§ 4 The Shift from the Nineteenth to the Twentieth Century

Abstract

During the last third of the nineteenth century, ongoing modernisation propelled society into a state of crisis. While other countries besides Germany were affected, this crisis was felt particularly strongly there. Industrialisation, urbanisation, and a population boom made the traditional means of governing society appear inadequate. Economic activity became ever more frantic. The big bank and stock exchange crash of 1873 put an end to the boom of the Gründerjahre (the years that had seen the birth of modern industry in Germany), triggering the economic “Long Depression” that lasted well into the 1890s. This was accompanied by a shift from a liberal “night watchman state” to a social interventionist state. Increasingly, the state provided not only a framework system within which free economic agents could act, but developed means of controlling and steering economic processes. In legislative terms, this trend produced first spectacular results only a few years after the foundation of the Reich in the legislation on stock corporations, which formed a clear counterpoint to the laissez-faire views current up until that point. Anti-usury legislation followed the same direction. From 1879 onwards, an economic foreign politics of protective tariffs replaced free trade; its domestic counterpart can be seen in Bismarck’s coalition shift from the Liberals to the Conservatives, the Socialists Act (which we will return to shortly), and—not paradoxically, but rather complementarily—the social legislation that was to follow soon after. The intention was to domesticate the Fourth Estate using the carrot of social welfare and the stick of special laws. From a matter of religious and social charity, the “social question” thus became a matter for state regulation. The state increasingly took on the characteristics of the modern Anstaltsstaat (state of institutions). The liberal era was coming to an end.