Gold Smuggling In The Trans-Baikal Region: Background And Countering

Abstract

A strategic objective for any state is to preserve national welfare. In today’s world, a variety of technologies (techniques) are applied to achieve this, but history knows the examples of the state’s earliest struggles for maintaining its strategic resources and thus could build up a protection system. It is well known that Russia is a state with a huge resource (raw material) potential, the preservation of which is a principal task for the well-being of future generations. This article presents the main findings of a study to find out the reasons and effects of the illegal outflow of gold from the territory of the Russian Federation to cross-border regions. The study identifies the whole range of reasons that influence the emergence and development of gold smuggling from the territory of Trans Baikal (Eastern Siberia), where a huge number of gold mining companies (gold mines) were located in the early 19th century, and also reveals major problems in effective control and counteracting smuggling, which were the most critical at the time. The study is based on a significant empirical foundation, which allows the authors to conclude the part and importance of the state and the subordinated bodies, as well as regional and local authorities in removing a threat of plundering state resources.

Keywords: Customs authorities, eastern siberia, gold, smuggling, trans baikal

Introduction

The 1830s are particularly significant for the territories of Siberia and the Far East (including Trans Baikal). A well-known mining engineer in Russia, A.I. Kulibin discovers gold placer mines. This event opened up new opportunities for the region, as gold mining was likely to develop in the area. Both regional authorities and the central government were interested and began to contribute to exploring new fields. The development of gold mining in these territories has been studied in detail (Maruev, 2018), but there have been no studies aimed at showing the effect of these activities on state security from the perspective of meeting fiscal and law enforcement objectives up until now, so there is a need for studies aimed at revealing logical links and clear representation of the sequent historical and legal phenomena.

Gold mining was actively developed and covered the territories of Western and Eastern Siberia and the Far East. By the beginning of the 20th century, gold mining made a big difference in the economy of Siberia and the Far East. The second half of the 19th century saw the official sanctioning of ‘private gold mining’, which allowed private businesses to develop gold mining. According to some information, 81 gold mines operated on the territory of TransBaikal, Amur and Primorskiy regions in 1870, while by 1913, they numbered 546 (Grave, 1912). The decision by the authorities on private mining was not supported by the people directly involved in gold mining. The mining governor of Barguzinsky Mining Police District informed the Military Governor of the Trans-Baikal region on 4 November 1916,

... that the purchase of gold, so-called ‘easy-to deliver’ gold, in the area, which is not exempted from 5 % tax in favour of Cabinet of His Imperial Majesty, where all Barguzinsky Mining Police District is located and are within the jurisdiction of the area, and I find it inadmissible for persons who are engaged in gold mining in this area, as bringing damage to the Treasury, and for the Cabinet of Ministers as to allow the free purchase of gold at the mines by persons engaged in gold mining would mean to encourage workers to keep a gold secret from owners of gold mines, where they work, and owners of those mines would not record gold mining, but count it as free purchase and evade paying 5 % tax to the Cabinet of Ministers, because as no evidence can prove for sure where and how the gold mined, claimed to be as freely purchased and acquired in an area with free circulation of gold by workers and owners of gold mines. (Fond 13 - Voynyy gubernator Zabaykal'skoy oblasti, 1915, p. 57)

In the second half of the 19^th century and the early 20^th century, the Trans Baikal region became one of the key centres of gold mining in the Russian Federation. The development of the gold mining industry and putting forward a special state policy regarding gold mining on buying up and sale of gold led to a problem that had to be solved for the decades of gold mining, i.e. stealing gold and outflow of gold to cross-border states.

China has become the main recipient of Russian gold and the illegal transfer of gold is commonly referred to as ‘free-to deliver’ or smuggling in Law. In current legal practice, gold is considered to be strategic goods and is subject to special control by the state, but in the period considered, the legal framework was not stable. In addition, the influence of economic, political and other circumstances forced the state to provide special regulations for certain territories. Trans Baikal was one of them.

Over several decades, ‘free delivery’ became a serious threat to both the region and the state as a whole as the treasury was starved of large sums of money. This threat was dealt with under very difficult conditions, and the shortcomings of the imperial policy of gold mining regulation, state control over the gold miners and the antagonism of the local population made the situation worse. Equally important was the criminalization of the local population and foreign workers, which affected law enforcement and customs agencies severely (Hamzin, 2020; Kalmina & Kuras, 2019, 2020; Kazanceva & Karpovich, 2017).

Problem Statement

The basic subject of the study is a special type of smuggling related to the illegal export outside the territory of the Russian State of the most important strategic resource - gold, which was mined in the Trans Baikal region.

At the turn of the 19th and early 20th centuries, dozens of gold mines operated in the Trans Baikal Region. At the same time, there was no exclusive monopoly on gold mining established by the state. Gold may have been produced both by private and state-owned manufacturers and merchants. It is well known, some mines in Trans Baikal were owned by ‘the Cabinet of His Imperial Majesty’ and others were owned by private individuals who paid 15 per cent of the gold produced (mostly they were merchants from Nerchinsk, Irkutsk, Nerchinsk Zavod, Chita and other private gold industry entrepreneurs).

The massive gold mining and access to it not only by state manufacturers led to a special problem in the region - the active illegal export of gold to neighbouring states (Belozercev, 2019; 2020). The proximity to China provided many opportunities to sell this metal of value on preferential terms. This problem was often brought up and discussed by local and regional authorities. In 1899 the Boundary Commissioner of Kyakhta informed the Military Governor of Trans Baikal,

I consider it my duty to report on this matter, that there is no import of gold from China at present, on the contrary, there is an export of this metal from us to China. All gold-bearing systems of East Siberia and a part of Priamursky Region keep bearing a plentiful gavel (tribute) to Kyakhtinsky Maimaicheng in the form of plunderer gold in which some very large Chinese trade firms specialized in Maimaicheng. (Fond 1(o) - Zabaykal'skoye oblastnoye upravleniye, 1899, p. 5)

The situation was also covered by representatives of diplomatic and consular circles directly interested in representing the Empire’s interests abroad. The Imperial Vice Consul from Hailar reported in October 1915, “that the information received by the Consulate confirms the fact that a considerable part of the gold mined in the mines goes not to Russia, but abroad” (Fond 13 - Voyenny gubernator Zabaykal'skoy oblasti, 1915, p. 8).

According to the legislation of the Russian Empire, gold was regarded as a special category of transported goods. The rules of the law varied at different periods of history and enshrined the issue of export, its total and partial prohibition, selective permission, etc. Illegal issues of gold transportation were written in the acts of customs, criminal and mining legislation. Moreover, the acts of customs and mining law gave an idea of precious metals smuggling (in general terms), while the Penal Code regulated the responsibility for the export of gold only. At the initial stage of trade relations, only gold coins were included in the category of 'entailed goods' and could be exported only for the benefit of the Treasury and the Sovereign.

The Customs Regulation of 1857 divided goods into categories: duty-free, subjects to the payment of fees and prohibited. It was the same with articles made of gold. According to Article 1539 duty-free goods imported outside the borderline, detained, carried past customs and caught, as well as all goods brought to customs, but not declared in documents, were charged 10 per cent of the price and returned to the owner or a person who was carrying it across the border (Tamozhennyy ustav, 1857).

The most important documents containing prohibitions were issued by the central government in the early 20th century. For example, on 26 June 1915, the Minister of Finance of the Russian Empire issued a decree forbidding the export of gold abroad: gold placer, bar gold, coined gold, gold jewellery, gold leaves and “aurous specimen,”, which contributed to increasing the amount of illegal gold smuggling. The criminal legislation had a different operating mechanism and, above all, regulated the penalties for acts of smuggling.

Article 643 of the Penal and Enforcement Code of 1845 attracted penalties for taking gold bullion and any other form of gold across the Asian border except coins and other items as punishment for theft and confiscation of exported gold (Ulozhenie..., 1845). Liability for illegal activities was quite strict, depending on the quantity of gold. It was allowed to dispossess, exile to a distant province, whipping, imprisonment for up to 2 years, sending a prisoner to a curative penal battalion for up to 4 years. Art. 612 of the Penal Code of 1885 stipulated responsibility for selling, buying and exporting abroad any gold dust or lump gold without the permission of the Minister of State Property (Ulozhenie..., 1885).

Liability for this document included the following penalties: fines, imprisonment for three to six months and confiscation of exported precious metal to the treasury. A generalized content of the criminal acts suggests that there was no unified approach in the Russian Empire to the interpretation of the severity of gold smuggling and its consequences (Makarov et al., 2021).

Nevertheless, smuggling took place both during periods of liberal penalties, total prohibition, and severe penalties.

Research Questions

The stated theme of the study implies answering the questions related to the subject of the present research.

First of all, the legislative acts of different levels are found out. Applying them, the legal regulation of activities related to the possibility of export of gold and responsibility for smuggling was conducted.

Next, a causal connection is established in the socio-economic development of the region specified and the most important tasks of the region for the conservation of the resource base are provided.

Purpose of the Study

The purpose of the study is to investigate the legal and practical issues of counter-strategies regarding gold smuggling, as well as the prerequisites, trends and patterns of occurrence and development of this phenomenon in outlying, border regions with special features of development.

The reviewed historical experience allows both negative and positive aspects to be found out, and its further study (continuity of some processes) allows defining and using the most effective measures to fight illegal acts in modern practice and to achieve the objectives of the resource base conservation.

To achieve the set goal, the significant empirical base was analysed and summarized. The comparative analysis of it allowed concluding about the legislative and actual peculiarities of the research subject.

Research Methods

According to the special features of the study, we will present an overview of the scientific and methodological background. The purpose of this study is achieved through the parallel accommodation of general scientific and special research methods. The analysis and synthesis methods become the basis for the study. The application of them allows constituting the main parts of the studied trend, as well as to form a framework of categories. The induction method made it possible to find out certain regularities and special features of gold smuggling in the border regions. The special methods applied, first of all, comparative and legal, allowed revealing the peculiarities of normative and legal regulation of the basic concepts of the study and determining the problems of law enforcement. Secondly, we note that the issue specified in the study requires further research, both from a historical and legal viewpoint. An interdisciplinary approach will be useful in finding ways to develop the most accurate assessments and allow them to be used in the practice of contemporary states.

Findings

A study on gold smuggling requires not only documenting and assessing the illicit transfer of gold, but also giving the reasons that cause the emergence and development of the focused phenomenon in the region.

Conclusion

Having summarized the findings obtained finally, the following points should be noted. The study reveals and analyses many features of gold smuggling, identifies the main factors contributing to the development of gold smuggling. It also let us understand that the difficulties in fighting against gold smuggling are: a long insufficiently protected border, hard-to-reach landscape and proximity to the border of gold deposits; a lack of specialized services to monitor the border crossing along its length, the number of customs checkpoints and customs officials, and equipping with the necessary resources; assistance of local people to smugglers, as smuggling for many of them was the main source of income and living; the range of smugglers’ actions and workers in the mines, their wish to profit off illegally.

The issue of suppression of the smuggling of gold had to be solved by national measures. Regional and local authorities could not possibly solve the problems of personnel and management by organizing additional checkpoints, enlarging the staff of controlling bodies, especially officials of border and customs guards, hired from the expatriate population to avoid possible aiding of residents. Nor were they able to solve the problems concerning the way gold mining was regulated. It was impossible to solve the problem of gold smuggling and, thus, minimize damage to the state without a system of extensive measures at that time.

To sum up, it can be stated that such a negative social phenomenon as gold smuggling has a rather long history. So, knowledge of historical experience will certainly allow avoiding errors in the current format of organizing activities of state agencies providing fiscal and law enforcement tasks of the state including conservation of the resource base and national patrimony (wealth).

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