At the end of the nineteenth century, Russia had been plunged into depression, because the government was forced to print more and more money which caused a rise in inflation. In addition, because Russia was at war with Turkey, over thirty per cent of the government’s expenditure was being spent on the armed forces, whilst another thirty per cent was being lost on debt interest, which left little money for education or social welfare. Ivan Vyshnegradskii, the finance minister from 1887- 1892 began attempting to rescue the government finances. He reduced imports and imposed tariffs on imported goods, which forced peasants to sell more and more grain which they could not produce, this lead to a famine which overwhelmed large parts of the country in 1891. Russia was also lagging behind many of the Western countries at the time in terms of industrial development too. When count Sergei Witte was appointed finance minister in 1892, there was a desperate need to decrease inflation, improve infrastructure and encourage foreign investment. However, it is debatable how successful the policies introduced by Witte were in modernising the Russian economy.
Witte’s aim was to make the Russian economy strong enough to maintain Russia’s position as a Great Power. However, Russia did not possess several of the essential factors required to be able to rapidly industrialise like countries such as Germany and Britain were. Firstly, the majority of Russian peasant did not have complete freedom, which meant that the migration of workers to towns and cities in search of work was limited. Also, the Russian economy didn’t have sufficient funds to invest in industrial development, because it could not produce enough surplus grain to raise funding to support industrial development. To combat this, Witte encouraged other countries such as Belgium, France and