Affluence on the Eve of War: Europe's Booming Economy

A Selection from: Volker R. Berghahn, Europe in the Era of Two World Wars, 2005

Berlin, 1912 by Paul Hoeniger

From 1895, the world economy entered a boom period that, with a few short recessions, lasted until just before World War I.

Here are a few statistics relating to Europe’s basic industries on which the prosperity of the new branches could be built. These figures also reflect the changing economic balances between the nations that were also affected by the dynamics of industrial expansion. In Britain, then the leading industrial country, annual iron production reached 6.5 million tons in the early 1870s, four times that of Germany (1.6 million tons) and more than five times that of France (1.2 million tons), with Russia trailing far behind at a level of 375,000 tons. By 1913 annual production of the German empire had not only increased almost tenfold (14.8 million tons), but it had also overtaken that of Britain (9.8 million tons). France’s production had grown fourfold, but with 4.7 million tons the country was not that far ahead of Russia (3.9 million tons). As to coal mining, Britain was able to double its production between 1880 and 1913 and thus retain its lead over Germany (191 million tons, plus 87.5 million tons of lignite). In annual steel production, however, there was a marked change. In 1890, Britain was still well ahead of Germany (3.6 millions tons versus 2.2 million). In 1913, however, the Germans outproduced the British by a factor of three (18.6 million versus 6.9 million).

The expansion of industry—especially after 1895—left agriculture well behind. Thanks to rapid population growth, demand for agricultural produce rose in most regions of Europe, but farming was no longer as profitable as it had been in the 1850s and 1860s. In the years before 1914, the largest gains could be made in the industrial and commercial sectors. Agriculture fell behind. This development is reflected in the migratory patterns from the rural parts to the urban centers and the momentous growth of the industrial cities. They attracted millions of workers who were hoping to find a better life than their current one as land laborers on the large estates in East Prussia, Italy, and Ireland, or as smallholders on farmsteads that could barely support a family. Millions more Europeans emigrated to North America and other parts of the world.

Finally, the rapid expansion of domestic and foreign trade has to be considered. The volume of European exports doubled between 1870 and 1900 and (except for two brief recessions in 1900–1901 and 1907–1908) followed an upward trend. By 1913, two-thirds of trade took place among the nations of Europe. Some 13 percent of all goods went to North America. Import and export figures doubled and trebled. Africa and Asia participated in this internationalization of the world economy to the tune of 15 percent.

However, as will be seen when we look more closely at the age of imperialism and colonialism, the terms of trade with the European powers were extremely unfavorable and largely imposed by the metropolitan countries, often accompanied by ruthless methods of political domination. However much Europe as a whole benefited from the dynamic expansion of its industries and its global trading relations, the gains were very unevenly distributed among the domestic populations. It was above all the industrial and commercial bourgeoisie that was able to accumulate wealth. Their lifestyles and urban residences began to compete with those of the nobility, especially at the many smaller courts of Central Europe. There is the description of the British prime minister William Gladstone, who was quite used to the splendor of British upper-class social life in London. 

Having attended a party at the residence of the Berlin private banker Gerson Bleichroeder, he gave the following description of what he had seen: “The banqueting hall, very vast and very lofty, and indeed the whole mansion is built of every species of rare marble, and where it is not marble it is gold. There was a gallery for the musicians who played Wagner, and Wagner only, which I was very glad of, as I have rarely had the opportunity of hearing that master. After dinner, we were promenaded through the splendid saloons—and picture galleries, and the ball-room fit for a fairy-tale, and sitting alone on the sofa was a very mean-looking little woman, covered with pearls and diamonds, who was Madame Bleichroeder and whom he had married very early in life when he was penniless. She was unlike her husband, and by no means equal to her wondrous fortune.”

In comparison to the wealth of the upper-middle classes, the circumstances of the working class were, to be sure, much more modest. Still, in most European countries living standards were also rising among these strata. Many families could not only afford better nutrition and hygiene but were increasingly able to enjoy pleasures of the “little man,” such as tobacco and beer. Wages gradually rose and work hours in industry and commerce were slowly reduced from twelve to eleven or ten. This meant that many men and women, who had escaped the much more restrictive routines of labor in agriculture, gained more leisure time. There was more time to socialize with family and friends that was also reflected in the expansion of associational life. Ultimately, there was hardly a hobby in pre-1914 Europe that people could not pursue within an association or club in conjunction with like-minded people. In this sense, the currently much debated idea of a civil society may be said to have been fully developed well before World War I. . .

The prosperity of the pre-1914 years stimulated other leisure activities: shopping and window shopping. While in the provinces shopping continued to be primarily the purchase of daily provisions and other goods in small specialized corner shops—at the same time an important means of local communication among neighbors—cities also had large department stores. These “palaces of consumption” used attractive displays and invited anonymous buying of often mass-produced clothes off the peg and household goods; or, during sales, they encouraged wandering in the aisles in search of bargain. What was offered here at affordable prices was linked to another phenomenon that spread in the prewar years: rationalized factory production and the increasingly cunning marketing of cheap goods, particularly in the department stores.