The Study Of Russian Finance From 1881 To 1917

As a macro concept, finance refers to the activities that a country participates in in order to maintain their existence and to achieve its social management functions, by virtue of the regime's forces to distribute the national income. Fiscal policy refers to the guiding principles of the financial work that a country sets according to the political, economic and social development tasks in a certain period of time. Aggregate demand is regulated through fiscal spending and tax policies. Finance is the component of a country's economic policy and is developing with the changes of social mode of production. In the historical stage of this study, Russian society experienced great changes invariably accompanied by changes in all aspects of national fiscal policy. The study of these series of changes in this paper serves the following objectives:The first objective is to sort out the Russian Tsarist Government's specific financial situation, including tax, national budgets, national debt, banking and monetary system, and so on from 1881 to 1917.After the reform of serfdom in 1861, Russia gradually changed to a capitalist industrial way of development. In order to achieve the goal of industrialization so that Russia's national strength is able to catch up with other European countries, tsarist government gave a lot of policy support from the financial level. An important basis of fiscal policy-making is the progressive development of Russia's capitalist industrialization. The most striking examples came from the Finance Minister Witte. Witte thought that the strengthening of industrial construction is fundamental to Russia. He even dreamed that one day Russia could have the power to control over the entire Far East through the development of Russia's industrialization. The fiscal policies that Witte developed all served this goal. Witte, vigorously promote monetary reform, whose superficial purpose is to maintain the stability of Russian currency's value in order to establish a good image of Russian currency market and the Russian financial environment in international community, so that international investors had confidence in investing in Russian market. And his fundamental purpose is to encourage international capital to invest in Russia to help Russia's industrial development. And Russian state's investment to the industrial sector is also very large. In this period, Russia participated in many wars. The war brought disaster to Russia people, but created opportunities to the development of industrialization. A large number of munitions and other war supplies required in the war brought tremendous opportunities to Russian metallurgical industry, locomotive manufacturing, arms production and other industries.To sort out the financial situation in this period will help to further understanding of the country's political, economic and other aspects in this historical period and a better understanding of Russian society.The second objective is to explore the evolution of Russia's fiscal policy and the development process in this historical period. 1881-1917, Russia experienced several Finance Ministers. The policies made by those Ministers have certain hereditability and also have styles and characteristics of their own. With the development of Russia society, Ministers made their policies differently.Take Tax policy as an example, as an important source of national income, because Russia had deficit, ministers all hoped to keep national budget balance by using tax as a lever. Bunge adopted a more moderate tax policy. He hoped to alleviate the burden on the people by improving tax collection efficiency, so as to achieve the purpose of tax increases. He raised the indirect tax and reduced direct taxes, therefore the poor farmers did received benefits. But the state's budget deficit had not shown any improvement. And his successor, Vesniegradsky adopted a more stringent tax policy. He not only substantially increased tax rates and introduced new taxes, but also resort to violence to collect all the tax arrear. If only to assess from the results, Vesniegradsky's taxation has indeed impressive. After Witte took office, he introduced the national liquor tax and increased corporate tax revenue. In Witte's period, the tax system in Russia made great strides and made a great contribution for the state budget. When the country stepped up development of industry, which requires huge capital cases, the tax revenue was a strong guarantee to support the rapid development of the country. During the late period of Witte's office Russia plunged into a chaos of war and internal revolution. In face of requirements for war, the state increased the tax rate to enrich the national income. But the outbreak of the internal revolution made Tsar reduce the direct taxes as a kind of pension for his people. In the context of war, income tax appeared in Russian history for the first time.Ministers'different fiscal policies not only reflected the characteristics of the ruling, more importantly, reflected the changes experienced by Russian society.The third objective is to, by way of fiscal studies, reveal economic reasons (from national financial aspects) of Tsarist Russia's extinction and to apply the results of study as reference for modern national economy.The study of financial policies of different ministers in different periods enables us to get the following conclusion: Russia's financial policies in this historical period were made for two needs of the country. First, it was for the need of Tsarist rule and bureaucratic interests; Second, it was for the developmental need of Russia - the capitalist industrialization. 1861, feudal serf system of Russia collapsed, Russia embarked on the capitalist road of development from then on. The collapse of serfdom does not mean the collapse of the ruling class. That is only the Tsar's "delaying tactic" in order to maintain his own rule. Capitalism developed under the rule of Tsar. The ruling class set their own will as the center of development, so the development of various financial systems was for the purposes of maintaining the rule of the Tsar and safeguarding the interests of bureaucrats. Bunge reduced the national expenditure, taking great pains to reduce the tax burden on poor farmers and greatly improving the national farmers ransom amount. What he did was to achieve his ideal of "tax balance." In order to complete the task of tax collection and eliminate national budget deficit, Vesniegradsky imposed heavy taxes and sort to stringent tax collection means. The perennial state budget deficit was mainly due to Tsar's expansion policy. When minister's policy was made at the expense of the interests of the bureaucratic class, it would certainly meet strong opposition from this class. The introduction of Russia's income tax is a good example. During World War I, Russia almost never consolidated the huge waste in the military field, it is because Russia's big capitalists and financial oligarchs entered into various committees and special sessions set up for the purposes of national industrial mobilization and military supply to manipulate the countries in regard of decision-making in order to maximize self-interests. At a time Russian Ministry of Finance ignored various approaches done on military orders by the supplementary organs.Tsarist government's fiscal policy regulated the country's economy, but did not control the country's politics. Tsarist government's rule faced a major challenge in the early 20th century. 1905-1907 internal revolution within the country disposed numerous political crisis. All this came to an end in 1917 with the outbreak of October Revolution.For these purposes, the author systematically studied Russia's fiscal situation ofthe late 19th century to the early 20th century and reached the following conclusions: First, the economic reasons for the demise of tsarist Russia (from national financial aspects).1881-1917 was a period of rapid development for Russia's capitalist economy, which includes Russia's first industrial boom, Russo-Japanese War, 1905-1907 Revolution, the second industrial boom, and the First World War, which can be taken as the peak of Russia's capitalist development and also a critical period of tsarist Russia's eventual doom. Through the case studies of budget, debt, taxation, monetary, banking and other content, the economic causes (the national financial aspects)of extinction of tsarist Russia can be drawn. There are mainly the following points:1, financial overdraft. This was reflected in Russia's long-term deficits of the national budget. Russia's long-term budget deficit was mainly attributable to its expenditures on military and government departments use and debt payments. These non-productive expenditures brought heavy financial burden on Russia's state budget and led to a long-term deficit.2, the illusory nature of the state finance. This is mainly shown on the Russian dual budget system, and on the illusion of state budget surpluses. From the 19th century, Tsarist Russia's fiscal began to carry a very important feature: the financial budget is divided into the general budget and special budget, that is, to implement a dual budget system. Special budget is of great significance in the 20th century when war frequently broke out. In addition, from 1894 onwards, the auction of state-owned assets, funds, and even some national railway companies prepayment loans have included in the scope of the special budget revenue. The special budget of expenditure is not very clear with war spending and railway construction an important component of its expenditure. When the good time of state finance, special budget could be used for early repayment of debt. Tsarist Government's maintaining the general budget and special budget was intended to cover the actual financial situation, massive war spending and national debt of Russia from the whole society. Because of this, the Ministry of Finance was doing everything possible to defend the dual budget system, and critically acclaimed its important role. Russia's state general budget reached a surplus in 1888, but the country's total budget in most years was mainly in deficit. However, the fact that Russian state budget achieved surplus in most years was not real. This is because a large part of the official statistical records of tsarist Russia was open to question. The real purpose of Russia's state general budget surplus is to accumulate surplus for treasury funds and to prove Russia's ability to repay to those foreign bankers. The ultimate purpose was to borrow money from them. In order to prove Russia's foreign capitalists and the bankers that the state's financial situation was good and the country had the ability to repay foreign debt, the Ministry of Finance fudged the budget data. In most years, the Russian ordinary state budget surplus was forged. That approach, while made Russia's average budget show surplus, contained the Russian state regular general budget expenditure. A lot of productive expenditure and expenditure on social and cultural undertakings was ruthlessly reduced, while the tax burden on the Russian people became heavier.3, the exploitative nature of the state finance. This is mainly reflected in the Russian sources of revenue. Russia's main source of budget revenue is the state's tax revenue (in which indirect taxes accounts for the main part) and the National Liquor monopoly revenue. From Bunge'time proportion of direct taxes in Russia's national tax began to decline and the proportion of indirect tax began to increase. The exploitation of Russia's tax policy from the Vesniegradsky's time became heavier. This harsh tax policies were adopted by Witte and the ministers after him. The only purpose of this tax policy is by all means to increase state revenue. Russia's tax policy has shown a nature of serious exploitation and Russian people's ability to pay taxes, therefore was greatly affected, so that Russia's national long-term poverty.4, non-productivity of finance. This is mainly manifested in the direction of Russia's financial expenditure. Russia's budget's main directions are military spending, government expenditure on administrative expenses and debt. Russia is a military feudal imperialist country. The country's military expenditure reached one-third in the proportion of the total national budget in peacetime. During the war years direct military spending is more enormous. For example, during the Russo-Japanese War the direct military spending was more than 2.5 billion rubles and the direct military spending during World War I was more than 20 billion rubles. The country's military expenditures, the government's administrative expenses and debt payments are non-productive government spending. These expenditures took nearly 90% of the total national budget, showing that the magnitude of their spending. In addition, the general population's cultural and educational expenses, health expenditure, social security expenditure took small proportion of the budget.5, fiscal imbalance. This is mainly reflected in the rapid growth of the national budget and industrial functions of monetary banking system. Russia's national budget began its rapid growth, from Witte's time and its purpose was to support national industrialization process. While under the support of national finance, the process of industrialization in Russia was greatly accelerated, Russia's great amount of national debt, too much tax, too much non-productive expenditure directly led to a very heavy burden on Russian people. The national economic situation was extremely poor and weak. All of this ultimately led to the break-out of domestic democratic revolution during World War I. Therefore we can say Russia's huge national debt, extremely harsh tax policy and unreasonable expenditure structure of the country were the economic reasons for the ultimate subjugation of tsarist Russian government.Second, reference for economic development of modern society:1, The debt ratio in the state finances should be controlled within a reasonable range.2, The national budget need to take account of the relationship between industry and agriculture, light industry and heavy industry, production expenditures and non-productive expenditures.3, The state budget expenditure on government administration and defense expenditures should be controlled within a reasonable range.4, Reasonable proportion of production expenditure may ensure the country's rapid economic development.5, Reasonable proportion of expenditure on education, health and social welfare is closely related to the social order and harmonious development.6, The openness of the national budget must be adhered to. 7, The allocation of extra-budgetary funds must be strictly limited.8, The formulation of state's tax policy must take into account both the state's fiscal revenue and the capacity of the national population.9, The ratio of direct and indirect taxes should be in a reasonable range.10, In order to realize social justice, according to the needs of social development, a timely and reasonable tax system is needed to achieve revenue balance.11, In the formulation of national monetary policy, the maintenance of the stability of the national currency and the total amount of the national currency need to be taken into account to meet the country's economic development.At present there is no domestic scholar studying the Russia's economic characteristics of early 20th century from the financial point of view. Though Russian and western scholars study the financial problems of Russia quite well, they mainly study in a specific aspect. Therefore an overall grasp of Russia's fiscal impact on the national economy is for the first time which is an important innovation of this paper.The paper got some valuable first-hand information, including not only a large number of Chinese and Russian data, but also a large number of western English materials. All the reference collected were aimed at a more comprehensive perspective to analyze the problem.This article was written from different perspectives, such like, national policy orientation and the generation of such orientation, the crisis in the Russian autocracy, financial and economic reasons for tsarist government's extinction and so on, which can be said as the originality of this article.