Evaluate the success of Sergei Witte’s economic policies

Evaluate the success of Sergei Witte’s economic policies

R & R pp. 13-18

Economic Reform 1893-1914

-        In the 1890s industry grew rapidly – ‘the great spurt’

-        A major reason for the growth – the increase in the output of coal in the Ukraine and of oil in the Caucasus

-        Economic historians agree that although this increase was the result of private enterprise (economic activity organised by individuals or companies and not government), it was sustained by deliberate government policy

-        However, the motives of the tsarist government were military rather than economic

-        The Tsar and his ministers wanted to expand the economy in order to improve the strength of the Russian armed forces – e.g. production of more and better guns, equipment and ships

Sergei Witte

-        An outstanding individual involved in Russia’s development

-        Minister of Finance from 1892 to 1903

-        Set himself the task of modernising the Russian economy to a level where it could compete with the advanced nations of the West

-        He invited foreign experts and workers to Russia to advise on industrial planning

-        Engineers and managers from France, Belgium, Britain, Germany and Sweden played a vital role in the ‘great spurt’

State capitalism

-        Witte believed that modernisation could only be achieved through state capitalism (the control of the economy by the government)

-        He likened the current relationship of Russia with the advanced economies of Europe to that of a colony and its mother country – ‘Russia is a colony for all industrially developed states, generously providing them with the cheap products of her soil and buying dearly the products of their labour’

-        Russia therefore needed to decolonise herself and begin to produce and trade as an equal

-        Russia must not remain ‘the handmaiden’ of the advanced industrial states

-        Witte believed Russia’s greatest need = to acquire capital for investment in industry

-        To raise capital – he negotiated large loans and investments from abroad, while imposing heavy taxes and high interest rates at home

-        He also encouraged the inflow of foreign capital – Witte limited the import of foreign goods

-        Productive tariffs (duties imposed on foreign goods to keep their prices high and, therefore, discourage importers from bringing them into the country) were set up as a means of safeguarding Russia’s young domestic industries, i.e. steel production

-        In 1897 the Russian currency was put on the gold standard (the rouble, Russia’s basic unit of currency, had a fixed gold content, giving it strength when exchanged with other currencies)

-        It was hoped that this would create financial stability and so encourage international investment in Russia

-        The aim was largely successful BUT it penalised the consumers at home (they had to pay the higher prices that traders introduced and prices tended to rise…