The first years of the new empire saw a rapid economic growth in a variety of enterprises. Bismarck encouraged industrialization, using the iron and coal resources of the Ruhr and Saar areas, and promoted free trade. This liberalizing of the economy and the resulting economic boom led to the expansion of German industry, especially the railroads, and also the growth of many small, private companies. Following an economic crash in 1873, though, the German government began to shift away from these liberal free-trade policies, with few restrictions on imports, toward protectionist measures that introduced tariffs on imports to protect German manufacturers. While these policies gradually stabilized the economy, they also encouraged the concentration of industries into large conglomerates that were protected from foreign competition by the government.
The political structure of the Second Empire reflected Bismarck’s fundamental distrust of democratic rule in general and of various parties and groups in particular. The empire’s 25 relatively sovereign states had various forms of government. They were ruled by a Bundesrat (federal council) of princes dominated by Prussia and a Reichstag (imperial assembly) of elected deputies. The executive leader of the government, the chancellor, was responsible only to the emperor. The emperor in turn dictated all foreign policy and possessed the exclusive right to interpret the constitution. Bismarck’s autocratic scorn for parliamentary government was matched only by his anxiety over two growing political factions within the Reichstag: the Roman Catholic Center Party and the Social Democratic Party (SPD).
Bismarck, a Protestant, shared many German Protestants’ fears about the political power of the pope and the Catholic Church. After 1870, when the First Vatican Council enhanced papal authority by declaring the pope infallible on matters of dogma, Bismarck initiated the so-called Kulturkampf (culture struggle).
This movement suggested that Catholic allegiances were not only intellectually backward but were also dangerous to German security. For most of the decade, many religious orders (especially the Jesuits) were suppressed, and disobedient priests were dismissed, imprisoned, or exiled. Ironically, the legal persecution only consolidated support for the Catholic Center Party, which doubled its popular vote in 1874. Finally, in 1879, the Kulturkampf eased, chiefly because Bismarck needed to gain the Center Party’s support against the liberals in order to pass high protective tariffs on imports.
The chancellor next turned his wrath on another powerful group with international ties, the SPD, founded in 1875. Blaming the SPD for two attempts by non-Socialists to assassinate the emperor, he had a new Reichstag elected that supported his desired tariffs and outlawed the Socialists. To forestall workers’ demands and to ensure healthy army recruits, Bismarck provided state insurance for sickness, accidents, and old age. Once again, however, Bismarck’s attempts at political suppression failed, and the outlawed SPD won a large number of seats in the election of 1890. Stunned, Bismarck prepared to abolish the constitution. However, he was suddenly dismissed by the new emperor, William II, who wished to rule in his own right and to pursue a more aggressive foreign policy. "Germany" © Emmanuel BUCHOT, Encarta, Wikipedia
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