Economy was transformed 1855-1894

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  • Economy was transformed 1855-1894
    • Industry/ output
      • Markets existed although 'business' was mostly small-scale
        • No internal market demand
        • The most common peasant purchases were vodka, metal tools and salt
      • Gov support was offered for the development of the cotton industry and mining in the Donets Coalfield
      • Use of foreign technical expertise and capital also supported industrial expansion and the railway network saw a marked expansion
      • Although textiles remained the dominant industry, there were also new developments. Oil extraction began in the Caspian Sea port of Baku in 1871 and an ironworks was set up in Donestsk in 1872, which started mining the rich ironfields of the Krivi Rog region
        • In 1879, the Naphtha Extraction Company was established by the Noel brothers, to exploit the coal and oil extraction further
    • Agriculture
      • In 1855, the Russian economy remained mostly rural with a ratio of 11:1 village to town dwellers,
      • Lack of progress was primarily due to Russia's commitment to a serf-based economy
        • Inhibited economic development by limiting the forces that drive change, such as wage-earners, markets and entrepreneurs
        • Land management within the serf communes (mirs) meant that individual serf families worked scattered strips and were obliged to follow a communal pattern of farming
          • Little incentive or opportunity for them to develop in 'wage-earners'
        • Land owning elite were generally uninterested in how efficiently their estates operated
          • For many, serf-owning merely provoked idleness
          • There was no opportunity for capital accumulation, since income was generally falling
        • Can't urbanise as peasants are tied to their lad
      • Between 1881 and 1891, grain exports increased by 18%, as a percentage of total Russian exports, and by 1892 the Russian budget was in surplus
        • Achieved at the expense of the peasants who paid the taxes and saw their grain requisitioned by the state
          • Many were left with no reserves for the winter
            • V: "We ourselves shall not eat, but we shall export"
            • 1891-92 famine affected 17 of Russia's 39 provinces
              • Over 350,000 died from starvation or disease
                • Gov failed to organise adequate relief and it was left to volunteer groups to help the stricken peasants
      • After emancipation the quantity of land ploughed decreased
        • Serfs could not afford repayments. By 1875, arrears had reached 22% of the annual payments
        • USA farms produced 1.5x the yield of Russian farms; Britain 4x better
        • Traditional farming practices e.g. the reliance on a solcha, medieval rotation left some land fallow each year and strips divided on the death of a peasant
        • 26 million hectares passed into peasant hands between 1877 and 1905
          • Amount of land owned by nobles fell by almost 50%, while the land owned by peasants more than trebled
      • Only 1% of peasants achieved Kulak status
    • Infrastructure
      • Banks and the credit facilities were extended with the establishment of a state bank in 1860, municipal banks in 1862 and a savings bank in 1869
      • Government subsidies were offered to enable private entrepreneurs to develop railways
      • Witte promoted state-ownership of railways, buying up private lines; capital was invested in new lines: the iconic trans-Siberian railway, begun in 1892, was completed as a single track railroad connecting Moscow to Vladivostock by 1904 (7,000km)
        • By 1905, Russia had 59,616km, 66% state owned
          • Helped open up Russian interior and allowed more extensive exploitation of Russia's raw materials
    • Policies
      • Treasury was reformed under Mikhail von Reutern and new arrangements for collecting taxes, auditing the accounts of government departments, and publishing budgets were put in place
      • Tax-farming was abolished and the tax system was reformed to include more indirect taxation
      • Trade was promoted with the reduction of import duties from 1863
        • Foreign investment in Russia was encouraged with a Government guaranteed annual dividend
      • Overall, annual average growth rate of 6%
      • Despite these improvements, Russia's economy remained relatively weak. A third of all Gov expenditure went on the repayment of debts and the Russian currency- the rouble- was subject to wild variations in its value
      • Limitations of Emancipation Edict and a taxation system which left 66% of Gov revenue coming from indirect taxation, kept the peasantry poor and the domestic market small
        • Tariff reductions meant a decline in Gov revenues and the decision was taken to raise these again from 1878
      • Tariffs raised in the 1880s, and under V a prohibitive import tariff of 30% of the value of raw materials was introduced
        • Designed to boost home production and considerably helped the iron industry of southern Russia as well as the development of industrial machinery
      • Negotiated valuable loans e.g. from the French in 1888
  • Context
  • Mikhail Von Reutern
  • Ivan Vyshnegradsky
  • Sergei Witte

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