Question 3

How did Alexander III encourage economic development in Russia?

Points to include:

• Alexander III was aware that only economic modernisation would enable Russia to support the growing population and maintain its status as a great power.
• The contrast between Russia, with its poor transport, backward farming methods and limited industrial growth (despite Alexander II’s reforms), and countries such as Britain, Germany and France, where rapid economic growth had taken place, was obvious.
• Russia had been the world’s greatest producer of pig iron in 1800; by1881 Britain produced well over 10 times the quantity.
• Modernisers in Russia saw railway development as essential to the development of trade – hence, in 1891 work began on the Trans-Siberian Railway.
• Russia relied on the export of grain (40% of total value), but crop yields were low because plots were continually subdivided in response to the growing rural population and the emancipation system which tied peasants to the mir and obstructed the introduction of new farming methods.
• Furthermore, the country’s economy was highly dependent on the weather and in 1891 famine hit 17 of Russia’s 39 provinces, and was followed by an outbreak of cholera and typhus.
• The Minister of Finance, Vyshnegradskiy, was impelled to take action as peasants blamed the Tsarist government for their plight.
• Alexander III needed economic growth to support his military spending (50% of government expenditure) and protect the Empire.
• Since the internal market (80% peasants) was too weak to bring economic development, state intervention was essential.
• Vyshnegradskiy, and later Witte (from 1893), worked to create a centralised planned economy.