Sergei Witte (1849-1915)
- Expert on railway administration and wrote a book on rail tariffs in 1883.
- 1889- joined the Ministry of Finance in order to develop in new railways departments.
- 1892 was promoted, firstly to the Minister of Communications and then Minister of Finance, a post he held until 1903.
- Although he was an able and forward-thinking adminstrator, the results of his measures invited controversy.
- He was the author of the 1905 October Manifesto and became Russia's first 'constitutional' prime minister that year, but was forced to resign after six months.
- He opposed the entry of Russia to the first world war on economic grounds and died shortly after in 1915.
- Witte was totally committed to economic modernisation, seeing it as the only way of preserving Russia's 'great power' status. Despite the strong feelings roysed by Vyshegradsky's policies. Witte believed that the former Ministers policies were essentially the correct ones and that economic development was the only way in which standards of living would ultimately be raised. Furthermore, he believed economic development would curb unrest and revolutionary activity as everyone prospered.
Witte identified three key problems that were holding back economic development:
- Insufficient capital
- Lack of technical and managerial expertise
- Insufficient manpower in the right places.
Since there was no entrepreneurial class in Russia, he believed that industrialisation needed to be directed from above. This arrangement is sometimes referred to as 'state capitalism' and it meant continuing the policies of his predecessor with protective tariffs, heavy taxation and forced exports to generate capital. Consequently, the government raised domestic loans to finance enterprises. The policy appared to work. Foreign capitalists saw an opportunity to make money in Russia and foreign investment increased considerably, 1900, 911 million roubles in foreign investment.
Much of this investment went into the mining and metal trades, while a substantial amount supported the oil industry and banking. Franced proved to be the biggest investor, supplying a third of all the foreign capital but provided provided 23%, Germany 20%, Belgium 14% and the USA 5%.
Witte also encouraged foreign experts and workers- engineers and managers from France, Belgium, Germany, Britain and Sweden to oversee industrial developments and advise on planning and techniques. Under their guidance and expertise, Russia was rapidly forced into a industrial revolution, with the growth of the railways, a strong concentration on 'heavy' industry and the establishment of huge factories in expanding industrial cities.Industrial Growth
In the 1880s, the state began to buy private railway companies and the construction of new long-distance state railways began. By the mid- 1890s, 60% of the wohle railway system was state-owned and by 1905 this proportion had increased to nearly 66%.
By 1905, Russia had 59,616 kilometres of railways, which, although still small in comparison with the size of the country, nevertheless indicates that a major engineering feat had been accomplished. This had many implications. The railways helped open up the Russian interior…