Economic Modernisation in Tsarist Russia (Part 2)

by James Graham

Nicholas was more aware of the difficulties modernisation presented but was devoid of methods to prevent them eventuating. Nicholas kept Witte as his Minister of Finance allowing Witte's plan to be initiated. Witte's policy created a dangerous and shameful dependency on foreign capital. Between 1893-1896 foreigners invested 144.9 million roubles compared to 103.7 million from domestic sources. In the next three years the gap reached unprecedented levels with foreigners investing 450.7 million roubles and domestic sources only 111.8 million. The large increase in investment allowed Russia to boast one of the fastest growing economies with an annual growth rate per capita of 3.5%. This policy effectively created another restraint on Nicholas's autocracy that of foreign creditors. Any action or event that would trigger a flight of capital had to be given serious consideration by the Tsar thus reducing his power.

The most serious threat Witte's reforms had on the autocracy, was the enlargement and creation of new urban classes. In 1900 the proletariat had reached 1.7 million people and grew to 2.3 million by 1913. An organised mass of two million people (less than two percent of the total population) was enough to destabilise the autocracy. This is what happened in 1905 when mass, worker led strikes left Nicholas little choice but to submit to some of the protestor's demands. An elected Duma was set up to advise and consult with the Tsar as well as to propose new laws. This was a serious blow to the autocratic system as opposition to the government could now legally be expressed. Even pro-government Duma members, believed employers should treat their workers fairly to prevent them having cause to form unions, strike or foment disturbances. Such a high level of constructive criticism being given to a Tsar was unprecedented and was a clear sign that Nicholas's authority was slowly slipping away. Nicholas did manage to claw back much of his authority after the 1905 revolution but in doing so only antagonised more of his support base. This antagonism made them increasingly willing to support later, far more revolutionary endeavours against the autocratic system. By 1914 Nicholas's half modernised Russia was in no condition to survive a war. As such, it should come as no surprise that the moth eaten autocratic system was unable to find the answers to Russia's many problems and finally collapsed in February 1917.

By nature the autocratic system was incapable of achieving sustained economic modernisation without serious social consequences. In an autocracy this meant a revolution. With competent leadership the Russian autocracy may have been prolonged, but the system under Alexander and Nicholas was doomed as they lacked the aptitude to balance the dangers of modernisation with the autocratic system.

Economic Modernisation in Tsarist Russia

Economic Modernisation (Part 1)
Economic Modernisation (Bibliography)