Economic Policy and Railway Construction under Alexander II (1855–1865)

Abstract

This article analyses the economic policy of the Russian government between 1855 and 1865 in the context of Immanuel Wallerstein’s World Systems Theory. The mid-nineteenth century saw an expansion of the modern world system, when the industrialised countries of the “centre” pulled the agrarian countries into the world market as the “periphery” supplying raw materials. Following its defeat in the Crimean War, Russia became an object of pressure from the “centre”, which was both diplomatic and ideological in nature (in the form of an increasingly popular principle of free trade). On the other hand, Russian landowners were interested in supplying grain to the world market; this required “export” railways from the interior to the seaports to be constructed. Inclusion in the world system made it possible to attract foreign capital to the construction of roads, but only on condition of rejecting protectionism. In 1857, the government drastically cut customs duties. The import of cheap metal and railway equipment deprived Russian factories of orders. While in the West railway construction was the driving force of industrial development, the Russian industry was deprived of these incentives and increasingly lagged behind the countries of the “centre”. However, abandoning protectionism did not help attract foreign investment. The Principal Society of Russian Railways, created with the participation of French bankers, was unable to spread its shares in the West. Unsuccessful measures to spread these shares in Russia caused a drop in the rate of the credit rouble, and further attempts to stabilise the exchange rate led to heavy financial losses. As a result, the construction of export roads and the final entry of Russia into the world market was delayed by a decade.