German economy & industry without the World Wars?

I'm in addition very, very doubtful of all of the claims of the British and French colonies being money sinks, which is parroted extremely often with very little to back it up. 1/3 of French trade went to its colonies during the 1930s, and for Britain the figure was even higher. Both the British and the French imposed laws on their colonies of them being financially neutral, and never sent large (state) investments into them. Perhaps the Algerian War and the First Indochina War were expensive, but those were special events. And while the world may have been a more liberal economic system than it would be in the Interwar, inherently Germany would never be able to achieve economic domination of either French or British markets - at most, it may achieve a substantial foreign influence, just as it did originally in 1914.

In 1913, Germany had £1.18b invested globally, very little of this would be in the German colonies. In contrast, GB had £1.78b invested in its Empire, £755m in the USA, £756m in latin and South America, £218 in Europe (half of that is in Russia) and another £256m in the Middle East and Asia, for a total of £3.76b invested globally. The earnings from these investments made up about 10% of UK's GDP. The war basically shaved off 15 years of European development and saddled everyone with GFC+ style debt to GDP ratios. The winners were USA and Japan.

GB trade with the Empire in 1911 was £340m, an important trading partner. This was the same amount of trade as with the US while that of GB-German was £156m.

In terms of economic growth the proportions of GDP by sector for leading powers in 1913 were:

United States (GDP 517,383) Ag 27.5%, Ind 29.7%, Service 42.8%
France (GDP 144,489) Ag 41.1%, Ind 32.3%, Service 26.6%
Germany (GDP 237,332) Ag 34.6%, Ind 41.1%, Service 24.3%
Netherlands (GDP 24,955) Ag 26.5%, Ind 33.8 %, Service 39.1%
GB (GDP 224,618) Ag 11.7%, Ind 44.1%, Service 44.2%
Japan (GDP 71,653) Ag 60.1%, Ind 17.5%, Service 22.4%
Russia (GDP 254,448) Ag 70%, Ind 26%, Service 4%

Ag: Agriculture, timber and fisheries
Ind: Processing and mining construction housing
Service: Transport, Banking, Military

As you can see, GB's Ag sector was very small and industry and services were the main segments. Germany can expand it's industry by further shrinking it's Agricultural base but will probably not equal GB in the Service space. Russia and Japan have the greatest scope for industrial expansion.
 
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Merchant Shipping in 1908
Empire 9,500 ships, 17m tons
Rest of the World 9,500 ships 16m tons

Over 12,000 ton ships GB (34), Rest of World (10)
Over 10,000 ton ships GB (49), Rest of World (46)
Over 5,000 ton ships GB (567), Rest of World (506)

Over 20 knots speed GB (7), Rest of World (7)
Over 18 knots speed GB (41), Rest of World (23)
Over 16 knots speed GB (106), Rest of World (106)
Over 12 knots speed GB (960), Rest of World (830)

British shipping was also carrying £400,000,000 of foreign trade. £300,000,000 worth of trade is at sea at any one time.

Import and Export Trade 1908
Empire £1,948,000,000 (UK £1,304,000,000 + Empire £644,000,000)
German Empire £729,000,000
USA £685,000,000
France £539,000,000
Russia £205,000,000
A-H £195,000,000
Italy £158,000,000
Japan £110,000,000

By 1911 German trade was up at £803,800,000 but the Empires trade was at £2,400,000,000.

And Germany's shipbuilding industry was competitive, its shipping industry had risen to number two, following the British industry but in proportion to global trade still had room for growth. I would argue that German exports moved mostly in German hulls, and so did much of her imports. Her industry is more closely linked to her import/export volume. The British industry is carrying not only her trade but others, such as the majority of the Japanese and some significant part of the USA shipping not on the lakes or coastal If the USA or Japan shift to national flagged hulls and develop their shipping further it comes from the British industry. The British have become dependent upon imports, especially food, her merchant marine profits from carrying not just British cargo but global cargo, and not just to or for the Empire.

What would be fascinating would be a breakdown to trade volumes by UK and Dominions, a lot of trade was intra-Empire but I think we already were seeing the various Dominions loosing the links to Britain, for example Canada was primarily a US trade partner. I suspect there was a lot of outward pressure to trade beyond the Empire that was tearing the Empire out from under itself, a thing fueled by German growth and only going to increase, combined with American and Japanese growth that should be coming.

Oddly it appears advantageous o use British hulls, the powerful shipbuilding industry combined with the shipping industry, aligned with bankers, brokers and insurance interests all become politically allied to the import economy and as I think occurred, undercut the domestic industry. Long term that is reducing the British industrial base and putting a potent lobby against any tariff or Imperial Preference schemes. Germany has a much weaker such lobby, German shipping hauls cargo out so is lockstep with the industrial economy.
 
In 1913, Germany had £1.18b invested globally, very little of this would be in the German colonies. In contrast, GB had £1.78b invested in its Empire, £755m in the USA, £756m in latin and South America, £218 in Europe (half of that is in Russia) and another £256m in the Middle East and Asia, for a total of £3.76b invested globally. The earnings from these investments made up about 10% of UK's GDP. The war basically shaved off 15 years of European development and saddled everyone with GFC+ style debt to GDP ratios. The winners were USA and Japan.

GB trade with the Empire in 1911 was £340m, an important trading partner. This was the same amount of trade as with the US while that of GB-German was £156m.

In terms of economic growth the proportions of GDP by sector for leading powers in 1913 were:

United States (GDP 517,383) Ag 27.5%, Ind 29.7%, Service 42.8%
France (GDP 144,489) Ag 41.1%, Ind 32.3%, Service 26.6%
Germany (GDP 237,332) Ag 34.6%, Ind 41.1%, Service 24.3%
Netherlands (GDP 24,955) Ag 26.5%, Ind 33.8 %, Service 39.1%
GB (GDP 224,618) Ag 11.7%, Ind 44.1%, Service 44.2%
Japan (GDP 71,653) Ag 60.1%, Ind 17.5%, Service 22.4%
Russia (GDP 254,448) Ag 70%, Ind 26%, Service 4%

Ag: Agriculture, timber and fisheries
Ind: Processing and mining construction housing
Service: Transport, Banking, Military

As you can see, GB's Ag sector was very small and industry and services were the main segments. Germany can expand it's industry by further shrinking it's Agricultural base but will probably not equal GB in the Service space. Russia and Japan have the greatest scope for industrial expansion.

And when I look at per capita numbers I see Germany closing the gap with the UK, then one of the highest, likely mechanizing its agriculture sector more, freeing labor to keep industry growing and its services sector is poised to grow now that industry has matured. Germany has a decent internal market to let her grow but still must export to achieve anything like true wealth. Comparatively speaking her internal market is much better than any other European nation but far short of the American one, so economy of scale is at a lower level, giving her an edge in Europe but trailing the USA. My suspicion is that Germany has reached her population zenith or is close to it, the population will grow more slowly and then simply balance out. Within 1914-borders I can get between 105 and 125 million people by modern day using actual growth and edging it one way or the other. (I can get higher levels but I tend to think population density will slow things as does the strain on the economy, keeping density closer to actual moderates the population).

When I adjust for population, I have Germany ranging from one-quarter to one-third the US economy depending of how you guess the growth for either. Russia does better because her population is bigger, same with China, and Japan can become her equal, once the Empires fall apart, Britain and France become runners up. Even without WW2 I see the long term trend as the Empires becoming too dispersed in trade to keep either truly competitive, much of either Empire is quite poor and underdeveloped, the British should favor free trade that makes her Empire virtually irrelevant, actually benefiting others as she pays to defend or develop them, or crashing her economy if she goes protectionist and realigns the global trade around herself. Britain's better investment is to avoid WW1 and focus on developing her Empire as an economy suited to consuming her domestic wares as much as feeding her.

So the future line-up should shift, the USA, Russia and Germany not that distant, Japan and China with China capable of getting ahead, then UK and France. The UK moves higher if you add the Empire, getting up to equal or better than the USA. If we simply keep Britain on her historic track and shed her Empire, she is really in competition with France. In every scenario without the reduction or destruction, Germany emerges as the leading European economy, treating Russia as something else, and its usual equal is the Empire of Japan, given any decent economy, Germany is at that tier below bigger nations like the USA, Russia, India, or China, but rather more like the Japan is today, a regional powerhouse with global reach. And even with Russia treated as European, Germany stands again rather like Japan, nearly as strong despite being smaller, without far better free market and democratic and Liberal policies, Russia/USSR never really gets that wealthy for its size, its strength is just bigness.
 
A feature of agriculture in Germany was it employed a significant portion of the German population and it was relatively inefficient, measured by its output in relation to the number of people employed. The absence of OTL causualties, a better than OTL birth rate and the rationalisation of German agriculture, would together release significant German manpower.

I agree and would expect that the rationalisation and commercialization of Eastern European agriculture would similarly help.
 
Only in rare cases far after nationalism has been discredited is it possible to have an election on secession from the large state. There's few ways secessionists can succeed.

In Europe, we have seen many secessionists succeed democratically.
-Czechoslovakia
-Norway and Sweden
-Yugoslavia
-USSR

I am sure others can add more.
 

kernals12

Banned
Germany's GDP recovered very quickly from both wars and today German workers are as productive as their American counterparts, so Germany would not be any wealthier. Without the wars, I imagine Germany would dominate the chemical industry, instead of the auto industry since it would mean IG Farben survives while Volkswagen never exists. They could also still have a large aircraft industry, maybe BMW would be better known as the ultimate flying machine.
 
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Germany's GDP recovered very quickly from both wars and today German workers are as productive as their American counterparts, so Germany would not be any wealthier. Without the wars, I imagine Germany would dominate the chemical industry, instead of the auto industry since it would mean IG Farben survives while Volkswagen never exists. They could also still have a large aircraft industry, maybe BMW would be better known as the ultimate flying machine.
There's one huge difference - without ww1 there's no hyperinflation afterwards which turned Germans into notorious savers. They end up instead spending much more of their income to consuming more goods which means extra business, which means extra wealth generated. The average German saves 10 % of his income, the average British or American one only 5 %, this results in the service sector having a greater share of the economy as there's more money to be made there. In earlier decades it was much larger.
 
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There's one huge difference - without ww1 there's no hyperinflation afterwards which turned Germans into notorious savers. They end up instead spending much more of their income to consuming more goods which means extra business, which means extra wealth generated. The average German saves 10 % of his income, the average British or American one only 5 %, this results in the service sector having a greater share of the economy as there's more money to be made there. In earlier decades it was much larger.
???
How in the world does it make sense that a hyperinflation (which eats up all your savings) creates a culture of saving?
No no no, there must be something wrong here.
I know that there is a culture of saving in Germany, and savings rates over here are indeed higher than in other economies. And 1923 has left some sort of imprint.
But I doubt that the causation goes that way.
I even particularly remember reading an old decorated plate in someone's home, on which it said:
Eßt und trinkt, solang's euch schmeckt / Schon zweimal ist uns 's Geld verreckt
which translates as: "Eat and drink as much as you want / Twice already, our currency collapsed"
So, no, I'm sure 1923 was a shock but if anything, it would have relativised saving tendencies. I think they much rather hark back to the 19th century and to an earlier popularisation of credit and savings in the Raiffeisen movement (rural co-operative banking), but I'm no expert on that matter.

But that's not the focus of this thread...
 
???
How in the world does it make sense that a hyperinflation (which eats up all your savings) creates a culture of saving?
No no no, there must be something wrong here.
I know that there is a culture of saving in Germany, and savings rates over here are indeed higher than in other economies. And 1923 has left some sort of imprint.
But I doubt that the causation goes that way.
I even particularly remember reading an old decorated plate in someone's home, on which it said:

which translates as: "Eat and drink as much as you want / Twice already, our currency collapsed"
So, no, I'm sure 1923 was a shock but if anything, it would have relativised saving tendencies. I think they much rather hark back to the 19th century and to an earlier popularisation of credit and savings in the Raiffeisen movement (rural co-operative banking), but I'm no expert on that matter.

But that's not the focus of this thread...
It's an irrational action based on fear and distrust towards banks and stocks, it doesn't have to make sense, they still save loads of money despite receiving 0 % interest for it in a non 0 % inflation environment.

It is related imo, more spending equals bigger economy.
 
What would be fascinating would be a breakdown to trade volumes by UK and Dominions, a lot of trade was intra-Empire but I think we already were seeing the various Dominions loosing the links to Britain, for example Canada was primarily a US trade partner. I suspect there was a lot of outward pressure to trade beyond the Empire that was tearing the Empire out from under itself, a thing fueled by German growth and only going to increase, combined with American and Japanese growth that should be coming.

The Empire was built on free trade principles unlike German and US protectionism. However, trading both within and without is hardly tearing it apart. The Empire wouldn't need to start protecting it's trade, ie some form of Imperial preference, by the mid to late 20's without the war and yet it did introduce this measure in 1932.

GB exports in 1911 of home production to the Empire.
  • India & Ceylon £54.8m
  • Australasia £40.7m
  • South Africa £20.2m
  • Canada £19.7m
  • Egypt £10.3m
  • Singapore £4.4m
  • Nigeria £3.1m
  • West Indies £2.8m
  • Hong Kong £2.7m
  • £158.8m total

An additional 5% was re exports, not produced in the UK. GB imported from the Empire £176.7m.

The Dominions and India's trade was about £860m in total so less than 40% (£339m) was with the UK. Intra Imperial Trade was about £484m.

The value of Canada's trade in 1913 was £232m but only about 40% of this was with the USA (Canadian trade was 10% of US total) and 20% was direct between Canada and UK.
 
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Anchises

Banned
It's an irrational action based on fear and distrust towards banks and stocks, it doesn't have to make sense, they still save loads of money despite receiving 0 % interest for it in a non 0 % inflation environment.

It is related imo, more spending equals bigger economy.

Its not that irrational because it creates an institutional stability that leads to less severe recessions and depressions imho.
 
The Empire was built on free trade principles unlike German and US protectionism. However, trading both within and without is hardly tearing it apart. The Empire wouldn't need to start protecting it's trade, ie some form of Imperial preference, by the mid to late 20's without the war and yet it did introduce this measure in 1932.

GB exports in 1911 of home production to the Empire.
  • India & Ceylon £54.8m
  • Australasia £40.7m
  • South Africa £20.2m
  • Canada £19.7m
  • Egypt £10.3m
  • Singapore £4.4m
  • Nigeria £3.1m
  • West Indies £2.8m
  • Hong Kong £2.7m
  • £158.8m total

An additional 5% was re exports, not produced in the UK. GB imported from the Empire £176.7m.

The Dominions and India's trade was about £860m in total so less than 40% (£339m) was with the UK. Intra Imperial Trade was about £484m.

The value of Canada's trade in 1913 was £232m but only about 40% of this was with the USA (Canadian trade was 10% of US total) and 20% was direct between Canada and UK.

Fantastic information, thank you! I feel British free trade policy helped the Empire more than the UK, it kept food prices manageable and was a boon to the investor class but was longer term dragging her industrial sector down. All that imperial trade is where Germany needs to regain markets, but I suspect after the war more pressure exists to exclude them. Whether that succeeds is hard to tell.

It appears the Empire was not dependent upon the UK, but the UK was slightly dependent upon the Empire to sustain its economy. That might explain why British industry lagged, with a virtually captive market it felt not enough pressure to innovate and compete. My impression is that Britain is suffering under the commons problem, it pays to defend the Empire who pay little towards it, but I wonder what the Dominion burden really is?

Post-WW1 we still have a cohesive Empire, the Liberal free trade policy is ingrained but Conservative governments are going to pursue more protection, I suspect Labour might be amenable (to protect jobs) and with a surviving Germany the pressure may increase for trade barriers before the Beggar Thy Neighbor era. I think it only hurts the Empire but policy does not always benefit us. German diplomacy needs to keep the Empire open for business or Germany is going to have to pursue new markets outside the British.

And without the wars, I think we have a similar dilemma but for different reasons. The Empire is far more cohesive yet it has even less rationale not to trade freely with Germany. The political will to impose trade barriers might be longer in coming, if at all, such that Germany should continue to grow as the industrial supplier to the Empire, sort of how China produces so much for the USA and global market. We know France was a serious financial competitor to London, but German banks should have a lot of trade surplus wealth to reinvest, and that will only integrate the German economy into the Empire's if it begins active lending within the Empire. So we see more independence like Canada who felt it was more tied to the American bloc that London? Other Dominions or colonies find German business more important that London?
 
There's one huge difference - without ww1 there's no hyperinflation afterwards which turned Germans into notorious savers. They end up instead spending much more of their income to consuming more goods which means extra business, which means extra wealth generated. The average German saves 10 % of his income, the average British or American one only 5 %, this results in the service sector having a greater share of the economy as there's more money to be made there. In earlier decades it was much larger.

Was that the only cause? Savings rates are often attributed to culture and also policy, the German state appears more likely to be pro-savings, it is a more conservative path and serves patriotic impulses, some system of popular bonds could easily steer Germans into stronger saving mode. How can be moderate the consumer model to get both strong spending underpinned by good savings?
 

Deleted member 1487

As I understand the trade issues pre-WW1 German Junkers still had a lot of influence on German politics and they were blocking trade deals that would open British/Imperial/Dominion markets to industrial goods because they required reciprocal lowering of agricultural tariffs, which would have wiped out their estates and made Germany dependent on foreign imports of food. Without changes in German politics (some allege that German belligerency and entry in to WW1 was in part to head off the increasing liberal parties influence in politics and decline in Junker power) it is highly unlikely that trade deals would be worked out; it also seems like some were possible if Germany were willing to drop it's tariffs on agricultural imports, but who knows for sure in an ATL.
 
I agree and would expect that the rationalisation and commercialization of Eastern European agriculture would similarly help.

It should free up labor for industry, making Eastern Europe ripe to locate labor intensive industries there. We often see such transfer of industry where labor is cheaper than automation.
 
As I understand the trade issues pre-WW1 German Junkers still had a lot of influence on German politics and they were blocking trade deals that would open British/Imperial/Dominion markets to industrial goods because they required reciprocal lowering of agricultural tariffs, which would have wiped out their estates and made Germany dependent on foreign imports of food. Without changes in German politics (some allege that German belligerency and entry in to WW1 was in part to head off the increasing liberal parties influence in politics and decline in Junker power) it is highly unlikely that trade deals would be worked out; it also seems like some were possible if Germany were willing to drop it's tariffs on agricultural imports, but who knows for sure in an ATL.

The political reforms necessary to break the Junker hold on the Reichstag is coming, without the war it might take another decade or two or three, but the other potential is like the USA, you get subsidies that buy them off, masked as aiding the small farmer or as food security, they simply keep the big agriculture players protected and wealthy, their influence narrowed to fighting for those subsidy Marks. They could mechanize and likely improve profits while damping down the need for foreign labor too. My suspicion is that the industrialists re going to prevail, hat has been the usual course, the middle class taking power from the landed elite, and in Germany I think you have the SDP and Zentrum on board.
 
Was that the only cause? Savings rates are often attributed to culture and also policy, the German state appears more likely to be pro-savings, it is a more conservative path and serves patriotic impulses, some system of popular bonds could easily steer Germans into stronger saving mode. How can be moderate the consumer model to get both strong spending underpinned by good savings?
Modern money is underpinned by the countries reputation - how companies deliver goods and pay their bills, how much money flows into the country and out of it, how the credit servicing is going or not going etc, not like in the old days by actual savings, gold, silver or anything that can be redeemed at face value for the bills and coins it represents. The secret to having a strong consumer economy seems to be teaching the people to buy more than you can afford with your income, mortgages for homes, new cars bought with credits, student loans for the kids and multiple credit cards for everyone etc, they all play their small part in pulling earning from the future into the present where it's powering the economy. It leads to the occasional bubble and bank insolvency but overall the countries practicing it, USA, UK, Netherlands are running better than the German ordo-liberalism model.
 

Anchises

Banned
Modern money is underpinned by the countries reputation - how companies deliver goods and pay their bills, how much money flows into the country and out of it, how the credit servicing is going or not going etc, not like in the old days by actual savings, gold, silver or anything that can be redeemed at face value for the bills and coins it represents. The secret to having a strong consumer economy seems to be teaching the people to buy more than you can afford with your income, mortgages for homes, new cars bought with credits, student loans for the kids and multiple credit cards for everyone etc, they all play their small part in pulling earning from the future into the present where it's powering the economy. It leads to the occasional bubble and bank insolvency but overall the countries practicing it, USA, UK, Netherlands are running better than the German ordo-liberalism model.

Woooow wait.

Great Britain is economically really better off than Germany?

Netherlands and UK both have a load of other factors who, at least too me, seem to have far more influence (work time, being a small country in case of NL etc.)

The "occassional bubble or bank insolvency" had harsh consequences in a lot of countries and just dismissing that seems a little simplistic.
 
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