FOR many years past Mongolia has been loosely divided into two areas: Inner and Outer Mongolia. Inner Mongolia, which borders on China, has been incorporated into new special administrative areas in China, and is therefore politically indistinguishable from that country. Outer Mongolia, with which this article is concerned, has an area about a third of that of the United States, and supports a population of nearly 700,000, most of whom are half-nomadic. Over this huge domain, which abuts for more than a thousand miles on Asiatic Russia, Moscow now exercises what to all intents and purposes is an overlordship, keeping Outer Mongolia practically closed to the outside world. For this reason reliable information about Mongolian conditions is difficult to obtain.

Outer Mongolia has long been a football between China and Russia not only because of its position as a buffer state but also because of its chronic weakness. In the seventeenth century, after its decline from world power, it came under the dominion of the Manchu emperors of China, but when the Manchu dynasty came to an end in 1911 the country declared its independence of the new Chinese Republic. This was the signal for constant manœuvering between China and Russia, which was expressed in a series of invasions of Mongolia. In 1915 the Sino-Russo-Mongolian tripartite agreement established Mongol autonomy under Chinese suzerainty, but the régime was short-lived, and in 1921 Urga, the capital, was occupied by Soviet troops and Outer Mongolia again proclaimed its independence.

Russia in 1924 recognized Chinese sovereignty over Outer Mongolia; despite that fact it remained independent, and in 1924 it established a republican form of government closely modeled on that of Moscow. The extent of the relationship may be gathered from a description of the machinery of government. The dictatorship of the Communist Party in Soviet Russia is paralleled in Mongolia by the dictatorship of the so-called People's Revolutionary Party, and the Mongolian Government is powerless to make any important decision or to undertake any responsible work without the sanction of the central party organization, which meets at Urga, or, as it is now called, Ulan-Bator-Khoto (city of the Red hero).

By the end of 1925 this party, which was established in 1921, had organized throughout Outer Mongolia about 150 party "cells," comprising about 4,000 members, or less than 1 percent of the population of the country. Following the Russian precedent, the leaders tried to conscript members for the party exclusively from among the poor and middle classes; access to the party was made easy for the arats (or peasantry) and difficult for the taijis (or nobles) and lamas (or priests). Accordingly the arats represent 80 percent of the total membership, the taijis 12 percent and the lamas 8 percent.

According to the constitution, which was adopted in 1924, Outer Mongolia is an independent republic in which the laboring classes hold supreme power. The people appoint their high officials through the Great Khuruldan, or assembly of the people's representatives, which elects the government, or Little Khuruldan. Lands, mineral wealth, forests, and waters and their resources are the property of the people. Foreign loans before the revolution of 1921 are considered as "having been forcibly imposed" and are therefore regarded as null and void. A provision of outstanding significance in a country formerly ruled by priest-kings is that which declares the separation of Church and State and proclaims the principle that "religion is the private concern of every citizen." The titles, class distinctions and sovereign rights of the former ruling princes and nobles are abolished. As circumstances permit, a state monopoly of foreign trade is to be gradually introduced. Local government is vested in the various territorial units, which graduate in size from the arban (10 tents) to the baga (150 tents), somon (several bagas), hoshun (several somons), and aimak (several hoshuns). Part of the old territory on the Siberian border has broken away from Mongolia and set itself up as the Tannu-Tuva People's Republic.

Outer Mongolia is a country of illiteracy and disease. Only 5 percent of the population can read and write. Two expeditions sent out by the Soviet Government to investigate sanitary conditions in Mongolia reported that among the Mongols there was a great deal of venereal disease, a comparatively low birth rate, a high mortality rate among children, widespread tuberculosis, and general ignorance of the most elementary rules of sanitation and hygiene. In view of this state of things, some of the accomplishments of the new government are noteworthy. The Ministry of the Interior has organized a veterinary department, an anti-plague station, a bacteriological laboratory and a veterinary school. The Ministry of War has established a special health department, which with the assistance of a number of Russian surgeons gives medical aid to the people. The Ministry of Public Instruction organized a Scientific Committee for Mongolian Research Work, which has built up in Ulan-Bator-Khoto a state library containing some thousands of volumes. The Ministry of Justice has abolished many primitive methods of punishment such as death by starvation, wearing of the dunga (wooden neck-stock) and use of the tashur (whip), and has begun reforming the criminal code.

Many other reforms stand to the credit of the new government. It was not so many years ago that barter governed the generality of business transactions. Under the new régime the Ministry of Finance has established the Mongolian State Bank, and in 1925 introduced a state monetary system, based on the Mongolian dollar, or tuhrik, a silver coin the value of which was fixed at 90 cents of the Chinese dollar, or about 36 cents in United States currency. Measures for the improvement of Mongolian cattle, and regulations governing forests, mines and the fur trade have also been put into effect.

The Mongolian Government has a monopoly of the sale of spirits, wines and beer, and of the export of certain raw materials. Attempts have been made to attract foreign capital for exploiting the mineral wealth of Mongolia, but apparently foreigners cannot be induced to take up these concessions because of the uncertain political situation. There are several state farms and also a few state industrial enterprises, including an electric power station in Ulan-Bator-Khoto, coal mines at Nalaiha (near the capital) and some factories working on raw pastoral products.

Almost all official and semi-official establishments in Mongolia are in dire need of trained specialists. These the Mongolian authorities are compelled to obtain from abroad--at present almost exclusively from Soviet Russia. The experience of the Mongolian Central Coöperative is typical. During the first two years of the existence of this coöperative its accounts were kept in the Mongolian language by Mongolian bookkeepers and clerks. But it was found that this kind of work was beyond the abilities of Mongolians, and the coöperative was obliged to invite in Russian collaborators. In 1923 Russian specialists took charge of the accounting department and its records were kept in Russian. Three years later the 786 persons on the staff of the coöperative were divided as follows: 361 Russians, 257 Mongols, 95 Buriats (from Siberia) and 73 of other nationalities. The Mongols were but one-third of the total working personnel. In the foreign offices of the coöperative there was not a single Mongol.

The more important trade marts of Outer Mongolia are Ulan-Bator-Khoto, Altan-Bulak, Uliasutai, Kobdo and San-Beise. All the government buildings and many business offices are concentrated in Ulan-Bator-Khoto, a city of about 60,000 inhabitants. Altan-Bulak (formerly Maimachen), situated opposite the Russian town of Kiakhta, at the present time appears to be the most important industrial town, and in it are located several factories. Uliasutai is an important trade center for the central part of the country. Kobdo is the administrative and trade center for western Mongolia, and has close trade relations with western Siberia and Chinese Turkestan. San-Beise is the trade center in the east, and has trade relations with the Zabaikal province in Siberia and with Manchuria; it is growing very rapidly and shows constantly increasing trade returns.

The principal livelihood of the nomadic Mongols is cattle breeding. According to the official estimates for 1926, the total number of cattle bred was 19,222,000 head: 419,000 camels, 1,591,000 horses, 1,957,000 oxen and cows, 12,726,000 sheep, and 2,529,000 goats. The census of 1924 showed that the Mongolian families having no cattle made up 6 percent of the total number of nomad families; families with less than 100 bodo[i] of cattle, 86.5 percent; families with from 100 to 700 bodos, 7 percent; and families with more than 700 bodos, 0.5 percent. According to the estimates of Soviet economists for the years 1926-27, cattle breeding (i.e., live cattle, wool, hides and skins, etc.) was valued at 16,000,000 tuhriks (about $5,760,000). It is carried on in a very primitive way. The cattle graze throughout the year on pasture lands and feed on old grass in winter.

The second important source of national revenue is the fur trade. In Mongolia there are marmots, squirrels, foxes, wolves, wild cats, hares, skunks, bears, panthers and many other fur-bearing animals. According to local statistics the furs taken annually are valued at about 5,452,000 tuhriks ($1,962,720).

In the nomadic circumstances of Mongol life agriculture spreads very slowly. Cultivated areas are situated mostly in the basins of the Selenga and Orkhon rivers, where there are small agricultural villages, mostly Chinese and Russian. Mongolian agriculture is found in the western part of the country, chiefly in the Kobdo region, but little land has been turned over. In 1928 farm lands under cultivation comprised about 105,000 acres, or less than 1/5,000 of the total area of Mongolia. The total agricultural production may be estimated at about 22,950 tons, valued at 4,800,000 tuhriks ($1,728,000).

Mining is still in its infancy, in spite of large mineral deposits. The gold mining company "Mongolor," which was in operation before the revolution, had many gold fields under its control and during the years 1901-1919 produced in Mongolia more than 10 tons of gold. There are shale coal mines in Nalaiha (near Ulan-Bator-Khoto), which produced in 1927 about 10,000 tons of coal. Other mineral products are salt and precious stones.

Industry in Mongolia is only just beginning and has a state capitalistic character, working mostly on raw pastoral products. Already there are industrial enterprises turning out rough woolen cloths, common Mongolian shoes and boots, soap, sausages and other smoked products; there are also a few flour mills, an electric power station, a confectionery factory and a brick works. The total production of all these factories and of other similar small enterprises does not exceed 3,000,000 tuhriks ($1,080,000).

Conditions of transport in Mongolia are very primitive, corresponding to the general level of the cultural and economic life of the country. There are no railways. Goods are carried mostly on the backs of animals, and in carts drawn by oxen, camels and horses. The last few years have seen the development of motor transportation, mostly on the route between Ulan-Bator-Khoto and Kalgan. Last year more than two hundred motor cars were used on this road.

The main trade routes in Mongolia are as follows:

1. Ulan-Bator-Khoto to Altan-Bulak, 210 miles, connecting Mongolia with Siberia and continuing to Kiakhta and Verkhneudinsk, 160 miles farther on.

2. Ulan-Bator-Khoto to Kalgan, 660 miles, the chief trade route to China.

3. Uliasutai to Kalgan, 1,060 miles.

4. Kobdo to Biisk, 560 miles.

5. Kobdo to Kosh Agach, 230 miles.

6. Khathil (on Lake Kosogol) to Kultuk (on Lake Baikal), 240 miles.

7. Uliasutai to Khathil, 340 miles.

8. Ulan-Bator-Khoto to Uliasutai, 660 miles.

9. Ulan-Bator-Khoto to San-Beise, 450 miles.

10. San-Beise to Borzia, 200 miles, the main trade route connecting Mongolia with the Siberian-Zabaikal Railway.

11. San-Beise to Hailar, 300 miles, the principal trade route between Mongolia and Manchuria.

12. Kobdo to Uliasutai, 290 miles.

In all Mongolia there is only one small steamer in use, on Lake Kosogol. Special research parties have reported that steam navigation is possible on the Selenga River 197 miles from its mouth, and on the Orkhon River 194 miles from its mouth. On these rivers only steamers with a shallow draft can ply. Some dredging was done in 1925, and in the following year the Mongolian Government concluded a treaty with the Soviet Government establishing steam navigation on these two rivers and aërial postal and passenger communications between Ulan-Bator-Khoto and Verkhneudinsk. Telegraph facilities have also been extended, as shown on the accompanying map.

The national net income may be reckoned at from 25 to 30 million tuhriks (about $10,000,000) yearly. Domestic trade, which has developed slightly and is very profitable, constitutes only a small part of this total, since three-fourths of all internal trade is in foreign hands, mostly Chinese and Russian. Foreign trade is steadily increasing. The following figures give a good idea of its growth:

Year Exports in thousands of tuhriks Imports in thousands of tuhriks Total
1924 19,376 18,196 37,572
1925 19,765 19,647 39,412
1926 24,838 22,115 46,953
1927 25,259 24,608 49,867

Outer Mongolia exports principally furs and agricultural products, and imports mostly commodities for general consumption -- foodstuffs, clothing and cloth goods, tobacco, spirits and wines, and hardware; machinery and other productive commodities have been imported only during the past few years.

The foreign trade of Outer Mongolia is principally with China and Soviet Russia. The trade with other countries is insignificant and is carried on chiefly through China. In recent years the ratio of trade with Soviet Russia has increased at the expense of that with China, as shown by the following table:

Year Percentage of trade with China Percentage of trade with Soviet Russia
1924 85.7 14.3
1925 78.3 21.7
1926 68.7 31.3
1927 63.6 36.4

In the economic sphere it is the Soviet hope to transform the Mongolian Republic into a Soviet colony for its supplies of raw materials. In its export trade with Mongolia it is perhaps restrained by its industrial weakness. At any rate, China possesses more than three-quarters of the import trade of Mongolia, and there is little possibility that this proportion will be diminished for some time to come, as Chinese wares are suited to the tastes and demands of the Mongols and can hardly be replaced by similar wares of foreign origin. These include such articles as tea, tobacco, silks, jewelry, textiles, rice, iron bowls, and such foreign goods imported through Chinese territory as cooking utensils, ready-made clothes, rubber goods and electrical fittings.

A certain percentage of foreign trade is handled by Soviet economic organizations and other foreign firms. In 1925 there was a total of 301 foreign firms -- 283 Chinese, 10 British, 5 American and 3 German -- but the number of foreign firms has since decreased. By far the biggest factor in Mongolia's foreign trade, however, is the Mongolian Central Coöperative, which is the instrument of government monopoly. By 1928 this organization had got control of one-quarter of all the foreign trade of the country. The Soviet Government conducts its trade in Mongolia through a separate organization called the "Stormong."

The Mongolian Central Coöperative works in close contact with the Mongolian Trade Bank. This bank was established in 1924 by the Mongolian Republic conjointly with Soviet Russia. According to the statutes of the bank its purpose is to consolidate the economic relations of both states, to develop trade and industry in Mongolia and to strengthen its money circulation. The bank was capitalized at 500,000 gold rubles, one-half of which was contributed by the Mongolian Government and the other half by the Soviet Government. This bank plays the important rôle of a state bank and is very active in currency reform and has reserves of gold and silver as security for the issue of bank notes. In January 1928 the capital was 1,650,000 tuhriks ($594,000). In its current and deposit accounts were 3,847,620 tuhriks ($1,385,143), chiefly accounts of the different state trade organizations of Mongolia and Soviet Russia. Private accounts amounted to only about 300,000 tuhriks ($108,000). The total indebtedness to the bank on open credits about this time was 8,561,000 tuhriks ($3,081,960). This sum was distributed chiefly among the different Mongolian and Soviet organizations and establishments.

Last year special credits were opened for the financing of pastoral and agricultural activities of the Mongolians, and measures were taken to attract small savings among the Mongolian people at various places. For these purposes several branches have been opened. The balance at the bank on July 1, 1928, showed 24,065,000 tuhriks ($8,663,400).

We have seen that Soviet activities have resulted in fundamental changes in the political and economic organization of Outer Mongolia. While many of the internal reforms now being carried out under the guiding hand of Moscow represent progress, the political changes have in general been most upsetting. The lamas, who were formerly all-powerful, have completely lost their influence on state affairs. Many old and experienced Mongolian politicians are leaving the political arena, and their places are being taken by younger men who have been trained on communistic principles by Soviet teachers. On the other hand, Soviet aid has permitted the gradual development of the productive forces of the country, and modern methods are slowly being introduced in agriculture and in business. Outer Mongolia is potentially an important country; her destiny seems now to be bound up with that of Soviet Russia.

[i]A bodo is the unit of local taxation. One bodo is the equivalent of a cow, a horse, 7 sheep or 14 goats. A camel is reckoned as two bodos. In calculating the bodo young cattle are not taken into account.

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