Bismarck and the Foundation of the German Empire

by James Wycliffe Headlam

Bismarck in adopting Protection was influenced, not by economic theory, but by the observation of facts. "All nations," he said, "which have Protective duties enjoy a certain prosperity; what great advantages has America reached since it threatened to reduce duties twice, five times, ten times as high as ours!" England alone clung to Free Trade, and why? Because she had grown so strong under the old system of Protection that she could now as a Hercules step down into the arena and challenge everyone to come into the lists. In the arena of commerce England was the strongest. This was why she advocated Free Trade, for Free Trade was really the right of the most powerful. English interests were furthered under the veil of the magic word Freedom, and by it German enthusiasts for liberty were enticed to bring about the ruin and exploitation of their own country.

If we look at the matter purely from the economic point of view, it is indeed difficult to see what benefits Germany would gain from a policy of Free Trade. It was a poor country; if it was to maintain itself in the modern rivalry of nations, it must become rich. It could only become rich through manufactures, and manufactures had no opportunity of growing unless they had some moderate protection from foreign competition.

The effect of Bismarck's attention to finance was not limited to these great reforms; he directed the whole power of the Government to the support of all forms of commercial enterprise and to the removal of all hindrances to the prosperity of the nation. To this task he devoted himself with the same courage and determination which he had formerly shewn in his diplomatic work.

One essential element in the commercial reform was the improvement of the railways. Bismarck's attention had long been directed to the inconveniences which arose from the number of private companies, whose duty it was to regard the dividends of the shareholders rather than the interests of the public. The existence of a monopoly of this kind in private hands seemed to him indefensible. His attention was especially directed to the injury done to trade by the differential rate imposed on goods traffic; on many lines it was the custom to charge lower rates on imported than on exported goods, and this naturally had a very bad effect on German manufactures. He would have liked to remedy all these deficiencies by making all railways the property of the Empire (we see again his masterful mind, which dislikes all compromise); in this, however, he was prevented by the opposition of the other States, who would not surrender the control of their own lines. In Prussia he was able to carry out this policy of purchase of all private lines by the State; by the time he laid down the Ministry of Commerce hardly any private companies remained. The acquisition of all the lines enabled the Government greatly to improve the communication, to lower fares, and to introduce through communications; all this of course greatly added to the commercial enterprise and therefore the wealth of the country.

He was now also able to give degrees his encouragement and support to those Germans who for many years in countries beyond the sea had been attempting to lay the foundations for German commerce and even to acquire German colonies. Bismarck's attitude in this matter deserves careful attention. As early as 1874 he had been approached by German travellers to ask for the support of the Government in a plan for acquiring German colonies in South Africa. They pointed out that here was a country fitted by its climate for European occupation; the present inhabitants of a large portion of it, the Boers, were anxious to establish their independence of England and would welcome German support. It was only necessary to acquire a port, either at Santa Lucia or at Delagoa Bay, to receive a small subsidy from the Government, and then private enterprise would divert the stream of German emigration from North America to South Africa. Bismarck, though he gave a courteous hearing to this proposal, could not promise them assistance, for, as he said, the political situation was not favourable. He must foresee that an attempt to carry out this or similar plans would inevitably bring about very serious difficulties with England, and he had always been accustomed to attach much importance to his good understanding with the English Government. During the following years, however, the situation was much altered. First of all, great enterprise had been shewn by the German merchants and adventurers in different parts of the world, especially in Africa and in the Pacific. They, in those difficulties which will always occur when white traders settle in half-civilised lands, applied for support to the German Government. Bismarck, as he himself said, did not dare to refuse them this support.

"I approached the matter with some reluctance; I asked myself, how could I justify it, if I said to these enterprising men, over whose courage, enthusiasm, and vigour I have been heartily pleased: 'That is all very well, but the German Empire is not strong enough, it would attract the ill-will of other States.' I had not the courage as Chancellor to declare to them this bankruptcy of the German nation for transmarine enterprises."

It must, however, happen that wherever these German settlers went, they would be in the neighbourhood of some English colony, and however friendly were the relations of the Governments of the two Powers, disputes must occur in the outlying p arts of the earth. In the first years of the Empire Bismarck had hoped that German traders would find sufficient protection from the English authorities, and anticipated their taking advantage of the full freedom of trade allowed in the British colonies; they would get all the advantages which would arise from establishing their own colonies, while the Government would be spared any additional responsibility. He professed, however, to have learnt by experience from the difficulties which came after the annexation of the Fiji Islands by Great Britain that this hope would not be fulfilled; he acknowledged the great friendliness of the Foreign Office, but complained that the Colonial Office regarded exclusively British interests. As a complaint coming from his mouth this arouses some amusement; the Colonial Office expressed itself satisfied to have received from so high an authority a testimonial to its efficiency which it had rarely gained from Englishmen.

The real change in the policy of the Empire must, however, be attributed not to any imaginary shortcomings of the English authorities; it was an inevitable result of the abandonment of the policy of Free Trade, and of the active support which the Government was now giving to all forms of commercial enterprise. It was shewn, first of all, in the grant of subsidies to mail steamers, which enabled German trade and German travellers henceforward to be carried by German ships; before they had depended entirely on English and French lines. It was not till 1884 that the Government saw its way to undertake protection of German colonists. They were enabled to do so by the great change which had taken place in the political situation. Up to this time Germany was powerless to help or to injure England, but, on the other hand, required English support. All this was changed by the occupation of Egypt. Here England required a support on the Continent against the indignation of France and the jealousy of Russia. This could only be found in Germany, and therefore a close approximation between the two countries was natural. Bismarck let it be known that England would find no support, but rather opposition, if she, on her side, attempted, as she so easily could have done, to impede German colonial enterprise.

In his colonial policy Bismarck refused to take the initiative; he refused, also, to undertake the direct responsibility for the government of their new possessions. He imitated the older English plan, and left the government in the hands of private companies, who received a charter of incorporation; he avowedly was imitating the East India Company and the Hudson's Bay Company. The responsibilities of the German Government were limited to a protection of the companies against the attack or interference by any other Power, and a general control over their actions. In this way it was possible to avoid calling on the Reichstag for any large sum, or undertaking the responsibility of an extensive colonial establishment, for which at the time they had neither men nor experience. Another reason against the direct annexation of foreign countries lay in the Constitution of the Empire; it would have been easier to annex fresh land to Prussia; this could have been done by the authority of the King; there was, however, no provision by which the Bundesrath could undertake this responsibility, and it probably could not be done even with the assent of the Reichstag unless some change were made in the Constitution. It was, however, essential that the new acquisitions should be German and not Prussian.

All these changes were not introduced without much opposition; the Progressives especially distinguished themselves by their prolonged refusal to assent even to the subsidies for German lines of steamers. In the Parliament of 1884 they were enabled often to throw out the Government proposals. It was at this time that the conflict between Bismarck and Richter reached its height. He complained, and justly complained, that the policy of the Progressives was then, as always, negative. It is indeed strange to notice how we find reproduced in Germany that same feeling which a few years before had in England nearly led to the loss of the colonies and the destruction of the Empire.