Post-Alex II industrialisation

Cards (31)

  • Bunge introduced fiscal amendments when he was finance minister (1882-1886). These included the abolition of Salt Tax (1881); the creation of Peasant Land Bank (1883); the abolition of the Poll Tax (1886) and a move towards a greater state ownership of the railways
  • The Peasant Land Bank was created under Bunge by the government in 1883 to allow peasants to borrow money at relatively cheap rates to allow the purchase of land
  • The move towards greater state ownership of railways under Bunge eventually led to 69% of the system being under public control by 1911. This more liberal approach did not last long as Alexander III blamed Bunge for a dramatic fall in the value of rouble in the mid-1880s. Consequently, he was replaced by Vyshnegradskii.
  • Vyshnegradskii was made Finance Minister in 1887. He managed to balance the government budget whilst also making a surplus of income. He achieved this through more efficient utilisation of income taxes, railways, crown properties, the state bank and treasury.
  • The 1891 famine was seen partly as the result of Vyshnegradskii's policies, and depsite his other achievements he was forced to resign in 1892 and was later replaced by Count Witte
  • Vyshnegradskii raised import duties to 33% in 1891. Superficially, this had the desired effect - the Russian budget achieved a surplus in 1892 and the first in a series of French loans was secured in 1888
  • Grain exports were increased by 18% and in the words of Vyshnegradskii "we must go hungry, but export". His export drive, combined with overpopulation and poor weather, made his statement prophetic.
  • In 1891-92 Russia suffered its worst famine of the 19th Century. It cost around 2 million lives and exposed the shortcomings of government policy. The famine sparked off widespread criticism of the tsarist regime. The government's attempts at famine relief were seen to be slow, especially by members of the Zemstva, who tried to make up for the regime's inadequacies.
  • Witte built on the work of Vyshnegradskii. A second major loan from the French was secured in 1893 and the money was used for capital goods projects such as railway building.
  • An efficient railway system offered significant military and security advantages in addition to economic ones. This persuaded the tsar that Witte's plans were worth backing
  • By 1893, Russian economic activity still revolved predominantly around agricultural production.
  • The industrialisation drive under Witte was mainly aimed at increasing Russia's military capability.
  • Witte's industrialisation strategy involved a 'substitution' effect, with more investment being made in industry than agriculture. This caused suspicion and consternation among sections of the Russian elite.
  • Witte insisted that most investment went on heavy industry and the railways, as this was what had made Britain, France and Germany great economic powers and had already reaped some dividends for Russia.
  • Witte claimed that 'all thinking Russia was against him', emphasising how radical his approach was.
  • In 1897, Witte placed the rouble on the gold standard, a major development aimed at giving potential investors confidence in the value of the Russian currency.
  • The main strands of Witte's plan were to take out foreign loans, raise taxes and interest rates to boost available capital for investment in industry.
  • During the 'Great Spurt', the total amount of railway track opened rose from 17,264 miles in 1891 to 31,125 miles in 1901. Much of this was facilitated by the stupendous growth in capital from abroad, which increased on average by 120 per cent every year from 1893 to 1898.
  • Under Witte's 'Great Spurt', Income earned from industry shot up from 42 million roubles in 1893 to 161 million roubles by 1897.
  • Coal production doubled and that of iron and steel increased seven-fold under Witte.
  • There was also an indication that Russia had at last started to catch up with other industrialised nations; by 1900, for example, France had been ousted into fourth place in world iron production
  • Witte accompanied his industrialisation with some forward-looking social policies. He recognised the need to do whatever was possible to relieve distress and consequent protest in the initial, harsh period of industrialisation.
  • In 1886 laws were passed to set up factory boards to arbitrate in industrial disputes. As a consequence in 1897, Witte introduced decrees to limit hours of work for all workers to 11.5 hours (10 hrs for night work) and even to permit trade unions
  • A factory inspectorate had been set up in 1882, and regulations controlling use of child and female labour were introduced in the same year.
  • Witte focused on the development of heavy industry and neglected other parts of the industrial sector such as engineering and textiles. This was short-sighted, as to an extent the demand for metals (and hence coal) came from other industries such as cotton textiles.
  • Witte's reliance on foreign capital has been criticised as being dangerous as loans could be recalled at short notice and reliance on foreign technological expertise stunted the emergence of home-grown talent. 
  • Although the railway system expanded considerably under Witte, it was still very costly and not as impressive as that which existed in other parts of Europe. By 1914, for instance, Russia had eleven times fewer miles of track than Germany. Most railway investment was made in the Trans-Siberian line started in 1892 (but never fully completed). Although this greatly aided the industrial and agricultural expansion of Siberia, it was rushed and poorly constructed. 
  • Witte paid scant attention to agriculture, which caused rural discontent and distrust from other members of the government. This was one of the key reasons for his downfall in 1903.
  • Money for social reforms came from loans. Russia ran up huge in debts: 1.25 billion roubles in 1861 became 8 billion roubles in 1914. In 1900, servicing the debt took 20% of the annual budget.
  • Majority of industrialisation took place in the early 1900s under Nicholas II
  • Russian industrial output continued to increase after 1900, except for in 1905 because of factory strikes caused by the revolution. These figures of increased industrial production are less impressive when you consider the fact that Russia was experiencing a massive population increase.