Industrialization in other countries: Germany
Germany Before Unification (Up to 1871):
- The southern side of the Rhine Valley of Germany was incorporated into France by Napoleon. At that time France was, despite its economic shortcomings with respect to England and Belgium, quite a bit more advanced than Germany. This period of forced integration with France stimulated economic change in the Rhine Valley. In 1815 this area became independent of France but retained some of the economic and institutional reforms of the Napoleonic period. Serfdom and the guilds were abolished. Other remnants of fedualism were ended which restricted commerce and industry.
- Before unification of Germany, Prussia (Later Germany) initiated the concept of a common market in 1818 and in 1833 a treaty extended the Zollverein (Toll Union) to the larger states of Germany, although Austria was excluded. The Zollverein (Toll Union) of 1833 abolished tolls between the various German principalities, made Germany into a common market. For a period of decades, until about 1860’s, there were attempts at imitating in Germany the industrialization that had taken place elsewhere in Europe. This imitation was only moderately successful.
Why was Germany able to industrialize so rapidly between 1870 and 1914?
- The Industrial Revolution began about a century later in Germany than it did in England. Before 1870 Germany was not united properly. This was because of the power struggle, mainly between Prussia and Austria, that was occurring at the time. This disunity did not provide for a stable or flourishing economy, and so Germany was not very advanced industrially at all.
- Then Bismarck finally got his way, and in 1871 everything changed. The New German Confederation was formed, and all the German states were united under one ruling body. This meant that the country was co-ordinated in its actions and was less vulnerable to political, social, or military attack. So the new Germany was very strong.
- This unification provided a base platform for industry to grow, and Bismarck cared for this well. He implemented several policies to protect the baby businesses; among them were laws which forced up the cost of many foreign items and made the German goods better value. This strengthened the economy and industry responded. After this there was no stopping anyone; the economy was up and running. Germany then went through a period of rapid industrial growth, culminating in the outbreak of the First World War.
- A big boost to the new economy was the five billion Francs paid to Germany was a result of the Seven Weeks War with France. This fee was exactly equal to the amount taxed by Napoleon from Germany. Also included in the package was the French territories of Alsace and Lorraine. These were both rich in minerals and soil, and so were a great boon to the fledgling economy.
Major Factors Responsible For German Industrialization:
Railways and Industrialization:
- Railways played a very important part in Germany’s growth. The country was a slow starter in the railway race, but she soon caught up. The network quickly enveloped the entire country and provided links with each area and the international community, making everyone more aware of each other and decreasing the psychlogical distance between places.
- Railways increase efficiency, because everything gets there faster, and the tempo of business speeds up. Germany became the centre of activity for the European business community, and Germany was able to trade better because she could now ship directly south, rather than via another country. This problem was caused because all main rivers in the nation flowed north; away from the majority of trading partners.
- The rail system increased the demand for steel and coal. The coalfields in the Ruhr Valley were fully developed and made Germany into the foremost coal producer in Europe. A steel industry also developed and the stimulus of the coal and steel development expanded the banking and capital markets available to Germany. This helped other industries such as the chemical and electrical industries develop in the latter part of the nineteenth century. The German chemical industry became the most advanced in the world. At first the production of dyes based on aniline was critical.
- By 1880, Germany had 9,400 locomotives pulling 43,000 passengers and 30,000 tons of freight, and pulled ahead of France.
- Germany implemented a technical education curriculum which emphasised the technical areas of industry, such as electrics, chemistry, and physics. This program produced more scientists, and better ones, and so more and better advances were made in these directions. This is why Germany was to become strong in the technical fields.
Threat of France:
- German politicians, industrialists, and academics all felt a threat from France. This was because the feared a retaliation from the Seven Weeks War of 1866, but their fears were unfounded. France had neither the power or motivation to challenge Germany. Germany strived to make itself stronger, just in case of an attack.
Resources, Banks and Cartels:
- Germany was, and still is, rich in natural resources. These include coal and iron ore in the Rhur, the Saar and the south east corner of Upper Silesia; rich soil gained from the Seven Weeks War with France (in Alsace and Lorraine); sodium and potassium in large quantities (this is what enabled a large chemical industry); and the people. This is probably the most important part of Germany; its people. The country possessed many people capable of making and using the technology and resources to their greatest capability, and capitalising on it as much as possible. This was particularly obvious in the business sector; many ‘high-flyers’ emerged. An example of this is the growth of the chemical industry; Britain had 30 scientists in the field, while in the same period Germany had 350. Germans had realised the value of the industry.
- Another way in which Germany was ahead of Britain was in the confidence of banks to lend money. In Britain, many banks did not lend money to businesses because they feared that the business would not be able to pay it back. In Germany, it was a different story. Banks gave over money willingly, and a special breed of bank grew up; the ‘credit bank‘. This type of bank is now known as a corporate bank. This breed is entirely devoted to banking in the business sector.
- Different banks formed cartels in different industries. Cartel contracts were accepted as legal and binding by German courts although they were held to be illegal in Britain and the United States. The process of cartelization began slowly, but the cartel movement took hold after 1873 in the economic depression that followed the post unification speculative bubble. It began in heavy industry and spread throughout other industries. By 1900 there were 275 cartels in operation; by 1908, over 500. But many German companies stayed outside the cartels because they did not welcome the restrictions that membership imposed.
- Prosperity was the general result of the growth in the economy. This was reinforced by Bismarck’s unfailing favour toward the business sector, and how he always backed it. As a result of this prosperity, businesses were able to keep up with the latest in technology, regrading their machines, and so they could keep abreast of the market. This was a major point over Britain, who was still using old, antiquated, machinery.
- In the search for new markets, more space for the population, and more resources, Germany started to build up a colonial empire. The ultimate aim was no control lots of Asia and Africa, but this did not eventuate. Instead, several different areas of Africa were either taken over or annexed by Germany. These colonies served as extensions of Germany, and so enhanced her economy.
- As the country prospered, it became a desirable place to live, and so many people moved in from other countries. This boosted the economy, and the country grew. This causes a snowball effect (to know about snowball effect, refer to ethics chapter), which is only stopped by rather unfavourable circumstances, such as over-population. Because of this economic growth, living standards went up, wages went up, and so people could afford to have more children. And so the population increased again.
- Also, when a country industrialises about 70% (may be more) of all people in the country move in toward the urban centres. The country becomes urbanised. This means that there are more workers available, and so industry prospers.
Government’s Role, Protection and Welfare:
- The government played a powerful role in the industrialization of the German Empire founded by Bismarck in 1871 during a period known as the Second Industrial Revolution.(The Second Industrial Revolution or Technological Revolution was a phase of the larger Industrial Revolution corresponding to the latter half of the 19th century until World War I. It is considered to have begun around the time of the introduction of Bessemer steel in the 1850s and culminated in early factory electrification, mass production and the production line.)
- Government supported not only heavy industry but also crafts and trades because it wanted to maintain prosperity in all parts of the empire.
- Even where the national government did not act, the highly autonomous regional and local governments supported their own industries. Each state tried to be as self-sufficient as possible.
- In 1879 industrial protection was introduced by applying the foreign tariffs on imports. This encouraged trade, employment, and business. The State charged a protection tax, and so it had more money to put back into the economy.
- Social Welfare was also introduced (First time by Bismark); Sickness Insurance, in 1883; Accident Insurance, in 1884; and an Old Age Pension, in 1889. These measures made people think twice about how bad the government was, and deterred people from swinging toward the communist side of the political spectrum.
- As Germany gained international stardom, money and experts flocked into the country. They always found work, and invariably made an advance in their field. So Germany’s technological expertise gained ground, and more people came.
- The development of each new field, as more and more experts arrived, placed a strain on the economy. There were more people than ever, and so the industries produced more. As the population increased, each industry spurred on another. An example of this is the growth of the railways; this required more rails, carriages, coal, and drivers, and as the network got bigger and better more people travelled on it; the cycle starts again.
- The entire secret to Germany’s success lies with Prime minister Bismarck. Firstly, he unified the country; secondly, he brought the economy into line; thirdly, he made sure it stayed that way and encouraged it; and fourthly, he prevented anything from hurting the economy badly.
- Bismarck won the support of both industry and skilled workers by his high tariff policies, which protected profits and wages from American competition, although they alienated the liberal intellectuals who wanted free trade
- Even before unification, his Blood and iron Policy included Iron (which fuelled Industrialization).
- It is argued that more important than Bismarck’s new tariff on imported grain was the introduction of the sugar beet as a primary crop. Farmers quickly abandoned traditional, inefficient practices for modern new methods, including use of new fertilizers and new tools. The knowledge and tools gained from the intensive farming of sugar and other root crops made Germany the most efficient agricultural producer in Europe by 1914. Even so farms were small in size, and women did much of the field work. Many worker became available for industrial work.
- An unintended consequence was the increased dependence on migratory, especially foreign, labor.
Other Facts and Factors in German Industrialization:
- The north German states were for the most part richer in natural resources than the southern states. They had vast agricultural tracts from Schleswig-Holstein in the west through Prussia in the east. They also had coal and iron in the Ruhr Valley. Through the practice of primogeniture, widely followed in northern Germany, large estates and fortunes grew. So did close relations between their owners and local as well as national governments.
- The south German states were relatively poor in natural resources and those Germans therefore engaged more often in small economic enterprises. They also had no primogeniture rule but subdivided the land among several offspring, leading those offspring to remain in their native towns but not fully able to support themselves from their small parcels of fragmented land. The south German states, therefore, fostered cottage industries, crafts, and a more independent and self-reliant spirit less closely linked to the government.
Class and the welfare state:
- Germany’s middle class, based in the cities, grew exponentially, but it never gained the political power it had in France, Britain or the United States. The Association of German Women’s Organizations (BDF) was established in 1894 to encompass the proliferating women’s organizations that had sprung up since the 1860s. From the beginning, the BDF was a bourgeois organization, its members working toward equality with men in such areas as education, financial opportunities, and political life. Working-class women were not welcome; they were organized by the Socialists.
- Bismarck built on a tradition of welfare programs in Prussia and Saxony that began as early as in the 1840s. In the 1880s he introduced old age pensions, accident insurance, medical care and unemployment insurance that formed the basis of the modern European welfare state. His paternalistic programs won the support of German industry because its goals were to win the support of the working classes for the Empire and reduce the outflow of immigrants to America, where wages were higher, but welfare did not exist.
- Based on its leadership in chemical research in the universities and industrial laboratories, Germany became dominant in the world’s chemical industry in the late 19th century.
- Big businesses such as BASF and Bayer led the way in their production and distribution of artificial dyes and pharmaceuticals, leading to the German monopolisation of the global chemicals market at 90 percent of the entire share of international volumes of trade in chemical products by 1914.
- Germany became Europe’s leading steel-producing nations in the late 19th century, thanks in large part to the protection from American and British competition afforded by tariffs and cartels. The “German Steel Federation” was established in 1874.
Q. Write contribution of Bismarck in the industrialization of Germany.
Q. Write impacts of German Industrialization.