Witte's monetary reform is the secret of the success of the Russian Empire on the world stage

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:53

Undoubtedly, S. Yu. Witte was one of the most successful finance ministers in the history of the Russian Empire. And Witte's monetary reform contributed to the development of trade and production due to the convergence of banking and industrial capital and the elimination of inflation. However, the reformer was much more famous for his first innovation, connected with the establishment of a monopoly on the sale of alcoholic beverages in 1894. For the period from the beginning of 1894 to 1902, this Witte reform increased budget revenues by 16 times.

When the Russian government became convinced that the tax changes that had taken place not only helped to cope with the budget deficit, but also contributed to the reduction of drunkenness, it was decided to carry out the second stage of changes, during which indirect taxes on kerosene, tobacco, sugar and matches were increased by 1.5 times. Witte's reforms were not limited to "drinking" reforms, but also included the introduction of an apartment tax, a trade tax on business profits, and an increase in the collection of bank deposits. But the most important achievement of Witte as Minister of FinanceRussia is considered to be the transition from inflationary paper money circulation to the gold standard.

Witte's monetary reform assumed the stabilization of the country's monetary system by establishing the gold equivalent of the ruble. The need for such decisive action was due to the fact that at that time there was a great risk of a collapse of the Russian currency, because the official exchange rate of the ruble to the French franc was considered 1 to 4, and in practice it was no more than 1 to 2.5. into hard currency, which contributed to the improvement of the investment climate in the country. As a result, at the beginning of the 20th century, Russia experienced unprecedented industrial and economic growth in all sectors of the economy.

The influx of foreign investment up to the beginning of the war increased annually by 150 million rubles, while before the reform it was only 100 million rubles. due to the instability of the country's monetary system. Witte's monetary reform assumed that the ruble contained 7.66656 g of pure gold, and credit notes that were in circulation on the territory of the Russian state could be freely exchanged for this precious metal at the stated rate.

On the eve of the First World War, the gold ruble became one of the most reliable currencies in the world and freely circulated throughout Europe. This allowed Russia not only to enter the foreign market and attract new capital, but also to strengthen political ties with the leading countries of that time.

And even thoughthat initially the changes in legislation were perceived rather negatively, because they tied the hands of speculators, over time, Witte's contribution to the development of the state was duly appreciated by historians and economists. Today, this period of Russian history is studied in detail in many studies by both domestic and foreign authors, and the Witte reform is considered an example of the fact that useful innovations can and should be carried out without loss to the population.