Economic Growth in Tsarist Russia Lesson Focus

Economic Growth in Tsarist Russia Lesson Focus • The ‘Great Spurt’ • State Capitalism • Railways • Witte’s problems • The end of the ‘Great Spurt’ • How strong was the Russian economy by 1914?

The ‘Great Spurt’ • Rapid growth of industry in the 1890’s • Coal in the Ukraine, oil in the Caucasus • Private enterprise, encouraged by government policy • Military motive of the Tsarist government?

Witte and State Capitalism • • • Witte encouraged foreign investment and workers to come to Russia. State capitalism was difficult as Russia was backwards compared to GB, Fr, Germany. Russia must not remain the ‘handmaiden’ of western countries. Witte wanted to gain CAPITAL for investment in industry. Loans from abroad/High taxes and interest rates at home – GET THE MONEY IN, STOP IT GOING OUT Tariffs and the gold standard; financial stability, but higher prices domestically.

Financial Reforms under Count Witte (1892 to 1903) • • High tariffs. Improved the banking system. Encouraged Western investment. By 1900, about half of industry was foreign-owned and Russia became a debtor nation.

The Witte System Tariff Protection and Strong Balance of Payments Strong rouble The Witte System Foreign Investm ent State encourag ement to Industry High Taxatio n Railways

The Railways • Target for investment – size of country • Movement of goods and people • Increase in lines and rolling stock • Trans Siberian railway (1891 – 1902) • Difficulties – incompletion, reluctance, unaffordable for most. • Symbolic rather than practical

Problems • • • Playing catch up Per capita production low due to expanding population Dependency on foreign loans and investments Light manufacturing neglected – no real basis for heavy industry to keep expanding No attention to agriculture Demands of the military Resistance to change Government obsession with military Witte never trusted – secretive, obsessive, moody

Assessing the Success of Russian Industrialization • By 1900 some Russian industries were challenging world leaders, however the Russian industrial revolution was in its early stages. • Its world rank was due to its great size and rich resources, not its technology or trained workforce. • Despite all the reform, Russia remained a traditional peasant society that had not experienced many of the changes that had occurred with Western industrialization.

The end of the ‘Great Spurt’ • End of a worldwide boom • Large population could not be supported • Lack of organisation and infrastructure • Overcrowding • Unemployment • Homelessness • Serious social unrest • Exploited by political groups

Summary • Was Sergei Witte a success?