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358 on those duties, pointing out that the successive increases in the German tariffs in 1879, 1885, and 1887 did not hinder the development of Russian exports to Germany, whereas the Russian tariff legislation had produced a distinctly injurious effect on the trade of Germany. For nearly two years the negotiations for an agreement were continued, to be abruptly broken by the announcement on the part of Russia that the maximum tariff would be enforced against Germany after July, 1893. As this meant an increase of fifty per cent in all duties on German goods, Germany retaliated by imposing a corresponding penalty duty on all imports from Russia. In 1891 the dutiable imports into Germany from Russia were 400,000,000 marks, of which 91,000,000 marks were in wheat. In 1879 the duty collected on wheat by Germany was fixed at one mark per one hundred kilos (twenty-four cents). This rate was in 1885 increased to three marks (71.4 cents), and in December, 1887, to five marks ($1.19). Under treaty arrangements the duty on wheat could be reduced to 3.50 marks (83.3 cents), but Russia did not enjoy this concession. In spite of this discrimination the trade in wheat progressed, and would have continued to increase, had not the disaster of 1891 occurred in Russia, and the tariff war followed. The effect on the total movement of wheat from Russia and on the exports to Germany is shown by the following comparison:

Fortunately, an agreement between the two countries was reached in March, 1894, but all of a year was required to correct the injury inflicted on this branch of Russian export trade.

Within eight years Russia's wheat interests have thus been subjected to severe tests, and have endured in a remarkable manner. It now becomes necessary to give some attention to the internal economy that makes this elasticity possible. The cost of production is a mere detail when set against the social revolution implied in the change from serfs to peasant farmers.

Any estimate of actual cost of production of wheat in Russia must be based upon so many different conditions as to afford little satisfaction. No two governments of that immense and variegated empire would return the same averages; and to complete a general