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ECOS3024 > Topic 3 - German Industrialisation > Flashcards

Topic 3 - German Industrialisation Flashcards

1
Q

when did Germany become the most dominant European power

A

second half of 19th century

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2
Q

living standars even when Germany was dominant

A

lagged behind Britain and US

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3
Q

what was industrialisation process linked to

A

political formation of German state completed in 1871

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4
Q

when did German unification start

A

in 1815 with the treaty for the German confederation at the Congress of Vienna

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5
Q

how many people employed in ag in 1815

A

80%

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6
Q

nature of German states of Holy empire

A

feudal with little social and economic mobility with government mercantilist regulations that discouraged entrepreneurial enterprise

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7
Q

reforms from Napoleonic wars

A
  • Removing the economic powers of the guilds and other interests with monopolies
  • Removing feudal based regulations on manufacturing
  • Emancipation from serfdom of much of the peasantry, including in Prussia
  • Education reform
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8
Q

major effect of reforms from napoleonic wars

A

increase labour mobility and to release agricultural labour for other industries as well as to consolidate the land size for farming
* Napoleon’s occupation planted enlightenment ideas of the French revolution
* Occupation also sparked German liberal nationalism among the middle class bourgeoise who advocated the creation of a modern German nation-state based on liberal democracy, constitutionalism, representation and popular sovereignty

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9
Q

beginning of German customs union

A

began with Prussia’s new tariff law in 1818

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10
Q

Prussia’s new tariff law

A

1818
* Abolished most internal customs tariffs
* Allowed most raw materials into Prussia duty-free
* Imposed a 10% ad valorem duty on manufactured goods and imposed a substantial transit duty on any goods passing through Prussia

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11
Q

how many states in custom union by 1831

A

nine

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12
Q

when did most remaining states join custom union

A

1852

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13
Q

how did customs union contribute to creating a german national market

A
  • Generated a considerable growth in trade for economic development and from customs revenue it provided a reliable source of fiscal revenue
  • Essentially created the foundations for a German national market according to the liberal economic principles of Adam Smith
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14
Q

what led to agricultural development in first half of 19th century

A
  • Emancipation of the peasantry, larger unit sizes of farms and the adoption of improved farming techniques, especially in crop rotation methods led to considerable increases in agricultural productions in the first half of the 19th century
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15
Q

population growth and ag ouput growth 1816-1865

output per worker and proportion of persons

A
  • In the period 1816-1865, population grew by 59%, agricultural output grew by 135%

1.3%

proportion of persons fell from 65% to 52%

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16
Q

industrial take off - dates and driving force

A

Take-off by Germany into sustained growth occurred in 1850s
*Agreed that the major force behind this was investment in railways that began in the mid-1830s

17
Q

km of rail constructed by mid 1850s

A

8000kms

18
Q

role of railways

A
  • Opened up investment possibilities for relocating and reorganising manufacturing production using coal-burning steam-powered machinery
  • Railway demand was vital in the modernisation of the engineering and metallurgical industries and provided the platform for lighter manufacturing such as texiles to modernise by adopting steam-powered techniques
19
Q

by how much did railways reduce haulage costs per km

A

80-85%

20
Q

how much railway constructed by 1870 and annually how many tonnes of freight

A
  • By 1870 nearly 19,000km of railway was constructed and carrying annually 5,300 million tons of freight/km
21
Q

railways as share of total investment

A
  • Railway construction accounted for an enormous share of total net investment with estimates of 19.7% in 1855-59 and 17.6% over the period 1851-79
22
Q

average growth during period 1850-1870

A

3.5%

23
Q

most innovative aspect of German industrialisatin

A

banking that financed the railways

24
Q

why did germany initially have difficulty in financing railways

A

due to agrarian society and therefore low level of income and saving to draw on

25
Q

german banking development

A
  • German banks developed what has been called mixed banking which combined investment banking with the more usual commercial banking role of funding long-term investment with short term credit funds
26
Q

how did german credit banking suport industrialisation

A

o Enabled the greater concentration of capital required for railway construction and also for other large-scale industrial enterprises such as iron production, coal mining and engineering, industries all stimulated by the railways

27
Q

why was Germany able to become an engine of innovation

A
  • High quality of German state sponsored education supplied scientists and individual managers capable of appreciating discoveries as well as implications for production methods
    o Much of the scientific research of universities aligned with the technological needs and problems of many fields of industry, most notably, in chemistry, textiles, glass, steel, and chemical fertilisers
28
Q

architect of german unifcation

A

Otto von Bismark

29
Q

how did von Bismark get all the states to agree to unification

A

who used Prussia’s greater military power, enhanced by industrialisation, to defeat Denmark and Austria in 1864-66, then defeated France in 1870-71
* Subsequently persuaded all the southern German states to agree to unification

30
Q

liberal reforms on unification

A
  • Uniform coinage and currency created and in 1873 Germany went onto the gold standard
  • The Reichsbank, Germany’s central bank was established in 1875
  • The legal code was standardised and modernised with an imperial court of appeal established in 1879
  • Most remaining internal barriers to trade and on industry were removed
    Completed the formation of a German national market in which internal trade and the mobility of labour and capital was unrestricted
31
Q

abandoment of liberalism

A

While the middle class became progressively supportive of economic liberalism, Germany’s government moved in the opposite direction in the late 1870s
* However, reform could only be effectively proposed by the executive and then put to the Reichstag

32
Q

when did Bismark legislate protection for agriculture

A

1879, then increases in 1885 and 1887

33
Q

agricultural tariffs

A
  • initial increases in German tariff rates were moderate and included manufactured as well as agricultural products – only raw materials used in manufacturing industry were exempt from any increases
34
Q

effects of agricultural protection

A
  • protectionism stimulated domestic agricultural production at the cost of higher food prices for the German consumer
  • whilst the tariff revenue increase did in the short run increase the revenue going to the Federal government, in the longer run, the policy so successfully reduced imports that tariffs shrank as a source of revenue
35
Q

when did Germany experience an economic crisis and why

A

1873 as a result of stock market speculation, with many large bankruptcies and a collapse of prices

36
Q

effects of economic crisis

A
  • large decline in agricultural prices, with serious implications for the competitiveness of German agriculture

o was a watershed for liberal economic policy with nations turning to protectionist policies
o in response, German industries increasingly turned to cartel alliances; whilst besides protectionist policies the German government increased public investment in infrastructure, especially in railways, to bring recovery

37
Q

how did germany regain momentum

A

regained in 1880s
as a result of renewed growth of investment in its heavy industries associated with technological progress
* new technologies in chemicals, dyestuffs and electrical engineering also induced high investment in newer industries along with metals processing
* newly established electrical engineering and chemicals industries brought a further impetus to growth and development
* By the mid-19th century Germany’s exports were weighted towards high-technology capital goods and consumer durables

38
Q

trend rate of capital formation

A

increased in the second half of the 19th century reaching in excess of 14% of national net product by the 1890s.

39
Q

problem of overproduction

A

From the early 1880s, productive capacity tended to exceed aggregate demand
* Largely a result of protection policies – suppressed the real income of the population and therefore domestic consumption
* Weakness in the wage-bargaining of the labour movement contributed to the demand constraint
o Real wages did not match productivity growth, with productivity gains captured as products

ECOS3024 (5 decks)

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