Russian Economic Development From 1881 To 1914

Russian Economic Development From 1881 To 1914
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To what extent was the Russian economy industrialised in 1881?

1. Russia was primarily an agrarian society in 1881. Wheat was the largest export.
2. There were only small pockets of industrial development in parts of the Ukraine and around Moscow and St Petersburg.
3. The industrial working class made up only 4% of the working population in the 1897 census after 5 years of rapid industrialisation, so was even less in 1881.
4. Over 80% of the pop. were peasants and half of these were serfs tied to the land in subsistance agriculture.
How did Russia's economy in 1881 compare to the economies of the other Great Powers of Europe (Britain, France, Germany and Austria-Hungary)?
Other countries had gone through the agricultural revolution, increasing yields, freeing up people and money to fuel a now well-developed industrial revolution. Russia was falling behind. It was the most economically undeveloped, based mostly on subsistence agriculture making it difficult to produce grain for export to finance large-scale industrial development.
Why did Russia under Alexander III feel the need to modernise its economy and increase its economic wealth?
Russia wanted to maintain its status as a Great Power of Europe, and to do this it needed military power, which in turn depended on economic power. The military required large amounts of money to arm troops with modern weaponry and railways to transport them quickly.
What were Russia's greatest potential economic resources?

Steppe lands for growing grain
Vast natural resources of Siberia
What were the barriers to industrialisation?

1. Restrictions on the peasantry imposed by the mir and its collective nature resulted in lack of free movement of labour and the persistence of subsistance agriculture

2. No capital rising from below from surplus grain export to fund industrialisation and...

3. No growth of a business middle class which would normally foster innovation and provide capital and infrastructure investment to fuel an industrial revolution

4. Poor communication and transport infrastructure across the vast country making it difficult to transport goods and people to and from Siberia
What was Witte's general aproach to overcome the barriers to industrialisation in Russia?
Unlike the rest of Europe, capital, innovation and infrastructure had to be supplied from outside and imposed from above instead of rising up from below (change from above, as was typical in Russian history)
Who was Witte?

1. Finance Minister from 1892 to 1903 during which time Russia saw unprecidented economic growth (The 'Great Spurt').
2. Oversaw the building of the Trans-Siberian Railway running from St Petersburg to Vladivostok.
4. Chairman of the Council of Ministers (Prime Minister) from 1905, he negotiated an end to the Russio Japanese War.
3. Author of the October Manifesto of 1905 (precursor to Russia's first constitution advocating an elected parliament, constitutional monarchy and bill of rights)
What was the 'Witte system'? What were its components?

The 'Witte system' was Witte's plan for economic growth:
1. Central control: Economic development sponsored and directed by the government.
2. Emphasis on capital goods such as iron, steel, coal and machinery.
3. Finance and expertise from abroad (Loans from Belgium, France, Britain and private investors. Tied rouble to the gold standard in 1897 to create stable currency to encourage investment. Brought engineers and managers from europe to advise on industrial planning and techniques.)
4. Raise taxes on the peasantry and impose high interest rates for borrowing money.
5. Continue protectionist tariffs imposed in 1891 to protect Russian-produced goods.
Centerpiece was Trans-Siberian Railway. Most investment was funneled here. Witte considered the railway the key to industrialising Russia.
To what extent did Witte's policies succeed?

Success must be measured against the goal of economic growth to increase military and political power
1. Transportation and infrastructure - transformed but a qualified military success. Constructed over 30,000 km of railway between 1881 and 1900 (much completed by 1903 but not fully completed until 1914). Problem was single track - travel only in one direction, limiting speed moving supplies and people. Seen as one reason Russia lost the Russo-Japanese War.
2. By 1900 coal and iron production was over 5 times as high as in 1880 and oil production almost 20 times as high, so he succeeded on increasing the production of capital goods, with industrial growth concentrated in St Petersburg, Moscow, Baku and the Ukraine. Half of industrial workforce in large factories.
3. The decade from 1890 to 1899 saw an industrial growth rate of 8.0%, the highest in Europe.
4. Rapid growth of industrial cities like St Petersburg that doubled from 1890 to 1914.
1. Single track railway - travel only in one direction, limiting speed moving supplies and people. Seen as one reason Russia lost the Russo-Japanese War
2. Agriculture was not transformed, so the industrial transformation was built on shakey foundations. Famines in 1892, 1898 and 1901 affected both peasant and workers. In 1905 80% of the population were still peasants engaged primarily in subsistance agriculture.
3. Industrial growth stalled from 1900 to 1906, with a growth rate of only 1.4%
4. Rapid industrialisation and urbanisation led to urban slums, poverty, poor working conditions and unrest that threatened to destabilise the country, culminating in the 1905 revolution.
5. At 50%, the increase in national income from 1894 to 1913 was the lowest of all of the Great Powers.

Overall, he succeeded in setting Russia on the road to industrialisation at an astonishing pace but could not keep up with the other Great Powers who had the advantage of having gone through agricultural reform and were well into their industrial revolutions by the time Russia got started. His reforms stalled largely due the failure to transform agriculture, limiting internal capital for growth and making the country susceptible to famine.
What steps did Witte take to try to keep industrial growth from stalling and keep worker unrest at bay?

1. To keep the momentum of industrial growth, Witte wanted to reform agriculture to increase productivity - Petitioned the Csar for peasant reform in 1898 to abolish collective responsibility and facilitate resettlement of farmers on new lands. Many of his ideas were later taken up by Stolypin.
2. Witte also enacted a law limiting working hours in enterprises in 1897
3. Reformed commercial and industrial taxes in 1898 to encourage reinvestment of capital
What was the reason for the Russio Japanese War of 1904-05?
The desire of Russia for economic gain in the east through the acquisition of an all-weather port, Port Arthur so it could ship/import goods year around
What was the economic effect of the Russio Japanese War?
Huge financial loss to the country and investors. Loss of the Russian fleet that cost so much to build.
What was the goal of Stolypin's agricultural reforms from 1906 to 1911?
To prevent further revolutions by creating a peasant class loyal to the tsarist regime. There were so many peasants that if he could improve their lot and get them on the side of the Tsar, revolution was unlikely.

What were Stolypin's agricultural reforms?

Laid the foundations for an independent Russian peasantry
9 November 1906 law - peasants freed from control of the commune (no longer needed permission of the majority of members)
15 November - Peasant Land Bank instructed to give loans to peasants who wanted to leave the commune
New Years Day 1907 - Redemption payments abolished
June 1910 - Communes dissolved where no land redistribution had taken place
Cheap land in agricultural Siberia with government loans.
What was the impact of Stolypin's agricultural reforms?

1. Increase in ownership of land from 20% of peasants in 1905 to 50% in 1914. Made peasants happy so they became less politically active.
2. Rise in agricultural production from 46 million tons in 1906 to 62 million tons in 1913.
3. Industrial growth started up again after stagnation from 1900 to 1906 as grain surplus brought money into the country and fed the growing urban population. By 1914 Russian growth rate was the highest in the world.
The pace of improvement in the lives of peasants was such that Lenin feared that if it continued the peasants would not support a revolution but would support the tsar instead.
To what extent was the Russian economy transformed by 1914?

1. Foundations in place supporting agricultural transformation. Still in early phase as 80% of population were still peasants who worked the land. Significant urbanisation had yet to occur.
2. Industrial transformation in full swing but limited to certain regions and capital goods (oil, coal, iron, steel) rather than including development of light industry such as machine tools

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