Industrialization in Germany | History Optional for UPSC (Notes) PDF Download

Germany Before Unification (Up to 1871)

• The Industrial Revolution in Germany started about a hundred years later than in England. Before 1871, Germany was not properly united due to a power struggle mainly between Prussia and Austria, which hindered economic stability and growth.
• The southern part of the Rhine Valley was annexed by Napoleon and became part of France. At that time, France, despite its economic disadvantages compared to England and Belgium, was more advanced than Germany. This forced integration with France brought about economic changes in the Rhine Valley.
• In 1815, the Rhine Valley gained independence from France but kept some of the economic and institutional reforms from the Napoleonic era. During this time, serfdom and guilds were abolished, and remnants of feudalism that restricted commerce and industry were eliminated.

Zollverein

• Zollverein, also known as the German Customs Union, was initially proposed by Prussian Finance Minister Bulow in 1818 as a Prussian customs union. It was formally organized by the 1833 Zollverein treaties and came into existence on January 1, 1834.
• The Zollverein linked various Prussian and German princely territories, promoting economic cooperation.
• Over the following thirty years, many other German states, except Austria, joined the Zollverein.
• The Zollverein of 1833 abolished tolls between German principalities, transforming Germany into a common market.
• It reduced protectionist barriers among German states, facilitating the transport of raw materials and finished goods. This was crucial for emerging industrial centers in the Rhineland, Saar, and Ruhr valleys.
• For several decades, until the 1860s, Germany attempted to imitate the industrialization seen in other European countries, but with only moderate success.

Factors Responsible for Rapid Industrialization in Germany After 1871

1. Unification of Germany:

• In 1871, Germany was united under Chancellor Bismarck, bringing together previously divided states.
• This unity allowed for faster distribution of goods and resources across the country, fostering business growth.
• A coordinated and unified nation was less vulnerable to political and military threats, reducing risks and costs for businesses.

2. Government’s Role, Protection, and Welfare:

• The government supported heavy industry, crafts, and trades.
• In 1879, protection for industry was introduced through tariffs on imports, boosting trade and employment.
• Tariffs generated revenue, which was reinvested into the economy and used for social welfare programs like Health Insurance, Accident Insurance, and Old Age Pension.
• Social welfare initiatives, introduced by Bismarck, improved public perception of the government and deterred migration of skilled workers.

3. Contribution of Bismarck:

• Bismarck unified the country, aligned the economy, and ensured its stability.
• He gained support from both industry and skilled workers through high tariff policies, despite alienating liberal intellectuals.
• His Blood and Iron Policy, even before unification, included iron, which fueled industrialization.

4. Education:

• Germany implemented a technical education curriculum focusing on industrial areas like electrics, chemistry, and physics.
• This emphasis on technical education produced a workforce skilled in utilizing technology and resources effectively.

5. Population:

• Germany became a desirable place to live, attracting immigrants and boosting the economy.
• Economic growth led to higher living standards and wages, encouraging higher birth rates.
• Urbanization increased the available workforce, contributing to industrial prosperity.

6. Agriculture:

• Farmers adopted modern practices, such as new fertilizers and tools, moving away from traditional methods.
• Despite small farm sizes and reliance on women for fieldwork, these changes freed up workers for industrial jobs.
• The introduction of sugar beet as an import substitute also contributed to agricultural efficiency.

7. Threat of France:

• German politicians, industrialists, and academics felt threatened by France, particularly in the aftermath of the Seven Weeks War of 1866.
• This perceived threat motivated Germany to strengthen itself in anticipation of potential conflict.

8. Role of Railways:

• Railways played a crucial role in Germany’s industrial growth, improving efficiency and speed of transportation.
• Despite being a late starter in railway development, Germany quickly caught up.
• The rail system stimulated demand for steel and coal, further boosting the economy.
• Railways facilitated trade and positioned Germany as a central hub for European business.

9. Natural Resources:

• Germany was rich in natural resources, including coal and iron ore in the Ruhr, Saar, and Upper Silesia.
• Abundant sodium and potassium facilitated a large chemical industry.
• The settlement with France post-Seven Weeks War, which included financial compensation and territories like Alsace and Lorraine, contributed valuable minerals and soil to the German economy.

10. Banks and Cartels:

• Banks, particularly credit banks, were willing to lend money for business ventures.
• Different banks formed cartels in various industries, with cartel contracts being legally binding in Germany.
• These practices, while illegal in Britain and the United States, contributed to industrial growth.

11. Examples of Success:

• Steel: Germany emerged as Europe’s leading steel producer in the late 19th century, aided by protection from foreign competition through tariffs and cartels. The German Steel Federation was established in 1874.
• Chemicals: Germany became dominant in the global chemical industry by the late 19th century, thanks to its leadership in chemical research. Companies like BASF and Bayer led in the production of artificial dyes and pharmaceuticals, monopolizing 90 percent of the international chemical trade by 1914.

Differences in the Industrialization Processes of Germany and Britain

While both Britain and Germany industrialized with the help of coal, iron, steam engines, and heavy industry, their paths to industrialization had notable differences.

Late Start but Rapid Catch-Up:

• Germany began its industrialization later than Britain. Initially, Germany was lagging behind.
• However, Germany quickly caught up. Britain’s early start gave it an initial advantage, but it also faced challenges like outdated machinery and increasing competition.
• Germany’s late start allowed for rapid growth, while British growth eventually slowed down.

Emphasis on Technical Education:

• Germany placed a strong emphasis on technical education, focusing on the future by building infrastructure and improving basic education.
• In contrast, Britain did not prioritize technical education to the same extent, which hindered its progress.

Focus on Chemical Industry:

• Germany concentrated on developing the chemical and electrical industries.
• Britain, on the other hand, thrived in the textile industry, largely due to its colonies in the Americas and access to abundant cotton.

Role of Government:

• The central government in Germany played a more significant role in promoting industrialization compared to Britain.
• The German government, under leaders like Bismarck, aimed to accelerate industrialization and catch up with Britain.
• In Britain, industrialization was not driven by a single strong leader.

Banking Differences:

• Germany excelled in the confidence banks had in lending money to businesses.
• British banks were often reluctant to lend, fearing that businesses would default on loans.
• In Germany, banks were more willing to lend, and a new type of bank, the 'credit bank,' emerged.
• German banks formed cartels in various industries, a practice that was illegal in Britain.

Geographical Challenges:

• Germany faced geographical challenges, as its main rivers flowed north, which complicated transportation.
• In contrast, Britain had the advantage of rivers that flowed year-round and in multiple directions, facilitating the quick and efficient transport of materials, goods, and resources.

Focus on War Material:

• German industrialization placed a greater emphasis on producing war materials compared to Britain.

Importance of Railways:

• Railways played a more critical role in Germany’s industrialization compared to Britain.