Economy & society

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

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

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.

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

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.

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)

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.

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)

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.