Economic Factors in Unification of German People in the 19th Century

(Part 2)


In contradiction to Bismarck’s own claim and putting emphasis on an economic footing, J.M.Keynes wrote in 1919 that ‘the German Empire was not founded on blood and iron, but coal and iron'[2]. The term Сeconomic’ encompasses many sub-factors and one of these would have to be the gift of natural resources and, more importantly, the use of them.


Before the improved zollverien the German speaking states had a pretty stagnant, although self sufficient economy and controlled their own borders, tolls and currency. The dropping of the trade tariffs and joining of currencies allowed business to boom, enabling the member
states to expand and flourish considerably. The zollverien was the instigating force for the first economic and political union. This move did indeed ‘form one confederation, united by a common system of trade and customsaИж’ [4] and the omission of Austria’s involvement
reinforced Prussian dominance whilst igniting a sense of national identity. The second development, running parallel with the introduction of the zollverien was the widespread improvement in transportation. With the tolls lifted, roads were also improved and canals widened and deepened to ease the new flow of trading in the member states. The most significant improvement was the construction of the first German railway that led to better transportation of goods and later gave rise to great strategic, military advantages enabling
the Prussian army to mobilize with ease; the zollverien and the railways were of the utmost importance in unifying the German speakers.

German banking systems allowed the free flow of cash for investment in industry, and close involvement saw better results:

‘They lent money not only on a short term basis, but also for the longer term, and they frequently had seats on supervisory boards. This backing channelled capital and financial acumen in the right direction'[5]

Although these events promoted the expansion of industrialisation throughout the land, investment in farming was largely more significant right up until the early 1870’s and is probably, like other nations, more likely to be the pre-requisite for industrialisation and economic growth. The introduction of British machinery and Justus Liebig’s agricultural chemistry innovations led to an increase in production and until the 1850’s, output in
agriculture per man increased faster than in industrial factories.

It’s clear enough to see that economic unity was the most important factor and its power was a force that demanded obedience. Despite the member states ambivalence towards Prussian authority, after the Austrian’s defeat in 1866, they could see the advantages of joining and, more importantly and prominently, the disadvantages of not joining, the Prussian power over the zollverien. Putting emphasis on economic factors as the most important precondition to unification and in reference to the war of 1866, Bruce Waller said it well when he wrote ‘Once Bismarck had won that contest it was easier for him to use
the Union as an economic carrot and stick for political ends'[6]

Credit must be given to Bismarck’s efforts, in particular his engineering of the French Italian and Russian non-involvement in the war against Austria. Were it not for these acts of cunning diplomacy their, almost guaranteed involvement, would surely have cooled
Prussian dominance. When carefully considered, the economic stimulation awakened by the customs union and the favourable Prussian resources, other issues seem to pale in comparison when prioritising the factors of unification. These developments were a pre-requisite to the Bismarck legacy and without them his rise to chancellor in 1862 would not have been half as successful. The groundwork for the unification of Germany had been done long before Bismarck’s orchestration of events; to summarize and verify the economic cause,
another quotation by Bruce Waller seems appropriate:

‘By the early 1860’s the area to become the German Empire was closely linked economically and developing very much more rapidly than Austria. Germans were thus brought together first of all in the interest of survival and then, after mid-century, for the purpose of
prosperity’ [7].




Economic Factors