Alexander’s reforms had made certain progress trying to modernise the Russian economy, which aided the modernisation sought after by Alexander III. As Russia had not “developed a coherent strategy to cope with the rapid advance of industrialisation in Western Europe” by the 1880’s, the government had no choice but to either “control expenditure to create financial stability and attract foreign capital, or raise taxation with the same objective”. The Minister of Finance in 1891, Vyshnegradsky, attempted the second approach in order to accelerate industrialisation, and raised import duties up 33 per cent which superficially gave the Russian budget a surplus in 1892, and a first foreign loan was secured in 1888. However Vyshnegradsky’s policy put pressure on the peasantry due to its “net effect [for] fiscal rectitude”. His words ‘we must go hungry, but export’ proved true when the grain export increased by 18 per cent in total exports between 1881 and 1891 and the worst famine of the nineteenth century hit Russia in 1891-2.
The effect of the famine cost Vyshnegradsky his role as Minister of Finance and was replaced by Witte who was a firm advocate of modernisation. Witte aimed to take advantage of Russia’s late start to modernisation by rapid and forceful industrialisation. Witte’s strategy saw from experience in Europe that industrialisation produced an unstable first period which “brought impoverishment, dislocation, and social protest”. However he knew that the second period would bring “increased wealth generated by the industrialised economy” while, due to Russia’s late start, it could begin with the most modern technology and up to date methods to achieve industrial efficiency more quickly.
The most important physical development of Witte’s strategy was the construction of the Trans-Siberian Railway, which was completed in 1903. It became part of “Russia’s imperial expansion [and] domestic industrialisation”. The Tsar saw that an efficient railway system offered significant military and security advantages, in addition to economic ones and as a result there was a dramatic increase of industrialisation. During 1861 to 1891 industrial production was increased by 399 per cent and the length of railways increased by 1395 per cent. To further increase industrialisation Witte saw that foreign investment and external trade would have to be encouraged. In 1897 Witte put Russia on the gold standard and devaluated the rouble to make it fully convertible, which resulted in a 218 per cent increase in foreign capital from 1900 to 1914.
Witte’s role as Minister of Finance was taken from him during the aftermath of the 1905 ‘revolution’ and was swiftly replaced by Stolypin, whose aim was to boost industrialisation and create a new class of richer peasants. His reforms reduced the number of peasant landowners and forced large numbers to search for alternative employment, which was the only way industrialisation and urbanisation could be achieved. Stolypin’s reforms, along with Witte’s, presented an “integrated strategy for Russia’s economic modernisation”.
Due to both Stolypin’s and Witte’s reforms, Russia entered upon a second phase of industrialisation from 1908 based along the lines of Witte’s economic strategy; to ‘save Russia by rapid and forceful industrialisation’. However the main focus shifted to rearmament, as a cause of political disturbances and the maintenance of keeping Russia’s power status, which consequently had a striking impact on the economy.
In the wake of Russia’s rearmament programme, it growth rate had increased at an impressive rate of 8.8 per cent per annum, and its population had expanded 1.6 per cent every year since the 1880’s, making overall progress significant. After securing another French loan in 1909, Russia was becoming more financially stable, due to the gold reserves rising, and foreign investment falling as domestic financial institutions expanded to provide loans and credit.
The second phase also brought gigantism to the forefront of Russia’s industrial policy, which resulted in reduced costs through improved efficiency and productivity, and allowed the application of modern industrial technology for mass production. It was hoped that by building large and modern factories Russia could overtake foreign competition and make up for its industrial backwardness.
The implementation of Russia’s vigorous policy of industrial modernisation had several consequences that both the government and the proletariat felt, including economic and political aspects. Economically there was a massive growth in industry which led to an increased production rate, a total of 1177 per cent increase between 1861 and 1913, and raised Russia’s status in the world.
The political effects show that possibly due to Russia’s reliance on European capital for the finance of its industrialisation, her political freedom in international affairs was inhibited, rather than its intended strengthening of diplomatic and political power. This served to compel Russia’s diplomatic ties with France, causing her involvement in the First World War.
The growth of industry over the years had led to a vast rail network running throughout Russia. From 1861 to 1913 the total length of railway track had increased by 3191 per cent with a total of 70,156 km in railway track by 1913. This considerable expansion aided Russia’s military capacity, held important strategic and tactical advantages, and boosted its militaristic strength which heightened its overall power status internationally.
To assess whether Russia had undergone an effective modern industrial transformation a comparison can be against other nations who had already gone through industrial revolutions during the mid-nineteenth century. Russia’s national income per capita in 1913 was 101 roubles, the equivalent of 20 per cent of Britain’s national income and only 14.8 per cent of USA’s income. In heavy industry production, 1914 figures for coal show that Russia’s output was five times smaller than Germany’s and 7 per cent of USA’s yield; steel output in Russia was 4.3 per cent higher than France, but still lower than all other major steel-developing nations. The only heavy industry that was performing considerably well was Russia’s oil productivity of 9.1 million tons in 1914; mainly thanks to the development of the Trans-Siberian and Baku-Batum railway which allowed access to its substantial oil reserves; which was only defeated by the United States with a total yield of 33.1 million tons.
While these statistics certainly show Russia was not as industrialised as other major countries internationally, it had made overall significant progress. In 1860 Russia’s total rail length was 1,626 km, over the next five years it had increased by 2,216 km, and over the following ten years by 15,186 km. Since 1865 pig-iron had increased steadily with a total yield of 4.6 million tons in 1913, compared to 1865’s output of 0.29 million tons. Raw cotton, sugar, coal, and railway track also had increased progressively since 1865, showing that although Russia was not up to par with other developed nations, it had modernised and increased its industry. In terms of the Industrial National Product, between 1880 and 1913, Russia possessed the highest overall increase of 14 per cent, closely followed by Germany who with 11 per cent, whilst Britain decreased 6 per cent.
Another comparison which can be used to measure the effectiveness of Russia’s industrial development is how it performed in industrial production worldwide. As a percentage of world production in machinery in 1913, Russia was fourth overall worldwide, with 3 per cent; while in the electrical production industry Russia was fifth, with a 2 per cent production rate.
The effects of industrialisation were not just limited to economic and financial success, but also socially. By 1913 no less than 80 per cent of the population were still residing in villages and using out of date farming methods. Russia had a rapidly growing population and a low agricultural productivity, which with the increasing sub-division of their land, meant that increasing numbers could not support themselves. They were underfed and inadequately paid, which forced the growing peasant population to seek alternative employment in the towns and cities, adding to the overcrowding already there.
This overpopulation in the urban regions caused the proletariat to double between 1865 and 1890, and by 1900 there were over two million. A discontented peasantry emerged in the rapidly expanding cities, due to the poor conditions, the burden of heavy taxation, the barely sufficient wage, and the constant exploitation which worsened rural and urban misery. These social developments held dangerous political implications as it increased the number of potentially hostile opponents to the tsar, particularly the socially inclined subversive proletariat and the liberal minded bourgeoisies.
By early 1914 the overall outcome of Russia’s rapid and forced industrialisation strategy had generated several problems. Many areas of engineering and chemical production were still underdeveloped, especially high-end technology. The government were slowly realising “the road to power for nation-states…lay along the path of technological advance”, and industrial development had only been concentrated on very few areas including the St Petersburg and Moscow regions, where most of the rail activity was.
The downside to the industrial modernisation programme was the creation of an urban proletariat, long perceived to be dangerous. To minimise any threat or problems, Witte and Zubatov, head of the Okhrana, thought of several approaches to keep industrial relations passive. Witte attempted to improve factory conditions and control labour exploitation, whilst Zubatov tried to avoid the growth of hostile trade unions by creating official unions which could be controlled by agents of the state. However their plan faced and generated problems due to general poverty and social backwardness in the urban centres. There was insufficient funding for the factory inspectors, and the workers were in a poor social infrastructure, comparable to urban peasants, which was hardly encouraging for employers. With more people than jobs employers took every opportunity to reduce costs. The effect of this was; along with the small, genuine proletariat emerging alongside the accumulation of these urban peasants, that they became the targeted audience for early socialist and Social Democratic agitation.
To compose an effective judgement of the success of Russia’s endeavour to industrialise, it is necessary to understand how Russia’s military issues determined economic and political change; and to evaluate its financial and economic achievements in comparison to any problems generated.
The tsarist establishment was founded on, and always had the underlying principle to expand Russia’s borders and defend it. This tradition was a heavy burden for the tsars in the late nineteenth century due to the formation of several other large states in Europe. Russia also held an inherent weakness that, due to hundreds of years of serfdom, an organic and self-generating mass modernisation was near impossible, and while serfdom existed, military failure would continue to exist. The emancipation of the serfs by Alexander II was seen as a direct result of military failure, and indeed all of his reforms show that he intended to create a social and economic system that would project Russia’s military power more efficiently.
Strengthened by French loans in 1888 and 1892, Russia formed a close political friendship with France, which resulted in the Franco-Russian Alliance of 1894. This alliance was crucial in maintaining the tsarist regime, especially when anarchy reined in 1906. The French loans helped suppress the disorder, and boosted industrialisation.
The pattern of Russia’s industrialisation reflected its military priorities; with the construction of the Trans-Siberian railway giving Russia enhanced diplomatic influence in the East, and the railway aiding the armed forces in the Russo-Japanese War in 1904. The significance of Russia’s military and strategic concerns was key factor that determined the Russian pattern of social and economic change during the nineteenth and twentieth century was. This explains the continuity of the tsarist government and the domestic policy, and emphasises the importance of international politics in how economic change progressed.
Russia’s economic success and high rates of growth partially reflect the fact that her industrialisation began from a much lower base during the 1860’s than her rivals did, and in 1861 whilst Russia was emerging from serfdom, the country’s industrial sector was undeniably backwards. However by 1914 Russia was “on the threshold of becoming a major industrial power”, all statistics indicated that “Russia was following the pattern of industrialisation of its European competitors”, and when the limited administrative capacity of the Russian state is realised, it is possible to see how that the Russian attempt to modernise by rapid and forceful industrialisation was ultimately effective and successful up until the outbreak of the First World War.
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Sources quoted from:
Russia 1848 – 1917, Jonathan Bromley, p.39, 67, 68, 70, 71, 111, 118, 194
Tsarist Russia 1801 – 1917, John Hitte, p.67, 75, 76
Imperial and Soviet Russia, D. Christian
Economic growth of Tsarist Russia, Raymond Goldsmith, p.462
Economics and Social History booklet, University of Köln, Prof. Dr. Toni Pierenkemper, p.5
Ekonomiceskoe razvitie Rossii, P Chromov, p.452-455
Modernising Lenin's Russia, Anthony Heywood, p.1
