Front Page Titles (by Subject) Chapter VIII: THE RUSSIANS. - The National System of Political Economy
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Chapter VIII: THE RUSSIANS. - Friedrich List, The National System of Political Economy 
The National System of Political Economy by Friedrich List, trans. Sampson S. Lloyd, with an Introduction by J. Shield Nicholson (London: Longmans, Green and Co., 1909).
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RUSSIA owes her first progress in civilisation and industry to her intercourse with Greece, to the trade of the Hanseatic Towns with Novgorod and (after the destruction of that town by Ivan Wassiljewitsch) to the trade which arose with the English and Dutch, in consequence of the discovery of the water communication with the coasts of the White Sea.
But the great increase of her industry, and especially of her civilisation, dates from the reign of Peter the Great. The history of Russia during the last hundred and forty years offers a most striking proof of the great influence of national unity and political circumstances on the economic welfare of a nation.
To the imperial power which established and maintained this union of innumerable barbaric hordes, Russia owes the foundations of her manufactures, her vast progress in agriculture and population, the facilities offered to her interior traffic by the construction of canals and roads, a very large foreign trade, and her standing as a commercial power.
Russia's independent system of trade dates, however, only from the year 1821.
Under Catherine II. trade and manufactures had certainly made some progress, on account of the privileges she offered to foreign artisans and manufacturers; but the culture of the nation was still too imperfect to allow of its getting beyond the first stages in the manufacture of iron, glass, linen, &c., and especially in those branches of industry in which the country was specially favoured by its agricultural and mineral wealth.
Besides this, further progress in manufactures would not, at that time, have been conducive to the economic interests of the nation. If foreign countries had taken in payment the provisions, raw material, and rude manufactures which Russia was able to furnish—if, further, no wars and exterior events had intervened, Russia by means of intercourse with nations more advanced than herself would have been much more prosperous, and her culture in general would in consequence of this intercourse have made greater progress than under the manufacturing system. But wars and the Continental blockade, and the commercial regulations of foreign nations, compelled her to seek prosperity in other ways than by the export of raw materials and the import of manufactures. In consequence of these, the previous commercial relations of Russia by sea were disturbed. Her overland trade with the western continent could not make up for these losses; and she found it necessary, therefore, to work up her raw materials herself. After the establishment of the general peace, a desire arose to return to the old system. The Government, and even the Emperor, were inclined to favour free trade. In Russia, the writings of Herr Storch enjoyed as high a reputation as those of Mons. Say in Germany. People were not alarmed by the first shocks which the home manufactories, which had arisen during the Continental blockade, suffered owing to English competition. The theorists maintained that if these shocks could only be endured once for all, the blessings of free trade would follow. And indeed the circumstances of the commercial world at the time were uncommonly favourable to this transition. The failure of crops in Western Europe caused a great export of agricultural produce, by which Russia for a long time gained ample means to balance her large importation of manufactured goods.
But when this extraordinary demand for Russian agricultural produce had ceased, when, on the other hand, England had imposed restrictions on the import of corn for the benefit of her aristocracy, and on that of foreign timber for the benefit of Canada, the ruin of Russia's home manufactories and the excessive import of foreign manufactures made itself doubly felt. Although people had formerly, with Herr Storch, considered the balance of trade as a chimera, to believe in the existence of which was, for a reasonable and enlightened man, no less outrageous and ridiculous than the belief in witchcraft in the seventeenth century had been, it was now seen with alarm that there must be something of the nature of a balance of trade as between independent nations. The most enlightened and discerning statesman of Russia, Count Nesselrode, did not hesitate to confess to this belief. He declared in an official circular of 1821: 'Russia finds herself compelled by circumstances to take up an independent system of trade; the products of the empire have found no foreign market, the home manufactures are ruined or on the point of being so, all the ready money of the country flows towards foreign lands, and the most substantial trading firms are nearly ruined.'
The beneficial effects of the Russian protective system contributed no less than the injurious consequences of the re-establishment of free trade had done to bring into discredit the principles and assertions of the theorists. Foreign capital, talent, and labour flowed into the country from all civilised lands, especially from England and Germany, in order to share in the advantages offered by the home manufactories.
The nobility imitated the policy of the Empire at large. As they could obtain no foreign market for their produce, they attempted to solve the problem inversely by bringing the market into proximity with the produce—they established manufactories on their estates. In consequence of the demand for fine wool produced by the newly created woollen manufactories, the breed of sheep was rapidly improved. Foreign trade increased, instead of declining, particularly that with China, Persia, and other neighbouring countries of Asia. The commercial crises entirely ceased, and one need only read the latest reports of the Russian Minister of Commerce to be convinced that Russia owes a large measure of prosperity to this system, and that she is increasing her national wealth and power by enormous strides.
It is foolish for Germans to try to make little of this progress and to complain of the injury which it has caused to the north-eastern provinces of Germany. Each nation, like each individual, has its own interests nearest at heart. Russia is not called upon to care for the welfare of Germany; Germany must care for Germany, and Russia for Russia. It would be much better, instead of complaining, instead of hoping and waiting and expecting the Messiah of a future free trade, to throw the cosmopolitan system into the fire and take a lesson from the example of Russia.
That England should look with jealousy on this commercial policy of Russia is very natural. By its means Russia has emancipated herself from England, and has qualified herself to enter into competition with her in Asia. Even if England manufactures more cheaply, this advantage will in the trade with Central Asia be outweighed by the proximity of the Russian Empire and by its political influence. Although Russia may still be, in comparison with Europe, but a slightly civilised country, yet, as compared with Asia, she is a civilised one.
Meantime, it cannot be denied that the want of civilisation and political institutions will greatly hinder Russia in her further industrial and commercial progress, especially if the Imperial Government does not succeed in harmonising her political conditions with the requirements of industry, by the introduction of efficient municipal and provincial constitutions, by the gradual limitation and final abolition of serfdom, by the formation of an educated middle class and a free peasant class, and by the completion of means of internal transport and of communication with Central Asia. These are the conquests to which Russia is called in the present century, and on them depends her further progress in agriculture and industry, in trade, navigation and naval power. But in order to render reforms of this kind possible and practicable, the Russian aristocracy must first learn to feel that their own material interests will be most promoted by them.