Economy in Kaiserreich - 1871-88

Question 1

What did unification do to the economy?

Answer 1

• Created a boost to economic development
• Co-ordinating industry was easier
• France had been defeated in the war and had to pay a debt = industrial growth
• Changing currency to gold Marks made a good inflationary effect
• Openings of Ironworks & manfacturing companies contributed the the annual rate of 5% increase in economy

Question 2

What happened to the global economy between 1873-1896?

Answer 2

Great depression

It hit German industry but not immediately as the eariler railway building kept the economy sturdy

Decline in textiles and engineering prodcts demand from 1876 = slower growth in economy but this became faster again after 1894

Question 3

What made the Germany economy grow?

Answer 3

1880 - Agriculture still accounted for 40% of the GNP
Industry represented 30%

1914 - Agriculture went down to 25%
Industry represented 45%

Industry sector alone created an increase in annual growth rate of 4.5%

1914 - Germany stood next to Britain and USA in industrial nations

Question 4

Growth in German Population

Answer 4

A growing work force for market and labour

Balance of the population meant more younger generations were willing to adapt to the need for new skills

Question 5

Avaliablity of raw materials

Answer 5

Lots of coal in Ruhr, Saar and Silesia

Lots of iron ore in Alsace-Lorraine

All also had potash - acquired lands from the war victory

Question 6

Geographical advantages

Answer 6

Rivers like the Rhine and Elbe were good for railway systems

The canal, river and railways meant transportation of raw materials and goods across Germany and North Sea ports was easier

Question 7

Developed education system

Answer 7

Elementry education in Germany was the BEST in the world

Higher education made technical skills necessary for industrial development

1870 - More science graduates from just Munich University than all English Universities combined

Question 8

Banking system

Answer 8

German banks were free from state-control (weren’t nationalised)

They invested a lot in industrial research, trade and economic development

Amount of banks increased - 49 new ones in Prussia alone by 1872)

Close links between banks and businesses

Question 9

Development of businesses and organisations

Answer 9

Joint-stock companies could be established in 1870 under a new law

A trend of businesses and cartels emerged

There was only 8 cartels in 1875 but 600 by 1911

Dyestuff companies accounted for 90% of Germany’s total output

Siemens and AEG operated cartels in the electrical industry

Question 10

Supportive government

Answer 10

Supported through Bismarck’s tariffs and Caprivi’s trade treaties and measures

Ex. Subsidies to shipping lines to keep transport costs down

Question 11

Old Industry

Answer 11

Before 1871 - textiles, coal, iron, steel and railways

Question 12

New Industry

Answer 12

Advanced technology - electricals, chemicals, machinery and the motor car industry

Transport system grew - 40,000 km in 1890 to 60,000 km by 1914

Germany’s potash and coal became the basis for lots of chemical products

20th century - producing 3/4 of the world’s chemical dyes

Discovery of new chemical processes - growth of salts were used in agriculture

Question 13

What did Germany lead in?

Answer 13

1907 - Germany was producing 1,402,000 tonnes of Sulphuric acid alone

Led the way in pharmaceuticals, artificials fibres, some photographic materials, plastics and new explosives

Siemens led the way in production of electrical components like dynamos

Production of electrical energy increased by 150% between 1901-1915

1913 - Germany controlled half the world’s trade in electricals

Germany exported £11 million worth of electrical goods - USA and UK only exported £8 million combined

Machinery Industry used American ideas - 1899 Loewe rebuilt his Berlin factory using American ideas of mass production

Advances by Benz and Diesel and Mercedes in the Motor Industry

Question 14

What was the reason for industry development?

Answer 14

Kaiser Wilhelm II desired the glory of Weltpolitik - included developing Germany’s military resources

Question 15

Agriculture

Answer 15

Rapid industrialisation didn’t mean agriculture wasn’t need - 35% were still employed in this sector (1907) - more than Britain

Large estates of the Junkers in the east produced Rye and Beet

Smaller peasant holdings across Germany produced cereals/crops/fruit/vegetables/wine/livestock/dairy products

4 million acres of virgin land was tilled - horses/cattle/pigs/poultry increased

All this success came at a price!

Question 16

Agricultures - Economic impacts

Answer 16

Agriculture was protected with tariffs - started in 1879

It was lowered by Caprivi in 1890s / Bulow increased them again in 1902

Tariffs helped farmers by preventing cheap Russian/American grain imports from flooding the German market - but they were expensive for Germans

Farmers faced challenges - new processes and refrigeration all challenged traditional farming

Costs increase as farmers supply fell - rural debt increased!

Question 17

Trade and wealth

Answer 17

Overseas trade grew with industry growth

German merchants distributed goods all over Europe and across the markets of North/South America/Asia/Africa

Germany sold chemicals/metal goods/textiles/coal

Profits from these sales helped pay for imports of food/raw materials

1913 - Imperial Germany was a major trading/exporting nations of the world
- Volume of exports/imports had grown majorly (1880-1913)

1890 - Germany was buying £200 million-worth of foreign foods but selling £153 million-worth

Trade gap - between imports & exports but was covered up by ‘invisibles’

Majority of German exports went to Britain/France/Russia

Question 18

Free trade vs protection

Answer 18

1870s - German economy was strong enough to hold foreign competition
- Bismarck supported the policy of ‘Free Trade’ (NL)

But some people supported ‘Protection’ from Junkers and German manufacturers

1878 - latter formed the Central Association of German Manufacturers to lobby for change

Tariffs were introduced in 1879 in response to Alliance of Steel and Rye

1890s - Conservatives criticised Caprivi’s negotiated trade treaties with Russia/Austria/Romania

Trade treaties - promised to lower agricultural tariffs in return for a reduction of those countries’ tariffs on imported industrial goods - but this interrupted the alliance of farmers/manufacturers

Caprivi resigned though - so this healed the rift / high tariffs on industrial/agricultural imports remained until 1914

Question 19

Pressure groups as a result of free trade/protection

Answer 19

They emerged during the late 19th century

Industrials’ League - established in 1895

Imperial League - 1904

Hansabund - 1909 - Union of Commerical/Exporting/Shipping Interests

1911 - Imperial German Mittelstand Confederation represented lots of white-collar commerical interests

These groups held a powerful economic detect on the government