Sergei Witte served during the early part of Nicholas II’s reign as Minister of Finance. The tsarist government had military objectives through the acceleration of the economy. The Tsar also wanted to acquire more power and catch up with modern neighbour countries, and he knew that the only ways to achieve this were through military strength and through economic strength. Economic expansion meant the improvement of the strength of Russian armed forces, as the growing industry would produce more and better armament. The Minister of Finance took over the huge task of modernising the Russian economy to put it in line with other powers of the West. Witte realised that Russia had fallen behind countries like Britain and Germany economically and industrially and their development inspired him.
Principally, Witte aimed to modernise Russia and make it more powerful. He believed in economic development through state capitalism, which meant using the autocratic power to make radical changes in the economy. He also thought that it was possible to combine Western technology with Russian autocracy to sustain the tsar’s government through economic advance. As we can see, his work was greatly focused on the economy. During the 1890’s there was a period referred to as ‘the great spurt’ due to the enormous growth of industry in the country. To achieve this growth, Witte had to put into practice several policies. He realised that due to Russia’s backwardness, the country lacked the main factors that were necessary for industrialisation and growth to happen. There was no capital, no entrepreneurs, no transport infrastructure to increase industrial mobility and mobility in general, no technical experts etc.… Russia had a minuscule business class and the majority of Russian peasants had limited mobility which stopped migration and therefore prevented them from joining the workforce in new manufacturing industries. Further on, Russia did not have sufficient funds to invest in economic development and it seemed impossible to raise enough spare revenue (or surplus) from agriculture and grain to cover the costs of industrialising the country.
Clearly, Witte needed money to achieve his aims. First of all he decided to develop a deliberate policy in which economic growth would be sponsored and controlled by the government. The government focused on the production of capital goods such as iron, coal, steel and machinery. This had a dramatic impact, as the production of all these capital goods rose enormously. There were minerals in Siberia that could be used to stimulate further growth in industry, and government policy enabled a rapid increase in the output of coal in the Ukraine and of oil in the Caucasus. Between 1890 and 1900 Russia's coal, iron, steel, and oil production tripled. This entire boost in production was achieving Witte’s aim of industrial development. Much of the money raised, plus the revenue from foreign direct investment, was put into Witte’s railway plans. He believed that the key for modernising Russia was to build an effective railway network to transport raw materials, industrial and manufactured goods and to increase population mobility. This would stimulate the economy largely. Thanks to the increase in output of products such as coal, iron, steel and oil, the construction of these railways was easier. By 1930 much of the Tran Siberian railway, Witte’s special prestige project, had been built, helping the development in the Far East. The Trans Siberian railway was intended to connect the remoter areas of the central and eastern empire with the industrial west and therefore to help expand this influence. The railway would also encourage migration of peasants and consequently their introduction into industrial processes. Due to the considerable increase in mobility that the construction of railways introduced, large cities grew and impressive rates and therefore with the growth of population in cities, came the growth...
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