Russia's military expenditure continued to grow in absolute terms, but other calls on the state's budget came to play a significant part in government spending. During the second half of the nineteenth century, the Russian government considerably extended its activities and, in particular, played a much greater direct role in the economy of the country The government's recognition of the importance of the railway network in stimulating Russia's overall economic performance, together with the absence of other sources of investment capital, meant that the state itself took on much of the burden of financing Russia's railways. The Ministry of Communications accounted for only 2.5 per cent of the state budget in 1885, but by 1895 this had increased to 11 per cent and by 1908 to 20 per cent. The construction of the Trans-Siberian railway was an essential element in this development, and Witte was prepared to expend whatever resources were necessary in order to see the project realised. The government spent some 600 million roubles on its construction in the last decade of the nineteenth century, far above the original estimate of 320 million roubles, and further spending was needed after 1900, bringing the total cost for the railway to over 1,000 million roubles, at a time when Russia's annual budget was less than 1,500 million roubles.[70] The state also increased its direct involvement in another critical area of the Russian economy - the liquor trade. In 1863 the government abolished the system of tax farming that had generated revenue from the production and sale of vodka, but this was only a step on the road towards the state taking full control of the wholesale and retail trade in liquor. Between 1894 and 1901 the state became the only legal purchaser for the products of Russia's vodka distilleries and, while this proved an effective move in terms of safeguarding tax revenues from vodka, it did also involve the government in increased expenditure as it took direct control of the industry. By 1912, the state was expending nearly 200 million roubles annually to maintain the vodka monopoly.[71] Further strains were placed upon the Russian budget by the state's growing indebtedness and the need to service its loans. By 1899, 98 million roubles was required annually to pay interest on Russia's loans and Russia proved lucky in its ability to contain its expenditure in this area. Russian credit abroad had improved during the 1890s, especially with the signing of the Franco-Russian alliance in 1894, and this enabled the Russian government to reduce the level of interest it paid. Between 1891 and 1902, Russia was able to reduce its average rate of interest on its loans from 4.9 per cent to 3.86 per cent, thus allowing the state to borrow significantly more money, but without increasing the cost of servicing the public debt.[72]
The increasing social burdens that the Russian state assumed during the nineteenth century also had budgetary consequences. Judicial reform from the 1860s onwards made the legal system increasingly complex and easier access to justice resulted in a growing number of cases brought before the courts each year. The Ministry of Justice pressed for annual increases in its budget, emphasising that its expenditure was modest in comparison with that in other
European states.[73] Education provision expanded rapidly at the end of the nineteenth century and the financial demands on the state grew significantly. In 1879 the central government budget had only contributed 11 per cent of total funding for rural schools, but this proportion increased to 45 per cent by 1911. The government spent 2 million roubles on primary education in 1895, but this increased very rapidly to 19 million roubles in 1907 and to more than 82 million in 1914. Total education expenditure accounted for 2.69 per cent of the state budget in 1881, but this had increased to 7.2 per cent in 1914.[74] There were growing pressures on Russia's budget from every side. The army and navy continued to take the largest single element of government spending as war and the threat of war remained ever-present. The state's expansion into both direct involvement in the national economy and into enhanced social provision meant that the government could not easily seek to compensate for increasing military expenditure by making significant reductions elsewhere. The result was that the overall Russian state budget grew as expenditure increased in nearly every area. The challenge for the state was to increase its revenues to match this additional spending.
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The main component of government revenue during the eighteenth century was the poll tax. Peter the Great levied this tax on most of the male population, using it to replace the household tax that had been in force between 1678 and 1721. The rationale for the poll tax was straightforward: Peter needed a reliable source of income to support his military campaigns, while revenue from the household tax was falling as the population discovered that they could combine their households and thus evade the tax. The poll tax proved to be a highly successful means of raising money. Its collection presented no great difficulties: initially, military detachments collected the taxes from the regions in which they were stationed and then used the revenue to maintain themselves. After the end of Peter's wars, collection became the responsibility ofthe civil administration, and serfowners were given the prime responsibility for collecting the taxes from their serfs. The success of the poll tax was partly due, however, to the rise in the Russian population through the expansion of its frontiers and gradually decreasing mortality rates. Its relative ease of collection meant that the government felt able to increase poll-tax rates during the course of the century, increasing the burden on private serfs by one-third across the period. Between 1726 and 1796, the amount collected from the poll tax increased from 4 million roubles to 10.4 million roubles.19 After 1800, the poll tax played a less significant role in government revenues as other taxes contributed larger shares of the government's income. The emancipation of the serfs in the 1860s made the collection of the tax more difficult, while voices were heard suggesting that the tax burden should be more equally shared, rather than through the poll tax with its flat rate for each category of taxpayer.20 The government remained undecided about the fate of the poll tax during the 1860s, recognising that it caused difficulties for some tax-payers, but also needing the revenue that it generated. Even at the end of the 1870s, the poll tax produced 59 million roubles annually.21 It was the sense of growing crisis and peasant discontent that gripped the government in the late 1870s and early 1880s that propelled the Russian state towards a fundamental review of its taxation system and the abolition of the poll tax.22
71
M. Friedman,
73
'Zapiska o merakh, mogushchikh povesti k znachitel'nomu sokrashcheniiu raskhodov po vedomstvu Ministerstva Iustitsii', 1879, RGIA, Fond 1214, op. 1, d. 19, ll. 21-2.
74
B. Eklof,Russian