Financing
Despite its gold reserves of £106.3 million, Russia's pre-war financial situation was not enviable. The country had large budget deficits year after year, and was largely dependent on borrowed money.
Russia's war effort was funded primarily by France, in a series of loans totalling Fr.800 million; another loan in the amount of Fr.600 million was agreed upon, but later cancelled. These loans were extended within a climate of mass bribing of the French press (made necessary by Russia's precarious economic and social situation and poor military performance). Although initially reluctant to participate in the war, the French government and major banks were co-operative since it became clear that Russian and French economic interests were tied. In addition to French money, Russia secured a German loan in the amount of M500 million.
Conversely, Japan's pre-war gold reserves were a modest £11.7 million; a major portion of the total cost of the war was covered by money borrowed from the United Kingdom and the United States.
During his canvassing expedition in London, the Japanese Vice-Governor of the Bank of Japan met Jacob Schiff, a Jewish-American banker and head of Kuhn, Loeb & Co. Schiff was sympathetic to Japan's cause, and extended a critical series of loans to the Empire of Japan, in the amount of $200 million.
Read more about this topic: Russo-Japanese War