Many people today remember the Prussian, Bismarck as a grand old man, who preserved the peace after the ‘unification of Germany,’ and hope that the European Union will develop in similar fashion to Germany between 1870 and 1890. It is therefore useful to take another look at Bismarckian Germany and compare it with the EU’s present development.
In 1871 Germany consisted of 25 states, ranging from mighty Prussia with 134,616 square miles to tiny Schaumburg-Lippe, with 131 square miles. Prussia had by far the most powerful economy and was the dominant influence.
Today there are 28 states in the European Union, some large, some exceedingly small, but Germany has by far the most powerful economy and is becoming the dominant influence.
Under Bismarck the Reichstag was elected by direct and universal suffrage. Its influence, however, was confined to making suggestions which the government was at liberty to accept or refuse, to checking the proceeds and expenditure of the budget, and to passing such bills as did not affect the imperial prerogative of foreign and military affairs.
The European Parliament is consulted about the appointment of the President of the Commission and debates legislative changes, which the Council and the Commission are also at liberty to accept or refuse. The European Parliament also checks the proceeds and expenditure of the budget and if necessary has the power to reject it.
In 1871 member states retained practically their whole internal administration, including direct taxation, railways, police, education, justice and local government. Two countries also retained their armies. Nevertheless Bismarck showed his fist, by fining Frankfurt heavily after it had supported Austria in 1866. This acted as a signal to other states not to step out of line.
At the moment EU member states have more control over their economies than in Bismarck’s Germany. However, the German-dominated EU has been continuing to use its power, notably over Greece. In 2017 the EU demanded that Greece maintain a budget surplus of 3.5% for a decade from 2018, a feat which few governments in the world have managed. This acted as a signal to other EU states not to step out of line.
After Bismarck adopted Gold as his currency for Germany, there was a huge bubble on the Austrian stock exchange. Then German interest rates were raised, money became tight and there was an ugly stock market crash. Austrian greed was blamed. Nevertheless, the Americans themselves blamed the subsequent Wall Street crash primarily on Bismarck’s adoption of Gold, which had collapsed the value of the bi-metal dollar and the Austrian gulden, which was based solely on silver.
Paradoxically, the 1873 stock market crash helped Bismarck gain greater control over states like Bavaria which had formerly looked to Austria for leadership and funds.
After the millennium, the European Union decided to adopt a new currency, the Euro. A bubble of money resulted – then rising interest rates and a crash. ‘Greed’ was blamed, but the arrival of such a giant new currency and the eventual precipitous raising of interest rates, leading to tight money, could also have been a factor.
German banks lost nearly a 1 trillion euros in the Lehman crash but America’s ‘swap lines’ helped her recover, and her dud European loans were taken over by the ECB.
Paradoxically, the crash has enabled the European Union to gain greater control over the EU’s Southern States, because all the member countries of the ECB are now interested in Greece repaying her loans.
Some six years after the 1873 crash, Bismarck found it expensive to administer his new Reich, so he abandoned free trade and adopted tariff barriers and bi-lateral deals with third countries.
At the moment Germany currently has the largest current account surplus in the world but she is not spending it, even on repairing her crumbling infrastructure. Meanwhile, workers’ savings from Britain provide 1.5% of Poland’s GDP, 3% of Slovakia’s, 4% of Lithuania’s and a whopping 6% of Latvia’s. Britain also provides a large amount annually to help pay for the EU as a whole. Brexit will thus produce a gaping hole in the finances of the EU member states if Germany continues with her policy of ‘austerity.’
It is more than probable, therefore, that sooner or later there will be a crisis (in Italy?) which will give the EU the excuse to abandon free trade and adopt a more Bismarckian system of a tariff wall and bilateral deals with third countries.
In view of this scenario, it is imperative that Britain does not give too much away in the current Brexit negotiations in order to retain EU access for Britain’s valuable finance industry – only to find that the terms of trade are altered when the EU adopts its tariff wall. (i.e. the EU may covet our fishing, which is so easy to give away – but we will soon feel the pain)
The aging Bismarck was also determined to retain a large army after ‘unification.’ In 1875 he conjured up the idea of a French invasion in order to persuade a reluctant Reichstag to vote funds for it; in 1890 he intimated that both Russia and France were threatening, as an excuse to enlarge his army still further. Bismarck’s purpose was not only to repel external invaders but also to maintain control at home. The enormous army he left behind became a welcome tool for new Emperor, William II, to achieve his ambition of ‘a place in the sun.’
Under German pressure, the EU has now decided to set up a European Army. Many in Germany have great plans for ‘PESCO’. Germany has a strong defence sector and larger arms exports than Britain. It is repeatedly stressed in Berlin that the EU can find the unity in wars waged together which cannot be achieved by other means. That was definitely the case for the individual states which formed part of Bismarck’s Germany.
In the Bismarckian era, the idea of being German as unique and special was encouraged in order to unify the different German-speaking kingdoms, princedoms and Republics. Unfortunately, the downside of their propaganda was racism towards foreigners, especially the Poles. 32,000 Poles were evicted from their land in the 1880s; Alsatians and Danes were also treated as inferiors in Bismarck’s Reich.
Bismarck also did nothing to discourage anti-Semitism. It became acceptable to blame the Jews for the social upsets which accompanied Germany’s industrialisation, and in 1899 the United Anti-Semitic parties in Germany began calling for the endlósung, or final solution, of ‘the Jewish problem’.
Bismarck’s ability to unify his country through guile and war encouraged his successors to try and emulate his example. The emergence of the Pan German league soon saw many Germans advocate a wider Germanic empire in the future, comprised of Germanic (but not necessarily German speaking) states (the most powerful members of the Pan German League were Alfred Hugenberg and his boss, Gustav Krupp). This would be accomplished, as with German unification itself, initially through a customs union, then through legal entities, and finally, as Bismarck found, force might have to be used, as Europe would discover in the First World War.
The prime reason given for the European Union is that it is there to prevent the bellicose European countries from ever fighting against each other again. However, the view that we ‘all fell into war’ in 1914 only became dogma in the early 1950s, before the evidence came to light that Germany was primarily responsible for the conflict. Revelations that Germany had crystallised her ambitions to grab France’s coal and iron ore areas and incorporate them into the German Reich are still shocking.
In conclusion, Bismarck made Germany both powerful and feared, but Europe suffered from the Long Depression almost the entire time he was in power. His success in invading his neighbours without censure also encouraged the Pan Germans to believe that his feat could be accomplished again.
Faced with Germany’s deflationary zeal today (which helped cause a banking crash in 1931 even though Germany was the world’s greatest exporter) we are clearly much better off outside the European Union. However, we must not sacrifice our territory or our natural resources in our endeavour through Brexit to protect our premier industry, the City. If there is another crash, leading to a ‘closed bloc’ economy in the EU, there will be plenty of money that wants to escape. So the City has a bright future. Meanwhile we must support our industrial base. Our fishing in the waters around our shores is also sacred and must not be sacrificed. Above all, as Europe is driven towards tighter unification, we must not become embroiled once more.