Germany in Central America: Competitive Imperialism, 1821-1929

4. Bismarck and the Foundations of the German Empire, 1858–1871

4 • Bismarck and the Foundations of the German Empire, 1858-1871 In the 1860s and 1870s, the Prussian government unified most Germanspeaking states into an empire. After decades of group activity sponsored by bodies ranging from political clubs to singing associations, a series of wars-against Denmark in 1864, Austria-Hungary in 1866, and France in 1870-led to the elevation of Prussia's king to German emperor. Central Europe's German speakers were united in a Kleindeutschland that excluded Austria, parts of Switzerland, and a few small enclaves of German speakers scattered throughout Central and Eastern Europe. The states of the North German Union grew rapidly in industrial and commercial activity during these two decades. German nationalists were exalted, and their numbers grew dramatically. The new empire, however, lacked overseas colonies. While some historians have underscored preliminary projects to establish colonies and naval support points, German entrepreneurs and officials did not overlook opportunities to build an informal empire as one response to social imperialistic politics.1 The economy of the German states grew steadily for several decades before the world depression of 1857-1859. Prussia's constitutional-military crisis of the late 1850s and early 1860s and German unification drew attention from the problems of industrialization and the need for expansion . Increasingly in the nineteenth and early twentieth centuries, Germany engaged in a struggle to maximize its role in the world economy. After Hesse's mission, the Prussian government subordinated its interests in Central America to pressing matters of security and well-being in and near the homeland. In the third quarter of the nineteenth century, German grains met sharp competition from the capital-intensive agricultural industry of the United States and the grain fields of Russia. A rising standard of living for many Germans generated a demand for new imported products. These developments increased the desire for enlarge- 56 • Germany in Central America ment of the national market (encouraged through an informal alliance between the traditional aristocracy and the new industrial and financial bourgeoisie) with tariff protection. A unified Germany improved access to a wider range of domestic resources, diversified opportunities for investment , and assured access to foreign markets and raw materials through the Hansa cities. Even plant expansion became more rational within the larger national economy.2 Prussian Chancellor Otto von Bismarck's resolution of the constitutional crisis and Prussian leadership in industrialization and unification entailed wars and internal tension that dislocated life in some agrarian areas and threatened the lifestyles of Bismarck's beloved Junker class as well as other conservatives and aristocrats. His resolution of the budget crisis was, in some ways, a victory for laissez-faire German entrepreneurs who wished to replace local markets with a national market and who looked abroad for new economic endeavors. The success of the Customs Union encouraged the idea of one large, protected market under a government willing to subsidize railroad and industrial expansion and to unify commercial and business law and custom. Still, many German nationalists opposed the government until Bismarck made peace with the leaders after 1866. Yet, even during these tumultuous years, the place of Central America in Germany's development was not forgotten? In the Caribbean-Central American area, Germans sought to use the local economies as a sponge to absorb the small but growing surpluses of German textiles, iron wares, capital, and population, and as a supplier of additional raw materials and new products to satisfy demands for an improved lifestyle. German entrepreneurs became more active in Central America during the U.S. Civil War. The Caribbean also presented opportunities in mining, plantation production, and land speculation. The number of German firms (perhaps fifty by 1870) and residents (perhaps 700 males) in Central America in the 1860s sketched a modest but growing presence (see Tables 9 and 10). German settlers continued to arrive, engaging successfully in agricultural, commercial, and financial affairs, and building clubs and schools. German direct commerce with Central America, particularly Guatemala and Costa Rica, grew from 1840 to 1873. At their peak in this period, German products accounted for over 15 percent of Guatemala's and over 18 percent of Costa Rica's imports (Table 1). Germany's share of Guatemalan exports rose from 1 percent in 1860 to nearly 25 percent in the early 1870s (Table 2). Germans purchased around 7 percent of Costa Rican products in the mid- and late 1860s. Hamburg and Bremen commer- Bismarck...