[Footnote 81:  For that treaty, and Austria’s desire in 1862 to enter the German Zollverein, see The Diplomatic Reminiscences of Lord A. Loftus, vol. ii. pp. 250-251.]

What brought about this momentous change?  To answer this fully would take up a long chapter.  We can only glance at the chief forces then at work.  Firstly, Germany, after the year 1873, passed through a severe and prolonged economic crisis.  It was largely due to the fever of speculation induced by the incoming of the French milliards into a land where gold had been none too plentiful.  Despite the efforts of the German Government to hold back a large part of the war indemnity for purposes of military defence and substantial enterprises, the people imagined themselves to be suddenly rich.  Prices rapidly rose, extravagant habits spread in all directions, and in the years 1872-73 company-promoting attained to the rank of a fine art, with the result that sober, hard-working Germany seemed to be almost another England at the time of the South Sea Bubble.  Alluding to this time, Busch said to Bismarck early in 1887:  “In the long-run the [French] milliards were no blessing, at least not for our manufacturers, as they led to over-production.  It was merely the bankers who benefited, and of these only the big ones[82].”

[Footnote 82:  Bismarck:  Some Secret Pages of his History, by M. Busch, vol. iii. p. 161 (English edition).]

The result happened that always happens when a nation mistakes money, the means of commercial exchange, for the ultimate source of wealth.  After a time of inflation came the inevitable collapse.  The unsound companies went by the board; even sound ventures were in some cases overturned.  How grievously public credit suffered may be seen by the later official admission, that liquidations and bankruptcies of public companies in the following ten years inflicted on shareholders a total loss of more than 345,000,000 marks (L17,250,000)[83].

[Footnote 83:  German State Paper of June 28, 1884, quoted by Dawson, Bismarck and State Socialism, App.  B.]

Now, it was in the years 1876-77, while the nation lay deep in the trough of economic depression, that the demand for “protection for home industries” grew loud and persistent.  Whether it would not have been raised even if German finance and industry had held on its way in a straight course and on an even keel, cannot of course be determined, for the protectionist movement had been growing since the year 1872, owing to the propaganda of the “Verein fuer Sozialpolitik” (Union for Social Politics) founded in that year.  But it is safe to say that the collapse of speculation due to inflowing of the French milliards greatly strengthened the forces of economic reaction.