Minister of Finance (1892-1903)

Implementing the first industrialization plan for Russia. “Witte’s arguments: “The industrialization of the country, creation of a huge industry is a historical necessity to maintain the international prestige”.

Main methods

Witte’s conviction was in line with the German economist Friedrich List’s ideas of using protectionism as the state policy.

  • Protectionism is a policy where the state protects the domestic market from foreign competition by putting export and import customs to complicate the inflow and outflow of commodities.
  • State capitalism, monopoly of the state, strongly regulating the entire economy.
  • Reforms, supporting entrepreneurship - guaranteed state orders, subsidies and tax reductions for the industrial sector, in the tax policy and banking.

Further means

Monopoly on alcohol, currency reform (introduction of gold Ruble followed convertibility of the Ruble, guaranteed foreign credits and investments).

Siberian railroad according to Witte’s plan

“It should be noted that both Emperor Alexander III and Emperor Nicholas II considered the Siberian Railroad as purely economic undertaking, not as an instrument for annexing foreign territory.” (Professor Sidney Harcave p. 230).

Witte wrote in 1902, “Joining Europe and Asia by a continuous rail connection, that road becomes a global means of transit, on which the exchange of goods between West and East will have to flow. China, Japan and Korea, (...) enter into closer relations with Europe, a market with a developed manufacturing culture, and thereby create a greater demand there for the raw materials of the East. Thanks to the Siberian Road, these countries will also increase their demand for European manufacturers, and European know-how, and capital will find for itself an extensive new field of employment for the exploration and development of the natural riches of the Eastern nations.” (The Schiller Institute: Conference “How to Reconstruct a Bankrupt World”, Washington DC 2003)

“Witte hoped through state support and foreign investments to stimulate a faster industrialization in a certain period of time and catch the western countries (...) he was also creating future markets in Asia for the developing domestic industry (...) he supported commercial education in Russia and thanks to him many polytechnic and commercial institutes have been opened all over the country.” (S. J. Witte I evo Vremja (S. J. Witte and his time) B. V. Ananich Saint Petersburg 1999)).