Railways in the Russian Empire were built mainly by private traders. But in the public interest, using both government support and government funds.
The fact that Russia lags far behind the leading economies of the world in the development of railway communication became finally clear even during the Crimean War (1853-1856), when the interruptions in the supply of the army caused by muddy roads became one of the main reasons for the defeat.
In 1855, only 980 miles of railways were built in the country, which was 1.5% of the world railway network. The loss in the war was the impetus for the formation of the most successful industrial policy in the history of tsarist Russia, as a result of which the authorities and private capital, together with their efforts, not only overcame the lag behind the advanced countries, but also took second place in the world after the United States.
January 26, 1857 was the day when the Russian supreme power, that is, Emperor Alexander II and his immediate entourage, decided to put an end to the root cause of all Russian troubles - the imperfection of transport routes. It was then that the Tsar's Decree was issued on the establishment of the Main Society of Russian Railways (GORZhD) for the construction and operation of the first network of Russian railways.
In accordance with the tsarist decree, the first passengers were given special travel
The company was granted a concession for the construction of four lines, 4,000 miles long: from St. Petersburg to Warsaw, with a branch to the Prussian border; from Moscow to Nizhny Novgorod; from Moscow, through Kursk, to Feodosia and from Kursk or Orel, through Dinaburg, to Libava. The fixed capital of the company was determined at 275 million rubles, to which the government granted a 5% income guarantee. In reality, the society managed to collect only 112 million rubles, and they were enough only for the construction of the Warsaw and Moscow-Nizhny Novgorod railways.
In 1862, the engineer-general, professor of applied mathematics, member of the State Council, Pavel Petrovich Melnikov was appointed the new chief manager of the transport routes. During his management of the Department of Railways, the network of Russian railways increased by 7.62 km.
Pavel Petrovich Melnikov, First Minister of Railways of the Russian Empire
"The railways are extremely necessary for Russia, they are, one might say, invented for her … more than for any other country in Europe … the climate of Russia and its space … make them especially precious for our fatherland." Melnikov saw his mission in the construction of railways.
He restored business confidence to investment in railways. The government established a new order of concessions: it issued preliminary certificates without contributing the capital necessary for the formation of a society. The construction of the Ryazan-Kozlovskaya railway was allowed, in the capital of which only 1/4 of the shares were, and the bonds were issued in Prussian thalers - small German entrepreneurs began to buy bonds of the Russian railways.
At the same time, a new factor, the zemstvo, is emerging in the construction of railways. In 1866, the concession for the construction of the Kozlovo-Voronezh railway was issued to the zemstvo of the Voronezh province, in 1867 the Yelets zemstvo received a concession for the construction of a railway from Gryazi to Yelets. More than 65% of the share capital formed from 1861 to 1873 was held by the railway industry.
The favorable conditions for granting concessions caused a real railway boom, which lasted until the mid-70s. Dozens of new companies have sprung up. For the years 1865-1875. the length of the railway network in the country has increased from 3, 8 thousand to 19 thousand versts.
All this led to the transformation of concession legislation: the initiative to issue a concession, as a rule, began to come not from a private entrepreneur, but from the state. The government was forced to allocate budget funds to finance the construction. The concessionaires were actually building roads with government funds, and by the end of the 19th century. railways were no longer considered by the government as a commercial enterprise, they were given the status of institutions that had a social and strategic purpose.
State control over railway societies was carried out by various methods: from the introduction of members from the government or zemstvo institutions into the board of railway societies to the regulation of tariffs. In 1887, a law was passed, according to which the government recognized the right to set tariffs on the railways. Thus, the state, while guaranteeing a minimum profitability and providing companies with preferential loans, at the same time carried out strict regulation of financial statements, tariffs and business contracts concluded by companies.
Since 1880, the state itself begins to build railways and gradually buys out private ones. Tambov-Saratovskaya, Kharkov-Nikolaevskaya, Uralskaya, Ryazhsko-Vyazemskaya, Ryazhsko-Morshanskaya, Morshansko-Syzranskaya, Orlovsko-Gryazskaya, Varshavsko-Terespolskaya, Tambov-Kozlovskaya, Kursk-Kharkov-Azov, Libavo-Roma railways went to the treasury … In 1893, four major highways were added to them: Moscow-Kursk, Orenburg, Donetsk and Baltic, and from January 1, 1894 the state bought the roads belonging to the Main Society of Russian Railways: Nikolaev, St. Petersburg-Warsaw and Moscow-Nizhny Novgorod, as well as the Rigo-Mitava road.
At the same time, the opposite process was going on: the government allowed the creation of several large railway companies through the merger of small companies. In 1891, on such grounds, the construction and operation of the line from Kursk to Voronezh was transferred to the Kursk-Kiev railway society. In the same year, the construction of a line from Ryazan to Kazan was transferred to the society of the Moscow-Ryazan road, as a result of which the aforementioned society received the name of the society of the Moscow-Kazan road.
In 1892, private joint stock companies owned more than 70% of Russian railways. In the same year, Sergei Yulievich Witte, a supporter of state management of railways, was appointed minister of finance. By the time of his resignation in 1903, the ratio had become exactly the opposite: already almost 70% of the roads were state-owned. More than 20 thousand miles of roads of private companies passed to the state
During these years, the Russian government implemented the most ambitious project of the turn of the century - the construction of the Trans-Siberian Railway. The Great Siberian Road was built from 1891 to 1903 at public expense, since only the state could invest more than 1 billion gold rubles in an infrastructure project that did not promise quick profits.
Sergei Witte noted that "the construction of the Siberian Railway does honor to Russian railway construction," and the foreign press called the Transsib the main event in history after the discovery of America and the construction of the Suez Canal. In 1904 Scientific American magazine named the construction of the Great Siberian Road the most outstanding technical achievement of the turn of the century.
Despite Witte's statist views, it was under him that the most ambitious project of a railway concession, the China-Eastern Railway (CER), was implemented. The concession had the right of extraterritoriality and was managed by the Russian-Chinese (later - Russian-Asian) bank, which subsidized the "Society of the Chinese Eastern Railways".
The term of the concession was set at 80 years, counting from the date of the commencement of the operation of the railway. Only citizens of Russia and China could be shareholders. After 80 years, the road with all the property belonging to it passed into the ownership of the government of the Chinese Empire free of charge.
In total, the society has built 2,920 km of railways. Settlements were built along the railway line, the largest of which was Harbin. The Russian government has undertaken to guarantee the "CER Society" coverage of all its expenses, which in the end amounted to almost 500 million gold rubles.
By 1917, 70, 3 thousand km of railways were built in Russia, which is almost 80% of the modern network of Russian Railways. Concession legislation in the Russian Empire was characterized by the provision of companies with a large degree of economic freedom. This served as an incentive to attract Russian private capital and foreign investment to the transport industry.
