Industrialization, which had been so retarded and even discouraged by the pre-reform regime, faced considerable obstacles. The country still lacked a proper institutional infrastructure; its regressive business law made it possible to establish a mere thirty-two corporations by 1855. Nor was it easy to mobilize and attract venture capital, either from domestic or foreign sources, because of the lack of a domestic banking network and Russia’s low credibility on international money markets. Transportation, especially the virtual non-existence of railways (the only line before 1855 ran between the two capitals), meant that key resources (such as iron ore and coal) and markets could not be easily and economically linked. Russia was also technologically backward; it still imported 70 per cent of all machinery and relied heavily upon outmoded technology. And labour, whether under serfdom or emancipation (which deliberately restricted mobility), was problematic in terms of quantity, skills, and cost.
As in agriculture, emancipation did not primarily seek to serve economic needs or to foster development. Indeed, its initial impact on industrial production proved negative: emancipation of factory serfs brought production at many plants to a standstill, especially in the important metallurgical plants in the Urals. Still, the regime now had a new and deeper appreciation for the importance of industrialization, especially in the wake of the débâcle of the Crimean War. As one highranking official explained: ‘Russia is not Egypt or the Papal States—to be content to purchase materials for her entire army from abroad; we must build our own factories to make arms in the future.’ Supported by the military lobby and a small but influential corps of economists, the government was far more sensitive to the needs of industrial and commercial development.
Although the aggregate growth was relatively modest (especially in the 1860s and 1870s), by the mid-1880s the country embarked on an extraordinarily high rate of growth. A considerable part of the growth was concentrated in the vital area of transportation; the total of railway lines increased nearly thirteenfold (from 2,238 versts in 1861 to 28,240 versts in 1887). Simultaneously, the industrial base grew substantially: from 15,000 to 38,000 enterprises (with a corresponding increase in fixed capital, labour force, and output). The corporate structure also expanded substantially; during the years 1861–73 alone, the number of joint-stock companies increased from 78 (with capital of 72 million roubles) to 357 (with 1.1 billion roubles capital). Altogether, industrial production roughly doubled in the quarter-century after emancipation.
Nevertheless, the ‘take-off was yet to come. If 1913 industrial production was 100, by 1885 the empire had only achieved 21 per cent of that output. Despite the growth, Russian industry still suffered from such perennial problems as the lack of venture capital and low labour productivity. Both the heavy and light industrial branches relied heavily upon old technology, had a low level of mechanization, and made only limited use of steam power. Russia still had to import much of its machinery and even a substantial proportion of its iron and steel from abroad. Moreover, for the first time, the industrial sector was now becoming vulnerable to international business cycles; the economic depression in the empire in the 1870s coincided closely with that in Western Europe. Finally, industrialists also faced a remarkably soft domestic market; the mounting economic woes of the countryside—whether in peasant communes or on gentry manors—limited demand for the goods of the factory.
Despite the weakness of the countryside and gains in the factory, the country grew even more dependent upon grain exports. These had already risen from 16 to 31 per cent in the pre-reform period (1801–60); over the next three decades grain rose to represent 47 per cent of all exports, thereby constituting the backbone of foreign trade and the vital linchpin in the balance of payments. Like the rest of Europe, Russia also gravitated from free trade to protectionism, with an inexorable rise from the low tariffs of the 1850s and 1860s—first to a 10 per cent tariff in 1881, then 20 per cent in 1885, and finally to a prohibitive tariff of 33 per cent in 1891.
Society
