Summary Questions on Economic Change from Textbook

1. Explain why Witte tried to transform the Russian economy between 1894 and 1904?

Witte tried to transform the Russian economy in order to both preserve Russia’s place as a Great Power and, closer to home, to curb potential unrest stemming from the seeming failure of the Tsar’s reform policies.

2. How successful were the Russian government in promoting economic change and modernization between 1891 and 1904?

The Russian government were extremely successful in promoting economic change and modernization - particularly industrialization in this period. Over the course of the decade, Russia had the highest industrial growth of any country (8%) and had become the fourth largest economy. However, this success was undermined in several key ways.

Under the direction of Vyshnedgransky and particularly Witte, the Russian economy industrialised exponentially. The former, for example, managed to produce a surplus in the balance of payments, as well as increasing state revenue and exports of grain. Witte in his turn tied the rouble to gold reserves and attracted international investment and expertise. More importantly, he accelerated the growth of the railway infrastructure (particularly the Trans-Siberian express) with the key effects of linking industrial centres and agrictultural centres to markets, as well as stimulating the iron, coal and oil industries. Revenues were also generated from the transport of freight and passengers. He also achieved large increases in heavy industry, coal, pig iron, oil and textile production.

On one level, then, it can clearly be seen that during this period the Government were extremely successful in this regard. However, the process of modernization came at a high cost, particularly for the peasants and urban workers, who bore the brunt of the process through indirect taxation, requisition of grain for export, a lack of food, and, for the latter, poor pay and conditions. Equally, Russia found itself increasingly dependent on foreign loans and repayments (the burden for paying which again fell on the peasants). The process of modernization also completely ignored the agricultural economy, and indeed, some historians have argued that it was effectively sacrificed for greater industrial output. The situation of the peasants not only got worse, but they were unable, due to the conservatism of the mir, to utilise innovative farming techniques or new machinery. They were also unable to produce enough food for Russia’s growing population, leading to, in some cases, famine.

In this way, to sum up, while the Russian government were extremely successful during this period at promoting economic change and modernization (industrialization), this came at a price in terms of a neglect for agricultural modernization and an increasing over-reliance on foreign investment.