in the financial policy
of the Government. The emancipation put on the market an unlimited
supply of cheap labour; the construction of railways in all directions
increased a hundredfold the means of communication; and the new banks
and other credit institutions, aided by an overwhelming influx of
foreign capital, encouraged the foundation and extension of industrial
and commercial enterprise of every description. For a time there was
great excitement. It was commonly supposed that in all matters relating
to trade and industry Russia had suddenly jumped up to the level of
Western Europe, and many people in St. Petersburg, carried away by the
prevailing enthusiasm for liberalism in general and the doctrines of
Free Trade in particular, were in favour of abolishing protectionism
as an antiquated restriction on liberty and an obstacle to economic
progress.

At one moment the Government was disposed to yield to the current, but
it was restrained by an influential group of conservative Political
Economists, who appealed to patriotic sentiment, and by the Moscow
manufacturers, who declared that Free Trade would ruin the country.
After a little hesitation it proceeded to raise, instead of lowering,
the protectionist tariff. In 1869-76 the ad valorem duties were, on an
average, under thirteen per cent., but from that time onwards they rose
steadily, until the last five years of the century, when they averaged
thirty-three per cent., and were for some articles very much higher.
In this way the Moscow industrial magnates were protected against the
influx of cheap foreign goods, but they were not saved from foreign
competition, for many foreign manufacturers, in order to enjoy the
benefit of the high duties, founded factories in Russia. Even the firmly
established cotton industry suffered from these intruders. Industrial
suburbs containing not a few cotton factories sprang up around St.
Petersburg; and a small Polish village called Lodz, near the German
frontier, grew rapidly into a prosperous town of 300,000 inhabitants,
and became a serious rival to the ancient Muscovite capital. So
severely was the competition of this young upstart felt, that the Moscow
merchants petitioned the Emperor to protect them by drawing a customs
frontier round the Polish provinces, but their petition was not granted.

Under the shelter of the high tariffs the manufacturing industry as a
whole has made rapid progress, and the cotton trade has kept well