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MarketInsight | Fear itself


Franklin Delano Roosevelt famously remarked in his first inaugural address that “the only thing we have to fear is fear itself.”

In 1904, Russian was at war with Japan. The Japanese started the war with a Sunday morning surprise attack on Port Arthur, eerily similar to the Sunday morning surprise attack on Pearl Harbor. Port Arthur was Imperial Russia’s main Pacific base. In response, Tsar Nicholas decided to dispatch the Russian Baltic fleet of 11 iron-clad battleships. Tsar Nicholas had a problem. The ships were fueled with coal and the tsar had no overseas bases where they could refuel. Fortunately, his cousin, Kaiser Wilhelm of Germany offered to provide coal for his cousin’s ships as they cruised half a world away, which is a pretty clever way to get rid of a potential enemy, when you think about it.

The Russian fleet was a lot more powerful looking on paper than in actuality. The long journey was fraught by bad seamanship, terror, and depression. From the beginning, the fleet lived in constant fear of being attacked by the Japanese. A rumor that the Japanese had mined the Baltic Sea had the crews so on edge that they fired on a launch delivering last minute instructions from home. Only the terrible Russian gunnery allowed the mail to get through. A week later, the Russian fleet mistook an English fishing fleet for attacking Japanese torpedo boats and opened fire with all guns. Over the next 20 minutes, the Russians fired more than a thousand large caliber shells at the fishermen, who could not flee because they had their nets down. Once again, poor Russian gunnery would save the day. The Russians only managed to sink one boat. In the panic, they did more damage to their own fleet than the unfortunate English fishing fleet. Paranoia ran so deep that at one point, sailors on the battleship Borodino drew sabers to fight off an imagined Japanese boarding party.

The British were angry. As a result, the Russian Baltic fleet was denied access to the Suez Canal and had to endure a seven-month-long grueling cruise around Africa and across the Indian Ocean. Along the way, the crews collected exotic animals at each port of call. Poisonous snakes, crocodiles, and birds of every feather roamed the decks. The ships were rat-infested and overloaded with coal. The air was foul, disease was rampant and many of the crew suffered from depression. A number decided to jump overboard rather than endure the agony of the voyage. 

Eventually, the Russians limped north through the Sea of Japan, making for the safety of Kamchatka. It was there that they were intercepted by the Japanese battle fleet commanded by Admiral Togo. The Japanese famously pounded the exhausted enemy into oblivion. The Japanese had spent the seven months practicing their gunnery and preparing. The Russians, low on ammunition after the debacle with the fishing fleet, had only practiced once. The Battle of Tsushima Straits is one of the most decisive of all time. Togo was lauded as the reincarnation of the famous British Admiral, Lord Nelson. Russia, humiliated, was forced to sue for peace. Teddy Roosevelt negotiated the peace treaty and was awarded the Nobel Peace Prize. 

This is a story about fear and preparation. One side in a panic, the other prepared and confident. And, as it does so often in life, preparation and execution made all the difference.

Scott A. Grant is President of Standfast Asset Management in Ponte Vedra Beach. He welcomes your comments or questions at

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