industry: The impact of dictatorial regimes on the economy and society of the Russian Empire and the USSR

Question 1

definition of industry

Answer 1

Industry refers to the manufacturing of goods in factories. The industrial transformation was a process which radically changed the course of history, originating in Britain around 1750-1850. The process of industrialisation involved the shift in production away from hand-produced goods towards machine produced goods. Manufacturing prior to the shift occurred largely in the home and largely by hand. From the mid-1700s onwards, machinery started to develop which shifted manufacturing from the home to the factory.

Question 2

what was the main problem for russia in 1855 regarding industry

Answer 2

it had not yet started to industrialise on a scale that was comparable to Britain or other Western European countries.
* By 1855 England produced 10 times more iron than Russia
* Russia had just 1,600km of rail track, compared to 15,000km in Britain.
* Towns and cities were relatively small.
Russia’s** industrial backwardness was shown to be a significant issue in the Crimean War, 1853-56**. Russian equipment, transportation, and technology was proven to be way behind both Britain and France.

Question 3

why was russia so far behind industrially

Answer 3

• Serfdom was a barrier to industrialisation for a number of reasons. Firstly, serfdom prevented urbanisation because serfs were tied to the land. Cities and towns, therefore, lacked a workforce. Secondly, serfs were incredibly poor. This meant that Russia lacked an internal market to purchase industrial goods.
  * Russia’s population lacked financial capital. Russia* lacked a ‘middle class’ able to invest in industries.* In Britain industrialisation had been driven by people who had built up capital as merchants and in cottage industries. As a results, Russia was not industrialising ‘spontaneously’ like Britain had done. ‘capital’ needed to come from other sources.
• Russia’s geography meant that the transportation of coal – the fuel for industrialisation – was difficult. Russia had lots of raw deposits, but they could not be easily moved to major towns and cities. In England this had been achieved through a massive investment in canal systems but also in the extensive use of coastal shipping. Transportation of coal by sea was much more efficient than by horse/carriage. However, Russia could not do this. Hence – transportation links needed to improve, highlighting the importance of developing the railway system.
• Russia **lacked a constitutional monarchy **in its autocratic system. This prevented the rule of law, and the protection of property and patents. In Russia the Tsar was autocrat with supreme power and could possess all property and wealth should he choose to. A successful business or factory could be taken over by the state, making it less likely that individuals would choose to invest in these areas.

Question 4

main reason why all russian leaders tried to industralise

Answer 4

primarily to ‘catch-up’ with the West as a means of self preservation. The Tsars recognised in the wake of the Crimean War that they were far behind and in order to protect themselves they needed to industrialise. Likewise the Communists recognised that being surrounded by capitalist states was a serious threat to their regime, as shown by foreign support for the whites in the Civil War. Furthermore, as a result, most prioritised heavy industry over light industry meaning that living standards were often side-lined.

Question 5

who was finance minsiter under A2 [1862-1878]

Answer 5

Mikhail von Reutern

Question 6

What were Von Reutern’s two main policies

Answer 6

1. Encouraging private railway construction
2. Encouraging foreign expertise and investment.

follow the West model of freemarket capitalism leading industrialisation

relied on on foreign investment under the protection of the state rather than domestic investment

Question 8

Reutern’s achievements on foreign investment

Answer 8

• New industrys developed through the encouragement of foreign capital – e.g. Ludwig Loop of Manchester invested in Russia’s textile industry + the Nobel brothers invested in oil in Baku.
• Welshman, Hughes, was employed by the Russian government to support iron and steel production. His company, the New Russian Coal, Iron, and Railmaking Company was the largest producer of pig iron in Russia by 1884. He also founded Yuzovka, modern-day Donetsk. The name Yuzovka came from the Russified version of his name [Hughes -> Yuz]

Question 9

Reutern’s achievements on rail

Answer 9

• The amount of railway track increased from **2,194 in 1866 to 13,979 in 1878. **
• Industrial output grew by 6% year-on-year.
• Reutern secured foreign capital by issuing government bonds, taxation exemptions, and monopoly concessions. These three things helped to make Russia look like an attractive and safe place for foreigners to invest because it effectively guaranteed repayment.
• **94% of rail was in private hands by the 1880s.
  **

Question 10

negatives of Reutern’s policies

Answer 10

• Foreign investment led to financial issues. A third of all government spending was on debt in the 1880s.
• The extent of Reutern’s impact was limited. Things had improved, but from a very low base. By 1881 Russia remained a rural country with a small industrial base and Russia was actually falling further behind the West, not catching them up.
• There began to be a recognition that private investment was too slow. The lack of a middle class and reliance on foreign investment meant Russia had to turn to state-led industrialisation. All future leaders would rely on this model, as opposed to the Reutern.

Question 11

who were the two financial minsiters under A3

Answer 11

1. Bunge
2. Vyshnegradsky

Question 12

when was bunge financial minsiter

Answer 12

1881- 1886

Question 13

when was Vyshnegradsky financial minsiter

Answer 13

1886 - 1892

Question 14

what did Bunge do

Answer 14

Bunge tried to reduce the debt burden on peasants to create a market for domestic goods – abolished Poll tax, 1886. Bunge’s primary role was to** begin the process of rail nationalisation**. As above, 1880 94% was in private hands. By 1900 70% was under state control.

Question 15

what were vyshnegradkey’s aims

Answer 15

continued rail nationalisation but sought to raise money in order to invest more into industry.

Question 16

what policies did vyshnegradkey introduce to complete his aims

Answer 16

Protectionist economic policy. tariffs were put in place to stop foreign goods under-cutting domestic ones, and state investment in industry and rail increased dramatically. The Medele’ev Tariff of 1891 raised taxes to 30% on over 700 imported goods. The rationale was that by increasing taxes on foreign goods, domestically-produced goods would be ‘protected’. Under the tariff domestic goods would be cheaper than foreign goods, and foreign goods could not undercut Russian-produced ones, encouraging the development of domestic industry. Prior to the tariff it was cheaper to import foreign iron rather than use Russian iron. After the tariff it was cheaper to purchase Russian iron, creating more demand.

Ruthless attempts to achieve a budget surplus and to raise revenue for industrialisation. Vyshnegradsky’s efforts to raise capital for industrial investment involved increasing taxes and exporting grain abroad.** The policy continued despite the 1891-92 famine when Vyshnegradsky was quoted saying, “let us starve, but let us export!”**

Question 17

when was Witte financial minister

Answer 17

1893-1903

Question 18

what was the era under Witte known as

Answer 18

Witte’s great spurt

Question 19

nature of witte’s policies

dont explain just name

Answer 19

1. State-sponsored development of heavy industry.
2. Foreign loans, investment and expertise
3. high tarrifs on foreign goods
4. gold standard
5. raised taxation
6. export of grain

Question 20

State-sponsored development of heavy industry.

nature of witte’s policies

Answer 20

Significant investment into iron, coal, and steel industries.
Investment in trains – Witte believed railways were symbols of progress. He recognised their importance in relation to** [1] transportation, [2] opening up new markets, [3] stimulating the growth of other industries such as iron**. Railway boom – the amount of rail track doubled. By the 1890s 4/5 trains in Russia had been produced by Russia and trains consumed 60% of steel and iron.
The grandest project was the Trans-Siberian railroad [built 1892-1903]

Question 21

• Foreign loans, investment and expertise

nature of witte’s policies

Answer 21

The state did not have money to fund all this spending on its own. Most of the **money came from foreign loans, particularly from France. **

Foreign companies were also encouraged and the number increased from **16 to 269 between 1888 and 1900. **

Question 22

• High tariffs on foreign goods

nature of witte’s policies

Answer 22

Witte continued high tariffs to protect domestic industries from foreign competition, particularly, iron & steel.

Question 23

gold standard

nature of witte’s policies

Answer 23

The Rouble was matched to the price of gold adding security for foreign investors.

Question 24

raised taxation

nature of witte’s policies

Answer 24

Taxation on goods was increased. In particular a tax on vodka raised ¼ of state revenue in 1910

Question 25

export of grain

nature of witte’s policies

Answer 25

Grain exports continued to be the main way Russia raised money from foreign buyers. These revenues were invested back into industry.

Question 26

achievements of witte

Answer 26

The industrial expansion brought about by Witte’s policies was the** most successful burst of industrial activity during the Tsarist period**. Trebilcock [1982] stated: that the growth rates were ‘far exceeding Russian achievement for any comparable period before 1914 and establishing one of the most impressive performances in late nineteenth century Europe.
* 9% growth rate year-on-year
* Coal output tripled
* Russia was the third largest producer of iron in the world
* Moscow was the fastest growing city east of New York.

Question 27

criticisms of witte

Answer 27

• Russia was hit by an international recession in 1899 which slowed growth [highlighted the reliance on French loans]
• 20% of Russian spending was on paying off debt
• Witte prioritised heavy industry over light industry
• Industrial growth came at the cost of poor conditions in towns and cities. Growth was prioritised over welfare, hence the large rise in strikes during this and latter periods.
• He had failed to create a consuming market for goods. The Russian people still lacked capital to purchase goods.

compared with Europe, Russia was a long way behind. 1914 Russia had eleven times less miles of track than Germany

Question 28

russia had in a strong economy in 1914

points to support

Answer 28

Industrial production grew by 6% year on year 1908-14.
By 1914 Russia was** the fourth largest producer of coal, pig iron and steel**, and the Baku oilfields were only rivalled by Texas.
Russia was the fifth largest economy.

Russia was becoming less reliant on foreign loans. State investment still drove growth, particularly in armaments, but a domestic market was growing.

Coal production had doubled – 1900-1914

Question 29

russia had a weak economy in 1914

points to support

Answer 29

Structural issues – the e*conomic growth *was driven by military investment which meant that sectors such as agriculture were ignored. Chemical and machine tools were being imported.

Industry heavily concentrated in certain regions – Moscow, St. Petersburg, Dombass

Low productivity – 67% of workers worked in small workshops, but they produced just 33% of total industrial output.

Compared to other countries Russia was weak in 1913:
- Per capita income was 1/10th of USA, 1/5th of UK
- Russia’s coal production was just 10% of Britain’s.
- Pig iron production was half of UK
- Per capita output half that of Austro-Hungary

Question 30

similarities amongst the tsars

industry

Answer 30

• All tried to encourage foreign investment
• All used the state to try to encourage private investment
• All prioritised heavy industry over light industry
• Russia was backward compared to the West in 1855 [as shown by the Crimean War], and it remained backward in 1914 [as shown by the fact that per capita output was half that of Austro-Hungary, the least well developed of the other European powers].

Question 31

changes between tsars

industry

Answer 31

• Witte’s Great Spurt [Alexander III / Nicholas II] saw the period of greatest change [1893-1903]
• Alexander III and Nicholas II were more willing to use the state to directly invest in the economy. On the other hand, Alexander II was keener to encourage private investment.

Question 32

who had the greatest industrial chnage under the tsars

Answer 32

N2– witte’s spurt

Question 33

what two principles guided lenins economic policies

Answer 33

1. the role of ideology/economic determinism
2. self-preservation

Question 34

the role of ideology/economic determinism

what two principles guided lenins economic policies

Answer 34

For Marxists the ‘means of production’ were ideologically very important. Whomever controlled the means of production had the power to control everything else within a society. In a capitalist society, the bourgeoisie controlled the means of production, allowing them to exploit the working classes. After the revolution, Lenin believed that workers should have a greater say in how factories were run and that the state should take ownership of key industries – increasing nationalisation. In this sense, ideology played an important role in Lenin increasing the role of the state. A ‘Socialist economy’ can be defined as one where there is no private ownership and all members of society share in the state’s resources.

Furthermore, ideology also played a significant role in Lenin’s economic aims. Lenin famously said: “Soviets plus electrification equals communism”. His ideology was an inherently forward-looking one. He understood that Russia needed to modernise before the socialist ideals for which he had fought for could be achieved. In this manner, both Lenin and the Tsars recognised the need for modernisation.

Question 35

self-preservation

what two principles guided lenins economic policies

Answer 35

Lenin recognised that in order to achieve his long-term aims of achieving communism, the regime needed to survive. He faced many challenges in October 1917: the First World War and the threat of Germany, as well as opposition to his rule within Russia itself. The need for self-preservation meant that Lenin could not introduce a pre-determined plan of economic action. Instead, he needed to respond to event as and when they developed. Hence, Lenin’s policies adapted to circumstance.

Furthermore, a strong industrial economy was required for the Red’s to fend off any threats [whether foreign powers or otherwise]. Russia needed to industrialise quickly!

Question 36

what was lenin’s first major economic policy

Answer 36

war communism

Question 37

when was war communism

Answer 37

1918-1921

Question 38

terms of war communism

Answer 38

• Nationalisation of industries. In July 1918 the Decree on Nationalisation brought over 30,000 economic entities under state control. These ranged from windmills to huge steel plants. These were put under the control of the Supreme Economic Council, an arm of the government. The previous owners received no compensation.
• The end of the free market. Private trade was banned.
• A class-based rationing system introduced. **Red Army soldiers and the working class were given priority access to foods and goods. **
• Forced requisitioning of grain [see agriculture notes for more on this].
• Militarisation of labour. Discipline was reintroduced to factories. Professional managers were employed by the state to ensure workers were punished for any lateness or absenteeism.

Question 39

how did lenin’s contect differ from the Tsars

Answer 39

• Faced shortages in labour, capital investment, valuable resources [due to loss of land in Brest-Litovsk], and **lack of supply of agriculture goods. **
• Lenin** could not rely on foreign investment or loans** – these went to the White armies in the Civil War.
• Lenin did not rely on an alliance with private economic organisations. The Bolsheviks ruthlessly controlled the economic resources of the central areas they ruled.

Question 40

impact of war communism

Answer 40

• Economy was in a worse state in 1921 than during any comparable Tsarist period.
  * 9 million had died in Civil War and** famine by 1921**
• Workers were leaving towns or had died – the** number of workers was just 76% of 1917 numbers by 1919. **
• The population of St. Petersburg fell from 2 million to 600,000 by 1920
• Coal, oil, and other heavy industry production was well below 1913 levels.
• Lenin wrote in 1921 – ‘large scale capitalist industry has been destroyed’ and that the working class has been ‘declassed and ceased to exist’.

Question 41

what was lenin’s second economic policy

Answer 41

the NEP

Question 42

when was the NEP

Answer 42

1921-28

Question 43

why was the NEP introduced

Answer 43

The NEP was introduced in the context of the above socio-economic crisis. Russia was suffering from an economic, demographic, and political crisis. The reform was an attempt to stabilise the deteriorating situation and ensure that the Bolsheviks remained in power. In 1921 the Bolsheviks were threatened by the Kronstadt Revolt. A group of sailors had revolted in Petrograd, having previously supported the October Revolution of 1917.

The NEP was sold as a ‘temporary’ measure designed to concede economic reform in order to prevent political reform. As such, it was similar in motivation to the reform of Alexander II when he claimed Emancipation was designed to ‘prevent revolution from below’.

Question 44

terms of the NEP

Answer 44

• De-nationalisation of small industries and a return of private ownership (BUT continued state control over heavy industry)
• Return of the free market
• Return of foreign investment and expertise
• End of requisitioning.

Question 45

positive impact of NEP

Answer 45

• Agricultural recovery. 1925 – cereal production had grown 25% on 1920.
• 1920-23 factory production rose 200%, from a very low base
• industrial recovery. Industrial output increased rapidly, helping Russia to recover to pre-War levels of economic output. For instance, coal production rose from 8.9 million tons to 27 between 1921-28. This compared to 29 million tons in 1913.
• NEPmen – private traders – made profits and facilitated a private market by going to the countryside and purchasing goods which would then be sold for higher prices in the cities. By 1925 they handled ¾ of private trade.

Question 46

NEGATIVE IMPACT of nep

Answer 46

- Scissor crisis – oversupply of grain (but was resolved by a shift in policy and the introduction of a tax in cash rather than in kind)

• Foreign powers made trade agreements – Germany in 1922; Britain in 1924
• Urban workers suffered – unemployment rose sharply and wages were low. NEP was called ‘new exploitation of the Proletariat’ by critics.

Question 47

what happened to the economy during 1929-1941

Answer 47

the great turn

Question 48

why was it known as the great turn

Answer 48

Firstly, there was a shift in the type of economy in the Soviet Union. The Soviet Union’s economy shifted from being a ‘mixed economy’ [Under the NEP], with aspects of public and private involvement, to a ‘command economy’ where the state was responsible for economic planning. Secondly, the Great Turn resulted in a period of enormous change – comparable to Witte’s Great Spurt but on a far greater scale. Economic changes amounted to a revolution in the towns [through the Five-Year Plans] and countryside [through Collectivisation].

Question 49

when was the 1st 5yr plan

Answer 49

1928-32

Question 50

aims of 1st 5yr plan

Answer 50

Production increase by 300%
Develop heavy industry
Boost electricity by 600%
Double light industry

Question 51

evidence of success in 1st 5yr plan

Answer 51

Electricity output trebled

Coal and iron doubled

Steel production increased one third

New cities like Magnitogorsk developed

Question 52

evidence of failure in 1st 5yr plan

Answer 52

None of the main targets were met

Chemical industries, housebuilding, and other consumer goods were neglected

Question 53

when was the 2nd 5yr plan

Answer 53

1933-37

Question 54

aims of 2nd 5yr plan

Answer 54

Aimed to:
- Continue the development of heavy industry
- Improve light industries
- Develop communications
Boost engineering and tool-making

Question 55

evidence of success in 2nd 5yr plan

Answer 55

• Moscow Metro Opened 1935, Volga Canal Opened 1937, Dneieprostoi Dam produced hydro-electric power and was completed in 1932
• Steel output trebled
• coal production doubled
• by 1937 USSR was self-sufficient in metal goods and machine tools

Question 56

evidence of failure in 2nd 5yr plan

Answer 56

Light industries lagged behind
No appreciable increase in consumer goods which meant that economic growth was not translating into improvements in living conditions

There was an emphasis on quantity over quality

Question 57

aims of 3rd 5yr plan

Answer 57

Aimed to:
- Focus on the Development of heavy industry
- Rapid re-armament
Complete the transition to ‘communism’

Question 58

evidence of success in 3nd 5yr plan

Answer 58

Heavy industries benefitted:
- strong growth in machinery and engineering
- spending on rearmament doubled

Question 59

evidence of failures in 3nd 5yr plan

Answer 59

Some stagnation in production – particularly in steel and oil – causing a fuel crisis.

Consumer goods neglected

Question 60

summary of 5yr plans in economical change

Answer 60

The Five Year plans were enormously successful in producing economic change.** Industrial output trebled, with an annual growth rate of 10% year-on-year**. These growth rates were huge and greater than during the 1890s. The pace of change transformed lives in towns and cities during the 1930s and made the eventual victory over Nazi Germany possible.

Question 61

issues associasted with the 5yr plan

Answer 61

• Economic growth came at the expense/cost of living standards. Consumer goods were consistently ignored meaning that quality of life remained poor for the Russian people.
• Emphasis on quantity over quality in order to meet targets. E.g. the average life expectancy of a T-34 tank in WW2 was just 2 weeks; but Russia was able to produce 1,300 per month in 1943.

Question 62

aims of khrushchev’s 7yr plan

Answer 62

• Improve living standards
• ‘catch-up and overtake the West by 1970’
• Shift emphasis of industry away from the old heavy industry towards new ‘modern’ industries
• Boost technology

Question 63

achievements of krushchev’s 7yr plan

Answer 63

• Re: **Technology **: Sputnik, 1957, [the first satellite in space] + Lenin, 1959, the first nuclear-powered icebreaker. Yuri Gagarin became the first person in space in 1961
• Re: living standards: Consumer goods increased – e.g. tv sets, Refrigerators, retail spending.
• Re: new industries: air transport was expanded Areoflot was subsidised making air travel very cheap.
• Re: catching up with the West – Russia initially got ‘ahead’ in the Space Race being the first to send people to Space.

Question 64

limits to khrushchevs 7yr plan

Answer 64

• Growth rates fell by comparison to 1930s-50s. 1930s averaged 10% year-on-year, as did the initial post-war years. The Seven-Year Plan averaged **7.5%. **
• The **Space Race came with costs. excessive risk-taking **[Laika – the first dog in space – died in orbit] + distorting the economy.
• The Soviet Union came nowhere close to overtaking the USA

Question 65

similarities amongst commi

industry

Answer 65

• The Communists all nationalised key heavy industries
• No foreign investment
• All saw periods of significant economic change
• Mostly focused on heavy industry [even Khrushchev’s focus on the Space Race]

Question 66

differences amongst commi

industry

Answer 66

• Khrushchev somewhat shifted the focus away from heavy industry and focused more on improving living standards than Stalin.
• Stalin’s Great Turn oversaw the more significant economic change of the period.
• Lenin’s use of the Capitalist NEP differed from the central planning of Khrushchev and Stalin. Lenin showed more pragmatism and a willingness to react to the situations he found his regime in.

Question 67

which commi oversaw the greatest industry change

Answer 67

stalin

Question 68

chnages between tsars and commi

indusrty

Answer 68

• Foreign investment was significant under Tsars, not too significant under Communists. Stalin even rejected Marshall Aid from the USA after World War Two because it required him to make political concessions. On the other hand, the Tsars welcomed French loans in the late nineteenth century during Witte’s Great Spurt.
• Change to private involvement. The Tsars worked alongside private investment in the long-term, while the communist only had a short-term period of private involvement under the NEP
• Quantitatively, Soviet industrial achievement was greater than Tsarist industrial achievement. In particular, Stalin’s achievements were above others. [see below]
• Motivations – ideology was more important to the Communists. The FYPs, etc, were about achieving communism.

Question 69

continuities beytween commi and tsras

industry

Answer 69

• State involvement was significant under both Alexander III, Nicholas II, and Lenin, Stalin, Khrushchev. Nationalisation of key industries. This had to occur because Russia lacked a middle class with the capital to invest spontaneously & Russia consistently lacked an internal market wealthy enough to purchase those goods. As a result, the state played an important role both in facilitating investment in industry and creating a demand for it.
• Prioritisation of heavy industry over light industry. This was built on the needs of the state being a priority.
• Aim - Russia remained behind Western powers and always sought to catch up with them