THE MISTAKES OF THE RUSSIAN EMPIRE’S ECONOMIC POLICY (1866–1875)

Abstract

The article is devoted to clarifying the reasons for Russia’s economic lag in 1825–1875. In this context, the analysis of economic policy in 1866–1875 is important. During this period, it was carried out under the predominant influence of the Minister of Finance M. Reutern. It included a program for the accelerated construction of railways on a concession basis. The initial motivation for the adoption of the program was the need to stabilize the ruble exchange rate through large-scale stimulation of exports. Another motive was the military threat from the Western powers during the Polish crisis of 1863–1865. The author shows that the main disadvantage of the program was excessive haste in its implementation. This haste led to a focus on the import of railway equipment and the gates were opened to free trade. While in the West the railways construction was a powerful incentive for industrial development, Russian industry was virtually deprived of this incentive. Reutern’s mistake was the assumption that concessionaires would eventually begin to replenish the railway fund, from which loans for the construction of roads were issued. Ultimately, a lack of funds for imports forced the finance minister to change course, and after 1875 vigorous measures were taken to replace imports by placing orders with Russian factories. However, time was lost, and Russia’s lag behind the Western countries increased.