Much of the economic development was financed from abroad, using massive inward investment from countries such as Belgium, France and Britain. Foreign investors, especially French and Belgian, were encouraged to invest in Russian industry. A new rouble as introduced in 1897 linked to the gold standard in the hope of increasing investors’ confidence. The rouble’s value was fixed against other countries’ currencies and was made freely convertible to gold in the hope that this would produce more stable rouble and end the wild fluctuations of previous years.
The government placed emphasis on the production of capital goods such as iron and steel, coal and machinery. The impact of this policy on exploration of Russia’s natural resources was dramatic, as so was others, coal and iron, oil production all rose. Witte was a definite supporter of capital inflow and goods export. He called for protectionist measures towards national production. Witte considered that the country should be economically more active in the world market, especially in the Far East. He thought that the development of the country should go in a different direction than other countries. From this we can see that this policy of Witte’s was successful as it gave a positive outcome.
Because the capital goods developed in this period were also used for military reproduction Witte's main method for improvements in infrastructure would be the Trans-Siberian Railway, which from 1881 to 1900 increased from 13,000 to 33,000 miles. It was hoped it would encourage East to West migration of workers, to feed in to industry, however this did not happen. Instead, it helped growth and exports of Russia by making transportation of materials far easier. On the other hand, the growth in population compared with national output shows less production per head, and therefore less efficient production.
Following major reforms the Finance Minister clearly foresaw the need to develop a strong currency. In 1894-1895 Witte was able to stabilize the ruble. In 1987 he implemented a reform of the national currency. The ruble was provided with the gold standard and remained absolutely stable until WWI. It resulted in a great capital inflow to the country and as a consequence to railway and industrial development in the Russian Empire. Managing the budgetary deficiency Witte increased taxes. The extra taxation placed on peasantry caused deep resentment, and by the first 5 years of the twentieth century, peasant uprisings were becoming commonplace. He entered the state monopoly for the trade of alcohol. This resulted in a quarter of all incomes of the Imperial treasury.
The industrial workforce was employed in factories with more than a thousand workers. As a result large cities grew at a phenomenal rate. The population of St Petersburg, for example, doubled between 1890 and 1912, from 1 million to 2 million. This successful economic development allowed Russia to exploit the vast natural resources of Siberia. It also allowed Russia to develop its military power.
Because the capital goods developed in this period were also used for military reproduction Witte's main method for improvements in infrastructure would be the Trans-Siberian Railway, which from 1881 to 1900 increased from 13,000 to 33,000 miles. It was hoped it would encourage East to West migration of workers, to feed in to industry, however this did not happen. Instead, it helped growth and exports of Russia by making transportation of materials far easier. On the other hand, the growth in population compared with national output shows less production per head, and therefore less efficient production.
His policies did little for agriculture considering 80% of the population were rural peasants. It is thought he focused too much on heavy industry, neglecting others Ike light engineering. Finally, Russia became overly dependant on foreign loans (never good if a financial crisis was to occur and foreign loans have to be repaid). Tariffs making goods scarce, heavy meant prices for Russian consumers increased, whilst their wages stayed low. Workers had poor living and working conditions, and their discontent was severely repressed. Peasants' outdated farming methods led to less food for all. The increasing population gave peasants less and less land, and worsened food shortages.
In conclusion after taking into consideration of all if the polices in which Witte introduced I have come to a decision where I believe that to some extent did the policies of Sergei Witte address the problems facing Russia at the end of the nineteenth century. Not all of the polices were addressed by the nineteenth century they actually created quite a few problems such as poverty because of raised taxes and bad living conditions for workers during the industrialization.
By Kate Brook
by
kateabix (student)
