Economy & society

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  • Created by: EC
  • Created on: 08-03-13 14:39

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
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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
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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.

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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

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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.


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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)

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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.

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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)
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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.

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