Imperial Germany consisted of the following:
- Prussia (incl. Lauenburg)
- Bavaria
- Württemberg
- Saxony
- Baden
- Mecklenburg-Schwerin
- Saxe-Weimar
- Mecklenburg-Strelitz
- Oldenburg
- Brunswick
- Saxe-Meiningen
- Saxe-Altenburg
- Saxe-Coburg-Gotha
- Anhalt
- Schwarzburg-Rudolstadt
- Schwarzburg-Sondershausen
- Waldeck
- Reuss (Elder Line)
- Reuss (Younger Line)
- Schaumburg-Lippe
- Lippe-Detmold
- Lübeck
- Bremen
- Hamburg
- Imperial Territory (Reichslande) of Alsace-Lorraine
The initial effect of unification was a resounding boon to the Imperial German economy. It adopted a common currency, boundaries, and weights and measures. Internal tariffs were completely eliminated. Coal and steel production increased, as did railroad construction. An industrial Imperial Germany that had not existed prior to unification was suddenly a major player in the world markets and was on its way to becoming the industrial giant of the continent.
The indemnity that France paid for the loss of the war in 1871 fueled a great deal of this growth. With prosperity, the population grew from 41 million in 1871 to 65.3 million in 1911. The agricultural workforce shrank from 49 percent of the population at unification to 35 percent by 1907. The industrial workforce grew from 31 percent to 40 percent during the same timeframe. Urban centers in the Ruhr and major cities like Berlin grew at staggering rates.
There was no “Big Bang” in Imperial German industrialization although there is significant disagreement among authorities as to when the German Industrial Revolution actually began. There is even more disagreement as to the date when the Industrial Revolution ended. We do know that it happened. Anglo-Saxon or English industrialization was significantly different than continental industrialization. Private capitalism and the state united on the continent. Funding was private in England. There was either state ownership or significant state investment in railways. This state investment is one reason why the debt of the Prussian state more than doubled between 1840s and 1865 ( Bismarck used Austrian War reparations after 1866 to deal with this deficit). There was even a word for the great expansion and unification of Imperial Germany known as the Gründerboom.
Some believe that despite the initial boom, Imperial Germany suffered a major economic depression from 1873-1879. Current economic historians generally do not accept this thought even though a modern academic proposed it. The general view now is that the two major depressions that Imperial Germany suffered from 1873-1879 and later from 1890-1895 were actually slowdowns in the growth rate of the Gründerboom.
By one estimate the growth rate was four and one-half percent per year. During the depressions, the rate slowed to three percent per year. The myth of the depression started with scholars at the time, who felt it was a depression; however, to modern economic and social historians, it was not. The slowdown hit suddenly in October 1873 with a massive price collapse of industrial goods
The effect on wages based on the price deflation was severe and some workers at Krupp saw their wages halved between 1873 and 1878. There was an upturn of sorts in 1883 but, between 1884-1887 and 1891-1895, there were other downturns. This was not comparable with the devastating 1929 crash because growth was consistent. On the other hand, unemployment and deflation were not nearly the equivalent of the 1929 downturn.
During this same time, there was a growing patriotism in that the population looked forward to the nation-building process that would unite all German states and principalities into one nation. Under the leadership of Prussia, (some Southern Germans would say under Prussian dominance) the war against France became the constituting event in forging the nation. Previously, there had been no clear national identity. There were not even any common holidays. So patriotism had to be based on the Franco-Prussian war and the Germanic victories there. Sedan Day was now celebrated. What is called the Franco-Prussian War in English is called Deutsch-französischer Krieg(German-Franco War) in Germany. Within this new state, people could have different home regions, called Heimatin German. The Heimat (an original local region) was celebrated as a distinct part of a larger nation. A Heimat might have its own dialect, foods, or discernible landscapes, but the concept of regionalism did not enter the German vocabulary until the 1920s.
After 1871, this newly-developed patriotism slowly developed into nationalism that tended to span both class and religious barriers. Catholics and Jews both considered themselves German. Workers would sing both patriotic and socialist songs. One large exception seemed to be the Poles living inside Germany. Frederick Nietzsche wrote in 1873, “Up until now there has been no original German culture.” The increasing influence of societies like the Pan-German-League (Alldeutscher Verband), the Navy League (Deutscher Marinebund) and the Colonial Society (Deutscher Kolonialbund) turned the patriotism of the Gründerzeit (founding years) into a growing nationalism and militarism going far beyond the patriotic attitude of the founding years of the German Empire.
The more these nationalist organizations and societies dominated the public discussion on colonial and military issues and on issues of foreign politics, the more the undertone moved to nationalism. Soon these nationalistic societies slipped out of the control of the political elites and started to develop a life of their own. Subjects like the “superiority of the Germanic race over Romanic and Slavic races,” a subliminal anti-Semitism and a “Deutschland über alles” (Germany above all) rhetoric became predominant.
The more the patriotic pride of this newly formed nation turned into nationalism, the more the other European nations felt unsettled and alienated. The imperial newcomer that was Germany sought Great Britain’s acceptance and to be on par in the global power game. This desire led to a growing antagonism with England. England felt challenged by this newcomer and was determined to maintain its global supremacy by beating Germany in a naval arms race. Germany could not win the naval race and that became one of the driving forces for Europe sliding into the Great War in 1914.