I would like to acknowledge at the outset all the good instruction, helpful advice, time- consuming assistance and financial support, which have gone into the preparation of this work. Whatever merit the work may have, I want to credit Sidney Harcave, professor emeritus of history at the State University of New York at Binghamton and the founder of Schiller Institute’s Helga Zepp-LaRouche regarding the data about Sergei Witte. An additional thanks goes to EIR column by Rachel Douglas and Barbara Frazier regarding “The fight to bring the American System to 19th-century Russia”.* Further, I want to thank Professor Arto Lahti, Helsinki School of economics of his articles “Witte’s vision is Europe’s best growth strategy”. I am grateful to the Institute of East European studies in Helsinki (subsection to Ministry of Education) helping me to collect an extensive database on Sergei Witte and the Helsinki University Slavonic library for assistance as well. Finally, I want to accredit Moscow Archive for Witte’s materials from closed archives and professor Olli-Pekka Hilmola’s team in Lappeenranta Technical High school, for providing data on supply chain problems on Russian railways. etc.
I have devoted this work to Count Sergei Witte; (1849-1915) a remarkable statesman of the 19th century. According to American professor Sidney Harcave, who translated and edited Memoirs of Count Witte in the university of Binghamton New York (1990), Sergei Witte left his life work “The Witte System” for later generations, for them to pass judgment on his work. (Sideny Harcave (from the Introduction, Countess Witte’s foreword, xxiv). Subsequently, Count Witte hoped that his life work, “Witte System”, would live further.
In my correspondence with professor Harcave, he suggested that I would pay homage to Witte’s works, which I have done. This handbook, business plan, illustrates “my view” on Witte System, depicting an “Organizational Dimension” with an “Entrepreneurial Perspective” to achieve the goals set by Witte. Also Witte System’s “railway approach” has something to give to green economy, considering that railways are still environmentally most friendly form of transportation.
Additionally, I think there is a need to keep his name in peoples’ mind, since the true value of Witte’s reforms have not been publicly acknowledged neither in Russia nor in the west. A state patriot, whose purpose in life was to serve his country, he was not understood by his contemporaries. Despite his famous name, only few, even to this day, are familiar with his achievements. During the Soviet time, his name was linked with capitalism and was rejected by the authorities. Those who tried to research his work were not supported. His theoretical works were not republished and the archives with his material were scarcely accessible. In Russian history, as viewed by the Bolsheviks (uptil today), Lenin and Stalin, not Witte, were the originators of industrialisation.
I would also like to stress here that Sergei Witte’s modernization plan as Minister of Finance and Prime Minister (1892-1903; 1905-1906) was implemented by taking reference from the Western model and his natural bias was liberal pro-Western.
A peculiar fact is also that in the mid of the 19th century Russia looked after U.S.A as an example how to achieve economic growth through internal infrastructural improvements to speed the commerce and industry. This happened after the American civil war in the 1860s. The economic program called the “American System” was initially launched by U.S. President Abraham Lincoln’s administration. Also, The World’s First Transcontinental Railroad (North American Land-Bridge) was built (1863-1869) during Lincoln’s presidency to join the eastern and western halves of the United States. Known as the “Pacific Railroad” it served as a vital link for trade and commerce and was considered to be one of the greatest American technological feats of the 19th century.
It was thirty years later, when the first rail connection between Europe and Asia was established. World’s longest railroad, the Trans-Siberian railway or the Second Transcontinental Railway (9 112 km) was built extending from Moscow to Vladivostok; It was actually the westerners who stood behind this whole undertaking. The man to accredit the first proposal for a steam railway through Siberia in 1857 was an American, Perry McDonough Collins. This banker and gold-dust broker, with the fascination for the business potential for steamship travel in Siberia, submitted a detailed proposal to the Russian government for his ‘Amoor Railroad company’. The American proposal was rejected, as was the first Russian one. Then came an English engineer, named Dull, who fielded the idea of building a tramway between Nizhni Novgorod and Perm. This was turned down, as was a variation on the tramway theme supplied by another Russian, which envisaged horses galloping down nearly 3 000 kilometers of wooden tunnel. The next to try their luck were a trio of Englishmen: Morison, Sleigh and Horn who were respectively a banker, a bankrupt and a lawyer. They too met with rejection. It took nearly thirty years before prevaricating engineers, provincial governors, treasury officials and ministers could agree on tentative construction and another three years before complete agreement was given to full-scale construction of the Trans-Siberian railway. (Robert Strauss, Trans-Siberian Guide, 1993, p. 26)
It was first when Sergei Witte was appointed as the director of Railway Affairs and the manager of this Trans-Siberian railroad, the construction really started. He was personally responsible for carrying out the enormously challenging undertaking. In 1901 the great venture had been accomplished according to the plan. It took ten and half years (1890-1901) to build the longest railroad line in the world.
Few words about Witte’s career. He started as the manager of the Odessa Railway, then moved on to be the executive director of the Southwest Railway from the Baltic to the Black Sea, with connections to Germany and Austria. In 1886 he became a member of the Baranov Commission, set up by the Tsar to formulate a railroad policy for the government. Witte wrote the railroad charter, which was the basis for the first regulation of railroads in all of Russia. In 1892 Witte became the Minister of the Ways of Communication. He set up the Siberian Railway Committee and the plan to build a railroad all the way to the Pacific. (Helga Zepp-LaRouche, Schiller Institute/ICLC Bad Schwalbach Conference “How to Reconstruct a Bankrupt World, U.S.A March 21-23 2003, p. 20).
So Russia was to become the chief carrier of the East-West trade, shortening the long steamer voyage by almost three weeks. From the start, so Witte hoped, the road would thus be able to produce revenue and quickly repay the appalling costs of construction. Always putting his projects into the largest perspective, he announced that the construction of the Siberian railroad was “one of those events” that usher in new epochs in the history of nations and not infrequently bring about a railroad change in the established economic relations between states. (Theodore H. von Laue, Sergei Witte and Industrialization of Russia, U.S.A 1969 p. 82).
When Witte became Minister of Finance he was the first statesman who introduced capitalism in Russian empire. His growth strategy and a model of international commerce was successful. According to the author himself: “As minister of finance I was also in charge of our commerce and industry. As such I increased our industry threefold. This again is held against me. Fools! It is said I took artificial measures to develop our industry. What a silly phrase! How else can one develop an industry?”… It was imperative to develop our industries not only in the interest of the people but also of the state. A modern body politic cannot be great without a well-developed national industry. Witte, Memoirs (T. von Laue, Sergei Witte and Industrialization of Russia, U.S.A 1969 p. 262).
Few words about myself and the reason for researching Segei Witte. My personal experience of Russia covers fifteen years of living first as a child and later as an adult in Moscow and Saint-Petersburg. I graduated from a Swedish-speaking University, Åbo Academy (Turku-Finland) in 1992 with a Master of Arts in Commercial Russian and Economics. More than half of my studies contained economy at the Swedish School of Economics. The programme “Russian language with economic orientation” (Ryska språket med merkantil inriktning) was brought by Swedish guest professor Carin Davidsson of Russian faculty to Åbo Academy, from University in Uppsala, Sweden. The programme also covered Soviet economy for which her colleague Swedish economist Sten Luthman from University in Uppsala was responsible for.
My main work experience has been in the field of east-west trade particularly in transition economy. I have also acquired essential skills to work as a consultant for private companies and public institutions in various matters relating to development projects financed through European Union funds. I have gained experience of working in financial institutions in Moscow, Russia. I have also produced a book “The Witte System in Russia” together with my father Vladimir von Witte. (See www.vonwitte.com, www.vonwitte.org, www.vonwitte.ru.)
*…during the 1860s alliance between Tsar Alexander II and President Lincoln helped to save the United States from dissolution in the American Civil War (the Tsar sent the Russian Navy to protect American ports from the British), and placed at the disposal of Russian entrepreneurs the most advanced scientific and technological know-how, and economic science. by Rachel Douglas and Barbara Frazier The fight to bring the American System in 19th-century Russia, EIR January 3, Toward Eurasia, U.S.A 1992, p. 46
Douglas, Rachel and Frazier, Barbara “The fight to bring the American System to 19th-century Russia”, EIR Volume 19, Number 1, January 3, Towards Eurasia, U.S.A 1992