Bulgaria moved to recapture its lost territory only seven years after the Treaty of Berlin. In 1885 it annexed eastern Rumelia—or southern Bulgaria—by means of a military coup. The British were in favor of the annexation as it represented an obstacle to Russian ambitions in the Balkans; the Russians quite naturally were disturbed by the act. This was the first in a series of Bulgarian moves designed to reestablish earlier boundaries.

The establishment of a Bulgarian government in 1878 was relatively easily accomplished, and that government achieved a certain degree of stability in the aftermath of Turkish rule. The Turnovo Constitution (1879)—originally drafted by the Russians but rewritten by Bulgarians—established an essentially advanced and democratic system. It set up a unicameral parliament, which was to be elected on the basis of universal suffrage; the parliament was to control the executive. The monarchy, which lasted from the 1880s until World War II, was established at this time under a Germany dynasty that was acceptable to the European powers. Although the first prince was forced to abdicate by the Russians, his successor established firm and advanced economic and administrative institutions in the country. Eventually, because of a crisis in Bosnia and Herzegovina, the country was able to declare itself an independent kingdom in 1908.

One historian has described the postliberation period as the "only prolonged period of peaceful development" for Bulgaria. After the liberation, land rose in value. Peasants were able to purchase land from the Turks, and agricultural production rose markedly. Modern industry grew up at a relatively rapid pace, although the country remained primarily agrarian. The state began to take steps in education and culture. All levels of education were expanded; students of higher education studied both in Bulgaria and abroad; and illiteracy, which was overwhelming at the period of liberation, was reduced to 76 percent by 1900 and to 54 percent by 1920. Science and the arts were actively encouraged, and literature flourished once again.

Financial burdens, however, escalated rapidly between 1886 and 1911. In 1911 the national debt was actually more than three times the size of the national budget. At the same time, as industry increased, two antagonistic groups developed: the urban middle class—composed of merchants and white-collar workers—and the poor, who were generally laborers or peasants. Working conditions in factories were nearly intolerable, causing factory workers to interest themselves in the cause of socialism, while on the farms the peasants began to organize a movement known as the Bulgarian Agrarian Union (also called the Agrarian Party), which was designed to offset the growing power of the urban groups. In 1891 the Social Democratic Party was established; this party later formed the base of the communist party in Bulgaria.

The Macedonian Issue

By the early twentieth century the country was once again embroiled in war; the Balkan wars of 1912 and 1913 impeded economic and social development in the country. Once again, as in the case of eastern Rumelia, irredentism was the Bulgarian motive for war. Both eastern Thrace and Macedonia, the lands ceded to Bulgaria by the Treaty of San Stefano, were still under Turkish rule. The lands had not only large Bulgarian populations but also strategic and economic significance. Macedonia, more than Thrace, was of extreme importance to Bulgaria; Bulgarians believed the population of Macedonia to be composed almost exclusively of Bulgarians. The issue of Macedonia was, in fact, a focal point around which Bulgarian political life revolved after 1878, because that issue was seen by the Bulgarians as involving the territorial integrity of their nation.

Between the tenth and fourteenth centuries Macedonia was alternately occupied by the Bulgarians, the Serbs, and the Turks. At the time of liberation Macedonia was ceded to the Bulgarians by the Treaty of San Stefano, only to be returned to the Turks by the Treaty of Berlin. In 1893 the Internal Macedonian Revolutionary Organization (IMRO) was founded. This terrorist organization, with the battle slogan "Liberty or Death for Macedonia," fought a continual underground war of terrorism against the Turks. In 1903 there was a major Macedonian uprising in which two factions participated. Although the predominant faction favored Bulgarian annexation of Macedonia, another group favored complete autonomy for Macedonia. In 1908, when King Ferdinand proclaimed Bulgaria completely independent, memories of the medieval Bulgarian empire, which included Macedonia, were rekindled.

The Balkan Wars

The tumultuous history of Macedonia set the stage for the two Balkan wars. In 1912, at the onset of the First Balkan War, Serbia, Bulgaria, Montenegro, and Greece formed an alliance to drive the Turks from Europe. Turkey, who was at war with Italy at the time, was weak and disunited. Macedonia and Thrace were hotbeds of internal disorder. In October 1912 Turkey declared war on Serbia and Bulgaria, a move that was countered by a Greek declaration of war on Turkey. In 1913 the Bulgarians succeeded in capturing Adrianople, and the Greeks captured Salonica, Crete, and Samos. Eventually, the Turks were badly defeated. But the question of Macedonia remained. Serbia, Greece, and Bulgaria all laid claim to the land at the end of the first Balkan War. Eventually a compromise was reached: the northern section went to Serbia and the eastern section, to Bulgaria.

Despite this compromise, the Serbs and Greeks remained wary of the Bulgarians. In 1913 the Second Balkan War began, the Greeks, Montenegrins, Serbs, and Romanians joining forces with their previous enemy, the Turks, against their former ally, the Bulgarians. This rivalry had been fostered by both Austria and Russia. Eventually, the Bulgarians turned to the Russians for arbitration and finally signed a mutual defense treaty with Russia. When the Romanians crossed into Bulgaria, the Bulgarians—who were simultaneously fighting in Macedonia and were therefore weakened by fighting on two fronts—were forced to surrender. As a result of this loss, when the peace treaty of Bucharest was signed in August 1913 and Macedonia was partitioned between Greece and Serbia, Bulgaria managed to retain only a tiny fragment in the eastern sector.