Economy in Kaiserreich - 1871-88 Flashcards
What did unification do to the economy?
- 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
What happened to the global economy between 1873-1896?
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
What made the Germany economy grow?
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
Growth in German Population
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
Avaliablity of raw materials
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
Geographical advantages
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
Developed education system
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
Banking system
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
Development of businesses and organisations
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
Supportive government
Supported through Bismarck’s tariffs and Caprivi’s trade treaties and measures
Ex. Subsidies to shipping lines to keep transport costs down
Old Industry
Before 1871 - textiles, coal, iron, steel and railways
New Industry
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
What did Germany lead in?
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
What was the reason for industry development?
Kaiser Wilhelm II desired the glory of Weltpolitik - included developing Germany’s military resources
Agriculture
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!
Agricultures - Economic impacts
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!
Trade and wealth
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
Free trade vs protection
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
Pressure groups as a result of free trade/protection
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
