Ii THE URGENT PROBLEMS OF RAILROAD
^ CONSTRUCTION IN RUSSIA AND THEIR
^ SIGNIFICANCE TO HER CREDITORS
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YOUROVETA HOME & FOREIGN TRADE CO., Inc.
New York
By
A. A. BOUBLIKOFF
Former Member of the Russian Duma
Vica-President of the Youroveta Home & Foreign Trade Co., Inc.
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THE URGENT PROBLEMS OF RAILROAD
CONSTRUCTION IN RUSSIA AND THEIR
SIGNIFICANCE TO HER CREDITORS
By A;,^A. BOUBLIKOFF, Former Member of the Russian Duma
Vice-President of the Youroveta Home & Foreign Trade Co., Inc.
Member of the Executive Committee of the All-Russian Congress
of Representatives of Industry and Commerce
Vice-President of the Central War Committee and Chairman of
Its Transportation Section
President of the Atchinsk-Minoussinsk R. R.
Director of Central Caucasus R.R.
1918
Publication Department
YOUROVETA HOME & FOREIGN TRADE CO., Inc.
New York
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THE URGENT PROBLEMS OF RAILROAD
CONSTRUCTION IN RUSSIA AND THEIR
SIGNIFICANCE TO HER CREDITORS
By A. A. BOUBLIKOFF, Former Member of the Russian Duma
Russian national wealth before the war was estimated by the
most optimistic economists at not more than 120 billion roubles,
and the national income at 15 billion roubles. Russia's State
debts, including paper currency, exceed, at present, the sum of
80 billion roubles. It is perfectly obvious that under these con¬
ditions, Russia is facing imminent State bankruptcy.
There are, however, ample reasons to warrant the most un¬
qualified assertion that Russia will not only weather the crisis,
but that she will emerge from it sooner, and with smaller losses
to her creditors than any other country in the world.
As a matter of fact, there exist in Russia two factors, by
means of which the country's productivity could be increased to
an extraordinary extent. In the first place, Russia possesses un¬
told natural wealth, which has hitherto remained unexploited
and, hence, unproductive. Secondly, Russia is inhabited by a
capable and industrious population of 180 million people, whose
productive ( apacity has also remained to a large extent unutil¬
ized. It is a notable fact that the entire peasantry, which con¬
stitutes the greatest part (upward of 80%) of the population,
is engaged in productive work only for two or three months in
the year. During the remaining months it merely consumes the
product of the summer work period.
The causes of Russia's low productivity are twofold : first,
her natural wealth is inaccessible because of the absence of a suf¬
ficient number of railroads ; second, Russian national manpower
is not sufficiently financed.
It is obvious that the Russian State is physically unable to
pay off its war debt, even should it most sincerely strive to do so.
Consequently, Russia's creditors, not because of solicitude for
Russia's welfare, but merely to safeguard their own interests,
must face the necessity of carrying out a number of measures
planned on a tremendous scale and intended to increase the pro¬
ductivity, and hence the paying capacity of the country.
Among these measures one of the foremost places is occu¬
pied by the construction in Russia of a vast net of railrc>:ids which
would make possible the exploitation of her natural resources
now lying dormant and unutilized.
Unfortunately, the solution of this problem is hindered by
the manifest inefficiency of the existing Russian railroads. Even
before the outbreak of the war the railroad system in Russia was
enormously overburdened by freight. The intensity of railroad
traffic amounted in European Russia to seventy-four million pood-
versts per verst (equal to one million and a quarter ton-miles
per mile), an intensity never reached by any railroad system in
the world.
The war and the subsequent revolution, during which tens
of millions of people grew accustomed to use the railroads free
of charge, have, no doubt, greatly developed the taste of the
population for railway travel. The mobility of the population
has considerably grown. In view of this circumstance, it may
be expected that, after the restoration of normal life in the coun¬
try, passenger traffic on the railways will increase ennrmously.
If, at the same time, the production in the country will be re¬
stored to the pre-war level, the existing Russian railroad system
will be totally inadequate for the transportation demands of the
country.
It will be impossible even to raise the question (with one
exception which will be discussed below) of building new railway
lines of the so-called pioneer type ; that is, lines whose purpose
it is to create the conditions for the exploitation of untouched
natural resources. Furthermore, the few pioneer railroads con¬
structed shortly before and during the war will be enormously
handicapped in their work by the fact that the adjoining lines will
be unable to receive and forward the new freight handled by the
pioneer roads.
It must be definitely emphasized that it is not a question of
an insufficient amount of rolling stock. Even should this amount
be restored to the ante-bellum status, whether by purchasing new
rolling stock or by repairing the locomotives and carriages in¬
capacitated during the war and revolution, the existing railway
[4]
system will still be inadequate, for even before the war it suf¬
fered from the lack, not so much of rolling stock, as of road
capacity.
Therefore, any attempt to inaugurate the exploitation of
Russia's hitherto untouched natural resources must he preceded
by an effort to repair and perfect the existing system. It should
he provided with the necessary rolling stock, and a number of
new unloading roads, built along those basic freight directions which
are at present overburdened and on which the traffic is further
expected to grow. Only when this problem is solved, will it be
lX)ssible to inaugurate the construction of new pioneer lines and thus
bring about that mighty efflorescence of Russia's economic prosper¬
ity which will introduce into the mighty stream of world production
the infinite wealth now hidden in and below the soil of Russia, and
in the potential energy of her population.
Among these unloading roads, exceptionally important are
the lines from the Donetz coal basin into the interior of Russia,
for the task of these lines is to provide Russian industry with an
uninterrupted supply of hard mineral fuel. Already before the
war all the lines running from the Donetz basin into the interior
showed a fifteen to twenty-five per cent, yearly increase in freight
traffic. Under after-war conditions, the freight traffic is bound
to grow even more rapidly, because the state of the world's coal
market is such that northern and northwestern Russia may face
the impossibility of getting any foreign coal to meet its industrial
needs. Moreover, under the influence of the war there has been
partly created anew, partly transferred from other regions of the
Empire, a number of industrial enterprises in such regions (for
example, on the middle reaches of the Volga), where industry was
practically non-existent before the war. All these industrial
plants will have to be provided with coal mined in the Donetz
basin. This is another argument in favor of the construction of
new powerful lines running from the Donetz region into the in¬
terior of the country.
The construction of the first of these lines; namely, the
Grishino-Rovno railroad, was begun in 1916. This road will for
a long time assure the Northwest an unobstructed supply of
Donetz coal.
The supply of Petrograd and Reval with Donetz coal by
means of the existing railroads will be absolutely impossible. To
151
solve the supply problem in this region it is necessary to build the
Orel-Liman line, 520 versts long, as an extension, running into
the interior of the Donetz basin of the Petrograd-Novgorod-Orel
railroad, which is now in the process of construction.
An even more serious problem is the coal supply of the Mos¬
cow region. The construction of the "Moscow-Donetz Basin line
with outlets to the Sea of Azov," covering a mileage of 1,000-|-
450 = 1,450 versts, which was suggested as a solution of this
problem, is considered by all Russian railroad authorities one of
the most urgent tasks of railway construction in Russia. The
amount of freight traffic which this line is expected to be called
upon to handle from the very outset of its exploitation is so great
that the question was repeatedly raised whether it would not be
desirable to build this road as a special freight trunk line of ex¬
traordinarily high capacity. The freight traffic along this line
and, consequently, its profit, promise to be altogether exceptional,
for this line will connect the Moscow industrial region with one
of the basic natural resources of European Russia ; namely, the
deposits of anthracite in the eastern portion of the Donetz Basin.
Furthermore, this road will insure the unobstructed flow of this
anthracite into the Mediterranean markets and also meet the de¬
mands of the commerce between Moscow, on one side, and the
rich south of Russia and Caucasus, on the other.
The railway communications between the Donetz Basin
and the southwestern region, on one hand, and the Ural region
and Siberia, on the other, have for many years been in a critical
condition. The freight congestion on the Balashov-Kharkov
line, which handles the traffic between these regions, is so enor¬
mous that the road has almost no margin of reserve road capacity.
It has been estimated, for instance, that to lay the second track
on this road it would be impossible to use the existing track, and
that the rails and sleepers would have to be transported by horses.
In addition, the rapid and powerful growth of economic prosperity
in Siberia, which antedates the war, the construction of a number
of feeding lines in that country, and especially the construction of
the South Siberian railroad, which has been begun this year,
threaten to flood the Balashov-Kharkov line with an additional
mighty stream of freight traffic. To meet these new transporta¬
tion demands it has been planned to construct two lines : Kharkov-
[6]
Penza-Inza, 900 versts long, and Saratov-Milierovo, with an out¬
let to the Azov Sea, 950 versts long.
Thus, to meet the demands for railway facilities necessary
to unload the Donetz Basin, the demands which had been urgent
even before the war, it is necessary to build four lines, with a total
mileage of 3,820 versts.
The traffic stream flowing from the Ural and Siberia in the
direction of Petrograd and other Baltic ports is in a no less pre¬
carious state. The lines Yekaterinburg-Perm-Vologda-Petrograd
and Cheliabinsk-Samara-Moscow, have for a long time had no
margin of reserve road capacity. In the meantime, a number of
new lines were built during the war in the region of the Ural and
Siberia. They include the following roads: Berdiaush-Lisva; Ye-
katerinburg-Saitkovo, with branch lines; Troitzk-Kustanai ;
Troitzk-Orsk ; Tatarskaya-Slavgorod ; Novonikolayevsk-Barnaul-
Semipalatinsk ; Yurga-Kolchugino, with branch lines; Achinsk-
Minusinsk. In addition, concessions have been granted for the
construction of a whole series of branch lines in the Ural region,
and also of a number of lines intended to develop the net of the
roads listed above. All these new railways, at the flrst indication
of order in Siberia, will, no doubt, add tens of millions of poods
of new freight to the traffic carried by the Trans-Siberian. But it
has already been stated that the mouth of the Trans-Siberian and
its entire western section, even before the war and the appearance
of new freight, were unable to handle the traffic. Consequently,
the Trans-Siberian will by no means be able to carry additional new
freight, which, according to the most conservative estimate of the
Ministry of Finances, will amount to thirty million poods. In
reality, however, the Kolchugino road alone will probably furnish
up to 60 million poods of coke, to be shipped to the metallurgical
mills of the Ural region.
The Kazan-Yekaterinburg line, which was completed during
the war, solves the problem of connecting the East with Moscow.
But the lines running in the direction of Petrograd, as well as the
sectors of the trans-Siberian itself, lying west of the Omsk, are in
an almost catastrophic state. If a new trunk line of great capac¬
ity, running from the Kuznetzk coal region to Petrograd via
the Ural, is not constructed in the very near future, then, as
soon as the Bolshevist obsession is over, and Russia returns to
17]
normal production, even on a scale not exceeding that which pre¬
vailed before the war, the lines, enumerated above, will be un¬
able to function, and the Ural mills to dispose of their products.
It is a notable fact that the Kuznetzk mining region, situated
between the rivers Ob and Tom, contains the world's richest
deposits of coal and iron ore, and will, no doubt, form the basis
for the future economic regeneration of Russia. All the con¬
ditions necessary for the broadest development of the metallur¬
gical industry obtain here. There is iron ore containing 65% to
75% of pure metal ; coal yielding up to 80% of coke, an abundance
of cheap timber; the cheapest wheat that can be obtained any¬
where in the world; an unlimited amount of meat; an excellent
climate ; inland navigation, and, finally, even a certain amount
of capital, which was invested before the war by Russian com¬
mercial banks. All these potentialities will remain unrealized if
the Kolchugin railroad is to abut on the inefficient sectors of the
Siberian, Perm and Northern railroads. In view of these consid¬
erations, the construction of the road Rybinsk-Krasnouimsk-
Kyshtym-Tomsk, with branch lines connecting it with the Kol-
chugino railway and from Shadrinsk to Mishkino, thus covering
a mileage of 2,850-|-300=3,150 versts, is a matter of extreme im¬
portance for the future development of Russia, inasmuch as it
depends upon the development of the Ural and Siberia.
The line of traffic next in importance is that which connects
the Moscow industrial region with Turkestan. The soil of the
latter territory contains the world's richest "loess" deposits,
which, if irrigated, would supply with cotton not only Russia,
but the entire world. All of Russia's middle-Asiatic possessions
are connected with Russia proper by means of only one line of
very low capacity; namely, the Orenburg-Tashkent railway. In
the years which preceded the war, this road already had difficul¬
ties in handling the traffic which it was called upon to carry.
Meanwhile, three roads—the Fergan, the Bokhara and the Sye-
miryechensk, were completed during the war and extensive irri¬
gation of the land was inaugurated. The completion of this
work in the very near future is a matter of extreme importance
to Russia as a whole, for in its efforts to improve its balance of
trade Russia will be compelled to discontinue the import of Amer¬
ican cotton and to replace it by the home product. Under these
conditions, the Orenburg-Tashkent line, with its Moscow out-
[8]
let—the Riazan-Syzran line, are facing the possibility of being
unable to cope with the traffic situation.
The railroad system which at present connects middle Asia
with Moscow and the Shuya-Ivanovo industrial region demands
the construction of two new lines : Cherusti-Ruzayevka, 370
versts long, and Yermolino-Kinel, 850 versts long. But, above
all, it is necessary to bring into being a new independent link be¬
tween the Russian middle asiatic possessions and Central Russia
by means of the line Alexandrov-Gai-Kungrad-Charjui, 1,720
versts long. The latter road will also make it possible to exploit
the vast deposits of mineral oil on the northern coast of the Cas¬
pian Sea, but under certain conditions, it may assume an alto¬
gether exceptional world importance, for, should the British Gov¬
ernment allow the construction of a line between the Russian and
the Indian railroad systems via Afghanistan, the line Alexandrof
Gai-Charjui will become a part of the great Europe-India transit.
The economic possibilities in this connection are quite unlimited.
At any rate, the transportation on this line of international pas¬
senger and fast freight promises enormous advantages to Russia.
Besides, this line has in itself a tremendous political and commer¬
cial importance for Russia in its internal commerce with the rich
middle asiatic border provinces. Finally, it will make for¬
ever impossible the horrors of mass starvation now rampant be¬
cause of the interruption in the functioning of the Orenburg-
Tashkent railroad.
The aggregate mileage of the new lines which are to be built
for the purpose of connecting Central Russia with middle Asia
amounts to 2,940 versts.
The Caucasus is an equally rich border land. There is not
the slightest doubt that the free State of Armenia, which will be
created on the ruins of the Turkish Empire, will considerably
broaden the sphere of Russia's economic influence in the Cau¬
casus. But at present the entire region of Trans-Caucasia is con¬
nected with Russia proper only by the thin thread of the Vladi¬
kavkaz railroad. True, during the war the so-called Black Sea
railroad (from Tuapse to Soukhoum) has been nearly completed,
but its opening will relieve the situation only to a small degree,
for at Tuapse it abuts on the Armavir-Tuapse railroad, which is
of a very low capacity and which is greatly congested by its own
[9]
V
freight. It is obvious that the Black Sea railroad must be given
a free outlet of its own by constructing the line Tuapse-Kerch,
300 versts long. But even this will not definitely solve the prob¬
lem of connecting Trans-Caucasia with Central Russia. For this
purpose it is imperative to construct the direct line between Mos¬
cow and Tiflis, which is the center of Trans-Caucasia.
The line Kozlov-Svyatoy Krest-Vladikavkaz-Tiflis, planned
for this purpose, will have a mileage of 1,080 + 370 = 1,450 versts.
No one who is familiar with the natural resources of Trans-Caucasia
and who has an insight into the potentialities of the economic evo¬
lution of Asia Minor will for a moment doubt the financial soundness
of this undertaking, in spite of the fact that the construction of the
22-verst tunnel between Vladikavkaz and Tiflis will cost an enormous
sum of money. Nor will any one question the highest political and
economical importance of this line.
For the Northern Caucasus, the prime need is the securing of
a free outlet for the freight moving westward from Rostov. For
this purpose it is necessary to construct a short line Taganrog-
Mariupol-Tzarevokonstantinovka, about 200 versts long. This road
will make it possible to use the powerful trunk line of the Second
Yekaterina Railroad (Dolgintzevo-Volnovakha), which was built 15
years ago, but which is only slightly utilized because of the absence
of a direct outlet in the direction of Rostov.
Thus, to satisfy the transportation needs of the Caucasus, it is
necessary to construct three lines, 1,950 versts long in the aggregate.
It has been mentioned here that there exists one category of
pioneer railroads whose construction may be begun immediately,
for they themselves create their own outlets to the world trade
routes and do not depend on the traffic intensity of the existing
Russian railroad system.
The timber carrying railways in the North of Russia belong
to this category. These roads have not only a Russian, but also an
international economic importance. The demand for, and, conse¬
quently the price of timber, have greatly increased during the war.
It is hardly expected that either the demand or the prices will fall
upon the conclusion of peace. An enormous amount of timber will
be needed for the rebuilding of the homes, industrial plants and
mines, which the Germans have destroyed in their fury in northern
France and in Belgium, It is to the interest of mankind that the
[10 1
exploitation of the Russian forest wealth should be begun immedi¬
ately. Its value is such that it by far exceeds the Russian State
debts.
The unfavorable circumstances under which the exploitation
of the Russian northern forests will have to be conducted should
not, however, be overlooked. The Russian forests zone in the North
is practically a desert. Consequently, railroad construction will
have to go hand in hand with a colonization of the territory, con¬
ducted on a broad scale. Under these conditions, it is not to be
expected that the capital invested in timber carrying railroads will
speedily yield a satisfactory rate of profit. A certain period of time
must elapse before the territory will possess a population sufficient
for the exploitation of the forest wealth. For this reason it may be
necessary to connect the railroad concessions with the forest con¬
cessions, for the purpose of counterbalancing the losses suffered by
the railroads, by the enormous profits which can be derived from
the exploitation of the forests.
As regards the income to be derived from the exploitation,
immediately upon its opening, the timber carrying railroads differ
essentially from all roads discussed above. The latter, handling, as
they do, not only the local freight, but also the vast amount of
transit traffic coming from the adjacent portion of the railroad net,
are all assured of a very high rate of income. In the case of
timber carrying railways, a high rate of profit will become a reality
only at the end of a more prolonged period of time. From the
commercial standpoint, the capital invested in these enterprises will
need some sort of an external support. Before the revolution, this
support would have assumed the form of a Government guarantee.
At present, it will be necessary to use the exploitation of the forests
as a source of income, and there is not the slightest doubt, that, in this
respect, the Russian Government will be glad to meet the builders of
the Northern railroads half-way.
The "Plan for railroad construction," elaborated in 1916, pro¬
vides for the construction in the north of Russia, first of all, of the
following three lines; Kotlas-Soroki, 800 versts long; Ob-Archangel,
with a branch running to the Nadezhdino Mill, via the well-known
Ukhta mineral oil deposit, aggregating a mileage of 1,650 versts
and Kama-Pechora, 440 versts long,—2,890 versts in all.
To summarize, Russia urgently needs a number of new trunk
lines,coveringa mileage of 14.760 versts and costing approximately
I 11 ]
one billion dollars. Only when these roads are built will it be safe
to undertake the construction of new lines in the virginal regions
of Russia, thus furnishing a sound foundation for Russia's broad
economic unfolding and restoring her paying capacity.
It must once more be pointed out most emphatically, that the
undertaking to restore and develop Russia's economic vitality can
by no means be considered in the light of charity. This under"
taking vñll be nothing but a business method of saving the capital
which has hitherto been loaned to Russia by other countries andf,
foreign capitalists. Under the conditions which obtain at present,
the problem of paying Russian debts is mathematically insoluble.
No country possessing 120 billion roubles worth of national wealth
can cancel a debt amounting to 80 billion roubles. There is only
one way of liquidating such a debt, namely to further the growth
of the debtor's national prosperity. After all the miseries of this
war, Russia is no longer able to increase its wealth by its own
powers. Russia's foreign creditors are facing the following dilem-
na : either to help Russia and have the capital previously loaned duly
reimbursed, or to refuse to assist her and then renounce all hope
of ever getting back the money which had been advanced to her.
To pay one's debts, it is not sufficient to have the good will to do
so. All the loyal elements of Russia, no doubt, have this good
will. What they lack is the physical means, and they will not have
it until Russia is provided with 15,000 versts of transit trunk lines,
which she sorely needs and which she cannot get without foreign
assistance.
One billion dollars for nezv roads in Russia—it is the first
demand—not of Russia—but of the commercial wisdom of her
creditors.
A. A. BOUBLIKOFF
November 30th, 1918,
New York City.
[ 12]
OTHER ARTICLES BY THE
SAME AUTHOR
Pressing Questions of Railroad Policy. St. Petersburg, 1905.
The Methods of Guaranteeing the Gross Profits of the Railroads.
The Route of the St. Petersburg-Siberia Trunk Line.
Various Forms of State Assistance in Railroad Construction.
The Railways of Finland.
The Belgian National Company of Branch Lines.
The Necessity of a Unified Plan for All Railroad Construction in
Russia.
A Railroad Connection Between the Northern Railways and
Moscow.
The St. Petersburg-Kinel Railway.
The Railroads of Altai.
The Status of Private Construction of Railways in Russia.
Private Railroad Construction (with reference to the Charter of
the North Donetz R. R.).
Double-tracking or Construction of New Shortcutting Lines.
State Versus Private Railroad Ownership.
The Principle of Shortest Routes.
Recent Private Railroad Construction. St. Petersburg, 1916.
The Russian Revolution. New York, 1918.
A Treatise on the Importance of International Agreement on
Financial Rehabilitation After the War. New York, 1918.
The Recovery of the Russian Monetary System. New York, 1918.
The Necessity for Russo-American Co-operation in Russian Railway
Construction.