Industrial development before 1914 – Alexander II +III

-          Lynch                                                                                                                    Witte – Finance minister (-1881, 1886-)

Policies

-          Large loans and investments negotiated from abroad

-          Imposed heavy taxes and high interest rates

-          Encouraged the inflow of foreign capital

-          Limited the import of foreign goods

-          Protective tariffs to safe guard Russia’s young domestic industries.

-          1987, the rouble is put on the gold standard,

o   Hoped to create a stable currency and encourage international investment

o   Largely successful, however penalised domestic consumers because the higher value rouble raised prices for goods made scarce by tariff restrictions.

Much of the foreign capital that Witte raised was directly invested in the railways.

-          Believed this conviction was essential or the modernisation on which the Russian economy depended.

-          His enthusiasm was important in the extraordinary increase in lines and rolling stock between 1880 and 1914. A transport revolution

Witte’s policies had a major impact on the expansion of the economy, but it is debated if it was wholly beneficial. Critics argue he made the country too dependent on loans and investments, that by giving priority to heavy industry he neglected vital areas such as light engineering and agriculture.

He faced many problems in his work, the demands of the military often interfered with his plans for railway construction and siting of industry. His freedom of action was restricted by resistance to change which characterised the court and government. The main purpose of his policies was to protect Tsardom against disruption in Russian society, but ironically he was disrupted by the royal court.

The improvement of the Russian economy was also due to part of a worldwide industrial boom

o   However the boom ended with a serious international trade recession and the consequences were serious for Russia.

This meant:

-          There had been a very rapid increase of population in the towns and cities.

o   This increase had not been organised or supervised, resources and facilities were wholly inadequate.

o   There was acute overcrowding

Initially the peasants who had left the land to work in the factories accepted these conditions because of the higher wages but with the recession there became widespread unemployment.

Authorities found themselves facing large numbers of disaffected workers and their regular presence on the streets of St Petersburg and Moscow played an important part in the serious social unrest in Russia between 1900 and 1917.

The recession did not prove permanent, from 1908 to 1914 was of overall recovery for the economy.

-          Industrial growth rate at this time was 8.5%

-          Generally the workers did not gain from the industrial and financial expansion.

-          The absence of effective trade unions and lack of legal protection left the workforce at the mercy of employers.

-          Some workers did relatively better than others; wages were a third higher in St Petersburg than in Moscow.

-          Westwood

Alexander II – Russian industry underwent notable expansion in old and new branches.

-          Textile industry continued to develop, very large factories were founded.

o   Many were owned and run by the British

o   The interest of Lancashire began in the 1840s when Britain relaxed controls over the export of textile machinery.

-          Foreign entrepreneurs also largely responsible for transformation of the metallurgy.

-          High quality ironworks in the Urals dwarfed in the 1860s by the iron and steel industry of the Donetz Basin.

-          High quality coking coal sources found and oil started to become practical.

o   Previously oil had been dug by hand and transported in leather pouches on camelback.

o   After a few decades the region became covered with mechanically bored oil wells, there was a local refinery and river and rail tankers were carrying products all over European Russia.

-          Russia lagged behind the west in Engineering; it was only through import restrictions and tariffs that the home products could compete with imports.

Bunge – Finance minister (1881-6)

Bunge helped several industries by:

-          Tariff protection

-          Railway building

-          Establishing the factory inspectorate

-          Reducing peasants’ redemption payments

-          Establishing the Peasant Land Bank to help peasants buy additional land from nobles

-          Abolished poll tax

-          Envisaged a universal income tax

Witte was Finance Minister for eleven years. During this time he developed the expansionist policies favoured by Bunge.

-          Large scale railway construction

-          More protectionist tariffs

-          Securing of foreign capital

-          High taxation of the peasants

Alexander III had faith in his advice after he succeeded in elevating the rouble to the gold standard. Nicholas II had less confidence and he was dismissed in 1903.

-          Waldron

Policies

Growth of the Russian railway network played a key part in encouraging commerce across the empire and as an instrument of policy for the government to use to promote domestic industrial growth.

-          After 1868 there had been a fourfold expansion in the railway network.

-          Much of it was built and operated by private companies but during the 1890s the state became active in making direct investments in the railway structure.

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