No GNW (or “Peter goes South”)

[Dragonboy]

Really interesting to See Japan and Russian having such an initially cordial relations

 

[alexmilman]

Really interesting to See Japan and Russian having such an initially cordial relations

This is how it was in OTL until Russia changed its regional policy.

 

[Dragonboy]

This is how it was in OTL until Russia changed its regional policy.

Let's hope it continues to be cordial

 

[Kurd Gossemer]

Let's hope it continues to be cordial

Indeed, Russia has much to win by mostly letting Japan do the hard lifting while they can watch and make commercial treaties with the nations to better secure profit in the region.

 

[alexmilman]

Indeed, Russia has much to win by mostly letting Japan do the hard lifting while they can watch and make commercial treaties with the nations to better secure profit in the region.

Yes. In OTL the problem was a combination of a complete ineptitude on the very top (NII) and resulting free fly of all sorts of the ideas. Witte went against the initial plan for the TransSib because he saw a potential profit from the RR going through China and all the way to a dreamed out “warm water ocean ports”. To do so he sided with the Chinese and pissed of the Japanese.
The naval figures had been under the spell of the Mahan’s naval theories (which did not make much sense for Russia, especially on the Pacific) and the military seemingly had been going with the flow. Plus, the high-placed court figures were planning to make some extra money on the side by launching the Korean adventure.

 

[alexmilman]

277. Dealing with the Far East

“Peculiarities of Chinese life make it impossible for them to live together with Europeans.” [1]
“All the efforts and expenses of the government can only lead to creation within the Russian borders of an independent Chinese-Korean province.”
I.V. Furugelm, governor of the Primorye, 1865
“I prefer desert, but Russian, rather than Crutined land, but Korean”
General Unterberger
"The Population Census of the Russian Empire of 1897 registered 57,459 Chinese (47,431 men and 10,028 women); 42,823 of them (74.5%) lived in Primorye.”
wiki
“Something went wrong: instead of circular incision Mr. Bundy got a cicumcision.”
Married with children
​

When the Aigun and Peking treaties had been signed, everything looked nice and logical on paper. Russia was getting geographically important territories that were mostly empty except for the very few Chinese and the small local tribes. The future steps were obvious: build the forts, ports, establish Russian administration and get the Russian settlers to make the region truly Russian.

Chinese
What could get wrong? Well, quite a few things did wrong but for a while were not noticeable because for the years following the acquisitions the government paid very scant attention to the region and tended to ignore the reports of the local administrators unless they contained some cheerful news like foundation of the new towns, safe arrival of the Russian ships into the ports, etc. With the exception of very few migrants most of the labor force had been coming on a strictly seasonable basis: goal of a Chinese worker/trader was to win 150-200 rubles (which was taking approximately 7 months), return to his family in China and, until money last (which would be up to a year) live there and then repeat the circle. As a result, there were no illusions about the true loyalty of even those who stayed for the longer time and the Russian administration had all reasons to expect that in the case of war these people would be the fifth column with a good knowledge of the regional topography and other valuable pieces of information. The Chinese workers were not allowed into the railroad construction and their participation in building Vladivostok fortress was limited.This, however, was not preventing the Chinese boats from getting into the restricted parts of Vladivostok port, etc.

At best, the government was trying to curb what looked as the excessive local enthusiasm by pointing out that this or that proposal are in a contradiction with the Russian laws and the “special measures” of all kinds can’t be permitted.

But the recent events forced the government to shift attention from the West and South to the East and, even after the Chinese bluff was successfully diffused, situation did not look good. Actually, dealing with this bluff made it worse because development of the Amur Region and especially Vladivostok resulted in the serious changes of demographic and economic situation.

• There was a growing need in a labor force and, with the TransSib being on the initial stages of development, there were not enough the Russian workers. Quite logically, the niche was filled by the Chinese migrants willing to do all types of activities that did not require qualification.​
• Growing population obviously needed supplies so the numerous Chinese trading businesses appeared in Vladivostok and the region in general including taiga regions populated by the local tribes.​
• Honghuzi (Chinese bandits) started their operations in the rural areas.​

Honghuzi were obviously bad but the seemingly good categories had quite a few problems with the administrative point of view.

First and foremost problem was that even those who were settling on a seemingly permanent basis were, with a noticeable success, ignoring the Russian laws.
The few big-scale businesses were seemingly fine because they could not compete with the big Russian sellers by nomenclature of their goods and were even buying the goods from these companies and distributing them to the medium-sized businesses to which they also were providing a credit.

The mid-level traders had been using all types of the loopholes to cut their expenses by opening their shops without the licenses and violating all types of the regulations (including sanitary ones) to minimize the expenses. A standard practice for a medium-sized trading business looked as following:

• Open a shop without license.
• Inspector finds this out and gives 2 weeks notice
• The grace period expires and report is being sent to the Trade Chamber
• It takes time to process report after which police is supplied with the necessary documents
• The documents are delivered and there is 6 month appeal period
• In 6 months nothing happens and police comes with a warrant to get fine and a due excise tax.
• It is told that the shop is closed and now it is a new business with a new owner (even if the old one is still around but under different name), etc.

The next thing for the “legalized” ones was to put themselves into a lower tax bracket by declaring that their employees are actually their relatives and the whole establishment is just a family business (taxed on a lower scale).
The expenses of these shops had been much lower than in the Russian ones because the employees had been paid less and lived in a shop (in the bakeries they had been slep on the tables used for the bread preparation, etc.) so they were steadily kicking the Russian small shops out of business.

The small-scale traders were a serious problem on more than one level. The street vendors in the cities had been cheating on quality and quantity of the goods and in the rural areas, especially when dealing with the local tribes, they were actively peddling a low quality contraband spirit. And, of course, they were not paying any taxes at all. To counter their activities the state would have to introduce an efficient program sponsoring opening of the Russian rural shops, and eventual wholesale abolishment of the Chinese trade with the tribes and in rural areas. Even if these programs were approved, they’d require money, Russian traders interested in the region and enforcement apparatus (so far, the area was pretty much lacking an adequate police force).

“The government should come to the aid of the population in this area in the following way: 1) by establishing small credit: 2) organizing a network of resettlement shops such as petty trade, especially in places newly opened for resettlement, which would have the right to lend goods to new settlers while they are not strong enough after a difficult trip. A credit in kind could be counted against those monetary loans that are now issued to migrants and which in most cases do not achieve the goal, 3) wide patronage of the opening of public and consumer shops in villages by lending and finally 4) the opening of state warehouses in the camps of the tribes, with the acceptance of fur goods at the established fee… In parallel the following prohibitive measures should also be introduced in the Amur region, which are introduced gradually as Russian trade develops: 1) prohibition of Chinese trade and Russian trade with the help of Chinese in the places of residence of thectribes and among new settlers; 2) prohibition of trade by Chinese and Russian with the help of Chinese for distribution and delivery, except for trade in food supplies: 3) prohibition of trade of Chinese in the region, except according to guild certificates of the 1st category, and industry according to certificates of I and II categories. These activities can be extended equally to all foreigners when revising existing treatises.”

Then there was a problem with the cabotage. The Russian steamers did not have a serious competition but the existing regulations regarding smaller sail ships were prohibiting the mixed/foreign crews on the Russian-owned ships thus giving the Chinese and Korean sail boats an ability to get a legal license for 5 - 15 rubles per navigation. The easiest solution would be to remove the restriction but the regional administration was stubbornly holding to its own idiotic decision and a big part of a coastal trade had been conducted by the small boats of 300-6,000 puds most of which did not even bother with the license and were simply the ports and big settlements with the custom inspectors.

As far as the labor force was involved
“Russian workers are hired in those branches of labor where skill, snaring, agility, sharpness and even some risk inherent in Russian skill are required. Stencil, monotonous, simple, rough work belongs to the Chinese, who take not so much their physical strength as amazing endurance and the ability to work for long periods of time without rest.” In the works including the big volumes of digging the Chinese workers were at least 5 times more effective and just adding their numbers would not help “If the work can be done in two hours by 4 people, then to do it at 1 hour you need to put not 8, but at least 12 Chinese, but working conditions do not always allow this, and there is no possibility to make the Chinese work lively and diligently. ”
One of the problems that made the inefficient but cheap Chinese labor attractive was that the stories about the shiny perspectives of the Far East attracted all types of the entrepreneurs including the outright adventurers with very small capital who simply could not pay descent wages to their workers: the Chinese were paid 1.5 - 2 times less per hours than the Russians of the same qualification. But the Chinese were “compensating” on a much cheaper consumption: a monthly food expenses of the Russian worker were approximately 22-28 rubles (depending upon precise location) and for Chinese worker 8-15 rubles. Add to this greater expenses for the clothes.

There were separate “issues” in the gold extraction industry, mostly along the expected lines. The Chinese were getting work in the low output areas not allowing usage of the modern machinery but were trying to cheat the employers by stealing part of the extracted gold.

Then, there were two fundamental problems:

• Chinese tended to form the traditional “societies” which were regulating behavior of their members and were completely screening them from the official legal system by having their own penal codes which did include punishments like burying alive, drowning, beating with a bamboo stick, etc. Of course, besides punishments they were delivering all types of the services including their own postal service. Basically, they were states within the state and this hardly could make the local administration happy.

• The Chinese had been completely ignoring all existing health regulations. Being used to live in a squalor at home, they were doing the same in Russia “The living conditions of the Chinese in the cities and towns of our Priamurye are terrible: this is a complete violation of the requirements of our sanitary laws and construction regulations. The premises of the Chinese, especially at night, are like large boxes with shelves on which yellow people sleep closely. Dirt and smell in these rooms are unbearable. Depending on whether these premises are located in cities or towns, their size increases. Needless to say, the disease rate is very high, epidemics of typhus and other infectious diseases are frequent. …. There are a large number of Chinese hospitals and treatments in the Amur region, which completely escape the control of our Medical Inspectorate. In order not to arouse her suspicion, Chinese owners of the treatments never report deaths in them, throwing away the corpses of the dead and streets… In the aisles between Chinese shops at the bazaar in Vladivostok, the dirt is impassable, most of the products either lay in the mud or splashed with mud… In Chinese shops with edible products a lot of cages with birds appeared for sale; since the cages were hung over the products laid out on the tables, they were contaminated with bird droppings… [3] … In addition to wells, the Chinese are using water carriers, who are taking water from reservoirs formed from wastewater and rain dirty water…”

The problems were obvious but at least for a near future the Chinese were irreplaceable due to the shortage of the Russian population. The main hope was that as soon as the railroad construction is done, there will be Russian migration big enough to squeeze out if not all than enough of the Chinese to put the region under effective Russian administrative control. But, besides the railroad itself, there would be a need in the state programs advertising advantages of the Russian Far East to the increasing numbers of the population in European Russia looking for the employment opportunities. And not just advertising but providing meaningful financial help.

In a meantime, there was The Imperial Permission "to grant the Dumas of the cities of the Amur Governorate to temporarily have the right to draw up mandatory regulations on restricting special quarters within the designated cities for residence of those Asians, whose unsanitary conditions necessitated special supervision". In other word, the localities got permissions to create chinatowns.

Vladivostok ended up being worst off because it just happened that the Chinese used to live in its very center and the city authorities for years could not figure out the alternative for the Chinese quarter. There were tens thousands Chinese there most of whom, the cheap labor, did not have dwelling of their own.

“Going through these streets personally and entering shops, baths and even attics and cellars inside the yards, under the guidance of the City Sanitary Doctor, I was surprised by the picture that opened in front of me. Dirt, terrible smell, crowding of the population, I was reminded of the worst quarters of Beijing, I managed to find several opium smoking places, and one was found in the best Chinese baths, gambling places and secret houses of tolerance, where the main contingent is Chinese. Most taverns traded without established permits, they also housed Chinese Hairdressers, and at night they turned into lodging… A lot of Chinese constantly sleep in the aisles, up the stairs of these houses, scream, trade, dine and immediately send their natural needs.”

Koreans
Even before 1863, Koreans began to appear in Vladivostok and in the South Ussuri district exclusively for summer earnings, returning back in the autumn. In 1863, resettlement by families began. The first families appeared in the amount of 13 and arbitrarily occupied state lands in the newly formed new Possetskaya plot on the seashore near Novgorod Bay. The example of these families was contagious and in subsequent years the Possite district began to be replenished with the Korean population, with the number of resettled families increasing annually. Within the following 10 years over 5,000 peasants moved into Russia and their number kept increasing. Some of them had been resettled from the border closer to the Amur at the state expense and given some taxation benefits.
“The benefits of settling our empty lands soon became clear. Bread production has developed, an excess of bread products has appeared in the district and their prices have decreased significantly. At the same time, the population itself was often called upon by local authorities to build dirt roads, repair them in a timely manner, as well as to maintain a supply for the transportation of public goods and persons traveling as required.”
However, with their growing numbers administration found them somewhat problematic in the terms of making the area “Russian” because they were not assimilating. And, unlike the Chinese, who were coming and going, the Koreans tended to stay developing their own fields and gardens. Which, the local administration in its infinite wisdom considered to be a bad thing even if they were often using the lands unsuitable for the Russian peasants. And renting the Russian-owned lands surely was a bad thing because it was spoiling the Russian peasants… Well, the Russian generals always had been the greatest experts on the issues of Russian well-being. Otherwise, why would they be appointed to the high level positions?

Administrators of a lower rank, quite understandably, were more concerned with the local affairs than a vision of “the yellow peril” and the private entrepreneurs were plain selfish. As a result, in their reports and petitions to the high administration they were pointing out that in the gold-extraction industry the Koreans are quite useful. Of course, in the terms of consumption an average Korean worker was getting close to a Russian worker but he was at least twice as productive as a Chinese. The Koreans were getting along with the Russians quite nicely and there were even the mixed teams. Their houses on the mines were always clean, they were rarely getting drunk and their tendency to stay was rather welcomed due to their attachment to the gardening: they were making gardens in the places which a Russian peasant would consider completely unusable and growing oats to the horses, and potatoes, cabbage and other vegetables for the mine workers, which was very useful for the mines located deeply in taiga and having limited supply capacities. Small wonder that the petitions against their expulsion had been signed not only the mine owners but the fellow-workers as well.

Even in the cities the difference was noticeable. “In Nikolaevsk in the summer a hundred cucumbers cost 1 p. 20 kopecks - 2 rubles. now 20-25-30 kopecks, potatoes 1 p. 20 kopecks now 20 - 30 kopecks. Old and new prices for other vegetables in the same proportion.”


An additional reality, which understandably escaped attention of the high-ranking administration, was a plain fact that the climate and soil in the Amur region were quite different from those in European Russia and that the agricultural implements, seeds, and methods did not work on the new place. As a result, rather than to learn completely new practices, many Russian peasants were simply renting their land to the Koreans who knew how to make profit out of it. Of course, an administrative view on the subject was that (a) the Russian peasants are getting lazy (and prone to drunkenness and other vices) and (b) that they must learn the productive agricultural methods (with the “science” providing them with the proper seeds and instruments) so that the ultimate goal of expelling all “yellow faces” will be eventually achieved. Actually, author of the quoted report expressed surprise that the regional administration keeps missing the fact that the Koreans had been willingly and successfully assimilating adopting Russian language, converting to the Christianity and applying for the Russian citizenship.

“In the mining areas, in large centers of the Amur region, in the mountains. Nikolaevsk, in Vladivostok, Koreans are strongly amenable to assimilation. Russian clothes prevail, most people understand Russian, many speak and write perfectly. Children who have reached school age go to Russian schools and, having quickly mastered the Russian language, take the first place in success among their comrades. Many of them then continue their studies, enter gymnasiums and universities, other higher educational institutions, as well as teacher' seminaries, mainly in Irkutsk, in order to then, returning to their homeland, to teach the children of their tribesmen. Of these highly educated Koreans and returned to the Amur Territory, some entered the service of the administration, private offices, large trading firms, etc. or are engaged in contracts, trade and other crafts. The desire to become Russian is so strong that many Koreans in Vladivostok, Nikolaevsk and Suchan, in the Catherine Fields, give their children, even girls, to Russian families to learn Russian, some even pay up to 40 rubles a month for them.”





__________
[1] From the report “Chinese, Koreans and Japanese in Amur Region” prepared by Special Representative of the Foreign Ministry V.V.Grave in 1912. Most of the quotations are going to be from this report. May explain why the ideas regarding annexation of the whole Manchuria could be …er… problematic, to put it mildly. 😜 BTW, taking into an account when it was written, it should not be too surprising that the terminology like “yellow faces” is being widely used in an official document and that author is sincerely concerned about the “yellow peril”
[2] The Amur Krai was providing 300 - 500 puds annually. The gold belonged to the state and the entrepreneurs had been getting concessions on extraction with the established price on a delivered product.
[3] Can’t tell about Vladivostok of the early XX but I once passed by a shop selling live chicken (no sign on a door but it was open at the moment) in Chinatown Boston early XXI century. It definitely did not smell roses. 😂

 

[dunHozzie]

So you're arguing we ought to claim Korea and have the Japanese have Manchuria? 😜😉😉

Joking aside, interesting observations. I wonder how much is fact and how much is the rasicm etc of the era

 

[alexmilman]

So you're arguing we ought to claim Korea and have the Japanese have Manchuria? 😜😉😉

I’m not arguing anything, just reporting more or less contemporary observations. 😜

Joking aside, interesting observations. I wonder how much is fact and how much is the rasicm etc of the era

First, racism was a “fact” at that era and second, why do you think that author’s racism was necessarily in contradiction with the facts? After all, the Koreans, by his own definition, also were the “yellow faces” and he assessed them in much more friendlier terms, especially those who became the Russian citizens.

Contemporary photos of Vladivostok are seemingly confirming the part about slums, dirt and anti-sanitary and what he wrote about the business practices was just a well-known fact: the Chinese merchant class had been better organized than their Russian counterparts and Chinese did have all types of the mutually-protective closed societies. What this had to do with “racism”? Taking into an account that they were foreigners squeezing out the Russian businesses, how surprising should it be that the Russian official was considered situation under the angle of protecting interests of the Russian citizens? Would it be too different for an official of any other …er… “civilized country”? Or China, if there was no outside pressure? How about the Boxers rebellion?

 

[dunHozzie]

First, racism was a “fact” at that era and second, why do you think that author’s racism was necessarily in contradiction with the facts?

I don't. In fact, the most dangerous forms of racism and other forms of discrimination have some elements of truth. A flat earther is easier to expose then someone that uses cause and effect trickery

Contemporary photos of Vladivostok are seemingly confirming the part about slums, dirt and anti-sanitary and what he wrote about the business practices was just a well-known fact: the Chinese merchant class had been better organized than their Russian counterparts and Chinese did have all types of the mutually-protective closed societies. What this had to do with “racism”? Taking into an account that they were foreigners squeezing out the Russian businesses, how surprising should it be that the Russian official was considered situation under the angle of protecting interests of the Russian citizens? Would it be too different for an official of any other …er… “civilized country”? Or China, if there was no outside pressure? How about the Boxers rebellion

Cause & effect trickery: a racist attributes this to the people being Chinese and points to the Korean example to say: Chinese are substandard and ought to be avoided, removed or even exterminated. A enlightend person investigates the true cause, which might indeed be differences in culture, or whether they never got an equal chance, or never got the education to understand why their behaviour was unacceptable, or any of the other myriad of reasons. Typically it's many facetted, race is rarely the reason, culture rarely the only reason.

I called the view of the author you quoted racist because he applied one stereotype to all people from a nation that was back then and still is the most populated country in the world. That discrimination at the least.

 

[alexmilman]

I don't. In fact, the most dangerous forms of racism and other forms of discrimination have some elements of truth. A flat earther is easier to expose

Yes, sure: there are hills (I happen to live on one of them) and even mountains and some ravines and canyons so it is obviously not completely flat. 😜

then someone that uses cause and effect trickery

Well, author of that report (which I browsed and you did not look at) hardly was using any trickery (unless you suspect him in falsifying an itemized menu of the Chinese laborers 😂) and rather realistically assessed the situation in the region: Chinese very fast became an important part of its economy and could not be jut thrown out but, OTOH, they overwhelmingly were not the Russian citizens or even the properly documented temporary migrants, they were creating a strong competition to the Russian trade including the predatory trade methods among the taiga tribes (including selling the low quality contraband spirit and opium) and some other serious problems (anti-sanitary living and trade conditions, banditry, avoiding paying the taxes, etc.). His assigned task was to evaluate the general situation, assess the existing proposals and make his own recommendations on how to deal with the situation.

Cause & effect trickery: a racist attributes this to the people being Chinese and points to the Korean example to say: Chinese are substandard and ought to be avoided, removed or even exterminated. A enlightend person investigates the true cause, which might indeed be differences in culture, or whether they never got an equal chance, or never got the education to understand why their behaviour was unacceptable, or any of the other myriad of reasons. Typically it's many facetted, race is rarely the reason, culture rarely the only reason.

Well, actually he was repeatedly pointing to the cultural differences to support his (or seemingly government’s) position regarding the reason why the big numbers of the Chinese citizens was not advantageous for the interests of the Russian Empire in its Far East territories. His (or government’s) function was not to reeducate the foreigners against their will or force them to adopt a foreign (Russian) culture. However, from the government’s position interests of the Russian citizens must be protected:

• . As a part of this consideration he was arguing against scenarios involving immediate expulsion of the foreigners (of which the Chinese happened to be a majority but not the only ones) because it would hurt supply issues and economy of the region. OTOH, he was proposing measures which would protect the Russian trading interests, clamp upon the illegal unlicensed trade, illegal penetration of the Russian territory, ethnic crime, violation of the Russian laws, etc.
• The sanitary measures and regulations must be obeyed to prevent the epidemics. Having extremely unsanitary area inside the cities was unhealthy and, taking into the account that these unsanitary conditions were a combination of the culture and modus operandi (very low expenses on the living conditions and wages were a part of the Chinese modus operandi: without them getting profit would be impossible), creation of the separate living area was a quite common solution: look at the chinatowns in the US. What was the option? To explain to the rest of the population that they have to suffer the epidemics in a name of the high principles which were not, yet, around? To build at the government expense the nice free dwellings for 40,000 illegal people in Vladivostok only? Pure anachronism and would not work anyway because, as you wrote, there were differences in culture, education and many other things. Besides, the people we are talking about were not, with few exceptions, coming to stay. They were coming for few months to win some money and to get back at home.
• It was a generally acceptable practice around the world (“civilized” one) that the foreigners have to obey the local laws. Why would the Chinese be an exception?

I called the view of the author you quoted racist because he applied one stereotype to all people from a nation that was back then and still is the most populated country in the world. That discrimination at the least.

To start with, he was not talking about the whole Chinese nation because the general Chinese ways and culture were not his business. He was talking about very specific aspects of the (to a great degree illegal) Chinese presence on the Russian territory as much as they were impacting well-being of the citizens of Russian Empire including non-Russian local tribes.

As a matter of fact, he was looking at the Koreans under the same angle: those who became the Russian citizens were not an issue and he was talking about the measures against those who came illegally and occupied state-owned land without a permission.

Where exactly in the pieces I quoted did you find discrimination? Dislike, yes. But actually, the author was not excited about many Russian inhabitants and practices in the area as well. And, BTW, comments about the anti-sanitary were statements of the facts. You can easily find relevant photos of Vladivostok of the early XX.

The Russian businesses operating in the same anti-sanitary conditions would be fined and closed and the Chinese ones kept operating. The Russian business operating without a license would be fined and closed but the Chinese businesses were cheating their way out of these rules. The Russians caught on burying people alive, drowning them or even beating them with the sticks would end up in prison and Chinese were getting away with it. The Russian merchants running the contraband operations would face confiscations and jail and Chinese were doing this with the impunity. Russian citizen traveling within Russia without a passport would be a subject to an administrative action and an European foreigner would be expelled from the country. Most of the Chinese workers and merchants had been entering Russian Empire illegally without the documents or with the forged ones and nothing was done to them. As I mention, and there is much more in the report, some of the local regulations are actually heavily favoring non-Russian businesses. So which form of a discrimination are you talking about?

The only valid part is that the author viewed the situation within the existing post-RJW framework which left Russian Far East in a highly vulnerable situation which could become even more vulnerable by a large influx of the Chinese who did not have any reason to be loyal to the Russian Empire as had been demonstrated during the RJW. So, do you seriously expect that the government’s (of any European government or the US) official in the early 1910’s would start advocating endangering of his country’s territory and economy in the name of being fair to the foreign culture?

If you seriously think so, I can sell you a slightly dilapidated but still very nice and big bridge in NYC. 😜

 

[dunHozzie]

So which form of a discrimination are you talking about?

That he applies his statement to all Chinese in the area he researched.

Again, he might not be wrong, I don't argue his facts. In fact I do agree with you that based on the arguments you make he sounds like actually better then average for his time. But he talks about the Chinese, as if there was only one type. Its like saying all Dutch are rude. Or all Americans are XYZ, all Koreans are ABC, all Russians are Whatever. That's discrimination. For example:

and there is no possibility to make the Chinese work lively and diligently. ”

The living conditions of the Chinese

The premises of the Chinese

Chinese owners of the treatments never report deaths in them, throwing away the corpses of the dead and streets… In the aisles between Chinese shops at the bazaar in Vladivostok, the dirt is impassable, most of the products either lay in the mud or splashed with mud… In Chinese shops with edible products a lot of cages with birds appeared for sale; since the cages were hung over the products laid out on the tables, they were contaminated with bird droppings… [3] … In addition to wells, the Chinese are using water carriers, who are taking water from reservoirs formed from wastewater and rain dirty water…”

Discrimination: its THE CHINESE, so all of them. Contrast that to the none discrimination approach: "there exists a large community of poor people, that based on empirical knowledge is dominated by illegal Chinese citizens...."

Discrimination: "Chinese shops are unsanitary and overcrowded." Contrasting non-discrimination: "the poor sections have many illegals that do not follow Russian sanitary laws, and the education and correction by local authority is not capable, nor designed to cope with it at this scale."Whether they are Chinese or not shouldn't matter. And I'll bet you Internet cookies it wasn't just Chinese shops either, nor where all Russian shops better.

 

[alexmilman]

That he applies his statement to all Chinese in the area he researched.

To an overwhelming majority to be precise: few owners of the big businesses definitely did not live in the slums.

Again, he might not be wrong, I don't argue his facts.

That’s very nice of you. 😜

In fact I do agree with you that based on the arguments you make he sounds like actually better then average for his time. But he talks about the Chinese, as if there was only one type.

Now, this is a typical “trickery” you mentioned above. He did not talk about Chinese in general, only about those living in the Russian Far East and only about the social groups relevant to his research. However, these groups represented an overwhelming majority of the Chinese who lived in the area.

Its like saying all Dutch are rude. Or all Americans are XYZ, all Koreans are ABC, all Russians are Whatever. That's discrimination.

Nope. This is irrelevant argument because he was not talking about the whole nation and you are arbitrary expanding his report to the areas beyond its scope. Only specific categories of the Chinese had been coming into the region and they tended not to be the members of the highly educated classes, to put it mildly. Just some small-scale merchants and the laborers ready to shovel dirt. Even the skilled professional workers had been rare.

For example:

Discrimination: its THE CHINESE, so all of them.

See above.

Contrast that to the none discrimination approach: "there exists a large community of poor people, that based on empirical knowledge is dominated by illegal Chinese citizens...."

Who happened to cause the problems…

Discrimination: "Chinese shops are unsanitary and overcrowded."

Actually, this was a statement of a fact.

Contrasting non-discrimination: "the poor sections have many illegals that do not follow Russian sanitary laws, and the education and correction by local authority is not capable, nor designed to cope with it at this scale."Whether they are Chinese or not shouldn't matter.

This is a classic example of a meaningless statement which, while being politically correct (and as such not belonging to the 1910s) would have nothing to do with a task assigned to the author of report: he was serving in the Foreign Ministry and was sent to investigate situation with the specific groups of foreigners present on the Russian territory. Research of the Russian poor sections belonged to the Ministry of Interior.

If he found in Vladivostok 40,000 Norvegians living there illegally and operating within the similar framework, he would probably recommend to organize the Norwaytowns in the region. But he did not find the same issues with the Koreans and Japanese so this could be many things but hardly “racism” or even “discrimination”: AFAIK, they all belong to the same race, together with the taiga tribes.

And I'll bet you Internet cookies it wasn't just Chinese shops either, nor where all Russian shops better.

Unlike you, I can provide cases showing when and where the Russian shops were not much better even without going to internet but there were two fundamental differences:

• 1st, the Russian government could punish the Russians but it could not expel them from Russia. And their issues did belong to the Ministry of Interior. In the Far East situation it could not punish the foreigners but it could expel them. And their issues belonged to the Foreign Ministry in which author of the report served.
• 2nd, the Russian merchants, even anti-sanitary ones, did not represent threat to the Russian economy and territorial security but the Chinese in question (not all few hundreds millions) represented a clear and present danger to the first and perceived to the second.

 

[Miguel Demiurgos]

Are we talking about some politically correct crap?

 

[dunHozzie]

Well, then I agree to disagree whether it was discrimination or not. I might be overly sensitive since my company has me do my ethics and compliance training again this month, but to me it still sounds like stereotyping and generalisations by referring to all Chinese in the region.

Nope. This is irrelevant argument because he was not talking about the whole nation and you are arbitrary expanding his report to the areas beyond its scope. Only specific categories of the Chinese had been coming into the region and they tended not to be the members of the highly educated classes, to put it mildly. Just some small-scale merchants and the laborers ready to shovel dirt. Even the skilled professional workers had been rare.

Sure. But he still refers to ALL. And to quote wiki on what's discriminiation:

the act of making unjustified distinctions between people based on the groups, classes, or other categories to which they belong or are perceived to belong.

He perceives all Chinese citizens in the Russian Far East he's researching to all be the same and paints them in negative light. Now where I think our disagreement comes from is the unjustified part of it. I think you're arguing he is justified, since there is evidence for it. I am arguing he's probably right that there is evidence, maybe even a lot. But it's still too easy to lump all into one basket. The world is rarely that black/white. I also don't like it seems (to me!) he's blaming them being Chinese for the state they are in.

Are we talking about some politically correct crap?

Sorta kinda. I am approaching it from the current time perspective, which to some is overly politically correct. And from the perspective of anyone in the 19th and 20th centuries, absolutely. But I feel strongly about this subject, so I wanted to share my perspective.

 

[alexmilman]

Well, then I agree to disagree whether it was discrimination or not. I might be overly sensitive since my company has me do my ethics and compliance training again this month, but to me it still sounds like stereotyping and generalisations by referring to all Chinese in the region.

My sincere condolences. I still remember “elevator look” from the sexual harassment training many years ago. Getting further into the subject would be violation of “pre 1900” and other things so I’ll leave it there. You, of course, are completely free to feel whatever you are comfortable with. 😜

Sure. But he still refers to ALL. And to quote wiki on what's discriminiation:

He perceives all Chinese citizens in the Russian Far East he's researching to all be the same and paints them in negative light.

Actually, this was not exactly the case: he was clearly distinguishing between the merchants, laborers and criminals. The negativity was in his, and not only his, assumption that as a group they do present certain danger to the Russian Empire both economically and politically and their presence on the Russian territory is just a necessity, preferably a temporary one. Economic danger was obvious: they were squeezing out Russian business and paid minimal or no taxes using gimmicks unavailable to the Russians. Political was based upon the recent experience of the RJW: the Chinese, presumably Russian allies, were not showing much of the pro-Russian enthusiasm, to put it mildly. Before, during and after there were problems with the Hunhuzi and there were serious suspicions that quite a few Chinese had been spying for Japan.

Now where I think our disagreement comes from is the unjustified part of it. I think you're arguing he is justified, since there is evidence for it. I am arguing he's probably right that there is evidence, maybe even a lot. But it's still too easy to lump all into one basket. The world is rarely that black/white. I also don't like it seems (to me!) he's blaming them being Chinese for the state they are in.

Sorry, I did not get it. They were coming to a foreign country as the temporary low-skilled workers, mostly in the Chinese run businesses. These businesses existed based almost exclusively on a very cheap labor (work pay + living expenses), which allowed them to be competitive. Now, who was responsible for their bad living conditions? A foreign government or their Chinese employers? FYI the numerous house servants on the Russian employ lived much better.

Sorta kinda. I am approaching it from the current time perspective, which to some is overly politically correct.

No, it is simply inapplicable if you don’t want to end up in a completely anachronistic lalaland and we are supposed to remain on the planet Earth of a relevant period. Practices of that time were rather terrible from a modern perspective but they were realities of life.

And from the perspective of anyone in the 19th and 20th centuries, absolutely. But I feel strongly about this subject, so I wanted to share my perspective.

That’s fine. If push comes to shove we all (or at least I) can confirm to whoever is in charge of these classes of yours that you fully absorbed all modern ethics and whatever else and are going to behave accordingly. I’ll even keep silent about your persistent colonialist plans. 😜

 

[dunHozzie]

No, it is simply inapplicable if you don’t want to end up in a completely anachronistic lalaland and we are supposed to remain on the planet Earth of a relevant period. Practices of that time were rather terrible from a modern perspective but they were realities of life.

100% agreed. In that time he'd be ahead of the curve.

That’s fine. If push comes to shove we all (or at least I) can confirm to whoever is in charge of these classes of yours that you fully absorbed all modern ethics and whatever else and are going to behave accordingly. I’ll even keep silent about your persistent colonialist plans. 😜

Hahahahaha, shhhh that's our little secret ;-)

Sorry, I did not get it. They were coming to a foreign country as the temporary low-skilled workers, mostly in the Chinese run businesses. These businesses existed based almost exclusively on a very cheap labor (work pay + living expenses), which allowed them to be competitive. Now, who was responsible for their bad living conditions? A foreign government or their Chinese employers?

The latter.

 

[alexmilman]

100% agreed. In that time he'd be ahead of the curve.

And fired for not doing what he was sent to do…

Hahahahaha, shhhh that's our little secret ;-)

Providing you behave. 🤔

The latter.

Than you have the Chinese taking advantage of another Chinese, which I’d call a “class conflict” if both oppressors and oppressed were seemingly OK with it successfully trying to get advantage out of the members of a different race. 😜

 

[CalBear]

Are we talking about some politically correct crap?

You SO do not want to try to drag current political debate out side of Chat.

 

[alexmilman]

Are we talking about some politically correct crap?

Nope. We are talking about the contemporary (early 1900s) perceptions and the factual data that had been collected and officially presented based upon these perceptions and situation on a ground. The rest was an attempt to, shall we say, get in synch: half a page digest of a document which is over 1,000 pages long could not provide a complete idea of what was in it, what was author’s assigned task and a personal position so at least minimal additional information was necessary to fill the most important gaps and remove some misunderstanding and false impressions.

To clarify, a report’s author was an official of the Russian Foreign Ministry sent in the early 1910s (*) to the Amur region to collect information about the foreigners who legally and illegally lived and worked in the region along the following lines:

• The ways (legal/illegal) they were getting into the Russian Empire including practices of using the fake documents, other people’s documents, getting in without any documents, etc.
• Patterns of staying: short-term, long-term, forever.
• Business practices of the merchants and positioning vis a vis the Russian counterparts.
• Places within the labor markets, working habits, productivity, expenses (Chinese vs. Koreans vs. Russians).
• Compliance/non-compliance with the Russian laws and regulations. Resulting issues.
• Willingness to assimilate and got Russian citizenship.
• Potential issues in the terms of loyalty in the case of war (with Japan or China).
• Recommendations on possible solutions of the problems and assessments of the existing ones.

The TL, to be meaningful, has to be based upon the contemporary practices and perceptions not on what we think now. As you understand, without clarification of the related terminology (which is admittedly a confusing issue) the discussion may go into the area of an unproductive bickering, which we were trying to avoid. As you may see the mutual understanding was easily achieved.

(*) The timing is important because the Russian settlers only started to arrive in the noticeable numbers and the migrants from China and Korea had serious advantage of a shorter route and, at least for the Chinese, the Eastern China RR (Witte’s pet project) was functional and connected to the Manchurian RR (Vladivostok-Khabarovsk) while the Russian branch of TransSib was not fully operational. Russian control of the region after the RJW was quite tenuous and military presence minimal so it should not be a surprise that the government was concerned with the possible consequences of a large foreign presence in the area especially when these foreigners had been trying to place themselves outside the Russian jurisdiction.

 

[alexmilman]

278. The Great Crisis

“If everything is going well, something bad is going to happen and the better things are going, the worst will be a following disaster.”
Al Bundy, ‘Married with children’ [1]
“There were so much money that the chicken did not peck them [2] … because these were the paper money.”
Saltykov-Schedrin, ‘History of the city’
“The crisis of 1873 was more extensive in terms of the size of the disasters caused by it and in terms of the general consequences with which it responded, more harmful than all previous disasters. At first it was a purely stock exchange crisis, but little by little it captured all branches of trade and industry into its area of operation…. The crisis in Vienna was already rampant with terrible force and led to the Viennese disaster and other German stock exchanges, and in northern Germany, meanwhile, until October, the foundation of the new companies was on its previous course, like a ship, which, once launched forward, cannot immediately stop, despite the fact that the engine stopped operating…”
Max Wirth, ‘Geschichte der Handelskrisen’
​

1873 Pretty much everywhere [3]

Europe and the US (which finally finished the ACW) had been in a generally euphoric state of mind. There was peace everywhere (where it mattered) and all types of the modern technologies had been around with the telegraph cables laid across the Atlantic, not to mention the lesser water reservoirs, the trade was booming and the railroads being built, between 1862 and 1872 the Austrian breweries more than doubled their production (and of course there was a big growth in many other industries as well) so this was seemingly a good time to make money.

“ This resulted in emergence of many plans of enterprises that bear a clear imprint of unprofitability and yet find gullible people who are seduced by them because they are new, and because such eras of industrial excitement are characterized by the development of a propensity for gambling, while in ordinary times such projects would stall immediately when they arise among everyone's indifference… Finally, envious greed played a significant role, which forced traders to rush at the first enterprise that promised profit, and they, of course, could not calculate whether the moment had already come or when production crosses the borders determined by demand, and the use of new services or the consumption of new goods cannot go hand in hand with the speed of appearance of both.” [4]

All these enterprises required credit. The turnover of the London Clearinghouse was: in 1870 - 3,904 million pounds; in 1871 - 4,787 million pounds; in 1872 - almost 6,000 million pounds.

Already during the American Civil War, the deterioration of the currency and the high cost of gold, due to the strong participation of German capital in the Union's loans, had an extremely favorable effect on the export of American products to Europe. Many Americans came personally to European markets and were selling goods for any price, if only they were paid with a real coin. Increased trade relations between the two continents also caused the need for closer relations between the monetary and stock markets on both sides of the Atlantic Ocean.

In Europe the major centers of speculations were:

• Austria, which after losing everything it could, was viewed as a peaceful and politically stable country. Already in May 1869, the total amount of enterprises based in Vienna was estimated at 982 million guilders, of which 470 million had already been transferred to joint-stock companies. Austrian National Bank was forced to increase loan rates from 4.5% to 5% but it was too late.
• Hungary because it seemingly had a huge economic potential (and plenty of things to develop). In Pest at the beginning of 1868, there were only 21 joint-stock companies, the total capital of which did not exceed 30 million guilders; but twenty months later, by September 1869, there were already 99 companies representing a nominal capital of 135 million.
• Prussia/Germany, development of joint stock business characterized by the following figures: from 1790 to 1867, 225 joint-stock companies were founded in Prussia; from 1867 to 1870 - 54 joint-stock companies. After the publication of the law on joint-stock companies in June 1870, it was founded: in 1870 - 34 companies, in 1871 - 259 and in 1872 - 504.

Demand for the money needed for the speculative investments was growing and resulted in printing huge amounts of the paper money not backed by anything but this was not enough to satisfy the demands. The banks had been scared enough to try put some limits upon the speculations but this led to the crisis.
Since 1871, real bankomania broke out in Berlin and Vienna, which reached the point that even construction companies were transformed into banks, and in the end even brokerage accepted the banking organization. Until now, negociants themselves had to be held responsible for such non-performance, but now they wanted to get rid of this responsibility with the help of broker banks, which took risks for a minimal payment. The initial goal of these banks was just to act as the intermediaries but many of these banks went into risky scams, took part in railway enterprises that could only generate income in the distant future, in construction companies that suffered from too high the price of land - and thus, as soon as the crisis broke out, these banks collapsed. In Vienna, for example, the construction companies ended up purchasing at the very high prices more than 11,000 hectares within and outside the city limits, a territory which would allow to build houses for a population three times bigger than existing population of Vienna, obviously such a growth could not be expected within a reasonable period of time. Most construction companies purchased more land than their cash allowed. When crisis started they simply could not make the required payments and could not sell the land even at a reasonable loss because they were purchased at the cost many times greater than a realistic value.

Speculations with the railroad construction were on even a greater scale. Quite often the high-ranking officials or the influential aristocrats had been getting concessions using their connection and then selling them thus bypassing the regulations regarding financial solvency of the public companies. There were few very loud scandals in Germany followed by the trials and revelations regarding these practices. Among other things, it was proved that the certificates required by law that the subscription took place and part of the contributions to the shares were paid had repeatedly submitted in a fake form. “According to the unanimous testimony of witnesses," the report said, "a significant part of subscriptions to shares were made in exchange for return receipts for the relevant amounts or for a known reward.” But the general public did not pay attention and preferred promises of the high profits to the much less exciting government’s bonds.
And if things were bad in Germany, in Austria and Hungary they were even worse but at least in Hungary enthusiasm related to the railroad speculations somewhat cooled down being replaced … by the stock exchange speculations. This shift to a great degree was prompted by the news of losses caused by individual entrepreneurs due to abnormal wage conditions, as well as emergency requirements imposed on concessionaires by various public authorities, mainly by the military department. However, both in Austria and Hungary the governments had been interested in a further private railroad development because, while costing little to the state, they were providing the links between the existing state-owned railroads. As a result, in Germany, Austria and Hungary the governments kept being generous with giving concessions to the new constructions and in Austria the railroad sector was practically controlling the whole money market because practically all financial institutions had been involved in it to one degree or another. Situation in Austria was made worse by the active participation of the aristocracy: “When amateurs get down to business, it usually turns out even worse than when it is being operated by scammers by profession.” Members of the titled nobility had been well represented in the boards of both the railroad companies and the banks (and quite often they were the same people) without having any professional qualifications (but having connections and votes in the upper chamber of the parliament).

Germany, besides the domestic speculations, was heavily investing in the US: unlike Britain and France Prussia from the very beginning betted on Union’s victory and was extensively lending money to the federal government. The pattern persisted after the war and when the US government started paying off its debt obligations the received money were heavily invested into the railroad construction. The German investors generally did not pay attention to the fact that the American rules for creation of the publicly held companies were much less restrictive than those in Europe. Germany stimulated effective demand and expanded industrial supply capacity by increasing and adjusting capital formation. For example, Germany dramatically increased investment of social overhead capital, such as in the management of electric power transmission lines, roads, and railroads, thereby stimulating industrial demand in that country, but similar investment stagnated or decreased in Britain. The resulting difference in capital formation accounts for the divergent levels of industrial production in the two countries and the different growth rates during and after the depression.

Strictly speaking, situation with the Austrian railroads was quite similar to one which existed in Russia during the reign of AII when Reutern was Finance Minister but under AIII the whole thing had been put under the tight state control with most of the railroads being bought out by the state and the private ones tightly regulated.

Britain and France had been less impacted by this speculation circle because both had rather scary experiences in the 1860s and at least somewhat cooled down. The main areas of vulnerability for both of them was extensive export of the capital abroad with the inevitable participation in some risky local schemas. At worst, the economic situation was “stagnant” but without the noticeable declines. However, in Britain there was heavy unemployment in the basic industries of coal, iron and steel, engineering, and shipbuilding.

Russia had its railroad construction under the state control and the real estate construction boom pretty much was not happening. The big cities kept growing but there was too much land available in and around them to hike prices to the crazy levels. Pretty much the only big-scale housing constructors had been the industrialists building the settlements for their workers but, due to the fact that the industrial enterprises tended to be on the outskirts of the cities, so were these settlements.

Anyway, the prevailing pattern outside centers of the major cities still tended to be the individual houses and it was shifting toward the “European” pattern rather slowly and not on the scale allowing nation-wide (or even capital-wide) scam. Even in the center of Moscow the blocks of the big modern multi-apartment had been intermixed with those of the small traditional individual houses with almost rural backyards.

While the numbers of public stock companies kept growing, they still were much less spread than in Europe or the US and as a result scope of the stock exchange speculations simply physically could not reach the same level as in Western Europe and the US. Which, of course, was not excluding the big problems like favoritism, bribery and swindling. Anyway, in the early 1870s too much attention and finances had been turned to the East to be seriously impacted by what was happening on the West.

Most of the exports to Europe remained agricultural and, while subject to the grown competition, not really dependent upon the ongoing processes because people need to eat. Of course, the general situation had its negative impact on the industrial exports into Poland, Hungary and Ottoman Empire with a resulting slowdowns in some industrial areas. The relative stability of the Russian domestic markets increasing their attractiveness for the foreign investments.


The US after the ACW accelerated construction of the railroads and while neither the banks nor trade had been heavily involved in the speculative insanity, there was plenty of opportunities to swindle the general public. When a planned route had been passing through the state-owned lands, the company was getting for free a strip few kilometers wide on both sides of the trucks and this allowed the companies to sell it relatively cheap creating new settlements along the route and thus having consumers of the railroad services. Of course, in more densely populated Eastern states situation was trickier and the railroad companies had to deal with the states, counties and even individual so the big-scale projects going further west were more popular.

But how much further to the west?

Most of the potentially valuable and settled areas on the “west” belonged to Mexico even if, except for some areas on the Pacific coast, they were sparsely populated. Of course, as far as the ruling Liberal Party of Mexico was involved, the American investments and railroads construction through the Mexican territory were more than welcomed and at some point Benito Juarez (admittedly, when he was hard pressed during the ongoing civil war) had been ready to offer the generous concession including rights of the exterritoriality and military presence. Of course, after his troubles diminished he became less generous but still quite accommodating.
Attractiveness of the East-to-West intercontinental railroad(s) was two-fold:

• With the proper agreements it would allow the American settlers to start farming on the Mexican territories with their produce being transported by rail to the Atlantic ports and shipped to Europe: so far cotton and grain remained two major American export items and cotton lost some of its positions due to the growing competition from Egypt, India and Brazil, not to mention disruption of the industry caused by the ACW. This idea still was to a great degree a wishful thinking because it would require the international agreements which the Mexican government, now reasonably secure, may or may not agree with.
• The US was widely using silver coin and the main sources of it were in Mexican Alta California even if the extraction was mostly done by the American companies (courtesy of Mr. Juarez).

The railroad industry was the largest employer outside agriculture in the US and involved large amounts of money and risk. A large infusion of cash from speculators caused spectacular growth in the industry and in the construction of docks, factories, and ancillary facilities. Most capital was involved in projects offering no immediate or early returns.

The bubble bursts.
While the general mode of a drunken speculation had been still prevailing in Austria, the financial professionals started their retreat. The credit institution and other large banks were beginning to refuse to accept any dubious pledges and mainly securities intended for exchange speculation; the credit of debtors of these institutions on current accounts has been limited. But they already had huge volume of the risky papers on their hands, which they were trying to get rid of thus causing fall of their value on a stock exchange starting from the April. On May 5 and 6, the fall in the rates of speculation securities went faster. On May 7, fifteen banks met to discuss measures that could keep further successes of the decomposition process. On May 8, the harbingers of the storm already appeared: about a hundred insolvency statements were made on the stock exchange. A new meeting of bank representatives was held. Losses in the courses have already extended to 300 million guilders. And on then the bubble burst.

“In the days of May 8 and 9 the Vienna stock exchange was literally insane with fear. The stormy scenes that were played out there were almost revolutionary; no description can give an idea of the explosion of rabies to which the victims indulged. The vast majority of all securities listed on the Vienna Stock Exchange quickly, irresistibly lost all value in these two days.” All exchange transactions have absolutely stopped. There was complete chaos. All attempts to at least slow down the crisis failed, including decree of FJI which pretty much gave carte blanch to the Austrian National Bank to do whatever is necessary. The crisis had been spreading, impacting first Hungary and Germany and then expanding across the Atlantic.

In Berlin, the railway empire of Bethel Henry Strousberg crashed after a ruinous settlement with the government of Romania, bursting the speculation bubble in Germany. The panic came and became known as the Gründerkrach or "Founders' Crash"

In the US there were few contributing factors:

• The decision of the German Empire to cease minting silver thaler coins in 1871 caused a drop in demand and downward pressure on the value of silver, which, in turn, affected the US since much of the supply of silver was mined there. As a result, the US Congress passed the Coinage Act of 1873, which changed the national silver policy. The act was hurting interests of the American silver mining companies (and hit Mexican government on the pocket) and also reduced the domestic money supply, raising interest rates and hurting farmers and others who normally carried heavy debt loads. The perception of US instability in its monetary policy caused investors to shy away from long-term obligations, particularly long-term bonds.

• In September 1873, Jay Cooke & Company, a major component of the country's banking establishment, found itself unable to market several million dollars in its recent transcontinental highly speculative (basically, the railroad to nowhere) railroad project. The company expected the usual injection of the German investments but an ongoing crisis with a sharp increase in interest rates in Germany has led to a massive repatriation of capital from other countries, including the United States. Liquidity was gone, refinancing became difficult. Jay Cooke’s financial company, which relied most on short-term loans, was unable to repay $15 million bonds on time. Just as Cooke was about to swing a $300 million government loan in September 1873, reports circulated that his firm's credit had become nearly worthless. On 18 September, the firm declared bankruptcy.

• The major fires in Chicago and Boston seriously hurt the insurance companies.

Getting additional fundings for the railroads already became more difficult after Crédit Mobilier scandal.

On September 4, 1872, the Sun broke the story. The newspaper reported that Crédit Mobilier had received $94 million in contracts for building a railroad worth only $50 million. The executives pocketed the excess $44 million. Then, part of the excess cash and $9 million in discounted stock was used to bribe several Washington politicians for laws, funding, and regulatory rulings favorable to the company.

The failure of Jay Cooke's bank set off a chain reaction of bank failures and temporarily closed the New York Stock Exchange. Factories began to lay off workers as the country slipped into depression. In NY 25% of workers became unemployed.

The New York Stock Exchange closed for ten days starting on 20 September. By November 1873, some 55 of the nation's railroads had failed, and another 60 had gone bankrupt by the first anniversary of the crisis.[16] Construction of new rail lines, formerly one of the backbones of the economy, plummeted from 7,500 miles (12,100 km) of track in 1872 to just 1,600 miles (2,600 km) in 1875,[16] and 18,000 businesses failed between 1873 and 1875. Unemployment peaked in 1878 at 8.25%. Building construction was halted, wages were cut, real estate values fell, and corporate profits vanished.

The railroad construction, which prior to 1873 heavily relied upon the foreign investments, went into a prolonged crisis causing numerous strikes that had been violently suppressed by the state militias and even federal troops (in Reading Railroad Massacre of 1877 hich 10 to 16 people were killed and between 20 and 203 were injured) and eventually crushing the lumber industry as well.

With the depression, ambitious railroad building programs crashed across the South, leaving most states deep in debt and burdened with heavy taxes. Retrenchment was a common response of the South to state debts during the depression. One by one, each state fell to the Democrats in the South, and the Republicans lost power.


General outcome pretty much everywhere was a shift from the liberal economic policies toward protectionism and stricter regulations.
__________
[1] Quoted by memory so the precise wording may be slightly different.
[2] Russian expression “so much money that the chicken do not peck them ”.
[3] In the “civilized world”, of course. 😉
[4] Wirth