By 1871, when Germany became united under the leadership of Prussia, it had already seen a period of rapid economic growth which continued after unification. By 1890 Germany was one of the most powerful economic and political forces in Europe.

Between 1871 and 1914 the German population increased from 41 million to 67.7 million – in contrast the French population only rose from 36 to 40 million. The number of towns and cities grew rapidly as members of the new population migrated from the countryside in search of work in factories. The population rise coincided with a second stage of industrialisation. There was a move from the old heavy industries like coal and iron to the more modern chemical and electrical industries. Germany began to overtake Britain, then known as the ‘Workshop of the World’, in the production of manufactured goods.

Unlike Britain, Germany favoured state support of industry through protectionist tariffs. The period also saw the rise of great investment banks, like the Deutsche and Dresdner Banks, which helped to finance industry. Industrial success was not gained without social conflict; the move from country to city and the creation of a huge new industrial workforce encouraged the growth of unions and liberal political parties opposed to the policies of the reactionary Prussian ruling class.