Ufa is an important port city of Russia, located on the bank of the river Belaya (White) in the North-western part of Russia. It is located on the banks of the Belaya (White) River, just below the city of Ufa. During the ancient times, it was the largest city of the Russian Empire, and till now it is a very important port city for the Russian navy. During the early times, it served as a harbour for supplying grain to the people of Siberia. In later times, it was a port for carrying out rail transport, particularly for grain and coal, to the vast Siberian areas.
In spite of being such a significant port, many modern day problems that affect the working conditions in the city have been due to the rise in private consumption and the growth in the non-rail freight traffic. Initially, the main business activity of ufa was the transportation of grain, and the grain trade brought a lot of wealth into the city. Over the years, with urbanization and modernization, the demand for grains in ufa gradually declined, and in fact, it had almost reached a stationary position, until the new motor coach invented by M.E. Tarkov, that could cross the frozen river successfully, aroused the grain market again.
The new motor coach enabled people to cross the frozen river on the frozen ice for the first time in many years. This new development gave an impetus to the urbanization movement, and the urban population started buying goods and starting business in ufa, with the success of this business venture. In order to compensate for the lost revenue from the grain trade, the people of ufa started selling their personal belongings, either outright or through their registered quota of goods. As a result of this successful innovation of M.E.Tarkov, UFA became the nucleus for another important development of the Russian economy-the development of a system of dividends or the “permanent” distribution of patronage dividend.
From the day of its creation, UFA became an open market for private capital, with the availability of unlimited numbers of capital. This was possible thanks to the existence of a non-reciprocal agreement between the members of UFA, namely the members of a Rassemble (“the Village”), who were interested in promoting economic activity in the ufa, and the government risky (“the State”), which were responsible for financing the activities of ufa and had a complete monopoly on the supply of patronage. The supply of patronage was not only limited to grain, but also included animals, fish and other valuable resources. Therefore, an unlimited number of persons, belonging to different nationalities, could invest in the projects of ufa, and each of them would receive a profit from his investment.
Thus, from the day of ufa’s establishment, businessmen who wished to expand their business abroad were able to do so without any hindrance thanks to the arrangement of membership in ufa and the progressive increase of its member equity. Initially, it was necessary that the businessman investing in ufa should have a share of membership in the zavobenny trust, which controlled the distribution of patronage dividend. The advantage of this arrangement was that everyone who invested in ufa was guaranteed a share of zavobenny. However, the disadvantages of such a system were that the entrepreneur had to pay for his own dividend, irrespective of whether he benefited from his investment or not. Thus, there was a tendency to “vote down” proposals of expansion in ufa that met with opposition from certain sectors of society.
In order to avoid such a situation, the present law of ufa has been changed, permitting the member equity to increase dynamically according to the changes in the prices of commodities. Furthermore, the present law provides for an increase in the member equity by way of compulsory dividend payments. However, the introduction of a progressive increase in the member equity is a delicate move that may affect the functioning of ufa. In such a scenario, the corporation may be dependent on the goodwill of its customers and business partners who may withhold patronage due to lack of confidence in the firm. Nevertheless, ufa has managed to survive such a situation as the vast majority of its customers to remain loyal to it.