Alexander II & proto-mangement of economy
Alex II recognised threat of peasant unrest was just as great as growing urban proletariat.
Dealt with by moving rural workers into industry - factories warrented 'New work discipline'
which controlled actvities of bulk of population.
Appointed Mikhail Reutern [1862-27] as Minister of Finance. Adopted...
- sensible approach of continued railway construction
- attraction of foreign technical expertise
- employment of foreign investment capital
Alexander II & proto-mangement of economy #2
As a result:
- modernisation & expansion within 'staples' as well as in newer industries
- Welshman JJ Hughes: transformed iron & steel production in Ekaterinoslav. 1884 - New Russian Coal and Railmaking Company largest producer of pig iron in country (many other successes)
- --> demonstration of value of foreign technical expertise to move Russia forwards
Railway construction #1
Ruetern built on foundation of railways built during reign of Nic I, so there was a sevenfold increase in track opened from 1862 to 1878.
Capacity of railways to 'great bulk' at speed --> expansion gave significant boost to industry..
...Major reson for doubling of indst. output & average annual growth rate of 6% during Ruetern's term of office.
Clive Trebilcock: " the country's first respectable performance in manufacturing "
& even allowed Russia to cussion itself against European economic depression 1873-1882.
Further illustrated importance of foreign investment capitial.
Ruetern secured foreign monies and investment through novel approaches, such as issue of government bonds, taxation exemptions, monopoly concessions.
Railway construction #2
Construction tended to be in hands of private contractors & gov guaranteed to bail out projects if encountered financial difficulties...
- Resulted in corruption (e.g. financial help for companies that didn't need it) and expensive transport system.
Due to high costs of construction & operation, 94% railway lines were in private hands by 1880.
Clive Trebilcock: Reutern created the
" first state managed exercise in industrial advance"
but efforts were cut short due Russo-Turkish War 1877-8
...He still paved the way for otheres to follow, e.g. Witte
After death of Alex II: Reforms
Alexander II dies (1881) & Reutern's demise.
New economic reforms from new finance minister: Nikolay Bunge 1882-6
- Abolition of Salt Tax 1881, Poll Tax 1886
- 1883 Peasant Land Bank
- Move towards greater state ownership of railways
State ownership of railways.... 69% of system under public control by 1911
Liberal approach short lived - Alex II blamed Bunge for fall in value of rouble in mid 1880s
Replaced with Vyshnegradskii [1887-92]
- Balanced gov income whilst making surplus of income
- Did this through more efficient utilisation of income from taxes, railways, crown properties, state bank, treasury.
After death of Alex II: Reforms #2
He raised revenue through
- Medele'ev tariff 1891
and income gained by:
- exporting large amounts of grain (even with prospect of domestic shortage and starvation)
1891 famine: partly blamed on Vyshnegradskii's policies
Despite achievements, forced to give way to Count Witte (1893-1903)
The 'Great Spurt' #1
Appointment of Witte...distinct break from past.
1893: economic activity still revolved around agricultural production
Witte: the first to show commitment to industrialisation, aimed to -
- compete with other nations
- improve country's military capability
To be achieved at expense of agriculture: more investment made in indst. rather than agri.
Caused suspisions with russian elite
Witte: 'all thinking Russia was against me' ...shows how radical he thought his approach was.
The 'Great Spurt' #2
Main strands of his plan:
- Resurrected Ruetern's idea of encouraging foreign experts to come to Russia
- returned to idea of taking out foreign loans, raising taxes & intrest rates to boost available capital for investment in indst.
- 1897 placement of the rouble on gold standard. (to give potential investors confindence in Russian currency)
- insisted most investment went on heavy indst & railways as it made GB, France & Germany great economic powers and had already reaped dividends for Russia
- further industrialisation to be planned & managed mainly by state (moving away from private enterprise)
The 'Great Spurt' #3
Effect of this was the Great Spurt, resulting in...
- coal production doubled & that of iron and steel increased sevenfold
- stimulus provided to development of more specialist and new technologies in oil and chemical industries
- total amount of railway track opened rose from 29,183 km (1891) to 52,612 (1901), of which much was facilitated by growth in capital from abroad which had increased every year
- income earned from indust. shot up from 42 mil roubles 1892 to 161 mil by 1897
There was indication that Russia finally began to catch up with industrialised nations.