The Growth of German Industry: 1870-1914

Course Title: Germany 1806-1918

Without any disputes, Germany was a latecomer to the Industrial Age. In the years following the Congress of Vienna in 1815, Britain, then the greatest industrial power of Europe, had left Germany completely in dust in terms of industrialization. Nonetheless, such discrepancy gradually closed up. This was not because the British industry shrank, but was rather because the German industry grew much faster than the British. Eventually on the eve of the First World War, Germany surpassed England and became the leading industrial power on the continent. And among these hundred years of blistering catch-up, the four decades following the unification of the empire in 1870 were undoubtedly the period where the most important advances in German industries took place.

From Backward to Advanced

After the Napoleonic Wars in 1815, Germany clearly lagged behind the Great Britain in terms of her industrial development. This could be proved by looking at the output of coal and pig iron of each country. Germany, or to be more specific the German Confederation excluding Austria, produced 1.3 million tons of coal in 1817[1] (Mitchell 416) and 85,000 tons of pig iron in 1823. (Mitchell447) These were but a fraction of what the British produced in roughly the same period of time. In 1815, the British output of coal amounted to some 22.3 million tons (Mitchell 416), while the production of pig iron was over 450,000 tons in 1823. (Mitchell 447) Hence, judging solely by the output of these two indispensable elements for the industries in those days, the difference between these two countries was rather significant.

The situation didn’t change much some twenty years later. In 1841, the British still produced near eleven times more coal and over seven times more pig iron than Germany[2]. What was perhaps more noteworthy, however, was the complete dependence on English technology amongst Germany industrialists. In that same year, it was reported that a manufactory in Hamburg was working “with English iron, with English coals, with English models, [and] all their tools English.” (Documents of European Economic History vol.1, or DEEH1 327) But not only that, even their director and 45 out of their 75 workers were Englishmen. (DEEH1 327) All the above evidences suggested that the British industry still had a clear edge over Germany in1841.

It was in the four decades after the unification of the German Empire in 1871 when the story really began to look different. To be fair, from 1870 to 1913, the British industry still enjoyed a respectable annual growth of 2.1%[3], as measured by the Index of Industrial Production. Since this rate was roughly equal to the 2.5% that Britain witnessed in the forty years preceding 1870, it is safe to say that the growth of the British industry didn’t significantly slow down. The German industry, however, grew at a much higher rate of 3.9% in that same period of time, as measured by that same index. With this seemingly minuscule discrepancy of 1.8%[4], Germany managed to surpass Britain in almost all major industrial sectors by 1913. Britain was no longer the growth engine of Europe.

Supremacy in the Staple Industry

            For instance, in the old staple industries where Britain used to lead all other countries by a comfortable margin, Germany replaced Britain and became the largest user of coal, iron ore, pig iron and crude steel in 1913. Back in those days, “as the manufacturing industries are based on the use of coal, iron, and steam, the manufacturing eminence and progress of a country can best be measured by the national consumption of coal and iron.” (Documents of European Economic History vol.2, or DEEH2 77) Hence, the fact that Britain produced 2.4 times more coal, 4.0 times more iron ore, 3.8 times more pig iron, and 1.3 times more crude steel than Germany in1870[5] clearly indicated that the German industry was no match of the Britain at that time. This is even more significant when one considers that the population of Britain was merely half of Germany in 1870 (Mitchell 4), suggesting that the per capita production of those raw materials in Britain was much higher than the production figures shown above.

            Nonetheless, Britain was not able to maintain her position for too long. In 1913, Germany managed to produce 76% more iron ore, 60% more pig iron and 126% more crude steel than Britain, while the output of coal was 5% less than the British figure[6]. The coal figure that might be rather surprising requires some further manipulations before interpreting it. This was because in 1913, the British exported 74 million (Mitchell 468) of the 292 million tons of coal (Mitchell 416) that they produced, while Germany only exported 17 million (Mitchell 468) out of their 277 million tons of coal (Mitchell 416) that they produced. Accordingly, even though Britain produced a little bit more coal than Germany, they in fact consumed less. Moreover, since the German people tended to use “wood for fuel, and require […] less coal for their closed stoves than Englishmen do for their open fires” (DEEH2 77), the difference in Germany’s favour was in reality far greater than appeared from the figures above. In short, in this old staple industry, Germany had completely taken over the British.

Supremacy in Traditional Manufacturing

            Merely producing and consuming the largest amount of resources evidently cannot be directly interpreted as equivalence of industrial supremacy. The real factor that determined the economic power of a country in those days was whether their products were superior to their rivals. Evidences suggested that towards the end of Germany’s Second Empire, products made in Germany greatly surpassed competition coming from France and Britain.

For example, progress in the textile industry has been much more rapid in Germany than in France. The German manufacturers of woollen cloth used to be only half the size of the French manufactures in 1875, but the French had been completely taken over by 1900. (DEEH2 87) As for the manufacturing of cotton, large-scale mechanical production allowed the German manufacturers to enjoy “at least a tremendous boom” (DEEH2 87). This can be confirmed by looking at the number of cotton spindles that each country possessed. By 1867, the French had 6.8 million cotton spindles; the German, only 2 million. (Mitchell 496) However, by 1913, Germany had more than 11 million, while the number for France marginally grew to 7.4 million. (Mitchell 497) In short, the France had fallen far behind Germany in the textile industry.

The English were equally impressed, if not shocked, by the progresses in German industry. Gone were the days when the Hamburg manufactories bought all their machineries from England, as it was pretty much the opposite that was the new trend. In 1903, it was reported that a variety of Germany-made machines, including heavy machine tools, hydraulic presses, steel ingots, crank shafts, shaft linings, shaft borers, pumps, forgings and all kinds other machines had successfully penetrated into the English market. (DEEH2 81) And in fact, some manufactories like Haniel and Lueg from Düsseldorf now executed more orders for England than for Germany. (DEEH2 81-2) In short, the old saying of “cheap and nasty” (DEEH2 81) that was once used to describe machineries made in Germany was absolutely out of date. With their first rate products, the German were able to reverse the old tradition of importing machines from England.

The unprecedented pressure felt by the English and French industries were far from being limited to the textile and engineering industries. A French writer once said that no matter in the chemical industry, in the porcelain industry, in the glass industry, in the toys industry, in the leather industry, or in the printing industry, Germany showed similar progress as they did in the textile industry mentioned above. (DEEH2 87-8) Moreover, a British writer once noticed that things in his surroundings, whether it be the clothes, the fairy books, the paper of the newspaper, the piano, the drain-pipe, or the music opera, were all made in Germany. (DEEH2 210-1) These two quotes from two foreigners leaves few doubts that the German indeed managed to conquer a sizeable portion of the British and the French markets.

Supremacy in Chemical and Electrical Manufacturing

While the old industries like textile and staple witnessed a tremendous growth during the Second Empire, it was in the new science-based industries where Germany experienced her greatest progress. And, within this new type of industry, the electrical and the chemical branches were the two most successful one.

The available statistics about the electrical industry clearly indicates that its growth could only be described as blistering. For instance, the total number of people employed in this industry in 1882 was still small enough to be “separately enumerated.” (DEEH2 77) This figure quickly increased to 15,000 in 1897 and reached 50,000 by 1907. (DEEH2 77-8) The output of electrical energy showed similar impressive growth. In 1901, Germany already produced 1.3 Giga-Watt-Hours of electricity, compared to 0.34 and 0.1 of France and England, respectively. (Mitchell 546) Germany later extended their lead and produced over 8 Giga-Watt-Hours by 1913, while France and England produced only 1.8 and 2.4 in that same year. (Mitchell 547) In fact, the German electrical industry was so strong that by 1902, the German manufactories alone had built 91 percent of all the electrical street railways system of Europe (DEEH2 78), while Germany herself had over one third of all the electric railways and over half of total mileage in Europe. (DEEH2 78) In short, this new science-based industry enormously helped to extend the existing margin between Germany and other nations, and at the same time greatly contributed to the overall industrial boom in the second half of the Second Empire.

The German chemical industry that was similarly based on new scientific knowledge was no less splendid than her electrical industry. For example, in the market of dye-stuffs that was estimated to have a market size of 150 million marks in 1900, Germany alone was responsible for four-fifths of it. (DEEH2 79) This impressive result was the brilliant achievements of German chemists who had invented coal-tar dyes to replace the organic dyes (DEEH2 79), and allowed Germany to export more than 100 million marks worth of coal-tar dyes in 1900. (DEEH2 79)

The picture was similar in the production of indigo for the textile industry. In 1897, the discovery of a process to produce artificial indigo by a German chemist quickly reversed the trade figure from an import of 3.5 million pounds of natural indigo into an export of 18 million pounds of artificial indigo in 1903. The end result of all these fascinating advances in the chemistry by German chemists was an annual production of chemicals that was worth over 1.2 billion marks in 1908, which was more than the total value of all the machinery manufactured, (DEEH2 78) and easily made Germany to be the largest player in this industry. (DEEH2 78)

To sum up, from all the exciting industrial development depicted in the last few paragraphs, one trend can be easily discovered. This is the fact that Germany was able to surpass both England and France in most areas, whether it be the old staple industries or the new science-based industries, from a significant fall-behind position in 1870, into the greatest European industrial power in 1913. Germany had completed her industrialization process.

Birth Rate, Transportation, and State Support

Having said that the industrial progress in Germany during her Second Empire was, to say the least, spectacular, one would naturally be interested to investigate the causes of this phenomenon.

There existed more than one factor that explained such tremendous growth. First of all, the high birth rate in Germany forced the German population to innovate. As a writer once pointed out, “nation makes progress […] only when forced to do so by compelling circumstances.” (DEEH2 275) Here, the compelling circumstance for Germany was the pressure coming from the high birth rate. In country like France that had only 226 births annually per 10,000 of population (DEEH2 275), the sons could easily maintain the same quality of life once they inherited a sizeable portion of wealth from their parents. Thus, there was “no necessity for innovations involving risk, worry and disappointment, and none for leaving agriculture to enter other industries.” (DEEH2 275)

Not so in Germany. With their higher birth rate of 363 (DEEH2 275), it was impossible for the German youths to maintain their economic class solely through inheritance. Hence, the sons had to “seek places in the cities and manufacturing centers, and recruit the army of wage-laborers.” (DEEH2 276) The fathers, accordingly, were then “much more concerned to provide them with the best education” (DEEH2 276), hoping that education would give their sons the best economic advantage before they entered into industry and commerce. In short, unlike the French youths, the German youths had a basic impulse to struggle and innovate in order to maintain in their social class.

A second factor that fostered the industrial growth was the completeness of the German railways network. As technology continued to advance, hydraulic and steam power were no longer powerful enough to satisfy the insatiable demand of power of the new heavy machineries. Unfortunately, coal, the new fuel that was normally used to run these new machines, was so expensive in the urban areas that few households and manufactories could afford, even though hills that were only several miles away were full of it. (DEEH1 438) Evidently, an inexpensive means of transportation was desperately needed.

A railway network was the best solution. Similar to the growth of most other German industries, the development of the railways network in Germany was much more rapid and thorough than other countries. In 1840, when England already possessed a railway network that measured more than 2,390 km, the German network only measured 439 km. However, by 1871, Germany already had a network comparable to England in length, since both measured some twenty-one thousands kilometers. And by 1913, Germany had completely surpassed England with her sixty-three thousands kilometers network, compared with only thirty-two thousands kilometers of the British.[7]

The economic benefit of the railway was unquestionable. Railways could carry “wood, turf and coal [as well as foods and other materials] at less than half of present cost.” (DEEH1 438) This would easily allow population, number of buildings, industry and trade to expand, and henceforth directly contributed to the growth of industries. In brief, the completeness of the German railway network facilitated the expansion of industries and the urban areas.

Thirdly, the government of this young empire also helped to promote the growth of some of her industry through various channels. From time to time, the government would offer her best support to industries that she regarded as vital to the state’s existence. For example, when Krupp Armament Works, a manufactory that produced weapons for the state army, found itself necessary to find new capital source in 1874, the government didn’t hesitate to grant loans to it through a state-owned fund. (DEEH2 84) This decision was meant to avoid Krupp from selling new common shares to the public which would prevent the state from receiving preferential treatments as regards to price and delivery, and also from being certain of getting the most perfect product possible. (DEEH2 83) Later, the state has even totally refrained from “inviting effective competition for the supply of field guns or heavy steel guns and repeatedly offered many interest-free loans to Krupp.” (DEEH2 85) A rather abnormal relationship between the state and Krupp has been established: the state depended on Krupp to supply top quality weaponry, and Krupp totally depended on the state to grow.

Importance of Education

However, the area where government intervened the most thoroughly in the economy was by far education, which has no doubt contributed the most in the industrialization process of Germany. As mentioned in the previous section, the electrical and the chemical industries were the two sectors that have shown the most splendid progress. These two industries that were heavily based on recent scientific knowledge were only made possible with a constant supply of top quality scientists. It was the state who supplied these firms with those scientists. For instance, the number of universities had increased from 13 in 1841 to 20 in 1881. (DEEH2 466), while the number of students increased from 20,576 in 1872 to 79,557 in 1913. (Mitchell 849) By building more universities, more young Germans would be able to enjoy higher level education.

Other than opening more universities, the government also did many other things to prepare her people for becoming manufacturing-oriented. For example, the government’s “belief in future applications of chemistry to industrial purposes” (DEEH2 476) led her to set up chemical laboratories that “no laboratories in England […] can compare in the detail and completeness of their equipment.” (DEEH2 476)

Moreover, the government encouraged students to “pursue their studies in those laboratories for a period of five, six, or even seven years.” (DEEH2 476) The result was a constant supply of chemical experts who joined the chemical manufacturing industry every year. As an example, one chemical manufacturer called Badische Anilin-und Soda Fabrik alone employed “100 scientifically trained chemists and 30 engineers.” (DEEH2 467) In short, the education system successfully produced students who were trained in top quality laboratories, and every year thousands of young men left the German Universities and conquered the world’s market with their knowledge. Giving the enormous success of the German electrical and chemical industries, the dreary investments in the education were definitely worth its costs.

Conclusion

To sum up, after some forty-three years of incessant growth, Germany has transformed herself from a backward and mostly agrarian-based country in 1870 into the greatest European industrial power in 1913 that had left England and France completely in dust. This lead that Germany possessed was by far not limited to one or two sectors of the economy but was rather broad-based. This could be shown from various economic figures as well as some personal observations by some foreigners, that no matter in the good old staple sector, in the traditional manufacturing sector, or in the new electrical and chemical sector, one could easily feel the dominance of German manufactories. This great success was attributable partly to the high birth rate of Germany, partly to the completeness of her railways network, partly to the support from the state, but mostly to the huge investment in educating the younger generation. With all these factors in work, Germany has successfully established an empire that was based on the fruits of her industrialization.

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