hi136 the history of germany lecture 3 germany’s first economic miracle
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HI136 The History of HI136 The History of GermanyGermanyLecture 3Lecture 3
Germany’s First Germany’s First Economic MiracleEconomic Miracle
““The great The great questions of our questions of our day cannot be day cannot be solved by solved by speeches and speeches and majority votes majority votes but by iron and but by iron and blood.”blood.”
Otto von Bismarck, Otto von Bismarck, Speech to the Prussian Speech to the Prussian LandtagLandtag, , 30 Sept. 186230 Sept. 1862
““The German The German Empire was Empire was built more built more truly on coal truly on coal and iron than and iron than on blood and on blood and iron.”iron.”
J. M. KeynesJ. M. Keynes
Industrial RevolutionIndustrial Revolution Late 18th, early 19th c. Started in Britain, then spread Late 18th, early 19th c. Started in Britain, then spread
over the whole European continent.over the whole European continent. Industry replaces agrarian sector as most important Industry replaces agrarian sector as most important
economic sectoreconomic sector Economy based on manual labour was replaced by Economy based on manual labour was replaced by
industry, manufacturing and machinery. It began with the industry, manufacturing and machinery. It began with the mechanisation of the textile industry and the mechanisation of the textile industry and the development of new iron-making techniques.development of new iron-making techniques.
Improvement of transportation (canals, roads, railways)Improvement of transportation (canals, roads, railways) Steam power – fuelled primarily by coal and powered Steam power – fuelled primarily by coal and powered
machinerymachinery Dramatic increase in production capacity and Dramatic increase in production capacity and
productivityproductivity Fundamental socio-economic and cultural changesFundamental socio-economic and cultural changes
Second Industrial Second Industrial RevolutionRevolution
Since middle of the 19th c.Since middle of the 19th c. Development of chemical, electrical, Development of chemical, electrical,
petroleum and steel industriespetroleum and steel industries Mass production of consumer goodsMass production of consumer goods Mechanisation of manufacture of food and Mechanisation of manufacture of food and
drink, clothing and transportdrink, clothing and transport Employment for increasing number of Employment for increasing number of
population whose needs were satisfied by population whose needs were satisfied by mass productionmass production
Spread of the Industrial Spread of the Industrial RevolutionRevolution
Paths to Paths to IndustrializationIndustrialization
The ‘British’ model of coal & iron-fired The ‘British’ model of coal & iron-fired industrialisation (Germany had many of the industrialisation (Germany had many of the same raw materials as GB)same raw materials as GB)
Late-comer industrialisers benefit from Late-comer industrialisers benefit from technology transfertechnology transfer
Role of foreign investors in early industrialisationRole of foreign investors in early industrialisation Role of state in German investment (Prussian Role of state in German investment (Prussian
government interest in railways, coal mines)government interest in railways, coal mines) Role of big investment banks (often represented Role of big investment banks (often represented
on board of companies)on board of companies)
(1913 ~ 100)(1913 ~ 100) MetalMetal CoalCoal TransportTransport BuildingBuilding TextileTextile
18701870 7,57,5 13,913,9 8,98,9 20,120,1 31,931,9
18801880 13,913,9 24,724,7 16,116,1 2929 40,140,1
18901890 23,823,8 36,936,9 27,927,9 45,645,6 6565
19001900 47,547,5 57,557,5 50,150,1 6767 72,872,8
19131913 100100 100100 100100 100100 100100
Hans-Ulrich Wehler, Deutsche Gesellschaftsgeschichte, vol. 3 (Munich, 1995
Data from: Paul Bairoch, "International Industrialization Levels from 1750 to 1980" JEEH 11
New Technologies in Industrial New Technologies in Industrial Production in Germany 1870-Production in Germany 1870-
19001900Heavy industry
English blast furnace technology
Coal from Silesia and the Ruhr
Ores from Lorraine
Bessemer process 1879
Stainless steel 1912
Mechanical engineering
Locomotives
Internal combustion engine 1876
Cars 1889
Diesel engines 1896
Zeppelins (airships) 1900
Airplanes 1905
Electrical Industry
Dynamos (Siemens)
Electrical engines
Telephones
Power stations
Films
X-ray units
Chemical Industry
Artificial fertilizers
Dyes
Plastics 1885
Pharmaceuticals
Safety explosives 1885
Famous Famous companies/industrialistscompanies/industrialists
StummStumm KruppKrupp ThyssenThyssen BoschBosch SiemensSiemens DaimlerDaimler BenzBenz AEG - RathenauAEG - Rathenau BayerBayer BASFBASF
Electrical industry - Electrical industry - SiemensSiemens
Siemens pointer telegraph, 1847Siemens pointer telegraph, 1847
Electrical dynamo, 1866
Steel – Krupp, EssenSteel – Krupp, Essen
Krupp steelworks, Essen, stages of Krupp steelworks, Essen, stages of growth 1819, 1852, 1912growth 1819, 1852, 1912
Pioneering of Pioneering of seamless railway seamless railway wheelswheels
Alfred Krupp, 1812-87, Alfred Krupp, 1812-87, the ‘Cannon King’the ‘Cannon King’
Develops Bessemer Develops Bessemer process for purifying process for purifying steelsteel
Close contacts with Close contacts with arms industryarms industry
Krupp & munitionsKrupp & munitions
Krupp’s cast-steel cannon at the Krupp’s cast-steel cannon at the 1851 Exhibition in London1851 Exhibition in London
Krupp’s 42cm ‘Dicke Bertha’ Krupp’s 42cm ‘Dicke Bertha’ siege gun (used to reduce siege gun (used to reduce
Liege in 1914 and shell Paris)Liege in 1914 and shell Paris)
Some consequences of Some consequences of the Industrial Revolutionthe Industrial Revolution Population effects: productivity increases, Population effects: productivity increases,
health improvements, lower birth rates health improvements, lower birth rates Urbanisation – industry as “city forming” Urbanisation – industry as “city forming”
activityactivity Class societyClass society Environmental damageEnvironmental damage Growth of global markets & international Growth of global markets & international
tradetrade
Social Consequences of Social Consequences of the Industrial Revolutionthe Industrial Revolution Clearer distinction between ‘work’ and Clearer distinction between ‘work’ and
‘leisure’.‘leisure’. Creation of an industrial working classCreation of an industrial working class
Rise of organised laborRise of organised labor Growth of bourgeoisie (merchants, Growth of bourgeoisie (merchants,
entrepreneurs) – economically dominantentrepreneurs) – economically dominant Craftsmen (old Craftsmen (old MittelstandMittelstand - middle class) - middle class)
become less importantbecome less important Civil servants and white collar workers (new Civil servants and white collar workers (new
MittelstandMittelstand - middle class) - middle class)
New Technology and Social New Technology and Social ChangeChange
Electric street lighting allowed people to keep later hours Electric street lighting allowed people to keep later hours and stimulated the entertainment industry.and stimulated the entertainment industry.
Railway travel created a more mobile populationRailway travel created a more mobile population Class distinctions on the railwaysClass distinctions on the railways Even so, complaints that rail travel was ‘too democratic’Even so, complaints that rail travel was ‘too democratic’
Plumbing, piped water and developments in drainage Plumbing, piped water and developments in drainage and sewers improved public healthand sewers improved public health Germany lagged behind Britain in the introduction of new Germany lagged behind Britain in the introduction of new
sanitation and public health technologysanitation and public health technology At the turn of the century indoor plumbing was still expensive At the turn of the century indoor plumbing was still expensive
and a luxury itemand a luxury item
Demographic RevolutionDemographic Revolution Inhabitants of German Empire: Inhabitants of German Empire:
1864: 39,392,000; 1864: 39,392,000; 1871: 40,997,000; 1871: 40,997,000; 1910: 64,568,000 1910: 64,568,000
Growth of urban populationGrowth of urban population More big citiesMore big cities
Demographic RevolutionDemographic Revolution Inhabitants of German Empire: Inhabitants of German Empire:
1864: 39,392,000; 1864: 39,392,000; 1871: 40,997,000; 1871: 40,997,000; 1910: 64,568,000 1910: 64,568,000
Growth of urban populationGrowth of urban population More big citiesMore big cities Urbanisation of daily lifeUrbanisation of daily life Migration and “uprooting”Migration and “uprooting” Relative decline of agrarian populationRelative decline of agrarian population Emigration and immigrationEmigration and immigration Improvement of health care – decline of infant mortality Improvement of health care – decline of infant mortality
(since 1900) and higher life expectancy (since 1900) and higher life expectancy
ClassClass
In Marxist terms a class is a group of people In Marxist terms a class is a group of people defined by their relationship to the means of defined by their relationship to the means of production. production.
Social class is based on economically Social class is based on economically determined relationship to the market (owner, determined relationship to the market (owner, renter, employee etc.) – Max Weberrenter, employee etc.) – Max Weber
Similar life chancesSimilar life chances Common interestsCommon interests Subjective factor: Identification with classSubjective factor: Identification with class
Der Sozialist, Robert Koehler, 1885, DHM, Berlin
Winners and LosersWinners and Losers Rapid industrial and economic growth brought about Rapid industrial and economic growth brought about
social change.social change. Some in society were obvious beneficiaries, others didn’t Some in society were obvious beneficiaries, others didn’t
do quite so well.do quite so well. The most obvious beneficiaries were the industrialists The most obvious beneficiaries were the industrialists
and bankers who owned German business.and bankers who owned German business. The working class were essential to the growth of the The working class were essential to the growth of the
German economy, but often lived in poor conditions.German economy, but often lived in poor conditions.
Elendsquartier in der Berliner Spreestr. 6, Berlin, about 1910 (DHM, Berlin)
Winners and LosersWinners and Losers Rapid industrial and economic growth brought about Rapid industrial and economic growth brought about
social change.social change. Some in society were obvious beneficiaries, others didn’t Some in society were obvious beneficiaries, others didn’t
do quite so well.do quite so well. The most obvious beneficiaries were the industrialists The most obvious beneficiaries were the industrialists
and bankers who owned German business.and bankers who owned German business. The working class were essential to the growth of the The working class were essential to the growth of the
German economy, but often lived in poor conditions.German economy, but often lived in poor conditions. Landowners lost out in the transition to an industrial Landowners lost out in the transition to an industrial
economy.economy. The old middle class also declined.The old middle class also declined. The benefits of growth were unevenly distributed, but The benefits of growth were unevenly distributed, but
there was a general improvement in prosperity.there was a general improvement in prosperity.
Some PeculiaritiesSome Peculiarities
Important role of state investment (coal mining in Important role of state investment (coal mining in Saarland belonged to Prussian state)Saarland belonged to Prussian state)
Important role of finance capital (long-term Important role of finance capital (long-term investments, directors of banks in supervisory investments, directors of banks in supervisory boards of shareholder companies)boards of shareholder companies)
Important role of industrial associations Important role of industrial associations (lobbyism)(lobbyism)
Important role of cartelsImportant role of cartels
Centralverband Deutscher Industrieller 1876 (Central Union of German Industrialists)
Bund der Industriellen 1895 (Union of Industrialists)
Hansabund 1909
Vereinigung der deutschen Arbeitgeberverbände 1913 (Union of German Employers’ Associations)
Free = Socialist “Generalkommission” general commission
Christian “Gesamtverband”
“yellow” = liberal
Exert pressure on the government and Reichstag deputies
Successes: Tariffs 1878/79
Organising the working class, representing interests of workers, indirect successes – state intervention and “welfare state”
Associations, lobbyism and trade Associations, lobbyism and trade unionsunions
CartelsCartels Cartels created in times of crisis (1873 ff), 70 in 1887, Cartels created in times of crisis (1873 ff), 70 in 1887,
143 in 1895143 in 1895 Agreements between companies to fix prices, regulate Agreements between companies to fix prices, regulate
output output Legally binding (in USA cartels were forbidden)Legally binding (in USA cartels were forbidden) But…But… So successful and useful, that even more cartels were So successful and useful, that even more cartels were
founded after 1896, 673 by 1910founded after 1896, 673 by 1910 Not all sectors dominated by cartels: potash industry Not all sectors dominated by cartels: potash industry
(100%), paper industry (90%), coal (82%), iron and (100%), paper industry (90%), coal (82%), iron and cement industries (less than 50%), electrical industry cement industries (less than 50%), electrical industry (less than 10%), almost no cartels in chemical industry(less than 10%), almost no cartels in chemical industry
ConclusionConclusion Causes for Germany’s First ‘Economic Miracle’:Causes for Germany’s First ‘Economic Miracle’:
Population growth provided both a work force and a market for Population growth provided both a work force and a market for manufactured goodsmanufactured goods
Germany had ample raw materialsGermany had ample raw materials Geography – rivers and railways provided transportGeography – rivers and railways provided transport Good education system provided a skilled workforceGood education system provided a skilled workforce Expansion of banks free from regulation encouraged investment Expansion of banks free from regulation encouraged investment
and a close relationship between banking and industryand a close relationship between banking and industry
ConclusionConclusion
Consequences of Industrialization:Consequences of Industrialization: Demographic changeDemographic change
Population growthPopulation growth Growth of townsGrowth of towns East-West migrationEast-West migration
Social Change Social Change Creation of an urban working classCreation of an urban working class Separation of ‘work’ and ‘leisure’Separation of ‘work’ and ‘leisure’ Growth of literacyGrowth of literacy Growth of service industry and mass entertainmentGrowth of service industry and mass entertainment
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