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Before 1870 Germany was not united properly. This was because of the power struggle, mainly between Prussia and Austria, that was occurring at the time. This disunity did not provide for a stable or flourishing economy, and so Germany was not very advanced industrially at all.
Then Bismarck finally got his way, and in 1871 everything changed. The New German Confederation was formed, and all the German states were united under one ruling body. This meant that the country was co-ordinated in its actions and was less vulnerable to political, social, or military attack. So the new Germany was very strong.
This unification provided a base platform for industry to grow, and Bismarck cared for this well. He implemented several policies to protect the baby businesses; among them were laws which forced up the cost of many foreign items and made the German goods better value. This strengthened the economy and industry responded. After this there was no stopping anyone; the economy was up and running. Germany then went through a period of rapid industrial growth, culminating in the outbreak of the First World War.
A big boost to the new economy was the five billion Francs paid to Germany was a result of the Seven Weeks War with France. This fee was exactly equal to the amount taxed by Napoleon from Germany. Also included in the package was the French territories of Alsace and Lorraine. These were both rich in minerals and soil, and so were a great boon to the fledgling economy.
Railways played a very important part in Germany's growth. The country was a slow starter in the railway race, but she soon caught up. The network quickly enveloped the entire country and provided links with each area and the international community, making everyone more aware of each other and decreasing the psychlogical distance between places. (This is the first real example of the 'shrinking world'.) Railways increase efficiency, because everything gets there faster, and the tempo of business speeds up. Germany became the centre of activity for the European business community, and Germany was able to trade better because she could now ship directly south, rather than via another country. This problem was caused because all main rivers in the nation flowed north; away from the majority of trading partners.
Germany implemented a technical education curriculum which emphasised the technical areas of industry, such as electrics, chemistry, and physics. This program produced more scientists, and better ones, and so more and better advances were made in these directions. This is why Germany was to become strong in the technical fields.
German politicians, industrialists, and academics all felt a threat from France. This was because the feared a retaliation from the Seven Weeks War of 1866, but their fears were unfounded. France had neither the power or motivation to challenge Germany; Germany either did not hear or did not listen, and the country strived to make itself stronger, just in case of an attack.
Germany was, and still is, rich in natural resources. These include coal and iron ore in the Rhur, the Saar and the south east corner of Upper Silesia; rich soil gained from the Seven Weeks War with France (in Alsace and Lorraine); sodium and potassium in large quantities (this is what enabled a large chemical industry); and the people. This is probably the most important part of Germany; its people. The country possessed many people capable of making and using the technology and resources to their greatest capability, and capitalising on it as much as possible. This was particulary obvious in the business sector; many 'high-flyers' emerged. An example of this is the growth of the chemical industry; Britain had 30 scientists in the field, while in the same period Germany had 350. Germans had realised the value of the industry.
Another way in which Germany was ahead of Britain was in the confidence of banks to lend money. In Britain, many banks did not lend money to businesses because they feared that the business would not be able to pay it back. In Germany, it was a different story. Banks gave over money willingly, and a special breed of bank grew up; the 'credit bank'. This type of bank is now known as a corporate bank. This breed is entirely devoted to banking in the business sector.
Prosperity was the general result of the growth in the economy. This was reinforced by Bismarck's unfailing favour toward the business sector, and how he always backed it. As a result of this prosperity, businesses were able to keep up with the latest in technology, regading their machines, and so they could keep abreast of the market. This was a major point over Britain, who was still using old, antiquated, machinery.
In the search for new markets, more space for the population, and more resources, Germany started to build up a colonial empire. The ultimate aim was no control lots of Asia and Africa, but this did not eventuate. Instead, several different areas of Africa were either taken over or annexed by Germany. These colonies served as extensions of Germany, and so enhanced her economy.
As the country prospered, it became a desirable place to live, and so many people moved in from other countries. This boosted the economy, and the country grew. This causes a snowball effect, which is only stopped by rather unfavourable circumstances, such as over-population. Because of this economic growth, living standards went up, wages went up, and so people could afford to have more children. And so the population increased again.
Also, when a country industrialises about 70% (may be more) of all people in the country move in toward the urban centres. The country becomes urbanised. This means that there are more workers available, and so industry prospers.
In 1879 industrial protection was introduced; this is the foreign tariffs I mentioned earlier. This encouraged trade, employment, and business. The State charged a protection tax, and so it had more money to put back into the economy. Social Welfarewas also introduced; Sickness Insurance, in 1883; Accident Insurance, in 1884; and an Old Age Pension, in 1889. These measures made people think twice about how bad the government was, and deterred people from swinging toward the communist side of the political spectrum.
As Germany gained international stardom, money and experts flocked into the country. They always found work, and invariably made an advance in their field. So Germany's technological expertise gained ground, and more people came. This is another snowball.
The development of each new field, as more and more experts arrived, placed a strain on the economy. There were more people than ever, and so the industries produced more. As the population increased, each industry spurred on another. An example of this is the growth of the railways; this required more rails, carriages, coal, and drivers, and as the network got bigger and better more people travelled on it; the cycle starts again.
What you have just read, I think, serves to illustrate vividly the nature of Germany's economic burst, and why she was able to industrialize so rapidly. Each and every one of these reasons and explanations gives another viewpoint to the topic; each gives a new method of industrial growth.
From what I have said, Germany was able to industrialize so quickly after 1870 because of ten main reasons:
Bismarck was left until last because he does not really come into it anywhere else. It must be noted, however, that the entire secret to Germany's success lies with Bismarck. Firstly, he unified the country; secondly, he brought the economy into line; thirdly, he made sure it stayed that way and encouraged it; and fourthly, he prevented anything from hurting the economy badly.
Focus on Nations; A.J. Koutsoukis; 1984; Longman Cheshire, Syd.
Two Centuries; J.D. Bollen and J.J. Cosgrove