Domestic concerns

From its origins in 1871, the empire was governed under the constitution designed four years earlier by Otto von Bismarck, the Prussian prime minister, for the North German Confederation. This constitution reflected the predominantly rural nature of Germany in 1867 and the authoritarian proclivities of Bismarck, who was a member of the Junker landowning elite. There were two houses: the Reichstag, to represent the people, and the Bundesrat, to represent the 25 states. The former comprised 397 members elected by universal manhood suffrage and a secret ballot. The constituencies established in 1867 and 1871 were never altered to reflect population shifts, and rural areas thus retained a vastly disproportionate share of power as urbanization progressed. In theory the Reichstag’s ability to reject any bill seemed to make it an important reservoir of power; in practice, however, the power of the lower house was circumscribed by the government’s reliance on indirect taxes and by the parliament’s willingness to approve the military budget every seven (after 1893, every five) years. Most legislative proposals were submitted to the Bundesrat first and to the Reichstag only if they were approved by the upper house. Although members of the Reichstag could question the chancellor about his policies, the legislative bodies were rarely consulted about the conduct of foreign affairs. Imperial ministers were chosen by and were responsible to the emperor rather than to the legislature.

A problem that was to plague the empire throughout its existence was the disparity between the Prussian and imperial political systems. In Prussia the lower house was elected under a restricted three-class suffrage system, an electoral law that allowed the richest 15 percent of the male population to choose approximately 85 percent of the delegates. A conservative majority was always assured in Prussia, whereas the universal manhood suffrage resulted in increasing majorities for the political centre and left-wing parties in the imperial parliament. William I was both German emperor (1871–88) and king of Prussia (1861–88). Apart from two brief instances the imperial chancellor was simultaneously prime minister of Prussia. Thus, the executives had to seek majorities from two separate legislatures elected by radically different franchises. A further problem was that government ministers were generally selected from the civil service or the military. They often had little experience with parliamentary government or foreign affairs.

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The constitution had been designed by Bismarck to give the chancellor and monarch primary decision-making power. Universal manhood suffrage had been proposed because of Bismarck’s belief that the rural population would vote for either the Conservative or Free Conservative parties. (Female suffrage had not been proposed because politics was considered a male preserve at the time.) The Progressives, a left-wing liberal party, were expected to do poorly in the two-thirds of Germany that was rural in 1867. Bismarck had not counted on new parties such as the Centre Party, a Roman Catholic confessional party, or the Social Democratic Party (Sozialdemokratische Partei Deutschlands; SPD), both of which began participating in imperial and Prussian elections in the early 1870s. The Centre generally received 20–25 percent of the total vote in all elections. The SPD grew from 2 seats in the first imperial election to 35 by 1890, when the SPD actually gained a plurality of votes. Bismarck termed the Centre and SPD along with the Progressives Reichsfeinde (“enemies of the empire”) because he believed that each sought in its own way to change the fundamental conservative political character of the empire.

Beginning in 1871, he launched the Kulturkampf (“cultural struggle”), a campaign in concert with German liberals against political Catholicism. Bismarck’s aim was clearly to destroy the Centre Party. Liberals saw the Roman Catholic church as politically reactionary and feared the appeal of a clerical party to the more than one-third of Germans who professed Roman Catholicism. Both Bismarck and the liberals doubted the loyalty of the Catholic population to the Prussian-centred and, therefore, primarily Protestant nation. In Prussia the minister of ecclesiastical affairs and education, Adalbert Falk, introduced a series of bills establishing civil marriage, limiting the movement of the clergy, and dissolving religious orders. All church appointments were to be approved by the state. As a result hundreds of parishes and several bishoprics were left without incumbents. Clerical civil servants were purged from the Prussian administration.

The Kulturkampf failed to achieve its goals and, if anything, convinced the Roman Catholic minority that their fear of persecution was real and that a confessional party to represent their interests was essential. By the late 1870s Bismarck abandoned the battle as a failure. He now launched a campaign against the SPD in concert with the two conservative parties and many National Liberals. Fearing the potential of the Social Democrats in a rapidly industrializing Germany, Bismarck found a majority to outlaw the party from 1878 to 1890, although constitutionally it could not be forbidden to participate in elections. Party offices and newspapers were closed down and meetings prohibited. Many socialists fled to Switzerland and sought to keep the party alive in exile. During the 1880s Bismarck also sought to win the workers away from socialism by introducing legislation granting them modest pensions, accident insurance, and a national system of medical coverage. Like the Kulturkampf, the campaign against the SPD was a failure, and, when the 1890 elections showed enormous gains for the Reichsfeinde, Bismarck began to consider having the German princes reconvene, as in 1867, to draw up a new constitution. The new emperor, William II, saw no reason to begin his reign (1888–1918) with a potential bloodbath and asked for the 74-year-old chancellor’s resignation. Thus, Bismarck, the architect of German unity, left the scene in a humiliating fashion, believing that his creation was fatally flawed. Indeed, his policy of supporting rapid social and economic modernization while avoiding any reform of the authoritarian political system did lead to an atmosphere of persistent crisis.

The economy, 1870–90

The empire was founded toward the end of two decades of rapid economic expansion, during which the German states surpassed France in steel production and railway building. By 1914 Germany was an industrial giant second only to the United States. After the establishment of the North German Confederation (1867), the impediments to economic growth were quickly removed. The usury laws and fetters on internal migration disappeared. A uniform currency based on gold was adopted by Bismarck and his National Liberal allies. An imperial central bank was created, and the tough regulations hindering the formation of joint-stock corporations fell by the wayside. Combined with the euphoria over unification, these changes led to an unprecedented boom between 1870 and 1873. The Gründerjahre (“founders’ years”), as the years after unification were called, saw 857 new companies founded with a capital of 1.4 billion talers—more new companies and investment in the private sector than in the previous 20 years. Dividends reached an astounding 12.4 percent. The railway system almost doubled in size between 1865 and 1875. Tens of thousands of Germans invested in stock for the first time to demonstrate both their patriotism and their faith in the future of the new German Empire.

These halcyon years came to an abrupt end with the onset of a worldwide depression in 1873. The prices for agricultural and industrial goods fell precipitously; for six successive years the net national product declined. A sharp decline in profits and investment opportunities persisted until the mid-1890s. About 20 percent of the recently founded corporations went bankrupt.

In agriculture, the deeply indebted Junker elite now faced severe competition as surplus American and Russian grain flooded the German market. Among the more immediate consequences of the crash was a burst of emigration from the depressed provinces of rural Prussia. During the 1870s some 600,000 people departed for North and South America; this number more than doubled in the 1880s. As a result of the depression, social and economic questions increasingly preoccupied the Reichstag, while constitutional and political issues were put on the back burner.

It would be incorrect to draw the conclusion that the economy remained in the doldrums for an entire generation. While the 1870s and early 1890s were depressed periods, the 1880s saw significant recovery in industry, if not in agriculture. The British, who had paid scant attention to Germany’s emergence as an industrial power, began to respect their competitor during this decade.

In adjusting to the depression of the 1870s, Germany’s leaders chose to return to a regulated economy after a generation of increasingly free trade. The hallmark of the new age was concentration; Germany became the land of big industry, big agriculture, big banks, and big government. The two areas in which the trend toward a controlled economy was most evident were tariff policy and the formation of cartels. Cartel agreements, which were sanctioned by the state, apportioned markets, set standards for manufactured goods, and fixed prices. It is not coincidental that Germany, where the guild system prevailed into the 19th century, should have given birth to the cartel. Cartels arose rapidly in the steel, coal, glass, cement, potash, and chemical industries. Between 1882 and 1895 the total number of business enterprises grew by 4.6 percent, but the number employing more than 50 workers grew by 90 percent.

In 1878–79 Bismarck initiated a significant change in German economic policy in conjunction with his new alliance with the two conservative parties at the expense of the National Liberals. Protective import tariffs were introduced on iron and the major agricultural grains; the latter were raised in 1885 and again in 1887. This departure from liberal economic policy addressed complaints from industrialists, estate owners, and peasants about the terrible impact the depression was having on their respective incomes. Only Britain held out against the protectionist tide that swept Europe in the 1880s. Bismarck’s shift, nevertheless, had serious political implications. It signified his opposition to any further evolution in the direction of political democracy. The grain tariffs provided the Junker estate owners of Prussia, who constituted the main opposition to full political emancipation, with subventions that insulated them somewhat from the international market. Thus, the landed elite, major industrialists, the military, and the higher civil service formed an alliance to forestall the rise of social democracy, prevent further political liberalization, and make sure that the uncertainties of the market did not weaken the elites.

Foreign policy, 1870–90

Until his resignation in 1890, Bismarck had a relatively free hand in the conduct of foreign policy. After three successful wars, he saw his task as promoting peace and gaining time so that a powerful German Empire in the middle of Europe would come to be accepted as natural rather than as an interloper. The Prussian victories had led to great insecurity among the Continental powers, who now reformed their armies in imitation of Germany and maneuvered for defensive alliances so they would not find themselves isolated in the event of war. Bismarck’s two areas of concern were the Balkans—where the disintegration of the Turkish Ottoman Empire could easily lead to conflict between Habsburg-ruled Austria-Hungary and Russia—and France, which desired revenge against the German victors. Each might spark a general European conflagration that would inevitably involve Germany.

Bismarck’s most important diplomatic objective was to prevent France from allying itself with either Austria-Hungary or Russia to create a coalition of enemies in both the east and the west. In 1873 he negotiated the Three Emperors’ League with Russia and Austria-Hungary. The league collapsed in the mid-1870s when rebellion broke out in Turkey’s Slavic provinces. In 1877 Russia declared war on Turkey, leading both Britain and Austria-Hungary to express serious concern about Russia’s expansionist war aims. When Russia forced Turkey to cede considerable territory in the Treaty of San Stefano, Bismarck called for an international conference to reconsider the peace treaty and to forestall another military conflict. At the Congress of Berlin in 1878, Bismarck played the role of honest broker among the powers. Russia reluctantly accepted more modest territorial gains, and tensions dissipated.

But a conflagration had barely been avoided. Soon after the conference, Bismarck negotiated an alliance with Austria-Hungary (1879), which remained in effect through World War I. While Bismarck did not intend to do so, he had tied the fate of the youthful German Empire to the aged multinational empire that faced continuous problems from its many ethnic minorities. The chancellor had clearly opted for the Dual Monarchy over Russia should a war break out. The alliance gave him leverage in Vienna, and he steadfastly used it to prevent a war over the Balkans. He chose Austria-Hungary because he feared that its dissolution would lead to Russian hegemony over the empire’s Polish, Czech, and other Slavic provinces. In addition, seven million Austro-German Catholics might seek admission to the German Empire, leading to a strengthening of the hated Centre Party.

Having a solid ally, Bismarck demonstrated his virtuosity by negotiating a revived Three Emperors’ League in 1881. He now had influence in St. Petersburg as well as in Vienna to prevent a conflict over the Balkans. In 1882 Italy, fearing French hostility, joined the Dual Alliance with Austria-Hungary, making it into the Triple Alliance. On the surface Bismarck had triumphed. France had no allies for a war of revenge, and the alliance with both Austria-Hungary and Russia gave him influence with the two major adversaries in the Balkans.

The transient nature of this artistry soon became apparent. A crisis in Bulgaria inflamed Russo-Austrian relations, leading to the breakup of the revived league. Once again a war was avoided with Bismarck’s intervention, but Austria-Hungary and Russia could no longer patch up their differences. Bismarck negotiated a separate Reinsurance Treaty with the Russian tsar in 1887. Nevertheless, France and Russia began courting each other before Bismarck left office.

Between 1870 and 1890 Bismarck earned the respect of European leaders for his pacific policies. Apart from a few colonial additions in the mid-1880s, Germany under his guidance acted as a satiated power. The question remained whether this burgeoning industrial power led by the Junker and industrial elites would continue this policy while the other Western powers carved out world empires.

Politics, 1890–1914

The political structure established by Bismarck in 1867 remained with scant change until the empire’s demise in 1918. Leo, Graf (count) von Caprivi, Bismarck’s successor, was a political neophyte, having spent his entire career in the military. Given the disjuncture between the Prussian and German political systems (see above Domestic concerns), Caprivi, surprisingly, sought to work with the parties of the centre and left, Bismarck’s Reichsfeinde. With their support, he reduced the grain tariffs and negotiated long-term trade treaties with Russia, the Dual Monarchy, and Romania. Food prices fell as a result, and industry flourished. National wealth rose rapidly, as did the standard of living of the industrial labour force. The Junker elite were outraged at Caprivi’s willingness to sacrifice their interests on behalf of industry and labour. Utilizing their political power in Prussia and their access to the emperor, they were able to force his resignation in 1894, making his chancellorship the shortest before the war. After his resignation, the former general wrote to a friend:

In regard to the “Junker agrarians” I see only evil, and it appears to me that a revolution by the agrarians is not impossible and for the moment more dangerous than a Social Democratic revolution.

Succeeding chancellors learned from Caprivi’s fall that opposition to the landed elite was fraught with peril. Bernhard, Fürst (prince) von Bülow, chancellor from 1900 to 1909, abandoned Caprivi’s trade policy and resurrected the alliance of the agrarian and industrial elites.

As Germany entered the 20th century, its economy was the most dynamic in Europe, but its authoritarian political system was marked by paralysis. With each election, the increasingly urban electorate returned Social Democrats in growing numbers. By 1890 the Social Democrats (who had adopted a Marxist program of revolution at their Erfurt congress in 1891) received more votes than any other party, although four other parties won more seats. By 1912 they had more voters supporting them than the next two largest parties combined. Both the Centre and Social Democrats were able to create parties with a mass base in German society. The Conservatives, National Liberals, and Progressives were more traditional parties, led by notables who were ill at ease in the world of populist politics. All three declined relatively, especially the Conservatives, who, despite flirting with anti-Semitism after 1893 by becoming a Christian party, fell to less than 15 percent of the vote by 1912. Many contemporary observers thought that a major crisis was impending between the recalcitrant elites and the increasing number of Germans who desired political emancipation similar to that of Britain and France.

While the Liberals and Conservatives declined in the Reichstag, new single-issue extraparliamentary interest groups gained adherents. For the most part organizations such as the Pan-German League, the Navy League, the Farmers League, and the Colonial League were authoritarian in their politics and aggressively expansionist in foreign policy. Their constituencies were overwhelmingly middle-class and educated (except for the Farmers League), and they sought to influence the decision-making process both directly, by impressing the ministers with their strength, and indirectly, by supporting parties that adhered to their goals. Given the wealth and high status of their membership (professors were highly visible as leaders), they were unusually effective in publicizing their goals. One of the striking characteristics of the empire was the support it received from the educated strata of the population, despite (or perhaps because of) its elitist constitution.

In the last election during the empire (1912), the Social Democrats scored a great victory, capturing 34.8 percent of the vote and 110 seats. On the local level they had begun to cooperate with the Progressives and occasionally with the Centre Party. Southern states such as Württemberg were moving toward full parliamentary government, and Alsace-Lorraine was given a surprising degree of self-government. Thus, there were some indications that the empire was evolving into a representative democracy. On the other hand, the states of Saxony and Hamburg adopted even more restrictive franchises than Prussia in the years before World War I. Above all, Prussia and its Junker, military, and bureaucratic elites, supported by much of the professoriat, stood firm in opposition to any substantial democratization of the Prussian electoral system, which was a key to political reform in the Reich. It is not at all clear, therefore, how German politics might have evolved if war had not come in 1914. Some historians have viewed the outbreak of war in that year as an attempt by these elites to shore up their sagging position with a successful war and annexations, as Bismarck had done in the 1860s when the authoritarian Prussian state was besieged by a liberal opposition.

The economy, 1890–1914

The speed of Germany’s advance to industrial maturity after 1890 was breathtaking. The years from 1895 to 1907 witnessed a doubling of the number of workers engaged in machine building, from slightly more than one-half million to well over a million. An immediate consequence of expanding industrial employment was a sharp drop in emigration; from an average of 130,000 people per year in the 1880s, the outflow dropped to 20,000 per year in the mid-1890s. The surplus population continued to leave Prussia’s eastern provinces, but the destination was the growing and multiplying factories of Berlin and the Ruhr rather than the Americas. Earlier British fears of German competition were now fully justified. While Britain produced about twice as much steel as Germany during the early 1870s, Germany’s steel production exceeded Britain’s in 1893, and by 1914 Germany was producing more than twice as much steel as Britain. Moreover, only one-third of German exports in 1873 were finished goods; the portion rose to 63 percent by 1913. Germany came to dominate all the major Continental markets except France.

The focus of national wealth as well as population shifted to the urban industrial sector by 1900. Only 40 percent of Germans lived in rural areas by 1910, a drop from 67 percent at the birth of the empire. Cities of more than 100,000 inhabitants accounted for one-fifth of the population in 1914, compared to one-twentieth at the time of unification. The application of intensive agricultural techniques led to a doubling in the value of all farm products despite a sharp decline in the rural population. Industry accounted for 60 percent of the gross national product in 1913.

The German working class grew rapidly in the late 19th and the early 20th century. Total union membership reached 3.7 million in 1912, of which 2.5 million were affiliated with the socialist unions. Bismarck’s social welfare legislation covered some 13.2 million workers by 1911. Although German employers were extremely authoritarian and hostile to collective bargaining, the labour force did make significant economic gains. Between 1867 and 1913 the average number of hours worked per year declined by 14 percent. Nearly every study of real income shows a rapid rise until 1902 and then a modest increase yearly thereafter. National income per capita rose from 352 marks to 728 during the life of the empire. Despite these advances, industrial workers lacked full political rights, which led a large number of them, including many Roman Catholic workers, to vote for the revolutionary socialist party.

While industrialization was rapid, it occurred only in certain sectors of the economy; other areas were only marginally affected. Some two million Germans persisted in traditional artisanal enterprises even as the nation became an industrial colossus. While Germany was characterized by large Junker estates and cartels, it was also the nation of dwarf-sized farms (60 percent of farmers owned less than five acres) and small workshops. German factories were larger and more modern than their British and French counterparts, but the preindustrial sector was more backward. During depressions those in the traditional trades often turned to anti-Semitism as an ideology that was portrayed as both patriotic and anticapitalist.

Foreign policy, 1890–1914

Bismarck’s successors rapidly abandoned his foreign policy. The Reinsurance Treaty of 1887 with Russia was dropped, leaving Germany more firmly tied to the Dual Monarchy and Russia free to conclude an alliance with France in 1894. Within four years Friedrich von Holstein, a councillor in the political division of the foreign office, had weakened Germany’s influence in the Balkans and allowed France to end its isolation. German overtures to Britain remained ineffective.

In 1895 the brilliant young sociologist Max Weber gave an inaugural lecture in Freiburg in which he pointed out that, while Germany was establishing a nation-state belatedly, the other powers had been founding world empires in Africa and Asia. Weber admonished his audience that Germany had to follow suit or become another Switzerland. Weber’s contemporaries needed little convincing. From 1897 to 1912 William II, with his politically astute naval adviser, Alfred von Tirpitz, sought to make Germany a global power. Germany’s naval power went from being negligible to being second only to Britain’s in little more than a decade. Nor did Germany build a navy simply to defend its coastline; rather, the new battleships were capable of challenging the other naval powers on the oceans. Tirpitz was a master of publicity, able to win much of the commercial and industrial middle class for his vision of a mighty empire, whose shipping lanes would be guarded by his fleet. The fleet was also expected to make the monarchy more popular and stem the growth of the left-wing parties. Germany’s efforts to build a global empire proved to be a colossal failure. Germany came on the imperial scene late, when the choicest territories had already been occupied. Togo, Cameroon, part of New Guinea, a few Pacific islands, and east-central and southwestern Africa—all territories of limited economic value—hardly seemed to justify the enormous expenditures on the navy. Moreover, Tirpitz’s plans alienated Britain. Germany already had the most powerful army in the world when it fastened on becoming a great naval power. The British found this threatening and negotiated an alliance with Japan in 1902 and another one with France in 1904. In 1907 Britain settled its differences with Russia, and the Triple Entente (including France) was established. Germany now found itself surrounded by three major powers allied against it.

The more established powers found Germany meddling everywhere. This behaviour was particularly striking because it followed two decades of Bismarck’s policy of avoiding conflict. The Japanese objected to Germany’s involvement in China in the 1890s. Russia watched as German power and influence grew in Turkey, its hereditary enemy. The French, of course, still harboured dreams of undoing their defeat in 1870. With Britain also alienated, Bismarck’s nightmare of a coalition against the young upstart empire had become a reality. Twice Germany’s rulers sought to break up the alliance that was forming against it. In 1905 and 1911 Germany created crises over the French penetration of Morocco. In each case the British and Russians stood firm, and, even though Germany gained concessions, the Triple Entente remained solid. At home, the political system that Bismarck had created was in serious trouble, in part because neither his successors nor the unstable young emperor, William II, shared the master politician’s gifts, in part because Bismarck’s social world no longer existed. It became increasingly difficult to govern with a democratically elected Reichstag and a Prussian parliament that represented a conservative plutocracy.

In 1912 the chancellor, Theobald von Bethmann Hollweg, and his ministers reassessed the decade and a half of efforts to achieve global power and judged them a failure. The army, which had not been expanded since 1894, once again became the pride of the regime. Eastern Europe and the Balkans were now considered the most likely areas for German economic and political penetration. Since Italy had become unreliable, Austria-Hungary was the only ally to be counted on in the event of war. Any threat to the stability of the Dual Monarchy could leave Germany totally isolated.

The assassination of the Austrian heir to the throne, Archduke Franz Ferdinand, by a Bosnian Serb in June 1914 augured poorly for the future of Austria-Hungary unless it showed resolve in dealing with the provocation. William II and Bethmann Hollweg urged strong measures against Serbia and reasserted their unconditional loyalty if war should eventuate. With Russia rapidly recovering from its defeat by Japan in 1905 and Austria-Hungary increasingly threatened by the national aspirations of its minorities, time appeared to be on the side of the Triple Entente. Thus, if war was inevitable, the sooner it came, the better. A localized conflict between Austria-Hungary and Serbia with a quick victory for the former would be desirable. If Russia chose to intervene to help its Slavic brother, Serbia, then a general European conflict would ensue. This was acceptable to the German government both because of its pessimism about the long-term strength of the Central Powers (i.e., the German Empire and Austria-Hungary) and because the civilian population could be expected to rally to the war effort if tsarist Russia appeared to bear much of the responsibility.