Thursday, April 30, 2015

The Industrial Revolution of Germany

BASF Factory (1881)
She emerged as the most industrialized country by the end of the 19th century. Germany surpassed the home of the industrial revolution – Great Britain. From a once divided nation, its strength and potential became full and unleashed.
Naturally speaking, Germany had the natural resources required to start an industrial revolution. Large coal reserves located in the areas of Saar, Ruhr, Upper Silesia, and Saxony. Iron deposits sited in the areas of Erzgebirge, Harz Mountains, and Upper Silesia.

But Germany had challenges after the Napoleonic War ended in 1815. Only the major ports of Bremen and Hamburg had clear and secure access to the North Sea, but even so, it lacked access to the buzzing trade routes in the Atlantic. 

Many medievalist economic institution also remained in place hampering the growth of agriculture and industries. Feudalism returned and continued with the serfdom of many and their obligation to provide a share of their harvest and labor to their landlords. Moreover, guilds controlled much of the industries and because with their licensure policies, establishing factories proved to be difficult and limited. In trade perspective, local German textile industry faced competition when the allies lifted the Continental System that blocked the entry of cheap British textile. A depression followed in 1817 exacerbated a drop in agricultural production driving food prices up.

The most significant challenge towards Germany’s industrial revolution was its political set up. Germany before 1871 was made of numerous German States with Prussia being biggest. As a result of fragmentation, trade was difficult and transporting of raw materials to factories was also challenging. Only with the unification of Germany that she truly became an industrial powerhouse.

Among the German states, Prussia emerged as the most economically powerful country in 1815. It controlled major manufacturing towns, coalfields, and trade routes. The Prussian government showed great enthusiasm towards economic progress, which became vital to its status as a great power. 

In 1818, Prussia moved immediately to counter the problems arising from the post-Napoleonic era. It imposed a new tariff system. Many hailed the Prussian Tariff of 1818 as a progressive policy and a great incentive for industrial growth. It removed duties to raw material but imposed tariffs on imported manufactured goods and overseas colonial goods. It also removed the tolls or customs region system, allowing free trade among provinces, resulting to an easier and wider distribution of goods and services. 

In order to cure the depression that started in 1817 and control its war debts, the government borrowed from the Rothschild in 1818 and 1822. Eventually, the growth of Prussia as an industrial country progressed under the control of some of its officials. Finance Minister Adolf von Motz, who served from 1825 to 1830, launched reforms in tax system and improvements in revenue through selling of crown lands. Furthermore, he also stimulated the economy by improving infrastructure through public works. 

Christian Peter Wilhelm Beuth also served Prussia well. As the head of the Department of Trade and Industry from 1830 to 1845, he organized a technical commission that monitored industrial development. He also established the Berlin Technical Institute that led advancements in technology and skills. The state played an active role to the recovery and industrial growth of Prussia.

On the other hand, other German states became active as well. Many of the German States supported industries and promoted a self-reliant economy. They provided incentives and subsidies. The Zollverein, however, proved to be the greatest factor for the economic development of many German States.

The Zollverein grew from the Prussian Tariff of 1818 to a full pledge customs union that became a catalyst for German unification. The Tariff of 1818 became the basis of Prussia in negotiating commercial treaties with neighboring German states to form a customs union. For more than a decades, many German states thought whether to join or to form their own customs union. However, by 1834, Prussia formally created the Zollverein. It provided new opportunities for industries by opening a wider market and new sources of raw materials. Without the Zollverein an industrialized and unified Germany would not had been possible.

Besides the Zollverein, financial institutions and cartels furthered industrial growth. Banks provided capital and investments to new companies. They also helped new companies to sell shares to earn capital. Cartels on the other hand provided protection and stability. In other countries, like Great Britain and the United States, they negatively view cartels for their anti-competitive and unfair business practices, but in Germany, they saw cartels as providers of stability for growth for small industries. It spared them from sometimes unprofitable and self-destructing price wars. It also provided protection in cases of price fluctuations and entry of foreign competition. Thus, industrial development proceeded from adequate financial support from banks and stable markets from cartels.

Textile became the first to experience mechanization. The first spinning machine in Germany was built in Chemnitz in 1782. From then point on, Chemnitz continued to build machines that made it into an engineering center. In 1784, the first textile factory, built in Ratingen, Dusseldorf, copied the factory system in Cromford that Richard Arkwright developed. 

British skills also contributed to the development of German textile industry. Cockerill Brothers, British descent industrialist, built mills in Brandenburg. English craftsmen also built power looms for the Maschinen Wollen-Weberei in Silesia. The growth of the textile industry led to the rise of textile centers like Aache (famous for its thread), Krefeld (famous for its silk), Saxony, and also Silesia.

The iron industry also followed. Much of the iron industry focused in the region of Silesia and it received attention even during the reign of King Frederick II the Great. In 1796, the first coke-blast furnace began operation in Gleiwitz in Upper Silesia. Few years later, in 1802, another coke blast furnace began operation in Konigshutte. Later on, the number of blast furnaces using coke rose up to 30 by the middle of the 19th century. 

In the 1800’s, most especially after the establishment of the Zollverein in 1834, Silesia found competition in the Ruhr Region. Its iron deposits led to the growth of the industry in the area. In 1849, the first coke-smelting facility began operation in the Friedrich Wilhelm Ironworks in Mulheim, Ruhr Region. Moreover, the introduction of the puddling method of making iron by Friedrich Harkort and Dietrich Piepenstock resulted also in the increase in iron production. 

Foreign investment accelerated development of the Ruhr Area. William Thomas Mulvany posed as one of the successful foreign investors in the Ruhr Area. An Irish by birth, he along with other investors opened mines in the Ruhr region and used the latest technology in mining. In 1866, with his mines and iron works, he founded the Preussische Bergwerkes und Hutten-aktiengesellschaft or the Prussian Mining and Ironworks Company. In the 1850’s the regions of Westphalia, Rhineland, and Saar also experience growth in their iron production. From 46,000 tons of iron produced in 1810, it rose to 529,000 tons by 1850.

Steam engines contributed to the industrial development of Germany. Steam engine powered textile mills. It also pumped out water in iron mines making the extraction of the ore easier. It allowed the increase in the number of factories operating, most especially in Prussia. From only 419 in 1837 it grew to 1,444 in 1849. Besides factories and source of power, steam also changed trade. It allowed riverine tug boats to carry more load and transport goods faster. The Defiance, the first steam ship in the Germany, sailed in the River Rhine and followed by the launching of Caledonia in 1817. These type of ships also led an increase demand for coal that mining companies exploited to increase production and profit. Thus from 1 million ton produced in 1820, it swelled to 6 million 30 years later. Regions like the Ruhr, Aachen, Saarland, Silesia, and Saxony also developed to become coal centers. It also allowed German ships access to the Atlantic trade. Steam powered the industrial revolution in Germany.

Railroad served Germany well in its Industrial Revolution and also in its Unification. The first railroad line opened on December 1835 and ran between Nuremberg and Furth. In 1839, another lined opened that connected Dresden and Leipzig. Initially, the private sector took the initiative in constructing railroads. But due to lack of capital, the state intervened and in some states, nationalized the industry. 

In Prussia, the government helped private railroad companies. In 1842, the Prussian government created the Railway fund meant to finance railroad construction projects. At first, Germans imported locomotives from Britain or Belgium, but later on it began to produce its own. Berlin and Munich became centers of locomotive production. Borsig became one of the successful firms in Berlin. By the 1840’s major cities in Germany had been connected by railroads. In Prussia, Berlin became a center of the railroad network. In 1948, the railroad that connected Cologne and Minden contributed to the development of the Ruhr Industrial region. Railroads connected the members of the Zollverein further stimulating commerce. Following railroads, communication and travel became faster and organized. The faster mode of transportation brought huge benefits to the Prussian Army. Mobilization became easier and faster and used during Prussian wars against Austria during the Seven Week’s War and later  against France during the Franco-Prussian War. By then, Germany had 11,600 miles in 1870 from just 3,638 miles in 1850.

In 1871, Prussia finally united Germany. It then marked the new phase of Germany’s industrial revolution. By then, Germany could now direct its economy under one direction, and goods finally had a large market. In addition, the provinces of Alsace and Lorraine that Germany took from France gave Germany even more natural resources needed for industrialization.

Heavy industry grew and developed after the German Unification. Steel production rose. As early as 1800’s, steel had been produced in expensive and little quantity. Alfred Krupp made a living out of producing steel. When the Bessemer process made possible the mass production of steel in cheaper price, Krupp and Hoesch used the process to their advantage. In 1879, steel became a booming industry after the Thomas-Gilchrist method allowed the use of phosphoric iron in making steel. Weapons manufacturing and ship building followed the steel boom. Krupp for example became a well-known firm for its artillery.

With the dawn of the so-called Second Industrial Revolution, Germany took over Britain as the most industrialized country and competed with the United States. In electrics, Germany offered companies like Siemens under Werner von Siemens and Emil Rathenau’s General Electric Company or Allegemeine Elektricitats-Gesellschaft or AEG. In chemicals, Germany showed its scientific skills and led the production of potassium salt, dyes, pharmaceutical products, and synthetics. It led to rise of agricultural produce, thanks to its increasing production of fertilizers. Germany also controlled 90% of dye production worldwide. Companies like Bayer and Hoescht led the chemical industry of Germany. Germany also became a leader in automobile. First cars were made in Germany. Daimler and Benz became the most popular brands of automobile in Germany and the world.

Factors that led to Germany’s boom in the Second Industrial Revolution included its education and government support. Germany imposed new high tariffs against imports and protected local industries and allowed them to flourish. It also stated government subsidies towards businesses. But education played a key role. For decades Prussia and many German States invested in education. Technical schools produced great minds and inventors. Eventually, by the time of the Second Industrial Revolution, Germany had a huge supply of talented and skilled population.

See also:

Bibliography:
"Industrial History-Germany". ERIH. Accessed on April 25, 2015. http://www.erih.net/

Hendrson, W. O. The Industrial Revolution on the Continent: Germany, France, Russia, 1800 - 1914. Abingdon, Oxon: Routledge, 2006.

Holborn, Hajo. A History of Modern Germany, 1840 - 1945. Princeton, New Jersey: Princeton University Press, 1969.

Layton, Geoff. From Kaiser to Fuhrer: Germany, 1900 - 1945. London: Hodder Education, 2009.

Tipton, Frank. A History of Modern Germany Since 1815. Los Angeles, California: University of California Press, 2003.

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