Modernisation: Witte

Witte was Minister of Finance 1893-1903

Why needed to modernise.
- Political- Tsar and leading elite wanted Russia to play a major role on the world stage- but lagged behind western competitors- needed to industrialise
- economic- strong industrial base needed to provide weapons, ships, munitions and other military equipment
- Social- raise the standard of population of Russia

How was it financed by Witte?:
- launched Russia into an age of heavy industry using railways- better communication and movement of people and goods- Trans- siberian railway
- Russia had huge reserves of coal, oil, iron and timber
- Foreign investment- negotiated huge loans- particularly from French- and adopted gold standard- rouble had a fixed gold content- gave strength when exchanging currencies
- increased taxes- peasants unhappy- meant had to sell more grain to pay taxes- allowed Witte to increase grain exports- imposed high tariffs on foreign imported goods to make very expensive and protect the developing industry

Positives
- towns increased in size
- millions moved from countryside to cities to work in factories
- output at least doubled for everything
- production of iron and steel risen from 9 to 76 million poods a year
- remarkable growth in industry
- new class of Russian industrialists, entrepreneurs and business men began to emerge

Negatives
- neglected agriculture - suffered from under investment
- bound to be an increase in social tensions and instability
- a more educated workforce could lead to people challenging the Tsar's government
- growth in middle classes create pressure for political change- most modern industrial countries have a democratic government
- working classes living and working conditions poor
- emphasis on heavy industry meant light industry e.g. textiles suffered
- depended on foreign expertise- shameful