European experience offers perhaps two outstanding examples of economies which drew significant measures of industrialization out of severe backwardness by means of concerted state action. These are Prussia in the late eighteenth century and Russia in the late nineteenth century. In each, as in many instances where old-regime states bring themselves to contemplate the ambiguous delights of modernization, the motive was military advantage.
The importance of Silesia to its Prussian rulers was its location, jutting out like a battering-ram towards the rival empires of Russia and Austria. It was precisely the place to contrive and foster the first major heavy industries on German soil. The first blast furnace anywhere in Germany was installed at Silesia’s Malapane Hutte during the reign of Frederick the Great in 1753. But it was in the period 1780-1820 that the state did most to raise the industrial capacity of this sparsely cultivated and thinly populated province. In the 1780s and 1790s, a formidable industrial bureaucracy led by von Heinitz, head of the Prussian industrial and mining agency, and von Reden, the industrial commissar for Silesia, scoured Europe for techniques and technologists. The result was that by 1802 the government foundries at Konigshutte and Gleiwitz boasted furnaces of best-practice quality, that the first British steam engine in Germany was erected at the great Silesian lead works of Friedrichsgrube, and that the iron-puddling process was commissioned in Silesia only shortly after Britain had developed it. The British ironmaster, William Wilkinson, was brought over to manage the Malapane Hutte and the Scot, John Baildon, to look after the blast furnaces.
Around 1800 Silesia possessed some of the most active mining concerns and efficient ironworks to be found in Europe. By 1842 one observer could claim that Silesia was ‘the equal of England and the foremost on the Continent’. This, of course, was an exaggeration. One Silesia did not make a German industrial revolution. The province lacked any genuine market outside the state. Its economic rationale lay in its proximity not to consumers but to battlefields. Nevertheless, if the first industrial nation had, by the 1840s, encountered a proficient Germanic imitator, this was almost wholly a function of induced growth— of state interest in the task of development.
In Russia, the commencement of economic modernization conventionally dates from the emancipation of the serfs in 1861. This is a misattribution. Alexander II, the Tsar Liberator, although himself humanitarian and liberal in outlook, did not free ‘the baptized chattels’ of Russian feudalism because he thought that reform would do anything for the economy. He did so because serfdom was already collapsing under its own weight, because the countryside consequently was in ferment, and because he feared the onset of reform from below if the regime did not rapidly pre-empt it with reform from above.
Instead, emancipation became a covert exercise in social control. The peasants who had the liberating decrees read to them in the 1860s merely exchanged one kind of overlordship for another. They were removed from the domination of the gentry and aristocracy who had previously owned them and set, in the majority of cases, under the control of the village commune. The regime used the commune to keep the vast horde of the Russian peasantry where social control dictated: in the countryside, in poverty, and under taxation. The commune controlled all land supplies and distributed them to households according to family size. Most got less than they had farmed under feudalism. Taxation was collectively assessed. So if an individual left the village or the household, the burden fell more heavily on those who remained. An internal passport system reinforced these constraints on mobility. Any improvement in cultivation required a two-thirds majority vote in the village assembly. So there were few changes in cultivation. For the privilege of living inside this system of ‘liberation’, the peasant household paid through the nose, in forty-nine annual instalments of ‘redemption’. Freedom within this structure was merely a matter of legal definition. Reality, for those bequeathed it, was oppression by another name. The peasantry had too little land, too much taxation, almost no cultivatory technique, and very little prospect of getting out of the countryside. Genuine emancipation came not in 1861 but in the Stolypin reforms after 1905.
The true stimulus for economic modernization was not the emancipation of the serfs but defeat in the Crimean war of 1854-6. Backward Russia was trounced by the two most advanced industrial powers in the world at that time, Britain and France. This made a point of devastating force. If conservative, old-regime Russia wished to remain a great power, she needed to attain a measure of advanced, new-regime industry. Tsardom was committed to an active international role; if it did not pursue the industrial means to sustain this, it would fail in its own terms. It was this which made the Romanov dynasty the least likely, and least comfortable, contender for industrial status in late nineteenth-century Europe.
But Tsardom was also committed to the maintenance of autocratic power at home. It saw industrialism as a threat to that power. Where Tsardom required social control, industrialism brought social mobility, urban expansion, disaffected workers, and upheaval. So if industry was to be pursued in Tsarist Russia, it would have to be within a particularly rigid, two-sector strategy of development. In one sector, the state would build up the core of heavy industry needed for strategic viability. In the other, the village commune would keep the mass of the population isolated from the contagion of factory and town. The circle would be squared: both internal security and external security would be attained. Industrial capitalism would be safely confined within a technological gulag.
Between 1856 and 1900, the Russian ministers of finance, the state officials responsible for pursuing the minimum of industrialization which the regime deemed acceptable, worked within the terms of this equation. Growth based on railway construction, selective importation of western technology, and the recruitment of European industrialists proceeded at a respectable rate until 1890. But before the advent of Count Witte to the ministry, it also proceeded on the assumption that Russia was primarily an agricultural society. Witte changed the emphasis: although he had no choice but to accept the regime’s particularly limited concept of capitalistic development, especially in regard to the veto on agricultural reform, he was the first finance minister to make a full programme of industrialization his first priority.
Some have read too much into this and have mistaken a programme for a ‘system’ or a ‘plan’. Von Laue, famously and risibly, saw Witte as ‘a forerunner of Stalin rather than a contemporary of Nicholas II’ and attributed the record growth rates of the 1890s to the economic hero at the finance ministry. In fact, of course, Witte was no time traveller and could not invent the economics of planning thirty years before the theoreticians at
Gosplan had worked them out. His achievements, though considerable, were simpler than this. He saw railway construction as a priority, nearly doubling transport capacity, but also providing a major market for the steel, engineering, and coal industries. These heavy manufactures were those most needed for the purposes of both defence and rapid industrial growth. They were also expensive in capital and demanding in technology.
Witte confronted these difficulties not with an anachronistic plan but with the pragmatism of the broker. He did everything possible to make Russia attractive to the foreign investor, bringing in huge amounts of French, German, and British capital in the late 1890s. And if financial capital could be imported, so could knowledge capital. All manner of inducements were provided to lure western industrialists to set up shop within, and set examples to, the late Tsarist economy. All this lay within the range of financial diplomacy around the turn of the century; it did not require Witte to anticipate Stalin. And, significantly, the growth surge of the 1890s came to an end when bad harvests interrupted the fiscal tribute from the countryside and international financial crises cut Witte’s credit line to the European exchanges.
It was significant too that the subsequent economic recession of 1900-5 did not bring a halt to the Tsarist industrial experiment. Foundations by now were firmly established. Industrial output growth resumed healthily after 1907, even though the finance ministry now pursued a more orthodox, and lower-profile, style of policy. Indeed, the supervision of industry in the final pre-war decade lay with investment banks and large industrial trusts rather than with government agencies. Where Witte had concentrated on heavy industries, growth was more evenly spread across the sectors. This was due not least to the Stolypin reforms which, at long last, brought a measure of genuine reform to the Russian countryside. Stolypin ended the redemption system and allowed the individual peasant household to withdraw from the commune into independent cultivation.
Cultivation levels, harvests, and prosperity in the Russian countryside improved between 1905 and 1914. Kustar, or village craft industry, tapped this market and extended the consumer side of Russian manufacturing. Poor peasants, at last able to escape the commune, provided labour for these crafts, or ranged further afield, seeking jobs in factories and towns. With its large-scale industrial concerns, its investment banks, and its freer agricultural regime, the Russia of late Tsardom displayed signs of economic westernization, indications that it was becoming more like the industrial systems on the other side of the continent.
It is salutary, however, to end with a different perspective on Russian growth before 1914. For the Russian case defines what economic modernization could not do. Even the Stolypin reforms touched only a minority of the villages: two-thirds of households remained in the worst-practice sector and used the most primitive agricultural methods. Even after the industrial growth of the 1890s and 1900s, over 85 per cent of the population remained in the countryside. And those who moved from country to town were the most rootless and hopeless, the dispossessed who would help form the revolutionary proletariat that the regime had so long feared. But the enduring feature was village life. In the world’s fifth biggest industrial economy, the vast majority of Russians would never have seen a factory. The figures who peer into the camera from the village street of the 1900s look, and lived, like their forebears of the 1800s. Had the camera been available then, the image would have been the same.
World History
