From The Eagle Rising: The Story of Prussia's Arrival On the World Stage, pub. 1989 by Professor Reinicke Herz
Around the turn of the century, under the leadership of Kaiser Wilhelm II, the Prussian military underwent a massive upgrade. Certainly, it is true, he utilized his army and navy more during his reign than his predecessors had. But this also reflected two other things.
One, Germany could no longer go on as if it were a provincial European power. It had developed a worldwide empire which it needed to protect, and it also had drawn the ire of several world powers with significant military strength. The inadequacies of Germany’s defenses had been highlighted more than once in the past, though also had its strengths. Two, as a far-flung imperial power, Germany needed to have a navy to rival, if not to eclipse, the other major naval powers of the world. Of most particular concern, of course, was the British Royal Navy, though the American and Russian navies were formidable as well.
The Imperial Navy grew dramatically, in both numbers and capabilities. Between 1895 and 1905, Prussia launched 38 new vessels – 8 transport steamers, 15 light cruisers, 9 armored cruisers, and 2 submarines. The Kriegsmarine also christened four new, impressive battleships – the SMS Kaiser Wilhelm II and SMS Prussia, launched in March of 1898, and SMS Friedrich der Grosse (aka Konig Friedrich II) and SMS Wilhelm der Grosse (aka Kaiser Wilhelm I), launched in November, 1900.
In addition, over those same years (1895 to 1905), Prussia increased the size of the Wehrmacht by 11 cavalry divisions, 26 regular infantry divisions, and another 7 divisions of native infantry composed of volunteers from Africa and China.
Also, in response to repeated concerns about troop buildups on the other side of the border, a string of fortresses was begun along the French frontier.
During these years, Germany was generally considered to be the 3rd ranked military power of the world, behind only the United States and Great Britain.
At the turn of the century, Prussia was considered by most to be the pre-eminent world power regardless of its lack of military superiority. Germany had become one of two cultural leaders, competing with the United States in this respect, and maintaining cultural leadership throughout western and central Europe, exclusive of the British Isles.
Germany was also the 3rd ranked economic power of the world, behind only the United States and Russia. She was the prime exporter of many commodities, including:
Military Supplies: Explosives, Ammunition
Finished Products: Steel, Machine Parts, Wine, Paper, Lumber, Fertilizer
Raw Materials: Sulphur, Iron, Coal
Foodstuffs: Fruit, Cattle
New Technologies: Aeroplanes, Automobiles, Telephones
It should be noted that, for most of these items, Germany was producing 1/3 or more of world’s supply of that commodity.
The German economy was dampened, somewhat, by her substantial debt levels, which bounced back and forth between being paid off by the expanding economy, and being elevated by purchases of new military equipment, the raising of troops, or public aid to the private sector meant to further bolster German industry. At the end of 1897, Germany owed 820 million Reichsmarks in public debt. It lessened to 720 million in 1898, but rose again to 920 million in 1899 after massive investments in industry and the military.
Finally, major debt payments throughout the year 1901 brought German public debt down to 470 million Reichsmarks. This was further helped by government measures implemented early in 1902 which brought interest rates down to 10 percent. By the end of 1902, the debt had been further paid down to about 200 million Reichsmarks, and dramatic new policy changes included tax breaks for the poorest of Germans, bringing their rates down to 45 percent. For the first time, Germany had a progressive tax policy which put most of the burden on the upper classes, and not on the general population.
And as the German federal budget improved, funds were freed up from debt service to be used for other priorities. A major effort was made to reduce corruption throughout the major cities of the Empire.
Despite the fear, distrust and hatred Kaiser Wilhelm’s policies had engendered among many major powers, Germany during these years was experiencing unprecedented growth in status, no matter how one measured it. Germany was on top of the world.
Unfortunately, Germany’s status was coveted by many. And it was bound to happen that, eventually, jealousy would overcome fear.