The Economy and Population Growth

Germany experienced an economic boom immediately after unification. For the first time, the country was a single economic entity, and old impediments to internal trade were lifted. The federal chancellery published a new commercial code and established a uniform currency. The indemnity that France had to pay Germany after losing the 1870-71 war provided capital for railroad construction and building projects. A speculative boom resulted, characterized by large-scale formation of joint-stock companies and unscrupulous investment practices. This period of intense financial speculation and construction, called by Germans the Gründerzeit (founders' time), ended with the stock market crash of 1873.

Despite the crash and several subsequent periods of economic depression, Germany's economy grew rapidly. By 1900 it rivaled the more-established British economy as the world's largest. German coal production, about one-third of Britain's in 1880, increased sixfold by 1913, almost equaling British yields that year. German steel production increased more than tenfold in the same period, surpassing British production by far.

Industrialization began later in Germany than in Britain, and the German economy was not a significant part of the world economy until late in the nineteenth century. This was due in no small part to the purblind and petty policy by which German Princes had long obstructed the provision of those channels of communication that are the arteries and veins of a country's commerce. In consequence of political division and princely jealousy, Germany was, at the beginning of last century, almost entirely devoid of highways. Especially in the northern districts, traffic had to be carried on along rough tracks that were hardly passable in the winter and after rainy weather. It was only in the forties of the nineteenth century that the construction of highways was systematically taken in hand.

Germany's industrialization started with the building of railroads in the 1840s and 1850s and the subsequent development of coal mining and iron and steel production, activities that made up what is called the First Industrial Revolution. It was the removal of political uncertainty by the foundation of the Empire which imparted the decisive stimulus, for 15,305 kilometres of line, or more than a quarter of the whole, were completed in the decade from 1870 to 1880. Of the many secondary causes which have contributed to give Germany what must be considered her natural place in the front rank of the industrial States, none had been more effective in its operation than the adoption of steam locomotion.

It was not till Germany's political future was assured by her victory over France that she properly developed the capacities of her 6,000 miles of natural and artificial waterways. The channels of the rivers were then dredged out and their banks protected by buttresses and groins ; new and improved locks were constructed ; and a way to the interior was thus opened out to vessels of much larger draft. On the Rhine, the barges, which had averaged about 100 tons displacement in the first half of the nineteenth century, gradually increased in size to 200, 400, and, finally, 1,500 and even 2,000 tons. During the last quarter of the century the traffic on these waterways expanded from 2,900,000,000 to 11,500,000,000 kilometer tons.

In Germany, the Second Industrial Revolution, that is, the growth of chemical and electrical industries, followed the enormous expansion of coal and steel production so closely that the country can be said to have experienced the two revolutions almost simultaneously. Germany took an early lead in the chemical and electrical industries. Its chemists became renowned for their discoveries, and by 1914 the country was producing half the world's electrical equipment. As a result of these developments, Germany became the continent's industrial giant.

In 1894, 92 companies were chartered with a capital of 88,000,000 marks. In 1899, five years later, 364 new companies with a capital of 544,000,000 marks, were formed. From 1876 to 1895 the weight of merchandise carried on the rivers of Germany increased 159 per cent. The freight traffic on the railroads in this same period went up 143 per cent. In 1895 the number of ships which entered the harbor of Hamburg was 9,443. In 1900, the number of ships was 13,103 and the tonnage was over 8,000,000, more than the record of Liverpool for the same year. In the total movement of commerce - importation and exportation - Germany climbed up between 1871 and 1900 from fourth place to second. Inevitably much of this progress was at the expense of England.

During the thirty years from 1880 to 1910 the development of the production of pig-iron in the two countries was telling. In 1880 the United Kingdom manufactured nearly three times as much pig-iron as Germany, and that the latter country in 1910 had the advantage by approximately 50 per cent. In the production of crude steel the relationship changed even more emphatically to the disadvantage of the British Isles - in 1890 production was 3.6 million tons in Britain and 2.2 million tons in Germany, while by 1910 British production of 6.5 million tons was greatly surpassed by Germain production of 12.3 million tons.

A nation's economic strength depends upon the numbers and character of its population and the position and natural resources of the country it inhabits. In the size of her population alone Germany's advantage over the British Isles was enormous, and it was still growing steadily. In 1871, the year of the foundation of the German Empire, the populations of the two countries were : Germany 41,000,000 United Kingdom 31,800,000 Germany's advantage 9,200,000 In 1911, the two populations were : Germany 65,400,000 Un1ted Kingdom 45,400,000 Germany's advantage 20,000,000.

The expanding and industrializing economy changed the way this rapidly expanding population earned its livelihood. In 1871 about 49 percent of the workforce was engaged in agriculture; by 1907 only 35 percent was. In the same period, industry's share of the rapidly growing workforce rose from 31 percent to 40 percent. Urban birth rates were often the country's highest, but there was much migration from rural areas to urban areas, where most industry was located. Berlin, by far the country's largest city and a major industrial center, grew from almost 1 million inhabitants in 1875 to 2 million in 1910. Many smaller cities, especially those in areas with much industry--such as the Ruhr region, the upper Rhine Valley, the Neckar Valley, and Saxony--tripled or quadrupled in size during this period.

For military and political reasons Germany was anxious to retain control over as large a number of people as possible, and it also desires to keep the Empire in a position to feed itself in case of need. Much attention had consequently been given to the problem of repopulating the rural areas, which are being drained of their best blood by the call of the towns, and with this object in view great efforts are being made to reclaim the three-and-a-half million acres of waste, moor and marsh land which was put to no use whatever. Scientific opinion seemed to encourage the idea that a considerable proportion of this might be brought under profitable cultivation if the proper methods were employed.