Author: by Sergei PSHIRKOV

The name of Sergei Witte, a prominent Russian statesman and Honourary Member of the Imperial Academy of Sciences, almost confined to oblivion in the Soviet years, deserves much greater share of grateful attention from the general public in this troubled period of our history. His book of "Reminiscences", for example, offers to the reader a vivid panorama of Russia at the turn of the outgoing century. The present article is an attempt to fill in this gap as a small tribute of gratitude to the statesman who did so much for the benefit of this country.

Sergei Witte was born on June 29, 1849 in the southern city of Tiflis (now Tbilisi-the capital of the Republic of Georgia). His ancestors moved in from Holland, then under Swedish domination, to Russia's Baltic region back in the XVII cent. His father, a nobleman from the Pskov Province, held the post of director of the Department of Federal Real Estate in the Caucasus. His mother-Helen-the daughter of a member of the Governor-General's Administration of the Caucasus-belonged to the ancient family of the Princes Dolgorukiys (who traced their roots to the founder of Moscow). His grandfather was the Governor of Saratov and later administered foreign possessions in the Novorossiysk Territory in Southern Ukraine.

In 1870 Sergei Witte graduated from the Department of Physics and Mathematics of the University of Novorossiysk and got a job with the South-Westem Railways Department of which he became the director in 1886. During that period Witte was actively involved with the Commission of Prince Baranof which assessed the conditions of all Russian railways. He prepared the draft of what was called the General Statutes of Russian Railways which was followed in 1883 by his manual on The Principles of Railway Freight Tariffs.

In 1890 the budding administrator caught the attention of Emperor Alexander III and was promoted to the post of Director of Department of Railways under the Ministry of Finances. The business promotion was accompanied by an unprecedented elevation to the rank of Councillor of State in the Russian Civil Service of that period.

In 1892 Witte was appointed, first, to the post of Minister of Railways (in February) and then to the post of Minister of Finance (in August). The latter was Russia's second top administrative body after the Ministry of the Interior. In this new position Witte excercised control over Russia's State Bank, the Inspectorate of Factories and Plants and of the Border Guards Corps. His Ministry supervized all movement of capital at the federal level and also of private and stock company assets.

In 1893 Witte was elevated to the rank of Privy Councellor. He was also made Honourary Member of the Russian Imperial Academy of Sciences.

With all that, what were the economic and financial reforms that brought him to this summit of

page 86

page 87

administrative power in Russia? First and foremost he was credited for switching many of the country's railways to state ownership and a revision and reduction of railways tariffs. Contrary to the conservative opposition, Witte went ahead with his plan for the construction of the Trans-Siberian Railway-a project which deserves special mention.

When Witte was made the Minister of Railways, during one of his first meetings with the Emperor the latter spoke of his idea of building a new giant railway stretching all the way from European Russia to Vladivostok on the Pacific coast. It was on May 19, 1891 that His Highness Nikolai, then still a heir to the Russian throne, who was on a journey to the Far East, initiated the construction of a stretch of what was called the Ussuriysk Railway between Vladivostok and Khabarovsk. This route was chosen so as to avoid crossing Chinese territory in a straight line from Irkutsk to Vladivostok.

When he became Minister of Finance, Witte paid special attention to the project, and a few years later (already in the reign of Nikolai II) what was called the Great Siberian Route of nearly 7 thousand kilometers was put into operation providing a direct railway link between St. Petersburg (and even Paris) and the Russian Far Eastern port of Vladivostok.

The range of Wine's administrative interests and concerns also covered the Russian Navy and at his meetings with the Emperor they had discussions on whether to build a new naval base at Libava (in Latvia) on the Baltic or in Murman on the Kola Peninsula. Finally the former site was accepted although Witte later regretted his inability to win royal consent for the Murman proposal. As fate would have it, it was finally accepted few weeks after the death of Alexander III, and had it been implemented in due time the Russian Navy would not have to search for a base in the Far East and there would have been no tragic battles of Port Arthur and Tsusima.

In late 1898 Witte ordered the construction of a giant icebreaker which received the name of Ermak (historical Cossack chieftain who led the conquest of Siberia from native tribes). The main idea behind the Ermak project was to ensure year-round navigation all across the Baltic to say nothing of the hopes to open up what is now called the Northeast Passage-the sea route to the Far East (along the North Eurasian coast). The Ermak was launched under the personal supervision of Admiral Sergei Makarov (later hero of the Russo-Japanese War). In practice all the new icebreaker could do was provide winter access to the ice-bound Baltic seaports and sail to the North now and then.

In the field of finances, Witte conducted a conversion of federal shares from 5 to 4 percent to the total tune of 1,120 million rubles. He introduced higher federal taxes on the sales of tobacco, matches, beer, alcohol and sugar and custom duties were raised on tea, coffee, cocoa, cotton, cotton and silk fabrics, pig iron, machinery and some other imports. 1895 saw the introduction of the state monopoly on alcoholic beverages-"wine monopoly"-which contributed close to a quarter of the budget revenue. By taking these steps Witte tried to prop up this share of the budget (which was nearly doubled from 1892 to 1902) while also taking steps for the protection of the national industry and commerce. With these aims in view he encouraged new railway construction and the placing of federal orders with major Russian industrial producers, while offering them appreciable loans. Steps for the protection of domestic producers from foreign imports, regulation of sugar production on the one hand, combined with the encouragement of foreign investments on the other, helped boost domestic industrial production for a certain period of time. At the same time, however, there mushroomed up new factories which could not bring their prices in tune with the general level of public incomes, eroded by successive crop failures and mounting taxes. As it was, Witte's reforms tended to overlook the dire plight of the Russian farming- the main source of livelihood for the 90 million Russian peasants.

1902 saw the establishment under the chairmanship of Witte of what was called a Special Conference on the needs and problems of Russian agricultural producers. In practice, however, the planned program of reforms (with the exception of small loan provisions) did not materialize. It was felt that the moulding of a consumer market was obstructed to a considerable extent by what were called "patriarchal" farming methods. Witte on his part pressed for the abolition of the traditional Russian farming communes, for the introduction of private ownership of land by the peasants and for bringing their legal status in line with that of other social strata. In the subsequent years it was Prime Minister Pyotr Stolypin who faced the task of translating into reality these principles outlined by Witte in his "Report on the Peasant Problem".

The portrait of Witte as a reformer would not be complete without saying a few words about his monetary circulation reform. Ever since the Crimean Wir (1854-1855) Russia used a monetary system based on banknotes with very few persons in high places being aware of the flaws and defects of this model. There was no agreement, for example, on whether the circulation should be based just on gold, or on silver or on both of these metals. After careful studies of the works of his predecessor on the ministerial post, Academician Nikolai Bunge, Witte focused on the problem with all due attention.

On January 2, 1894 there appeared a royal decree on using gold as the basis of Russian currency. And even then Witte was bombarded with questions such as why the reform is not based on a devaluation and why there are no coins smaller than the rouble. The critics maintained that such measures would have brought down the cost of living. Witte's reply to such arguments was that the devaluation was necessary because of the gap between the price of the rouble and its

page 88

nominal value and that any other solution would have plunged Russia into financial disorder. As it was in reality, the general level of prices remained stable after the publication of the decree. Greater stability of prices consolidated Russia's financial position.

Within his broad range of concerns Witte also paid due attention to Russia's intellectual potential and thanks to his efforts, and with the participation of local societies of merchants and entrepreneurs, a total of 147 elementary and middle schools were opened from 1896 to 1902. Witte also played a leading role (with active support from prominent Russian scientists like Dmitry Mendeleyev and Vladimir Kovalevsky)(*) in the establishment of the St. Petersburg Polytechnics (1902)-an educational center of a new type which provided for a harmony of technical, economic, ecological disciplines and humanities. Similar polytechnical institutes were later opened in Kiev and Warsaw. It should also be added at this point that as early as in 1900 Witte promoted the opening of a polytechnical institute in the Siberian city of Tomsk "in recompense" for his "failure to channel" the Great Siberian Route through that city

1902 saw the opening of Russia's first-ever press agency-called the Commercial and Telegraph Agency-which was attached to the Ministry of Finance.

In August 1903 Witte was appointed Chairman of the Council of Ministers.

During all of these years he was actively involved in Russia's foreign affairs and can be credited by right as the chief architect of a realistic program of Russia's penetration and consolidation of positions in the Asiatic-Pacific region. Witte regarded it as "a second Mediterranean"-a major focal point of international trade routes. Witte initiated the construction of what were called the East-China and South-China railways, of the strongholds of Port

Arthur and Dalny and promoted growing Russian presence in Manchuria. At the same time Witte was strongly in favour of an agreement with Japan on a division of the spheres of influence in this region. This, however, run into strong opposition in high quarters supported by the Emperor himself. As a result of this controversy Witte had to resign his post of the Minister of Finance, and Russia drifted into the tragic war with Japan.

The war broke out on January 27, 1904 when the Japanese Navy launched an attack on Russian warships in Port Arthur. The subsequent loss of the Navy and a chain of subsequent military setbacks forced Russia to accept President Roosevelt's offer of mediation in the conflict. And Witte was charged with the task of conducting these talks in August 1905 in Portsmouth, USA. There the two sides signed a treaty under which Japan received control over Port Arthur, Dalny and the Kwantung region on the same conditions as Russia had before the conflict. Japan also received control over the railway from Port Arthur to Kwanchen-tsy in Manchuria and half of the Island of Sakhalin. Korea was placed under Japanese protectorate.

The terms of the peace treaty had to be accepted in St. Petersburg as favourable enough and Witte was awarded the title of count.

But the amnesty granted to Russian political prisoners after the war was followed shortly after by a campaign of harsh reprisals against political dissent. The authorities turned a blind eye on reactionary pogroms in various places and the decree on the emergency powers of the provisional governors-general and other local authorities which curtailed even further the powers of the Prime Minister.

In a bid to save the country from a civil war and preserve its autocratic regime Witte submitted to Nikolai II a special report urging the need for civil liberties and access of the population to the making of Russian laws. On October 17, 1905, the Emperor signed a manifesto "On Improvements in the State Order" which helped to discharge the crisis.

Two days later Witte was appointed chairman of the new Council of Ministers. In this capacity he managed to extinguish "the flames of the revolution" and secure a measure of internal economic stability by obtaining loans from France and other European countries.

In conclusion, here is a quotation from a letter of resignation sent by Witte to the Emperor: "I was aware of my duty to do everything I can to save Russia from a financial collapse, or, even worse, from a situation in which the Duma (parliament), taking advantage of the government's need of money, could wrest concessions in the interests of certain parties, and not of the state as a whole which are inseparably linked with the interests of Your Imperial Majesty

...Now that the loan has been secured, and Your Imperial Majesty can, without concern about the ways of settling the accounts of the past war, and having the current measure of pacification, focus your entire attention on an internal settlement within the Empire, channelling in the proper direction the efforts of the Duma... I dare to submit to Your Imperial Majesty my most obedient appeal for a royal consent for my dismissal from the post of the Chairman of the Council of Ministers".

The request was granted shortly before the opening of the first State Duma on April 27, 1906. In his rescript His Royal Highness commended the numerous services for the state accomplished by the ex-premier and decorated him with one of the top orders of the Empire-the Order of St. Alexander Nevsky with diamonds and a considerable prize in cash.

Until his death on March 13,1915, Count Witte remained member of the State Council and Chairman of the Finance Committee.

* See: V. Isayev, "Forgotten Name", Science in Russia, No. 6, 1999.- Ed.

Permanent link to this publication: