The Effectiveness of Wittes Economic Reform in Russia
When Sergei Witte became minister of finance in Russia in 1892 he
recognised that the economy had to be modernised if Russia was to
become a world power on a par with the west.
The Industrial Revolution that had taken place in the west had led to
its massive economic growth and an increase in power and Empire
building. Being able to buy cheap, raw materials like oil and coal
from Russia fuelled part of the west’s industrial revolution.
Witte decided that Russia needed state Capitalism to modernise. He
borrowed capital and encouraged investment from the west and large
factories began to produce heavy industry like steel. Witte imposed
Tariffs on imports to discourage these products from being bought
outside of Russia.
A lot of foreign money was invested in building railways in an attempt
to create mobility across the vast continent and spread
industrialisation from west to east. Wittes special project was the
Trans-Siberian Railway which was nearly 4000 miles long from Moscow to
Vladisvostok! (Which means Rule the East!). Most of the line was built
between 1891-1902 but was not completed until the First World War.
Wittes economic policy seemed to be working as by 1897 the Russian
currency, the Rouble, was put on the Gold Standard which gave it value
in exchange with other currencies. But there were other problems that
were beginning to undermine Wittes visions for a successful economy.
Although a brilliant mind, Witte was not an easy man to get on with
and he was not popular with the Tsarist court or the government.
Change was resisted and Witte had no support for his vision of a
richer, more powerful, modernised Russia.
There was also conflict with the military commanders who pushed their
needs for transport and military hardware to the top of the economic
agenda. These conflicts interfered with Wittes plans and so by the
time of the Great Trade Recession at the turn of the century, critics
could identify three major weaknesses in his...