In essence, the period of relative prosperity and population growth in Germany during the 1870s brought on what has been called overexpansion. Germany had won a war, had been unified, and there was hope that the economy would continue to grow by leaps and bounds. Likewise, the new Reich had put Germany on the gold standard, doing away with the silver coins of the constituent lands. What this led to at that was wild speculation in various industries. Everything from railroads to stocks and factories and ships saw wild investment. This was driven in some respects by the establishment of a central bank, which made it much easier to invest in this way. The prices of these entities got overinflated as a result of the rapid investment. There was little in place to control the growth or stop a bubble from creating. Eventually there was a series of events with very poor timing. For instance, banks in Vienna began to collapse and fail. At the same time, the French had been propping up Germany in some ways with its reparation payments from war. Eventually those stopped, and this caused a severe contraction in the German economy. Given that there was already a bubble present in the economy, the contraction and lack of funds coming in from France produced a bigger problem that caused the German economy to go into a panic. This brought on many long-term problems for Germany’s economy, and even though the country had been poised for positive expansion, it seriously outdid itself in this regard and suffered from the dramatic effects of economic overextension and expansion. Even though Germany had expanded, it had little relationship to its neighboring countries because in all of its expansion, the consolidated lands had largely been Germanic in nature anyway.
Expanded Question to Ask: During the 1870s, Germany’s economy suffered a shock that reverberated throughout Central Europe. It is common during these events to blame minority groups for economic problems. Which minority groups bore the brunt of the blame in Germany?
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