The Russian Economy under Alexander III

Russia had no clear strategy for industrial development. State factories provided for things like armaments and army clothing with workers mostly provided from the state and crown lands. Private enterprise only existed in the cotton industry in St Petersburg and around Moscow. Some nobles developed factories on their estates using their own serfs for labour but only a few survived the abolition of serfdom. Other than that, domestic industries (working at home) developed: spinning, weaving, crafting things from wood, even metal work; but it was on a very small scale.

Russia needed to develop its own resources rather than rely on imports. It needed to develop an infrastructure, including baking and railways, that would allow industry to flourish by extending the domestic market, and it needed to develop sources of wealth other than agriculture. Sergei Witte recognised this, warning that Russia would become subservient to the thriving capitalist economies if something wasn’t done. He believed that the state should provide the means for industrialisation to take place – markets, a transport system and, above all, money – but that private enterprise should develop the industries and the trade.

In response, home industries were protected, foreign investors encouraged, and the development of heavy industry (coal, iron and steel) and railways, were prioritised. Railways not only enabled the transport of goods, including perishable agricultural products, but it was a stimulus to the coal and iron industries which rapidly developed (Russian railways accounted for 60% of the iron and steel industries’ total production) and to Russia’s emerging oil industry. Railways also stimulated exports and foreign trade. Though growing from a very low base, by the 1890s Russia’s growth rate was higher than any other industrial country.

However, there was a price to pay. Standards of living continued to be low with insanitary housing, surrounded by noise and filth, as well as overcrowding; and work conditions, despite reforms, remained unhealthy and even dangerous.