Ludwig August Rochau coined the term Realpolitik in 1853. It captured the spirit of his time.30 His message was simple. The liberal nationalists had been crushed in 1848 because they had lacked any understanding of savage political realities. The Berlin and the Frankfurt parliaments, with no real power, no access to an army and no grasp of international relations, had been destined to fail. Germans had to learn to be tough and unsentimental. They had to understand geopolitics, military power and, above all, economic might, for these things alone could forge a united Germany from its disparate and feuding states. In 1869 Rochau wrote that freedom was not to be achieved through political change but through the ‘acquisition of property’. For him the achievement of German unity was to be like some extraordinary business meeting which joined the different divisions of an enterprise together. This ‘new realism’ swept through Berlin. Philosophers, poets and literary men fell out of fashion; historians and economists – or ‘national economists’, as they preferred to call themselves – became the new demi-gods. Like Marx the new thinkers believed that natural economic laws determined history and that to understand them was to hold the key to the future. Economics was a central part of post-1848 political liberalism and the very term became synonymous with the new nationalist movement. Liberals began to concentrate on aspects of trade, money, power, productivity, public opinion and economic policy unheard of before. Its most fervent disciples were in Berlin.
The new Berlin economists envisaged Prussia, and not Austria, as the future economic heart of Germany. The vehicle for this was to be the German Customs Union, the Zollverein.31 Before the creation of the Zollverein in 1834 the thirty-eight German states had been separated by hundreds of obsolete medieval trade barriers; Berlin itself was surrounded by a customs wall until well into the nineteenth century. The tolls had posed one of the most annoying obstacles to German unity and liberals had long wanted them abolished; indeed in 1830 revolutionaries had attacked and demolished customs posts throughout Germany, chopping up the little houses and gates and throwing the toll keepers out on to the roads, and the 1848 revolutionaries had burned all the customs houses in Berlin. The importance of the Zollverein cannot be underestimated; amongst other things it marked the beginning of a German national economy, of a national state and of Prussian dominance over Austria. It came about because of Prussia, and because of Bismarck.32
After the Congress of Vienna Prussia had been divided into unconnected territories stretching over 7,500 kilometres from east to west. In 1818 the state had introduced a new customs bill to create a free trade zone between its provinces, but it also forced smaller states to join. Some, like the Anhalt principalities, were opposed to any policy which excluded Austria, and Metternich rejected it, calling it a ‘state within a state’. Nevertheless as early as 1834 a number of states had joined with Prussia, including Saxony, Frankfurt and Baden.
Throughout the 1840s and 50s Berlin used the Zollverein to further Prussian interests in Germany. The Minister of Finance Christian von Motz openly referred to it as an ‘independent policy for German unification’, insisting that the ‘political unity’ was a ‘necessary consequence of commercial unity’. In 1844 a Braunschweig liberal commented that ‘the Zollverein has become in fact the nourishing ground of the idea of unity’. Bismarck, who became Chancellor in September 1862, was desperate to make Prussia the key state in Germany and to keep his great rival Austria out of the Zollverein. His chance came that year when he signed a commercial treaty with France. When Austria demanded entry in 1865 Bismarck blackmailed the small- and medium-sized German states by threatening to disband the Zollverein altogether if its members supported Austrian entry. Berlin now controlled 90 per cent of the mining and metal industries, two-thirds of heavy industry and almost the entire textile industry of Germany; the smaller states supported Bismarck, and Austria was excluded.33 In July 1862 Berlin formally recognized the creation of the kingdom of Italy against Austria’s wishes, further widening the gap between Vienna and Berlin. Prussia had assumed the leading economic role in Germany; now it was putting this to its political advantage. Prussian victory in the race to unify Germany was now merely a matter of time.
Control of the Customs Union had become increasingly important to Berlin’s burgeoning power in Germany. The 1850s and 60s had been a period of extraordinary growth; the economy was booming and Germany was experiencing an industrial revolution which Prussia was keen to harness. Individual liberal bureaucrats promoted economic reforms in Berlin through bodies such as the Prussian Ministry of Commerce. One of the most important was the ‘schoolmaster of Prussian industry’ Peter Christian Beuth, who worked tirelessly to make Berlin into an industrial powerhouse. Beuth was the Minister of Trade, Industry and Construction who in 1821 had founded the Association for the Encouragement of Industry in Prussia and the Gewerbe-Institut (Institute of Trade). He also formed the Association of the Promotion of Industrial Knowledge and established a number of technical schools in Berlin, including the Berlin College of Trade and Industry in 1824, the Society of Architects and Engineers, and the School of Artillery and Engineering in 1822. He planned the new Customs House for the Kupfergraben, worked with Schinkel on the handbook for workers – the Vorbilder für Fabrikanten und Handwerker – and oversaw the 1828 creation of the Customs Association of Central and South Germany and Prussia-Hesse. Beuth was deeply influenced by his journeys to Industrial Revolution Britain. He saw the new cities as role models for Berlin and spent many months travelling through England, Scotland and Wales, visiting factories and interviewing industrial magnates – he even went with Schinkel in 1826 to examine the potential of new industrial architecture. He stole a number of designs from British manufacturers and introduced modern centralized factories in the city, doing away with the old ‘piece work’ system of production wherever possible. He also masterminded the first Prussian Trade and Industry Exhibition in Berlin held at Treptow Park, now the site of the vast Soviet war memorial where 5,000 Red Army soldiers lie buried. It was a huge success and, although it could not rival the Great Exhibition in London, was still impressive with its 176 exhibitors and 998 displays; 750,000 people attended.34
Beuth and his contemporaries researched, financed and promoted mechanization in every way. He was friendly with all rising young industrialists: ‘Hummel, Egells, Freund, Borsig, Hoppe, Tappert, Wöhlert, Arnheim, Ade, Hamann, Siemens, Schwartzkopff, the Müller brothers, the Kunheims and Kahlbaums, all were his friends and most were his personal students.’35 Beuth encouraged innovation and the use of technology from abroad – for example, bringing a British company to Berlin to install gas lighting in 1827. The ministry oversaw the granting of new business subsidies and donations, including funds for the 1822 Egells iron works and for the Borsig iron foundry and machine factory founded in 1837.36 They supported vocational education and even gave prizes for the best new products or designs created in Berlin. The Prussian government was deeply involved in business, a development which set Berlin apart from the English industrial giants – and indeed from other German industrial cities like Leipzig, which was still controlled from far-away Dresden. By now wealth had become more important to the one-time revolutionaries than the struggle for political rights, but despite the innovations Berlin still lagged far behind the great industrial cities of Britain. Something had to be done.
By the mid nineteenth century Berlin was in danger of being left behind in the race for industrial power. Granted, this was in part due to her reliance on the textile industry. This had made Berlin the single largest industrial city in Germany in the late eighteenth century – indeed uniforms from Berlin had clothed not only the Prussian army but the American and Russian armies as well. But after the 1848 revolution it had slumped and Berlin’s location worked against recovery. Furthermore the city