1) to what extent was there modernisation of the economy in the years before 1894?

reasons behind modernisation

• to maintain great power status

• gap in economy

• government revenue

• railways vital

• less reliant on imports

economic problems hindering modernisation?

• unstable currency until 1890s

• widespread scorn for trade

• many businessmen more attracted to quick profits from trade rather than the risks of production

• lack of investment capital

geographical problems hindering modernisation

• inefficiant agriculture

• scattered location of resources

• small name market

• vast distances and poor climate

• potential of rivers as trade routed resources by freezing

politicsl problems hindering modernisation

• elements of govt hostile to industrialisation as “unrussian” and afriad of proletariot

• govt dominated by conservative aristocracy

• unfavourable climate in govt and administration- corrupt and inefficient

social/cultural problems hindering modernisation

• ruling elite, concerned to prevent surplus rural population from moving to the towns, were keen to preserve the mir

• weak middle class

• allow commercial property and undeveloped property rights

minister of finance 1862-78

Mikhail von reutern

modernisation under von reuteurn

• treasury was reformed and new arrangements for collecting taxes and publishing budget was put in place

• taxforming abolished, more indirect taxation

• building of banks

• 1863:trade was promoted with reduction of impacts

• govt subsidies were offered to develop railways

• foreign investment in russia was encouraged

• encourage “safe” investments

• develpments of corron industry and mining in Donets Coalfields

von reutern banks

1860: state bank

1862: municiple banks

1869:savings banks

how far were his policies successful? positive

• encouraged enterprise

• supported industrial expansaion and railway network

• 1871: oil extraction began in caspian sea port of baku

• 1872: iron works set up in donetsk

• 1879: the napta extraction company established the export the oal and oil

how far were von reutern policys successful? negative

• remained comparitively weak

• 1/3 of all government expenditure went on repayments of debts

• subject to wild variations in its value

• taxation left 66% govt revenue coming from indirect taxation: kept peasantry poor and domestic market small

• tarrif reductions meant decline in govt revenue

annual average growth (von reutern)

rate of 6% during VR’s time in office

von reuterns tax system

left 66% og govt revenue coming from indirect taxation

minister of finance 1887

vyshnegradsky

import tarrif (vyshnegradsky)

import tarrif of over 30% of value and raw materials introduced:

boost home production

helped iron industry and development of industrial machinery

Vyshnegradsky economy

• 1888: negotiated french loan

• increased indirect taxesand mounted a drive to swell grain exports

• 1892: russian budget was in surplus

• 1891-91: bad harvests- famine

• 1892: vyshnegradsky dismissed

grain exports (vyshnegradsky)

1881-1891: grain exports increased by 18%

acheived at expense of peasantry- paid high taxes and grain requisitioned by state

hughesovka

• 1869: huges set up New Russia company Ltd, with a capital of £300,000

• produced iron

• 1896: employed 8,000

• 1904: employed 12,000

basic details: witte

1891: transport minister

1892: finance minister

1903: dismissed in reaction to unrest

1905: negotiated peace with Japan

1906: negotiated crucial french loan

railway growth

grew from 30,000 km to 60,000 by 1904

economics work

• assisted ,assive economic expansion of 1890s

• manager of industrialisation

• great advocate of railways

• 1894: established state liquor monopoly, eventually producing 30% of state revenue

• 1897: put rouble on gold standard

• budget doubled in 1890s; money poured into investment

• reformed company law

• 1902: chaired conferance on the needs of the agriculture industry

did the policies of vyshnegradsky and witte achieve an industrial take-off?

• protective tarrifs, heavy taxation, and forced exports to generate capital

• investment into mining, metal trades, oil and banking

• 1897: worlds fourth largest industrial economy

• bulk of export trade was in grain rather than industrial goods

total industry growth

1891: 3.99%

1896: 5.33%

total agriculture growth

1891: 1.17%

1896:1.96%

railwaya lengths

1891: 13.95%

1896: 17.95%

trends: 1860s

free trade policies helped expansion, using imported raw materials and machinery

trends: 1870s

growth disrupted by general european economic problems

trends:1877

end of liberal tarrifs; move to high tarrifs

trend:1890s

• great spurt

trend: 1900s

slump due to:

• general european depression and retraction of foreign investment

• government limited its involvement ue to financial difficulties

• exhaustian of tax-paying capacity of the peasantry

• series of bad harvests

• lack of internal market

trends: 1906

renewed spurt, with expanding domestic market

finance minister: bunge

• (1881-87)

• reu#duced tax burden on peasantry to try and stimulate economy

• tried to balance budget, but failed due to high government expenditure

finance minister: Vyshnegradsky

• 1887-1892

• boosted industry by establishing budget surplus and strong gold reserves to encourafe investment in industry

• meant squeezing peasanrt

• contributed to 1891 famine and dismissal

finance minsiter: witte

• 1892-1903

• state played great roll

interior minister: stolypin

• 1906-1911

• introduce major agrarian reforms

role of state

• government played key rold, as a subsititue for ntural pressures for economic development which were lacking

• direct investment, ownership to provide capital

• loans

• guranteed profits to private investors and companies

• government orders for products

• economic policies to maintain budget surplus and a favourable balance of payments ri attract foriegn loans and investment

role of foreign investment

• needed as subsitute fot lack of sufficient idigneous investment

• in the 1890s foreigners invested an average 100 million roubles compared to 36 million by russians

• 1910:over 50% of investment was foreign

• helped finance govt expenditure

squeezing of peasantry

• to provide surplus for eport to maintain balance of payments and pay needed for machinery imports

• to raise revenue needed for government financial assisrance to industrt and to balance budget

• to feed growing urban poulation

large scale modern industry

1900: 30% of facoties had over 1000 workers

43% of coal was produced from 4% of all mines

role of banks and cartels

• helped channel middle class savings into inudstry

• assisted, with the state, the development of cartels

• prodanesta in metsllurgy