Therefore, Witte who was a finance Minister stepped up to achieve economic modernisation within Russia. His aim was to make Russian economy strong enough to maintain Russia’s position as a Great Power. Although Witte implemented a ‘great spurt’ which had great effects on Russia economically, there is proof that it did not last to a long extent. Witte implemented many new policies and changes to the Russian economy. He raised the taxes of peasants.
However, given the backwardness of the Russian economy particular difficulties were presented. For example Russia needed to decolonise itself and begin trading as an equal. Witte judged that Russia’s greatest task was to acquire capital for investment in industry. To raise this, Witte negotiated large loans and investments from abroad while introducing heavy taxes and high interest rates at home. At the same time as encouraging inflow of foreign capital, he limited the import of foreign goods leading to protective tariffs being set up as a means of safeguarding Russia’s young domestic industries, such as steel production.
Also they didn’t have the significant funds to invest in an industrial revolution. So Witte introduced a plan for economic growth known as the ‘Witte System’. The government were to sponsor and direct the economic growth, emphasising the production of capital goods. Also, due to lack of funds, Russia gained financial backing from foreign countries such as Britain, which was a major factor for the development. Finally, the ‘Witte System’ enforced extra taxes to the over taxed peasants, creating more funds.
However this increase in exports was limited and did not increase at a significant extent, due to the fact that agriculture was still very backward. However, there were significant negatives which meant that the positives were subdued so some extent. Firstly, nobility priced land too high, sometimes 90% above market value, which meant that there was no real increase in consumer demand. Also, industry was not growing at fast enough rates to keep up with vast number of serfs moving into towns and cities. However, although economic growth was not significant, it was steady and did grow at a rate of 4.6% between 1860 and 1900.
The key to economic power in Russia was agriculture. When Russia’s agriculture was turning out to look like a disaster, Alexander III as the Tsar made a difference by introducing new laws. He created Peasant Land Banks where peasants were given loans to increase their land size and grow more grain. Therefore Russia was able to sell more grain and gain more money. This suggests that Russia’s economy was improving very early on and this method of increasing their economic power panned out to be successful in the long term, however this would only be successful if the peasants buying the land were productive.
To what extent did Witte achieve economic modernisation in Russia? Sergei Witte was introduced as the Tsars financial minister at a time when Russia was in a state of social and economic backwardness. Witte successfully achieved economic modernisation in Russia to a certain extent. Witte’s policies lead to a ‘Great Spurt’ in economic modernisation as they increased the number of factories and led to vast improvements in infrastructure such as railways. However his policies were still very limiting as they did not address the backwardness of agriculture and caused frequent famines, leading to the deaths of hundreds of thousands of people; keeping Russia economically and socially far behind the great European powers.
These workers were also crippled but enlightened by industrialisation meaning that again opposition increased. Because the government was putting as much money as possible into industrialising, wages stayed very low, causing many workers to live in horrific cramped conditions, which were prone to widespread disease due to the overcrowding. Taxes increased, worsening the workers financial problems and after being told that their hardship was to fund industrialisation for an eventual better Russia for everyone, in 1902 there was an industrial slump, which made it seem to the workers that their efforts were in vain. This increased opposition because the workers were looking for someone to
His aim was to make Russia a super power. * But, he was faced with many problems; Russia had a very small business class, which was central to keeping up with Britain. Also the majority of peasants didn’t have complete freedom which limited migration. Plus, the Russian economy had insufficient funds to invest in industrialisation, as well as the rouble not being on the golden standard so not many people were willing to invest as the rouble wasn’t a safe investment. This was changed when the rouble was put on the golden standard, many people and countries invested such as; factory owners from Bradford as well as Belgium, France and Britain.
How beneficial to the Russian Empire were the main economic trends between 1881 and 1905? The main economic trends were beneficial to the Russian empire to an extent as it both improved the Russian economy on a global market, but at the same time brought about problems for the working class. The Russian empire benefited from the agricultural reforms brought on by Bunge and Vyshnegradsky in 1882 as it meant that peasant could borrow money and make their landholdings more efficient. Before these reforms peasants were unable to improve their farming techniques due to the lack of finances and therefore it encouraged subsistence agriculture that would not yield any income to invest in the farms. The reforms meant that the emphasis would be on the improvement of the agriculture industry, led by the serfs (usually agricultural labourers).
There was also a lot of conflict between trade unions and employers, with strikes and lock-outs frequent. Finally, the agricultural sector of the economy did not share in the general prosperity with food prices remaining low and farmers’ feeling abandoned by the government. All of these factors meant that the Government were spending more than they were receiving and that this ‘boom’ did not affect all parts of society, showing that these were not golden years for Germany. The German Political situation at home also appeared to be good. There were no more attempted revolutions and voting figures showed that extremist parties, such as the KPD were losing