European nations a young country, and one in which industrial evolution has been far less closely connected with town life than in Italy, Germany, and France. In Russia, as a country still younger industrially than England, this is perhaps even more clearly in evidence. Even the very foundations of industrial development in the two countries are alike. Adam Smith clearly saw the connection between the development of English industry and the commercial expansion of England. In the case of Russia, in spite of the prevailing system of "natural economy," the enormous size of the State, which readily divides itself into an industrial and an agricultural region, has long meant the existence of a very large and growing internal market. By supplying the needs of this market Russian industry is enabled to grow and to develop.
If it may be said that the Russian textile industry—in part too the hardware industry—is of country and of peasant origin, yet in the history of that industry the State, the landowners, and the town handicrafts all played a certain, and no unimportant part. The whole of the eighteenth century is marked by the attempt to create factory or large scale industry in Russia at a blow. Perhaps nowhere else could one find at that period so many units of the factory type of so large an average size as in Russia. At a time when the domestic system was still being developed in England, large factories were being founded in Russia both by the State and by private persons and based on semi-compulsory labour. What part is played by this factory-industry, thus artificially created, imposed on Russia from above and not built up from below? The part
