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Tsarist Industrialization

 

One of remarkable characteristics of Alexander IIIs and, particularly, of Nicholas IIs reign was a contrast between internal oppressive politics and a more liberally-oriented economic and financial policies of the government. While they both tried to halt political change, the last Romanovs were persuaded to permit the government to sponsor a massive modernization program designed to boost  the countrys industrial capacity and introduce modern capitalist forms of production and exchange. 

 
Sergei Witte

The industrial revolution had arrived in Russia half a century later than in many of the leading countries. However, in the years following the Peasant Reform of 1861 capitalist development had been gaining pace and by the end of the century the industrial output had grown seven times, promoting Russia to the fifth place in the world industrial league table. In the post-reform era the industrial growth had been mainly achieved through the expansion of textile industries of all sorts and the production of consumer-oriented goods for the domestic and international markets. After grain, textile exports occupied the second most important place in Russian exports and competed successfully in eastern markets with their European rivals.

In the final decade of the nineteenth century, largely on the initiative of the government, Russian industrialization was given a new direction towards the development of the heavy industrial sector. The guiding figure in the program of speedy industrialization was Sergei Witte (1849-1915). He was an economic planner and manager of the type common in the governments of Western Europe and the USA, but exceedingly rare in the high officialdom of imperial Russia. His background was unusual for a tsarist minister, because he was not a noble but had made his career in business and railway administration. It was therefore natural for him to encourage closer contacts between the government and business when he became the minister of finance under Alexander III and continued in that post under Nicholas II until 1903.

This was the key ministerial position, for a minister of finance held the reins of command over the empires entire economy. Wittes remarkable energy and ability were devoted, in particular, to the stabilization of finance, the promotion of heavy industry and the building of railways.  In 1897, after accumulating a sufficient gold reserve, he established a gold standard in Russia thus fixing the value of the rouble against other currencies and against gold. This measure did much to add stability and prestige to Russian economic development, and to attract foreign capital. Witte encouraged heavy industry by virtually every means at his command, including government orders, liberal credits, unceasing efforts to obtain investment from abroad, improved transportation system, and heavy indirect taxation on items of everyday consumption to squeeze the necessary funds out of the peasants.

He put into effect a massive state-sponsored program of railway building, including the construction of the Trans-Siberian Railway which was completed in 1905, extending five and a half thousand miles to the shores of the Pacific Ocean. The rapid growth of railways depended on government orders for iron, coal, locomotives and equipment, which helped boost the development of Russian heavy industry and engineering. Thus, in Russian conditions, the State played a leading role in bringing large-scale capitalist enterprise into existence

Towards the end of the century Russia possessed eight basic industrial regions. Alongside its old industrial centers, such as Moscow, St Petersburg, the Urals and the Polish region, which contained textile industries, metal-processing, machine-building, chemical, coal and iron industries, new industrialized areas had emerged. The recently developed South region centered round the Russian city of Novorossiysk and the Ukrainian Donbass area was at the cutting-edge of technological innovation and supplied coal, iron ore, and basic chemical products. The south-western region specialized in beet-sugar. The Trascaucasian manganese-coal region supplied substantial amounts of its two products. Finally, the Baku sector by the Caspian Sea was a rapidly growing area of oil extraction.

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The Last Romanovs

 

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