In what ways and with what success was Russia’s industrial economy modernised between 1893-1903?
1893, a year which ultimately highlighted just how backward Russia was in comparison to other great European nations. Not only was it suffering from an oppressive autocratic monarchy in which reform was discouraged but it had an increasingly failing economy. This economy was extremely underdeveloped and restricted with the absence of an effective banking system and where major industrial growth had taken place in Germany, Britain and USA, Russia’s low urban workers constrained similar growth, meaning Russia was no longer upheld the power it had prior to 1850. The call for economic change came from those striving to protect Tsarism from the disruptive forces in society, the plan being that a better economy would keep the peasants from political extremism, and it would seem the government agreed with this; however it is more likely that they supported it for military rather than financial reasons; the idea that a growing industry would provide the base for the production of better guns, equipment and navy ships at a faster rate.
The humongous task of modernising Russia fell to Sergei Witte, the minister of finance; a man often regarded as one of the finest individuals involved in Russia’s reform at the time. Witte was a man who believed that modernisation could only occur through state capitalism, and particularly through the expansion of the transport system in railways, which at the start of 1893 could only be described as inadequate. His intelligence was proven through this time, with his prestige being the trans-Siberian railway.
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The transform that engulfed Russia at this time is known as the “great spurt”. Witte’s forte was his negotiations of large loans and investments from foreign countries, allowing capital to be poured into heavy industry, and the creation of protective tariffs imposed as a means of safeguarding Russia’s young domestic industries. Credit had to be given to his workings with foreign experts from France, Belgium and Germany, who on request from Witte were flown into Russia and using their own industrial revolution experience, offered guidance for Russia’s recovery period. His enthusiasm was the key driving force behind this economic reform, and was particularly exerted into using the expansion of the railways as a spring board to success. Witte recognised that the key to this modernisation lay with in acquiring money. He did this in two ways: foreign loans and taxation of the population; the latter involving direct taxes from wages (which were kept low to amplify the countries financial profit), and indirect taxes on goods. Witte’s economic reform was largely successful with a growth of 96.8%; the monetary system was boosted and the country in statistics seemed to be enjoying the benefits of such financial growth. Through the trans-Siberian railway the amount of track was doubled in the 1890’s and it proved impressive as a symbol of Russia enterprise. Major improvements in this transport sector reaped immense benefits in the exportation of goods and foreign trade, the production of grain in European Russia increasing from 36 million tonnes to 74 in just 20years. Another success was outlined in gold standardising of Russian currency, allowing for financial stability and encouragement of international investment.
With such economic success, came extreme limitations. The large loans and investments from abroad put Russia in debt; and debt meant that heavy taxes and high interest rates were imposed on the Russian population; pushing those already in poverty deeper. There was also the issue of independence, or lack of it. Russia was still unable to raise its own capital on a huge scale, and was dependent on foreign loans. With best intentions Witte had put protective tariffs onto lighter industries; however this penalised Russian customers, as prices raised on already scarce goods. Another major mishap in the reform was the trans-Siberian railway with promises to connect remoter regions of the central and eastern empire of the west, and therefore encourage migration of workers to areas where they were most needed. However even by 1914 much of this was still incomplete, and the money that had been pumped into the project in order to increase migration seemed wasted; migration had little occurred. Perhaps one of Witte’s biggest failings in his reform was his lack of though towards light industry such as textiles, and in particular the agricultural needs of Russia.
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We can however, account these failings to the problems that Witte faced whilst tackling the modernisation of Russia. As a man who was strongly disliked by the royal court and government, his talents were greatly overlooked and underestimated. Given more freedom with decisions he had the potential to drive Russia into competition with the other western countries. It was perhaps also down to this distrust placed in him that he overlooked areas that were in vital need of reform such as agriculture, and it was the demands of the military commanders that the government supported that often interfered with plans for railway construction and the building of new industrial plans. It can be argued that had he had a free reign with the plans for the trans-Siberian railway it would have been far more substantial by 1914, and increased communications across remoter parts of the Empire.
In all, it can be argued that Russia’s economic modernisation in 1893 to 1903 was largely successful with a highly popular international investment, and expansion of the Russian economy. The trans-Siberian railway helped promote Russia’s image of impressive and powerful, and with the industry booming, Russia seemed to be on its way to economic success. However it is often overlooked that Russia was starting from a low level of production, and therefore any growth would have seemed staggering; and compared with the increase in the population, such an augment in production and industry would have been necessary to cope with the demands of the people. It is also indispensable to take into mind that whilst heavy industry was growing, the focus on light industry was lost; agriculture suffering terribly and with that the situation of poverty stricken peasants was worsened. The debt from foreign loans meant taxes went up and wages went down, leading to a landslide in living conditions, particularly in urbanised areas where housing was not sufficient to cope with the increase of industry workers. Overall it is fair to say although in statistics the reform was successful in moving Russia towards modernisation, and it benefited those towards the top of the social hierarchy, it put major pressure on the peasants and down trod living standards.
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