Sergei Witte's Industrial Strategy
State Sponsored Development of heavy industry.
Coal, Steel and Iron formed the basis.
He used the railways as a springboard, using them as agents of civilisation and progress.
They linked up Russia, between factories, farms and towns, villages and cities.
Railways carried goods to markets in Europe and brought cotton textiles from Asia. They also opend up oil fields in Caucasus.
Railways also stimulated the metallurgical, engineering and coal industries. By the end of 1890s, nearly 60% of all iron and steel was consumed by the railways.
Witte's most famous success was the Trans-Siberian railway which involved 25 factories which produced 39 million roubles worth of rails, 1,500 locomotives and 30,000 wagons.
High Tariffs on foreign industrial goods.
Witte continued the policy of having high tarrifs on foreign imported goods to protect domestic production from foreign competition.
Russian companies brought Russian Iron, Steel and other products, meaning less money flowed out of Russia.
Strong Rouble, adoption of Gold Standard.
In 1897 Russia had built up it's Gold reserves enough that it adopted the Gold Standard for the rouble.
This meant exchange rates were fixed against other Gold backed currencies in the world, providing added security for foreign investors.
Foreign Loans, Investment and Expertise.
Russia did not have enough money in its state coffers to pay for this industrialisation, so Witte negotiated huge loans, mainly from the French.
He attracted foreign investors to put their money into Russia joint-stock companies.By 1900, one third of joint-stock company capital was invested by foreigners.
Witte encouraged foreign expert input on companies, engineering and technology from France, Germany, Britain and the rest of Europe.
Witte was criticised for creating a dependance on foreigners, but it encouraged private enterprise and Russia was now firmly on it's feet.
Raised taxation rates.
Witte raised indirect taxes on everyday items such as Vodka and kerosense.
This hit peasants hardest, having to sell more grain to pay their taxes, meaning Witte could export more grain.
Wages were kept low so they could go into industrilisation.
Exports of Grain
Grain was the main means by which Russia could earn foreign currency to pay off foreign loans with high interest rates.