To What Extent Did the Russian Economy Improve in the Period 1894 to 1914?

The Russian economy is universally declared to have been a thoroughly backward prior to 1890s therefore it is highly likely that there was economic improvement in the given period; however the extent of this is difficult to define due to the varying manifestations of economic improvement and the independence with which they may occur. The finance minister during this period was Sergei Witte, and to him the majority of the improvements are credited, yet the improvement was not universal. Whether this was him personally or simply a product the awful conditions which the Russian economy rose from is to be decided.

In 1897, 82% of the Russian population were peasants, leading one to the believe that any economic improvement must be both partially caused by and result in improvements in this area. This is because generally the greater the economic improvement the greater the amount of people are involved in bringing it about and the greater the number of people it affects for the better. The situation in 1894 was a mass of peasants that owned small and mainly subsistence farms. This meant that they sold very little of their produce and therefore had very little money. This was bad for two reasons.

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Firstly if they sold little then the state would have very little to sell to other countries, meaning that no extra wealth was coming in to Russia. Secondly, if the peasants had little money than they would not be able to buy much. If we acknowledge John Keynes’ theory of demand as true, this lack of it can only be seen as a severe impediment to the Russian economy. To answer the question, one must therefore decide if either the peasants started producing enough to sell or if less people were peasants. There is evidence to suggest that between 1890 and 1910 there was an increase of 38 million tonnes of cereals produced.

One could argue that this shows economic improvement because they were working the land more efficiently, and therefore selling more so getting richer, the extra wealth generated would be pumped into other areas such as manufacturing due to the rise in demand. In addition the extra grain acquired by the government could be sold to other countries, and this money could then be spent on industry, improving the economy. This theory is complemented by the fact that between 1897 and 1914 Odessa, the major gain exporting port, saw a rise in population from 403 thousand to 499 thousand, which would lead one to believe that more eople lived there because there was more work to be done because there was more grain to export. On the other hand it could be believed that this does not show an improving economy firstly because it 74 million tonnes in 1910 is actually a lot less per hector then more developed countries were able to produce. They were still poor in comparison with other countries such as England which had experienced the industrial revolution and therefore had more efficient farming.

In addition it must be taken into account that the population of Russia was rapidly increasing at this time, it doubled between 1861 and 1914 to 130 million people, therefore this increase in food production would not have lead to a vast amount of either overseas income or surplus money because they needed to eat most of it. This argument would lead one to the belief that on both an international and internal scale the agriculture of Russia shows very little economic improvement. It is, however commonly acknowledged that a failing of Witte’s was his lack of action in the agricultural department.

The fact that in 1914 four-fifths of the population were still peasants that we have already asserted helped very little towards an economic improvement puts into great doubt the scale of such an improvement. Nevertheless it is possible for large change to be implemented by few people therefore instead of passing judgement based only on Witte’s weakest area of economic reform the others must be examined. Transport is highly necessary for a good economy because it allows workers to move to where there are jobs, business to trade goods with ease and ideas to spread quickly.

Witte was aware of this and therefore undertook a massive project of railway extension going from 19510 miles of track in 1891 to 43850 miles in 1913. This included the Trans-Siberian railway which stretched from Moscow to Vladivostok and was meant to encourage the migration of workers from remote area to the manufacturing centre. Unfortunately this project was a disappointment internally as east-west migration did not increase significantly, which perhaps in explained by the fact that in 1914 sections were still incomplete.

One could argue that the smaller scale railways were just as important because they allowed peasants to move from the overcrowded agricultural land to the cities where they could benefit the economy by working in factories. This may have happened to a small extent however we have already concluded that the majority of the peasants stayed peasants, besides by law peasants had to gain permission from village elders to move , stifling the desired rural to urban migration and therefore economic improvement. It must therefore be decided that internally the transport revolution helped to improve the Russian economy to an unexpectedly small amount.

However the railway system in its vastness attracted international attention that was to improve the economy in other ways. The Trans-Siberian Railway was seen by other countries as a symbol of Russian enterprise and advancing society; this positive attention encouraged them to trade with Russia, therefore bringing in money, which in the long term would create demand and subsequently improving the Russian economy. Figures to back this are those of the comparative industrial output which rose from 109. 5 in 1904 to 163. 5 in 1913.

As four fifths of the population were virtually incapable of buying this, we can only assume that the excess was either sold abroad or used on the railways. This will have brought money into Russia, improving the economy. One must then decide if the benefits of the foreign trade and the kick starting of industry was worth the massive amount the railways would have cost the government. In the long term it must be considered so, as without both something and someone to trade with the Russian economy would have taken much longer to improve.

In addition, although the intended benefits were not seen within the given period, they may have appeared later, if the country had not been disrupted by war. However in the given time span economic improvement due to the railway was limited to the sector of foreign trust and therefore sales. The actual production of goods is often a good indicator of the success of an economy. There is no doubt that this happened in the years 1894 to 1914. For example between the years 1890 and 1913 the annual production in millions of tons rose from 5. to 35. 4 in coal, 0. 89 to 9. 1 in pig iron and 3. 9 to 9. 1 in oil. This is proof that in the industrial sector there was economic improvement. However it is known that much of this improvement was state directed, which would be fine if it were not for the fact that this direction was financed heavily by overseas loans. This meant that though the economy did improve, it was not strong in the way the France and Britain’s were because it firstly needed state intervention to keep it going and secondly could not finance itself.

If the improvements in this period in the economy could be continued over another twenty years, then it is probable that the loans would have been paid off and state intervention no longer necessary to such a large degree, however in this time period such drastic improvements were not possible. Therefore it must be understood although the industrial part of the economy did improve in measurements such as output and turnover during the given time period, it did not stabilise in a way that would make it strong.

The improvement of an economy is all comparative, as well as comparing the Russian economy to how it way at the start and finish of the given period we must also compare it’s improvement to that of other countries, so as to create a more contextual answer. Of the five great powers, Russia shows the least increase in national income between 1894 and 1913 at 50% however its growth in national product between 1898 and 1913 is the highest at 96. 8%. The latter figure shows that Russia’s production of goods had gone up by fa more than its rivals, showing that the economy defiantly improved.

After our inspection of both the industrial and agricultural sides of the economy it is possible to say that this improvement was almost entirely in industry. Never the less this shows great economic improvement. On the other hand the fact that Russia’s national income had increased the least shows that the people of Russia were not richer in comparison with the rest of the world. This may be firstly explained by the great increase in Russia’s population. Although production may have increased, the profit from it had to be shared out between more people.

Therefore as a country the economy had improved but for the individual it was hardy better. Although this is still economic improvement it is far more precarious as unhappy individuals may lead to economy damaging strikes such as the 3574 in Russia, in 1914. The fact that other countries such as Britain invested in Russian economy supports the idea that the country as a whole was improving economically, as these advanced countries would not risk their money otherwise.

The reason for this was firstly the railways, as has been discussed but also the fact that in 1897, the Russian currency was put on the Gold standard. This gave it strength when exchanged with other currencies, again helping Russia in the international climate but making it harder for Russian inhabitants to buy anything as prices naturally increased. Although putting the Russian rouble on the gold standard helped to stabilise the currency itself, it was not so powerful a move as to stabilise the economy and in fact added to the instability by further decreasing home sales.

Therefore the Russian economy was improving greatly in comparison with its rivals in overseas sales and production, but this improvement was limited by domestic instabilities that Russia’s rivals had to a much lower degree. In conclusion the Russian economy did improve greatly between 1894 and 1914 however this improvement was confined to a very small sector of the economy. That sector was industry on a national scale. On an individual scale this improvement of the economy amounted to very little, with wages not allowing a significant growth in home demand.

The agricultural side of the economy also improved very little, meaning that by 1914 four fifths of the people were not involved in the economical improvements to any great extent. The fact that the economic improvement was restricted to one area meant that it was unstable. On the other hand, although it must then be assumed that this improvement was greatly superficial in 1914, Russia was starting from the very bottom and therefore it is unlikely that a vastly improved in all areas and stable economy was possible in 20 years.

If Russia’s economical improvement was extended at that rate for another 20 years then it would have had time to both gain security and reach out into other sectors that were overlooked in 1914, such as light industry. Therefore it must be concluded that between 1894 and 1913 there was great improvement in one area of the economy, which, due to its confinement was superficiality in an economic overview, yet due to the awful conditions in which this improvement operated in, it must be deemed substantial.

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Sarah
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