German Economy 1871-1890

German Economy 1871-1890

The German economy, between 1871 and 1890 had certain aspects. This includes:

  • Growth of Industries
  • Nationalisation of Railways
  • Growth of Banking
  • Finance Capitalism
  • Growth of Cartels
  • State Socialism

These all contributed to the economic boom of 1871-1890

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German Economy 1871-1890

The German economy, between 1871 and 1890 had certain aspects. This includes:

  • Growth of Industries
  • Nationalisation of Railways
  • Growth of Banking
  • Finance Capitalism
  • Growth of Cartels
  • State Socialism

These all contributed to the economic boom of 1871-1890

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Growth of Industries

During Bismarck's period of chancellorship:

  • German industrialisation had progressed.
  • This was because German manufacturers began to capture the domestic markets from the British.
  • Increases in production included:
    • German coal production
    • The Steel production, by 700%
  • There was an expansion of the German merchant marine expands.
  • All of this contributed to Germany becoming the WORLD'S SECOND LARGEST EXPORTING NATION OF COAL, STEEL & IRON ORE
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Nationalisation of Railways

Nationalisation of railways had also contributed to the German economy:

  • The main idea of the railroads, was to support and increase INDUSTRIALISATION.
  • This was where heavy lines crossed the RUHR & other industrial DISTRICTS & provided good CONNECTIONS to the parts of Hamburg & Bremen.
  • Railways were nationalised in Germany between 1879 and 1884.
  • 24,000/28,000 km of rail roads were nationalised
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Growth of Banking

The German economy was contributed by the growth of banking:

  • The post-war BOOM PROVIDED a STIMULUS to the German banking industry.
  • 7 BANKS, such as the REICHBANK, DOMINATED COMMERCE & INDUSTRY, by the mid 1870s.
  • These banks combined a CAPITAL of 2,500 million marks.
  • They arranged PRIVATE LOANS to industry & public loans to the state.
  • This ENCOURAGED new industries:
    • Electricity
    • Chemistry
  • Bankers & industrialists both contributed to the FINANCE CAPITALISM
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Growth of Cartels

The growth of cartels came about when independent companies joined together:

  • This was where firms agreed upon prices, to AVOID COMPETTION & ACT as one single firm.
  • From 1875, there were 8 cartels, which INCREASED to 210 in 1890.
  • Cartels became more attractive when there were harder times.
  • The most dominant cartels were the Rhenish Steel Syndicate & the Ruhr Coal Syndicate.
  • They had enormous influence over the economic & political developments of the Reich.
  • Cartels enabled German industrialists to break into FOREIGN MARKETS, by lowering their prices.
  • Therefore, Germany began to compete with Britain & international markets.
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State Socialism

State socialism improved the economy and working conditions in Germany:

  • This involved different measures, such as:
    • The MEDICAL INSURANCE & SICK PAY introduced in 1883.
    • OLD AGE PENSIONS introduced in 1889.
  • Bismarck also felt that they must meet the growing demand for ECONOMIC PROTECTIOISM.
  • However, the National Liberals opposed this as they believed in FREE TRADE.
  • Demands for PROTECTIVE TARIFFS arose from the STEEL INDUSTRIES in the mid 1870s.
  • Bismarck moved towards the OLD CONSERVATIVE idea of TARIFFS & TAXES
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