Why did Germany quickly become Europe's largest industrial power at the end of the 19th century? How did it quickly overtake the British Empire?
Germany did grow very rapidly after reunification in 1870, but by 1900 it was still not Europe's largest industrial power. Before discussing why, here's the data:
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From: Time Map p. 407, Australian historian David Christian (2005)
By 1900, Britain's industrial potential (total industrial capacity) was still 40% higher than Germany's, but while britain was still growing, Germany was growing much faster. They are dwarfed by the United States, but both the United States and Germany are known for growing at much higher rates than any other industrialized country.
Germany actually surpassed Britain around 1909, and from these figures we can see why Britain agreed to join the Franco-Russian World War I program immediately after the Boer War. Without the war that began in 1914, Germany's economic growth would soon have lagged far behind Britain's.
But the question is why Germany was so successful during this period. It's a complex and interesting question, but there's no simple and clear answer. So, let's consider some key factors.
Apparently, the starting point was german reunification in 1870. Prior to this, Germany had two major countries, Austria and Prussia, both of which were important second-tier powers, as well as many independent small states. Since the Napoleonic Wars, the Germans have known that unification is necessary. Europe is a dangerous neighbor, especially France to the west and Russia to the east. Bismarck used more than 50 years and extremely skilled diplomatic skills to bring it all together, but by 1870 it was finally achieved, and a unified Germany existed for the first time as a modern nation-state.
This triggers a significant fluorescence of creative energy. At the most mundane and pragmatic level, this is due to the sudden emergence of a unified market and the disappearance of customs barriers. This has always been the main process of unification: the German customs union, or customs union
It began as early as 1818, just after the devastation of the Napoleonic Wars was cleared, and in many ways was a direct precursor to the European Union. It is a customs union without political unions.
(Image from the customs union wiki page; blue for Prussia, yellow for Austro-Hungarian, and gray for other German countries.) The red outline is the boundary of the German Confederation in 1828. ）
Germany, which was unified in 1870, did not include any territory within Austria or Austria-Hungary, and Luxembourg remained a sovereign state. (Note: The map shown above still shows that Belgium is part of the Netherlands; Belgium did not become independent until 1831.) ）
Back to the economic implications of unity: after 1870, the divided political landscape and the remaining trade barriers between the German states disappeared, and a unified market emerged. It looks like this:
Going back to Christian's data, we can see that in 1870 Germany's industrial potential was about 1/3 that of Britain's, smaller than either France or Russia, but then it began to take off. The reasons for this certainly go beyond the unified market, but it's hard to identify significant contributors. Obviously, an element vaguely defined as "national psychology" doesn't explain much, but it plays an important role. The zeitgeist was optimistic because new opportunities suddenly emerged. But perhaps in the fields of education and science, we can get the clearest picture of how and why Germany prospered before the war.
This period (1871-1914) was the golden age of German science, and German universities show most clearly how this period occurred. German universities at that time were largely the best in the world. Today's top universities, such as Harvard, Oxford and Cambridge, are still mired in medieval traditions, while Germany's established universities have undergone an overhaul that combines teaching with cutting-edge research. This model, which today is emulated by universities around the world, was created in Germany. At that time, it produced a large number of fresh graduates who were far ahead of their European and American compatriots, who subsequently started new companies based on 19th-century high technology.
The main architect model known as Humboldt University was Wilhelm von Humboldt, the older brother of the famous Alexander, who made so many scientific discoveries: the Humboldt model of higher education - Wikipedia
After the Napoleonic Wars, he was given the responsibility of reforming the Prussian university system. The most obvious result is the new University of Berlin, which is based on the idea of giving students and professors as much freedom as possible to pursue knowledge. He began the project as early as 1808. The goal is to train citizens who are not only knowledgeable, but also educated to become responsible citizens. It was not until 1876 that the benefits of this system were transplanted across the Atlantic to the United States. When Johns Hopkins University was founded, it directly copied the Humboldt system. Johns Hopkins University - Wikipedia
In the decades that followed, this model of education was widely adopted throughout the Western world, but Germany had a big lead. The modern R&D department of a high-tech company also developed in Germany at this time, which helped drive this amazing growth. Of all the complex variables, both tangible and intangible, the explosion of knowledge and entrepreneurship that has emerged in the German education system is the key to bringing them together.