a very short period of time. As to military possibilities, I leave them to those who are more competent to speak upon such matters. It would appear, however, that we can trust very little we see in the newspapers, for Russian cruisers, which are said to be sunk in deep water, appear patrolling the Gulf of Pe-chile in a few days; and battleships that have been pounded to pieces find they are still able to fight.

I should say that one has a good deal of confidence in the very remarkable man who is now at the head of naval affairs at Port Arthur, Admiral Makaroff; he is an extremely able little man. He is a small man with tremendously long beard and enormous head. He is a man full of ideas and full of ingenious resources as he has shown by his energy and activity when he arrived in Port Arthur.* Some of the military men whom Russia has sent to the east are also men of very great capacity, such as Generals Stoessel and Jalinsky, and others whose names have not yet appeared in the papers. When the military campaign begins seriously, intelligent and capable as the Japanese are, it will be very difficult to say on which side victory is likely to lie. I should say, of

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* The Petroaiavlovsk, with Admiral Makaroff on board, was blown up, apparently by accident, April 13th, 1904.

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course, what everybody now realizes, that the land fighting must take place in extremely mountainous country; that the whole of Corea is more or less mountainous and that Manchuria is defended by enormous ranges of mountains which may turn out to be almost impregnable. As' to cutting the Railway, those who followed the war in South Africa know that that does not amount to very much. Railway lines can be repaired rapidly and temporary bridges can be constructed. So far, apparently, the Russians have been able to keep even expeditionary parties from making any very serious inroads upon Manchuria.