BARU-OUR ONLY RIVAL Russian oil fields on the western shore of the Caspian Sea are the only ones, so far as is now known, where it would be possible to approach the magnitude already attained by the industry in this country. In fact, before the great discoveries in California and Texas, Russia actually did lead the world in petroleum production for a time, and might still do so perhaps, if domestic uprisings had not dealt several severe blows to the industry. Yet the two regions, Russian and American, are as un like as possible. The American production comes from relatively large areas scattered over the en tire country. The Russian production, on the con trary, comes from an area of only a few square miles, containing less than 3,000 wells, or only about one-tenth the number operated in the single state of Indiana five years ago. Nowhere else in the world has any equal area yielded such enor mous quantities of oil for such long periods of time. In this one respect, at least, not even the United States can surpass the Russian district.
The modern Russian industry centers at Baku, on the Apsheron peninsula, where Persian legend says that petroleum workings have existed for nearly three thousand years. The period of Rus sian possession, however, extends back only to the beginning of the last century, since which time more or less oil production has continued. Most of this Russian period of ownership is covered by the imperial monopoly, the revenue from the oil workings being turned into the royal treasury. Part of the time the government worked the oil springs, though, for the most part, the govern ment contented itself with regulating the selling price of the oil and receiving a bonus on all sales. The actual operations were then farmed out for a term of years to the highest bidder or to some court favorite, who paid for the privilege a stipu lated annual revenue. Under this system the pro duction rose as high as 1,500,000 gallons a year, yielding the government an income of 160,000 roubles.
This imperial monopoly seriously hampered the proper development of the industry until about 1872, when the government decided to open the region to private enterprises. The district was ac cordingly surveyed in plats of twenty to thirty acres each, their values appraised, and they were then sold to the highest bidders. Much attention had already been attracted toward the field by the previous developments and the possibilities in sight, so that the bidding was often spirited. Plats officially appraised at a few roubles each were taken eagerly at a price two or three thousand roubles higher, thus following out the rule of arti ficial land values created by prospects of oil.
The real beginning of the Russian industry dates from this admission of private enterprises, but the general condition of affairs at Baku for some years after 1872 makes a sorry comparison with the flour ishing business then firmly established in this country. The primitive methods of open pits and shallow dug wells were still in vogue ; in fact, drilled wells had apparently never been heard of. The oil was tediously pumped out by hand or by horse power and stored in underground pits. What refineries there were hardly deserved the name, on account of their inferior products. The lighter products of distillation had no important uses and were frequently allowed to run into the Caspian, while the residuum or astatki, entirely useless, ac cumulated at the refineries and was periodically disposed of by burning in open pits. The only means of shipment were overland in the slow, clumsy, high-wheeled native carts or arbas, or by boat across the Caspian and up the Volga, thus greatly limiting the market. Barrels in a country completely devoid of timber cost so much that they were often more valuable than the contents. While to complete the burden, the government imposed an excise tax on the oil, and brought the whole in dustry to the verge of collapse.