sublime disregard of the principles of sound business and finance, and she will probably continue to do so as long as the French investor will first find the money for building these railways, and afterwards provide more money for paying the interest on the loans previously contracted.

The constantly growing financial requirements of the State caused the Government to impose increasingly heavy import duties on all manufactured goods, until it was discovered that the limit had been reached, that the population became financially exhausted, and that higher duties did no longer produce an increase, but a decrease, of revenue. Naturally a large part of these duties had to be paid by the peasants, because many of the articles which came from abroad and were taxed could not be supplied at a cheaper rate by Russian factories because manufacturing industries had not yet developed in Russia.

Under the shelter of high protection it was possible to create manufacturing industries, and the Government greatly encouraged their foundation. For a time industrial enterprises, and especially the iron-works, flourished greatly-that is to say, as long as Russia was able to construct railways regardless of expense, owing to the constant influx of French capital. Almost the whole iron production of Russia was absorbed by the Government, for the poor peasants could not afford iron implements and continued to use their primitive wooden ploughs, wooden wheels, wooden axles, wooden nails, &c. Then only did it occur to Russia's leading men that Russian industries could not develop a market at home, because of the extreme poverty of the masses of the people which were unable to buy the products of those enterprises. The Controller of the State therefore reported an extensive industry will prove impossible until after the creation of a domestic market, which again is dependent upon a flourishing agriculture.'

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Agriculture was ruined owing to the financial exigencies of the State, and the manufacturing industries, which had been promoted by the Government at the expense of agriculture, were languishing because of the poverty of the agricultural population. Therefore Mr. de Witte tried the daring experiment of creating a market for Russian manufactures abroad, and thus converting the failure of Russia as an industrial country into a success. With that object in view, steamers were subsidised, export bounties on the most lavish scale were granted, commercial commissions were appointed to develop trade, Persia and China were to be converted into outlets for the Russian industries, and were to be rigidly closed against the industries of the rest of the world. Thus Russia was rushed headlong into her Asiatic adventures in order to find the funds required by the Government.

When the activity of the Government in building railways lessened, the artificial stimulus which so far had supported Russia's

industries was withdrawn; the huge ironworks which worked chiefly for the Government found themselves suddenly without orders, and the vast industrial fabric which had been erected during many years threatened to collapse. Therefore the Russian Minister of Finance not only endeavoured to create markets abroad for the tottering industries, but he had to try at the same time to keep these industries afloat at home by Government orders and by apparently illegal loans. The Controller of the State reported on these loans as follows:

. . . All these advances have been made under special conditions which, properly speaking, were inadmissible under the statutes of the State Bank. Such loans not justified by the statutes amounted to about 41,000,000 roubles at the beginning of 1900, to 65,000,000 roubles in the following year, and to more than 100,000,000 in 1902. A further injurious effect of these industrial loans is that the representatives of the State Bank, entrusted with the surveillance of the enterprises for which they are made, assume a preponderant part in the management of the business, thus exercising two incompatible functions, namely, those of controllers and administrators. That proceeding led to undesirable results and much friction, especially when the subsidised enterprise, in spite of the assistance-given to it, cannot be saved from bankruptcy.

If we now survey Russia's financial position by means of the facts and data given in the foregoing, it appears that the position is precarious and almost desperate, notwithstanding the enormous Budget and the splendid surpluses.

Now let us see how Russia has got into that desperate position. Owing to the geographical position of the country, Russia need fear no foreign attack. Nevertheless she chooses to maintain the largest army in the world and the third largest navy. Her alliance with France, which was concluded at a time when money was exceedingly cheap and plentiful in the money markets of the world, provided her with enormous funds at an unusually low rate of interest, and Russia, like a wasteful spendthrift, squandered the hundreds of millions which she obtained from France on unproductive objects, on objects which flattered her vanity, but which have ruined her. Thus she has during the last decade wasted her substance and mortgaged her future.

Russia's position is like that of a nobleman who has a large but utterly neglected estate and a house that is falling about his ears, who is deeply in debt, who pays one lender by borrowing from another, who sees his debts steadily mounting up towards the point at which ruin becomes unavoidable, and who desperately makes the most fantastic attempts at making money, hoping to disentangle himself. One of Russia's strange expedients for getting money was lately revealed in the Times. According to its extremely wellinformed Pekin correspondent, Russia claimed after the Boxer rising from China an indemnity of 17,900,000l., on the ground that she kept 179,000 soldiers in China at an expense of 100l. each. According to the Pekin correspondent of the Times, she kept in

VOL. LV-No. 325

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reality only 50,000 men in China, and the Russian Exchequer should thus have made a net profit of at least 12,900,000l. out of this transaction.

Of late years the supply of loanable money has for various reasons become scarce and dear in the various money centres of the world, and it would have been extremely difficult for Russia to provide for her ordinary peace expenditure, as she would not easily have been able to obtain those loans without which she can apparently not make both ends meet. Therefore it is not easy to see how Russia will be able to raise the funds necessary for carrying on the Japanese war, which will probably prove exceedingly costly, and how she will meet her current obligations, unless she should abandon her over-ambitious policy, which is beyond her financial strength, and disband her army and navy. However, such an event seems

hardly likely.

Many of the best observers have for a long time past been of opinion that Russia is financially unable to conduct a great war. However, lack of money has never prevented a nation from going to war, for it may make up for its war expenses by repudiating its public debt. Whether Russia will meet her obligations in full remains to be seen. If she should be forced to repudiate or to compound with her foreign creditors, either because of the costliness of the present war or because the international money market can no longer supply Russia's insatiable financial requirements, it will be an evil day for the French nation, which has lent to Russia more than 300,000,000l.

Russia's financial collapse would probably mean the break up of the Dual Alliance, for in the first place the thrifty Frenchman is exceedingly sensitive when his pocket is touched, and in the second place Russia would have proved herself financially unable to be an efficient ally to France in case of war. Ample funds are, after all, sinews of war which are as indispensable as are armies and fleets.

O. ELTZBACHER.

THE PROPOSED EDUCATIONAL

CONCORDAT

A NONCONFORMIST REPLY

THE evidences of a growing desire on the part of all parties to effect an amicable settlement of the weary controversy over the education of our children fill the hearts of all earnest educationists with hope that, with wisdom and moderation on either side, the present deadlock may be soon removed. By none were the able articles of the Bishop of St. Asaph and Mr. Lathbury, in this Review for January, more cordially received than by the Nonconformists. They contain much with which they disagree, and the proposals are not altogether such as could be accepted as a satisfactory settlement of their grievances; but the tolerant spirit in which they were written, and the frank recognition that the present state of affairs constitutes a serious injustice, together with their valuable suggestions of a modus vivendi, have created the most favourable impression, and have revived their hopes that a way may yet be found to remove their grievances without inflicting any injustice on their opponents.

The universality of the opposition referred to by the Bishop of St. Asaph is the very best proof of its sincerity. It must be admitted that many have adopted a most extreme attitude in their hostility. This must, of course, be looked for among a certain section of the community in every agitation. What has surprised us, however, is the extent to which this attitude has been adopted by men who have always maintained the reputation for moderation. I have never been an advocate of the passive resistance movement in the form which it has assumed in England, because I believe that constitutional opposition is the only one worthy of the importance of the cause, and, in the long run, if carried out intelligently and wisely, the most likely to attain the object in view. I must, however, confess that the adoption of this method of opposition by so many of the leaders of the denominations-men who have always been famous for their lawabiding advocacy-and their determination to bear any penalty that the law can inflict upon them rather than bow to the unjust provisions of the Act, have come as a shock of surprise upon many of us. 387

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This is a strong proof that the principles involved are of greater importance than any that have been touched by any other legislative proposals in modern times.

That this position has arisen largely from the utterly irreconcilable attitude adopted by the Government and the Church party when the Bill was introduced, and during its passage through Parliament, cannot be denied. The supporters of the Bill were, as was frequently pointed out to them at the time, utterly ignorant of the deep and widespread hostility they were arousing in the country both by the nature of their proposals and their ruthless methods of procedure. The Bill itself was more reactionary in its provisions than the majority of Church people had ever thought possible. The late Archbishop of Canterbury, in his famous reply to a charge of inconsistency in supporting the Bill after his previous declaration that rate-aided denominational schools were impossible, admitted that he had never expected to find any Government bold enough to attempt to establish such a system. To what extent the bishops and their followers are responsible for these provisions is beside our present point, certain it is that the most sanguine among their ranks never dared to expect, a few years ago, that such proposals would ever come within the range of practical politics in this country. If, then, the Bill came as a pleasant surprise to the supporters of denominationalism, how much greater must have been the indignation of the supporters of the Board and undenominational system! Add to this the irritation caused by the refusal of the Government to give the people's representatives an opportunity of even discussing some of the most important parts of the Bill in the House of Commons, together with the doubtful methods which were adopted to stiffen its provisions, particularly in the Upper House, and the popular revolt is fully explained.

The attempts to administer the Act in those parts of the country where it has been already adopted have not tended to any modification of the popular hostility. It is not too much to say that the Board of Education have shown the most flagrant partiality in the manner in which they have used their prerogative since the Act was passed. Their attempts unduly to rush the Councils to administer the Act before they were given time to make the necessary arrangements; their insistence on altering schemes so as to include an undue proportion of co-opted members on the Education Committees; their attempts to hand over schools to the Church of England which had always been conducted as free parochial schools; their insertion of provisions in their draft final orders, for appointing clergymen exofficio managers, and confining the selection of foundation managers to bona-fide members of the Church of England; their decisions as to endowments; and their ill-advised circulars to Voluntary Schools Associations, together with many other indiscretions, have been the means of greatly strengthening the opposition, and of driving many