Concerning the State Budget

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Our newspapers as usual, have published the most respectful report of the Minister of Finance on the budget— the state revenues and disbursements for 1902. As usual, everything, according to the Minister’s assurance, is going well: “the finances are in a most satisfactory state”, “equilibrium has been firmly maintained in the budget”, “the railway system continues its successful development”, and there is even “a steady improvement in the people’s welfare”! Small wonder that so little interest is shown in questions of the state economy, despite their importance; interest is blunted by the obligatory, standard eulogies; for everyone knows that paper will put up with anything, that “anyway” the public “isn’t allowed to peep” behind the scenes of official financial juggling.

On this occasion, however, the following circumstance stands out particularly. With his usual legerdemain the conjurer shows the public his empty bands, makes passes, and produces one gold coin after another. The public applauds. Nevertheless, the conjurer begins to make the most frantic efforts to defend himself and is almost in tears when he assures us that he is not deceiving us, that there is no deficit, and that his liabilities are less than his assets. Russians have been so well schooled in respectable behaviour in official places that even as onlookers they feel uncomfortable, and only a few mutter the French saying under their breath: “He who excuses himself accuses himself.”

Let us see how our Witte “excuses” himself. The gigantic expenditure, amounting to almost 2,000 million rubles (1,946 million), has been fully covered only because of the 144 million taken from the famous “free cash in hand” at the State Treasury, which free cash in hand was made up by last year’s 4 per cent loan of 127 million rubles (floated at 148 million rubles, of which 21 million have still not been taken up). In other words, a deficit covered by the loan? Nothing of the sort, says our magician, “the loan was certainly not floated because of the need to cover expenditures unforeseen in the estimate”, since 114 million rubles remained “completely free” after the coverage; the loan was raised because it was desired to build new, railways.

Well said, Mr. Witte! But, first, what you say does not refute the fact of the deficit, since 114 million rubles, even if “completely free”, cannot cover an expenditure of 144 million rubles. Secondly, the free cash in hand (114 million rubles) included 63 million received in excess of the usual revenue for 1901, as compared with the budget estimate, and our press has long since revealed the fact that you artificially reduce the estimate for the budget revenue in order to effect a fictitious increase in the “free cash in hand” and steadily increase taxation. Last year, for instance, stamp duties were raised (the new stamp duty regulations), the price of government-distilled vodka rose from 7 rubles to 7 rubles 60 kopeks a vedro,[1 vedro—about 12.3 litres (21.7 pints).—Tr.] customs duties continued to increase (increases were introduced “temporarily” in 1900 on account of the war in China), and so on. Thirdly, while you laud the “cultural role” of the railways, you modestly refrain from mentioning the purely Russian and very uncultured custom of plundering the Treasury when rail ways are built (to say nothing of the shameful exploitation of the workers and the starving peasants by railway contractors!). Thus, a Russian newspaper recently reported that the cost of building the Siberian railway was initially estimated at 350 million rubles, but that in actuality 780 million have been expended and that in the end the total cost will probably exceed 1,000 million (Iskra has had something to say about the plunder on the Siberian railway: see issue No. 2). You compute the revenues with precision, Mr. Witte, omitting nothing, but how about rendering an account of the actual extent of the expenditure?

Another matter not to be forgotten is the fact that the building of railways in 1902 was undertaken partly because of the military purposes of our “peace-loving” government (the vast Bologoye-Sedlets line, more than 1,000 versts long) and partly because of the absolute necessity to afford at least some “help” to oppressed industry, in whose affairs the State Bank is directly interested. The State Bank has not only granted loans with a liberal hand to tottering enterprises, but has practically taken many of them under its full control. The bankruptcy of industrial enterprises threatened to lead to the bankruptcy of the state! Lastly, let us not forget, either, that it is under the administration of the “genius” Witte that the sum of the loans and the size of the taxes are constantly increasing, despite the fact that the capital of the savings-banks is applied exclusively to support state credits. This capital has already exceeded 800 million rubles. Taking all this into consideration, we realise that Witte’s economy is wasteful, that the autocracy is heading slowly but surely for bankruptcy, since taxation cannot be raised indefinitely and the French bourgeoisie will not always come to the aid of the Russian Tsar.

Against the charge of having increased the national debt Witte defends himself with arguments that are sheerly ludicrous. He compares liabilities with “assets”, he compares the sum of the state loans for 1892 and 1902 with the costs of the state railways for the same years and produces a reduction in the “net” debt. But we have still further assets: “Fortresses and warships” (I swear, the report had it so!), harbours and government factories, quit-rent, and forests.

Magnificent, Mr. Witte! But have you not noticed that you are like the merchant summoned to court as a bankrupt who tried to justify himself before the bailiffs who were about to make an inventory of his property? As long as an enterprise is unshakably solvent no one would dream of asking that loans be specially guaranteed. No one doubts that the Russian people have plenty of “assets”; but the greater these assets, the greater the guilt of those who, despite the abundance, conduct the economy by increasing loans and taxation. You are merely demonstrating to the people that they should get rid of those who squander their assets, and do so as quickly as possible. In actual fact, of all the European countries, Turkey alone has so far put forward special state assets as a guarantee of state loans. This action has naturally led to the assumption of control by foreign creditors over the assets that were to guarantee them the return of the loans they had advanced. The economy of the “great Russian state” administered by representatives of Rothschild and of Bleichröder—what glittering prospects you open up before us, Mr. Witte!

This is quite apart from the fact that there is no banker who will accept fortresses and Warships as collateral, that these represent a minus, not a plus, in our economy. Even railways can serve as a .guarantee only when they are run at a profit. However, from Mr. Witte’s report we learn that up to the present all Russian railways have, in general, been run at a loss. Only in 1900 was the deficit on the Siberian railways covered and a “small net profit” obtained—so small that Mr. Witte remains modestly silent as to its amount. He also remains silent in regard to the fact that in the first eight months of 1901 the takings of the railways in European Russia dropped as a result of the crisis. We can well imagine the balance of our railway economy if the actual sums of money plundered during construction, as well as the official sums allotted for the job, were taken into consideration. Is it not high time to place these valuable assets in more reliable hands?

Needless to say, Witte speaks in the most soothing tones of the industrial crisis: “The hitch ... without doubt does not affect general industrial prosperity and, after a certain interval of time, we shall probably [!] see a fresh period of industrial revival.” Fine comfort for the mil lions of the working class, who suffer from unemployment and reduced wages! You may search in vain in the list of state expenditures for the slightest hint of the millions and tens of millions that the Treasury has wasted on direct and indirect support of the industrial enterprises “suffering” from the crisis. What gigantic sums are involved in such support may be seen from press reports to the. effect that the total sum of the loans granted by the State Bank between January 1, 1899 and January 1, 1901 increased from 250 million to 449 million rubles, and that industrial loans increased from 8,700,000 to 38,800,000 rubles. Even the loss of four million rubles from industrial loans did not cause the Treasury any difficulty. And as for the workers who have sacrificed on the altar of “industrial success”, not the contents of their purse, but their lives and the lives of the millions dependent on them, the Treasury helped these workers by sending thousands of them from the industrial towns to the starving villages “free of charge”!

Witte avoids the word “famine” altogether, assuring us in his report that the “detrimental effects of the poor harvest ... will be mitigated by generous help to the needy”. This generous help, according to him, amounts to 20 million rubles, while the deficit in the harvest is estimated at 230 million rubles (if one takes as the base the very low price of 50 kopeks a pood, compared, however, with the years of favourable harvests). Indeed, how very “generous”! Even if we assume that only a half of the losses is borne by the poor peasantry, it will still become evident that we underestimated the greed of the Russian Government, when we wrote (in re Sipyagin’s circular; see Iskra, No. 9) that the government was cutting relief loans down to one-fifth. The Russian Tsar is generous, not in his aid to the peasant, but in his police measures directed against those who really wanted to help the famine-stricken. He is also generous in squandering millions in order to grab an appetising slice in China. In two years, Witte informs us, 80 million rubles went in extraordinary expenditure on the war in China and “in addition very substantial sums were expended from the ordinary budget”. This means that anything up to 100 million rubles was expended, if not more! The unemployed worker and the starving peasant may take comfort from the fact that Manchuria is almost sure to be ours...

Lack of space keeps us from dealing at length with the remaining parts of the report. Witte also defends himself against the charge of scantiness in the disbursements on public education: to the 36 million rubles of the estimate of the Ministry of Public Education he adds the disbursements of other ministries on education and “cooks up” the figure of 75 million rubles. But even this figure (of doubtful veracity) is extremely miserable for the whole of Russia, representing less than five per cent of the total budget.

The fact that “our state budget is organised mainly on the basis of, a system of indirect taxation” is considered by Witte to be an advantage, and he repeats the stale bourgeois arguments on the possibility of “adjusting the consumption of taxed articles to accord with the degree of prosperity”. In actual fact, however, it is notorious that indirect taxation affecting articles of mass consumption is distinguished by its extreme injustice. The entire burden is placed on the shoulders of the poor, while it creates a privilege for the rich. The poorer a man is, the greater the share of his income that goes to the state in the form of indirect taxes. The masses who own little or nothing constitute nine-tenths of the population, consume nine-tenths of the taxed items, and pay nine-tenths of the total of all indirect taxes, while they receive no more than two- or three-tenths of the national income.

In conclusion, an interesting “trifle”. On which items were expenditures most of all increased from 1901 to 1902? The total expenditures increased from 1,788 million to 1,946 million rubles, that is, by less than one-tenth. Nevertheless, expenditures on two items increased by nearly a quarter: from 9,800,000 to 12,800,000 rubles “for the maintenance of members of the royal family” and ... “for the maintenance of the special corps of gendarmes” from 3,960,000 to 4,940,000 rubles. We have here the answer to the question: What are “the most urgent needs of the Russian people”? And what touching “unity” between the tsar and the gendarmes!