CHAPTER 3  

WARFARE: THE DISSOLUTION OF THE VIENNA PEACE UTOPIA FROM WITHOUT  

Warfare: the challenges of the peace utopia from without  

This chapter deals with the challenges to the Vienna dream of stability from without. In the  

Vienna myth about a century of continental peace and stability after 1815, the Crimean War (1853–1856) stands out as an exceptional case that confirms the rule and therefore does not need any particular explanation. An alternative view applied in this book is that the Crimean War is a link in a continuous flow of European conflicts soon after Vienna. The main conflict was between the two victors in Vienna, Britain, the maritime power, and Russia, the continental power. The Great Game between them dealt with the struggle for supremacy over Central Asia. The Russian expansion into Central Asia alarmed the British who saw their  

‘jewel in the crown’ threatened. They feared that the emirate of Afghanistan might become the base of a Russian invasion of India. The First (1839–1842) and the Second (1878) AngloAfghan Wars dealt with the installation of puppet regimes. In between these wars there was continuous tension, skirmishes and squabbles; the conflict continued until the British–Russian Pact in 1907 when Germany emerged as a greater threat to the continental order. There was also the Crimean War about the military control of the Black Sea outlets which indirectly dealt with India.  

The British–Russian conflict also took on an ideological dimension. Following the death of  

Alexander I in 1825, Nikolaus I had turned to reaction to curb liberal opposition. All over Europe Russia became the hate object of liberal opinion and Britain happily took on the role of its darling. Stereotypical images of light against dark, enlightenment against reaction, liberal against illiberal, dominated continental accounts of these two powers until 1914, although the polarization became more complex after the German unification in 1871, when the accommodating and complying Prussia in Vienna was transformed to the powerful and energetic German Reich. A new pact system replaced the concord of the Vienna peacemakers after the Italian and German unifications but it became a source of instability. Hostile camps with floating demarcations and shifting composition represented a rather different Europe from what the peacemakers in Vienna had in mind. The pact instability spread to the colonies. An intricate British–French– German conflict with shifting fronts in Africa from the Cape to Cairo underpinned the instability.  

As in the erosion of the Vienna utopia from within, nationalism underpinned the dissolution from without. The implications of nationalism as to foreign relations and issues of war and peace went far beyond the German and Italian unifications, as this chapter will show. Nationalism was an explosive force exploited by political leaders for foreign political purposes. Behind the shifting faces of nationalism was the shift of the social question to the class question, as we saw in the previous chapter. The dissolution of the Vienna utopia from within and from without, welfare and warfare were entangled.  

The Russian–British conflict throughout the nineteenth century fed back on Europe and contributed to the century’s instability. However, there were several other games between the European empires about commercial and military power in the colonial worlds, not only between Russia and Britain, but also France and, somewhat later, the imperial enterprises of Germany and Italy, which caused tensions and conflict in Europe. Within Europe, there was a violent confrontation of the peace settlement when France supported Sardinia to throw Austria out of the Apennine peninsula a few years after the Crimean War, and a few years later when Prussia, in wars against Denmark, Austria and France, fulfilled German unification and proclaimed Germany as a new European empire in 1871. The European Concert, orchestrated by the Great Powers in Vienna, broke down from the 1850s onwards through the wars between them in various constellations: in the Crimean War, Britain and France against Russia, in the Italian unification war, France against Austria and in the German unification wars, Prussia against Austria and France. The colonies and the Balkans became areas of military confrontation between the European powers. The unification wars affected core territories of Central Europe, to which the peace treaty in Vienna had paid particular attention. In the 1890s, the tension increased between Germany and Russia and Germany and Britain. Having established Germany as the leading continental power, Kaiser Wilhelm wanted to make his empire a maritime world power. The two new imperial projects of Germany and Italy emerged through warfare, in stark contradiction of the notion that had been the core of the peace utopia: a continental power balance guaranteed by a buffer of small states monitored by Prussia and Austria.  

The Concert of Europe tried to keep the Vienna order together despite the climate of great power tension and polarization. There were no meetings of the principal statesmen except for two occasions after the Alliance had ceased to function in 1822. In 1856, they met in Paris for the peace after the Crimean War, and in 1878, they met in Berlin to organize the Balkans. The other meetings were held between the diplomatic representatives of the Great Powers, before the Crimean War as a rule in London, after the war until 1870 in Paris, and thereafter until the 1880s in Berlin. Napoleon III was the greatest advocate of diplomacy by conference in the nineteenth century. He wished to revive the meetings of the principal statesmen and to use them to redraw the borders settled in Vienna. His concept was thwarted by the inconsistency of his conduct and the suspicion arose that he was aiming at French aggrandizement as much as the peace of Europe. The Concert remained a machine to settle minor problems attended only by diplomatic representatives, which does not mean that it was unimportant. However, the order was never systematic. It had no continuity and no power was bound to accept its decisions. When a power wanted to block a conference it made conditions before accepting which it knew some other power would refuse. When the interests of the Great Powers were vitally concerned, the machinery could not function, so there was no contact between the powers as a body. When with and after Bismarck the system of pacts emerged, members of the competing alliances supported each other en bloc irrespective of the rights of the question. Nor had the small powers any right of representation except at meetings where their rights and interests were under discussion. The Concert was thus mainly a Great Power Concert.  

The machinery of the Concert was executive, legislative and mediating. It was executive in the sense that it sometimes ordered armed forces for specific interventions. It was legislative by its statements on general questions of international law, and it was mediating in interest conflicts between the powers. In a certain sense, the Concert anticipated the League of Nations, but it depended almost exclusively on the personal inclinations of the statesmen in Europe and their diplomatic representatives. A standard of procedure never emerged. The experience of one conference was not handed over by any permanent machinery to the next. It never attracted much attention from theorists or lawyers. It met in secret. The decisions were published but not how they had been produced.  

The century after Vienna was, despite the Concert, anything but a period of general stability. This chapter will underpin this conclusion and demonstrate how the external instability was interwoven with the domestic social instability which we discussed in the previous chapter. In a pincer movement, the conflicts from within and without invalidated the peace utopia and destabilized Europe.  

Until the Italian and German unification wars the national question had been an intrastate force driving the liberal reform movements of the rising middle classes and intellectuals claiming people’s as opposed to monarchical sovereignty. It was rather a threat to the peace utopia from within. The German and Italian unifications added on a threat from without, although the European revolutions in 1830 and 1848 had shown that the distinction between intra and inter was minute. The definition of the outer borders of the people’s sovereignty necessarily involved other peoples and their corresponding definitions. These definitions themselves did not go uncontested. Nationalism spurred the building of the German and Italian empires.  

The Italian and German unifications reversed a bottom-up protest in the name of nationalism to a top-down integration, canalization and exploitation of the protest. In both contexts ruling elites took over the nationalist language and gave it a more conservative subtext. The articulation of the national question in the Italian and German empire building operated with a more distinctive definition of external enemies than the liberal nationalism in the 1820s and 1830s, which had targeted domestic authoritarian regimes and therefore dealt more with the constitutional definition of sovereignty and of the power balance between the monarch and the legislative than with external enemies. For Sardinia, the enemy in the unification movement was Austria; for Prussia it was Denmark, Austria and France. The smaller German states were already joined in a federation under Austrian leadership created in Vienna, which Prussia challenged: the Deutsche Bund.  

As in the intrastate challenges that followed the shift from the social to the class issue in the 1870s, the interstate challenges acquired a new dimension when Cavour and Bismarck claimed a more powerful and more active role for Sardinia and Prussia in the European order than the Vienna peace treaty had given them. They flouted the terms of the peace treaty. The unity of the Holy Alliance which had guaranteed the Vienna order, albeit with declining commitment and credibility among its members, had eroded considerably already through the British–Russian conflict and through the Crimean War but now it split up into a system of shifting military pacts and counter-pacts. It was a similar case with the domestic politics; the 1870s brought a fundamental shift in foreign politics in Europe. In both cases, nationalism of a new kind played a decisive role: nationalism as a ruler’s instrument of power as opposed to the earlier nationalism as an instrument to challenge the ruler’s power. As a ruler’s instrument of power, nationalism had an ethnic dimension of friend-enemy demarcation as opposed to the civic project for a shift of power from the monarch to the representative assemblies. Social nationalism tottered between civic and ethnic connections, as we saw in Chapter 2.  

Nationalism from the 1870s onwards also spurred the shift from colonialism towards imperialism outside Europe. The European conflicts spread to the world. The Vienna imagery of a peaceful world of free trade under the British hegemon shifted to a contentious European rush for raw materials and new markets for the products of the ‘industrial system’. The aggression grew among the European powers and between them and the native populations in the other continents.   

Polanyi argued that imperialist rivalries were part of the protective counter-movement that emerged in response to the emergence of the unregulated market. The argument here is in line with Halperin (Introduction) that imperialism was intrinsic to Europe’s industrial expansion, but not as Lenin and others proposed necessary to the development of capitalism. Imperialism was a choice by European elites in order to increase revenue and resources and as an alternative to alleviating land hunger and expanding opportunities for domestic participation through redistribution and reform. Imperialism did not follow from capital-saturated domestic economies as Lenin suggested but from strategy choices by European elites in order to increase their wealth without revolutionizing their societies through the expansion and integration of the domestic market. This is the Schumpeterian view that imperialism was the surviving ‘feudal substance’ of pre-capitalist Europe fusing with bourgeois-capitalism,  

the outcome of the strength of restoration and of the landed aristocracy throughout the nineteenth century, as Chapter 2 argued.  

Top-down attempts to maintain and bottom-up attempts to eradicate restrictions on political rights and economic opportunities generated minority and class conflicts at home and efforts to secure protected foreign markets instead of developing internal markets generated imperialist conflicts abroad and increasingly in the wake of the Great Depression and the agrarian distress in the 1870s and the 1880s in Europe itself. The imperial conflicts rebounded on Europe. Sandra Halperin has delivered overwhelming empirical evidence of the martial side of Europe during the century after Vienna. By the turn of the century overseas expansionism began to approach its limits as an engine of growth, and the imperialist ambitions of the European states began to focus on Europe itself. As the world was increasingly being carved up by naval powers, the essentially landlocked Russian, AustroHungarian and German Empires began to fight over Europe. Russia worked for the reinforcement of its Serbian foothold in the Balkans. Serbian nationalism frightened the Austrian leadership and Germany became obsessed with the control of Alsace-Lorraine. On the basis of these developments the First World War brought into conflict the two central features of European nineteenth-century development: remaining internal restriction and repressions despite the conservative social refoms and concessions (see Chapter 2) and external expansion. This was the tension and co-existence of welfare and warfare, which characterized the whole century after Vienna but in particular the 1870s onwards under conditions of economic stagnation and growing social protest. Nationalism and social imperialism were the ideological tools to cope with this development.  

The Crimean War and the Italian and German unifications: Bismarck replaces Metternich  

− − −  

Free trade and protectionism  

The theory of political economy underpinning the Vienna peace utopia was, as we saw in Chapter 1, global free trade under British commercial hegemony. Free trade in the framework of a global distribution of labour would provide economic growth which was the grease that mitigated domestic social problems in the states. This section will outline how, in parallel to the vocabulary of free trade, the continental protectionism of Napoleon continued throughout the nineteenth century. Germany became the centre of protectionist thought and politics. Protectionism became an argument for the development of a German economic challenge to the British free trade-orientated commercial hegemony.  

International relations theories frequently assume a strong positive connection between liberalism, in particular free trade, and peace. This assumption is founded on a belief that Adam Smith and other classical economists demonstrated or argued for this connection. Yet leading liberal thinkers including Smith, David Hume and John Locke made no such arguments, indeed Smith and Hume instead pointed to a strong relation between trade and war through the jealousy of trade, as we saw in Chapter 1.  

The notion that free trade promotes peace departs from the assumption that economic relations between states foster communication and ties of interdependence which promote mutual understanding and co-operative political relations. However, the dream of a golden age when trade would lead to peace was cherished by only a minority of thinkers with a diverse philosophical background, mainly in continental Europe and in the seventeenth and eighteenth centuries. Their ideas on the topic remained vague and largely ill-formulated.  

Liberal philosophers like Locke, Montesquieu, Kant, Hume and Smith all favoured free trade and opposed mercantilism but there was no consensus among them as to the possible influence this might have on peace. Montesquieu and Kant did see a connection between commerce and peace, through the emergence of mutual interests, but Montesquieu doubted the positive impact in political practice. Kant observed not only the positive peace-promoting sides of trade but also its link to avarice and greed.  

British enlightenment philosophers also saw a direct connection between foreign trade and international political power. A richer commercial society was likely to become a greater military power. As trade made nations richer, it was not only consumption but also the development of military technology that was stimulated. Wealth had as much bearing on warfare as on welfare.  

It was Richard Cobden (1804 –1865), manufacturer and radical liberal statesman, a successful entrepreneur in the Manchester printing industry, producing ‘Cobden prints’, who in his vehement campaign for free trade in the 1840s and 1850s brought forward the argument that free trade promoted peace, legitimizing his argument with references to Smith. He and John Stuart Mill encouraged the common misconception of enlightenment philosophers as advocating free trade for peace. Cobden was associated with John Bright (1811–1889) in the formation of the Anti-Corn Law League, the political platform of Cobden, also called the Manchester School. The adherents were a group of middle-class radicals who identified their enemy as protectionist aristocrats and the landowning upper classes. Many Manchester activists had close ties with the pacifist movement of the Quakers, the Peace Society and the International Peace Congresses. Although their claims regarding Smith and other British enlightenment philosophers as their intellectual antecedents were dubious, Cobden and his colleagues constructed a powerful rhetoric around the rubric of peace and free trade, the legacy of which continues to this day. The most eloquent of British spokesmen, Cobden was sure that if Britain adopted free trade ‘in all its simplicity’ there would be no tariff in Europe that would not be changed in under five years. He was influential as a free-trade lobbyist. Writing under the byname Libra, he published many letters in the Manchester Times discussing commercial and economic questions.  

Free trade theory also found adherents in France, one of whom was Michel Chevalier (1806– 1879), a French engineer, statesman, economist and free market liberal. In 1830, after the July Revolution, Chevalier became a Saint-Simonian, and edited their paper Le Globe. The paper was banned in 1832, when the ‘Simonian sect’ was found to be prejudicial to the social order; Chevalier, as its editor, was sentenced to six months’ imprisonment. After his release, the minister of domestic affairs Adolphe Thiers (1797–1877) sent him on a mission to the United States and Mexico, to observe the state of industrial and financial affairs in the Americas. In 1837 he wrote a well-received work, Des interest materiels en France, after which his career took off. At 35, he was appointed professor of political economy at the College de France. Later he was elected a representative of the national assembly and senator. He resigned from his chair to become a member of Napoleon III’s government. He persuaded the emperor to negotiate a commercial treaty with England during the entente after the Crimean War.  

Together with Richard Cobden and John Bright, Chevalier prepared the free-trade agreement of 1860 between the United Kingdom and France, referred to as the Cobden–Chevalier Treaty, which became a model for the spread of bilateral free-trade agreements. The agreement stipulated that France abolish prohibitions on British goods and reduce many duties which did not mean free trade, at most a move towards free trade. In return, French silks and wines were given easier access to British markets. Most other goods already enjoyed free entry. The model character of the treaty depended not least on its ‘most favoured nation’ clause. If France subsequently signed a treaty which gave some other country lower tariff rates than England enjoyed, these rates were automatically to apply to British goods as well.  

France made similar treaties with other states between 1860 and 1866. Each treaty meant lower duties and some of these were passed on to British goods. Other countries made treaties with one another, thus establishing a network of low-tariff agreements over European trade, although this emerging order should not be mistaken for a general European free trade.  

Cobden’s continental opponent was Friedrich List, whom we met in Chapter 2. He developed an idea of what could be called ‘free trade’ protectionism. He and Henry Charles Carey (1797–1879), who in The Harmony of Interests (1856) contrasted the ‘British system’ of laissez-faire capitalism to the ‘American system’ of developmental capitalism through tariff protection and government intervention, both argued that the devotion of the classical economists to international free trade was based on their interest, as British subjects, in keeping the rest of the world occupied in subordinate pursuits for an industrial England.  

Friedrich List was among the sharpest critics of the peace-through-trade argument. He connected economic strength to global political and military strength rather than welfare per se. List believed that the proper object of a government’s attention was not wealth considered in the abstract, but the relative power of the nation. He argued for a more complex understanding of politics, where the economy was not primarily seen as a more or less automatic provider of security or welfare but as a political instrument.  

List returned politics to economic theory where the goal was the wealth of nations in the proper and literal sense of the term. This differed from Smith’s emphasis on entrepreneurial individuals as the instrument of making nations strong. According to List, nations could not be treated as a universal category but had to be seen in relation to their development stage: agricultural, industrial (developing manufacturing) and commercial (established manufacturing). For List, free trade was a desirable instrument, but for the two earlier stages some form of protection was crucial. Protective customs were necessary to prevent British domination over continental nations. List confronted cosmopolitan economy, the brainchild of the physiocrat François Quesnay and then developed by the classics, who, according to List, never managed to clarify the distinction between political union and commercial society, and the ground on which political authority might be established. This was the thought behind his cherished German/ Central European customs union project, as we have seen in Chapter 2.  

List highlighted the disparities in wealth and power between the states created by contemporary trade patterns under the British hegemon. He critically connected issues of welfare and warfare, economic performance and political management, arguing that trade might simply reshape, rather than negate, international rivalries. In the scenarios laid out by Smith and Say, growing competition between the nations would lead to the transformation of the product diversification into standardization. Sismondi warned that this would either lead to a race-to- the-bottom exploitation of labour or to aggressive attempts to conquer markets by force. He suggested that nations specialize in particular products. List rejected this view, arguing that national specialization would only underpin the British economic hegemony.  

List was primarily interested in the difference in economic structures and power regarding England and Germany. He thus interpreted the nation in economic terms; the national character of a political economy (Volkswirtschaft or Nationalokonomie) contrasted internationalism. His understanding was thus based on ‘the nature of the nationality as the medium between individuality and humankind’.  

List’s understanding of the nation differed from later nineteenth-century variants, which were the product of an intensified nationalism. In his view, an association of humans with the same language and culture was not a blissful endpoint, but rather a developmental stage. His theory of a ‘national system’ took issue with Smith and the classics, whom he accused of having elaborated a cosmopolitical system where all humans were already unified into one big community. The idea of such a ‘cosmopolitical economy’ could only teach how the whole of humankind could come to wealth. Although he conceded that the development of the railways pointed to the possibility, List did not believe that such a community of ‘homines oeconomici’ yet existed. Before a world economy could be imagined it was necessary to fully establish nations. In the view of List, the commercial cosmopolitanism that implicitly framed the Vienna peace utopia was an ideological expression of Britain’s power.  

List saw the free-trade movement as an expression of English insincerity, according to which national interests were concealed in the cosmopolitan arguments of Adam Smith, with their ‘spirit of sophistry – of scholasticism – of obscurity – of dissimulation and hypocrisy’. This cynicism echoed an older jealousy of trade theory (Chapter 1). A common argument in the debate against the ‘cosmopolitical school’ of political economy was that it spoke only incidentally of war. List openly accused Smith of having founded entire theories on the idea of a perpetual state of peace, confronting Cobden’s image of Smith rather than what he had actually said.  

As Christopher Bayley has noted, List’s plea for at least temporary protectionism got support far beyond Europe. In general, even those Asian, African and Latin American writers who argued for human rights in the nineteenth century were firm in their opposition to free trade. A few writers accepted the need for free trade on the ground that it afforded protection against the violence of armed monopoly companies. In general, however, economic protectionism was quickly associated with cultural self-preservation. Friedrich List and other advocates of national political economy were referred to as experts. The assault on ‘Smithianismus’ or ‘animal political economy’ was more or less contemporaneous in Prussia, Hungary, Brazil and India. List was read in Bengal by the 1840s, and Calcutta intellectuals took note of and emphasized those passages in the writings of Adam Smith and John Stuart Mill which conceded that war and national protection might be valid arguments against free trade, which worked in the interest of Britain and wiped out indigenous industries.  

In an expansion of his German-dominated Mitteleuropa idea, List introduced a hierarchical dimension to his theory. Indeed, his idea of a mitteleuropaische Wirtschaftszone (Chapter 2) was embedded in a comprehensive global framework of power relations. In the relations between the nations of the temperate zone including Europe and North America and those of what he called the ‘torrid zone’ of the globe, the idea of an equality of nations was absent. List thought that an international division of labour, like the division of labour within a nation, was determined by climate and by nature. The most favoured nations were those in the temperate zone where manufacturing power particularly prospered and where the nations attained the highest level of mental and social development of political power. Tropical countries and inferior civilizations were thus tributary.  

In this scenario for North–South relations, the North would produce and export manufacturing goods, and the South would forever remain the producer and exporter of agricultural products and the importer of industrial goods. List did not attribute this unequal relationship to any alleged inferiority, for example racial, of the peoples of the ‘torrid zone’. He argued that the decisive factor was the climate. List demanded that England stop trying to exclude the large nations of Europe from joining in the growing trade between the North and the South. However, before these nations could do so they had to develop their own industry, merchant marine and naval power. If England were then to oppose them, they would have to unite to bring that nation to reason. List was ambiguous as to the question of how second-ranking states like France, Russia or the United States should influence England to reduce what he argued to be its unreasonable pretensions. At times he seemed to favour a confederation or a federal union of major European nations, albeit one with an outstanding role for Germany. At other times he thought that Germany should secure for itself a place in the world through its own efforts. He was nonetheless firm in his conviction that England must be challenged in order to allow every ‘manufacturing nation . . . to establish direct intercourse with tropical countries’ so no nation would be permitted to monopolize colonial possessions. This was an attack on Britain’s global power that the Vienna peace utopia implicitly endorsed.  

List was aware of the obstacles to a European alliance and failed to clarify why the other major nations of Europe should support German national ambitions. He simply thought that those nations shared a common interest with Germany in ‘the Eastern question’ and that a united Europe might take the whole of Asia under its care and tutelage. His conception of the dissolution of Asian nationalities under the impact of Europe bears a clear resemblance to Marx’s view on the impact of British rule on India and his concept of a particular Asian, as opposed to Western, mode of production. The Asian ambitions of the European nations, according to List, made for a conflict with Britain and at the same time, inasmuch as those ambitions required the freedom of the seas for their realization, they established a common interest between Europe and the United States. List wrote against the backdrop of the conflict between Russia and Britain in Central Asia. Earlier attempts to unify Europe, such as Napoleon’s continental system, brought about not only French continental supremacy but also the humiliation and destruction of the other nations of Europe. A real continental system would, according to List, have to be built on the equality of all nations meaning that Britain might reconsider its hostility towards Europe and join it in a European coalition against American supremacy. The global embedding of the German-dominated Central Europe constituted a variable geometry in List’s reasoning: coalition with or against Britain, with or against the USA, the pattern changed with the circumstances and List’s viewpoints, which were in a state of flux. The constant was that they all challenged the principles about continental power balance and stability established in 1815 based on free trade and British commercial hegemony.  

However, when he talked about a European coalition of nation states, by nation, List referred to the great nations. His concept of Germany included Belgium, the Netherlands, Denmark and Switzerland. However, his German–European project should not be understood exclusively through the retrospective perspective imposed upon us by the experiences of Nazism. List’s German Gross-Deutschland was conceived as a liberal and constitutional state. His idea of a Greater Germany had, moreover, been a radical idea before 1848 formulated, among others, by Friedrich Engels:  

Perhaps in opposition to many whose point of view I share in general, I am still of the opinion that the re-conquest of the German-speaking left side of the Rhine is an affair of national honour: that the Germanisation of Holland and Belgium, which have been wrenched away, is a political necessity for us. Shall we continue to let the German nationality be oppressed in those countries while in the East the Slavs are emerging ever stronger? . . . Without doubt it will come to another war between us and France, and we will then see who deserves to have the left bank of the Rhine . . .  

In 1846, shortly before his suicide, List proposed the formation of an Anglo-German alliance which would serve a dual purpose. Britain would help to protect Germany from Russian or French aggression, while Germany would protect the flank of Britain’s routes to India when the Empire had been extended to Egypt and the Near East. Russia coveted Constantinople and might champion the cause of the Slavs in the Balkans, while the French fleet might threaten British interests in the Eastern Mediterranean. The Eastern section of the Ostend–Bombay railway, which was another of List’s projects, would be operated by German, Austrian and  

Hungarian officials. The precondition for equilibrium in the pact with Britain was that Germany would dominate the Balkans and Central Europe. For many years List was preoccupied with the question of how to achieve this. He believed that when the corrupt rule of the Turks in the Balkans inevitably collapsed, the Habsburg Empire would step in and fill the vacuum with an efficient administration. Future economic power over the region would necessitate close co-operation between Germany, Austria and Hungary. Since Germany lacked a strong central political authority, List suggested that close co-operation between the Zollverein and the Habsburg dominions should be established as first steps towards eventual political co-operation. As custodians of the traditions of the Holy Roman Empire he regarded the Habsburgs as the natural leaders of the German states.  

Friedrich List’s perspective was not totally new. Fichte’s theory of the closed commercial state (Chapter 1) had opened a debate where the idea of the nation went beyond its Vienna incarnation as a threat. National economic, military and political strength could also be a powerful instrument in the hands of the rulers.  

List challenged with his arguments for a mix of free trade and protectionism one of the pillars in the Vienna peace architecture: the British hegemonic global power based on free trade. A more systematic political campaign for protectionism followed a generation after List in a different economic and military political world situation. After the establishment of the German Reich in 1871 the German economy began to boom. The single market, liberal economic legislation, with distinct steps towards the end of a corporate society and a French war indemnity payment of five billion guilders – Bismarck had enticed France to declare the war he wanted – triggered an unflinchingly optimistic belief in progress and promoted rapid economic growth. Investment achieved new heights, as did the production in rapidly expanding industries. The Grunderzeit began euphorically.   

After a few years, however, uncertainty and the threat of overcapacity and overproduction became rife. This was the beginning of the Great Depression, which all over Europe triggered new kinds of state interventions to secure domestic social peace, as we saw in Chapter 2. In Germany, where economic growth in 1872 had been 8%, the growth rate stagnated at around zero and, at a certain point prior to 1879, it was negative. Since the situation was more or less the same on the world markets, exports did not offer a way out. Political power centres came under increasing pressure to provide protection and lock off domestic markets.  

In Germany the Centralverband deutscher Industrieller (The Central Federation of German Industrialists (CdI)) was established in January 1876. The federation represented the whole spectrum of industry and its central idea was the rejection of liberal free trade. It became a powerful lobbying organization. Somewhat later than industry, the agrarian sector ceased to benefit from free trade. Cheap cereals from Canada, the USA and Russia (Ukraine) closed export markets to German agrarian products. The German market also opened to imports from  

these countries following the reduction of transportation costs. A month after the establishment of the CdI, the Grosagrarier founded the Vereinigung der Steuer- und Wirtschaftsreformer, the Association of the Tax and Economy Reformers, which began to lobby for protection of the German agrarian market. The name shows how the agrarian lobbyists appropriated the term reform to give the campaign for protectionism a progressive connotation shaking off images of reactionary Junkertum.  

The joint lobby of the iron and rye alliance still faced an obstacle. The agrarians did not want customs on industry products since this would increase the prices of imported machines. The industrialists did not want customs on agrarian products since this would increase food prices and lead to pressure to increase wages. In 1877, after long negotiations, these factions agreed on a common customs programme, not without discrete brokering and co-ordination by Bismarck who operated with state assistance to compensate the negative consequences of the deal. By this point Bismarck had already begun to plan a reorientation of German trade politics from free trade to protectionism. He shifted key personnel in his chancellor’s office. The parliamentary elections in 1878 saw the defeat of the national liberal free traders. In the new conservative Reichstag, 204 of the 397 MPs founded the Volkswirtschaftliche Vereinigung, the National Economic Unification. In December 1878 Bismarck made his standpoint public in a Christmas letter requesting a reform of the German customs tariff. In Parliament he needed the votes of the Catholic Zentrum party and to this purpose he broke with his supporters so far, the free-tradeorientated national liberals, who were weak after their election loss. Bismarck operated with his usual tactical skill when he approached the German Catholics and at the same time defended the exclusion of Catholic Austria from his German unification project under the leadership of Protestant Prussia, Bismarck’s kleindeutsche solution. He stopped the anti-Catholic Kulturkampf and began to deal with the Zentrum. Having brought protectionism to a successful close in Parliament and having played down the anti-Catholic campaign, Bismarck took the next step: the prohibition of the socialist organizations and social integration of the workers through a public social insurance system, as we saw in Chapter 2.  

As we saw in Chapter 2, Bismarck appropriated the national question from the liberals and the social question from the socialists and ‘nationalized’ the German Catholics. His goal was not the establishment of a nation state but a German empire based on national unification. Beginning with an interest in German influence in the ordering of the Balkans at the end of the 1870s, hand-in- hand with the domestic consolidation through disarmament of the social question, representatives of the business community pushed him to embark on an expansive imperial programme in the 1880s. Friedrich List had challenged a central dimension of the Vienna peace. Bismarck went one step further with his confrontation of the British free trade liberalism-making politics of List’s theoretical reasoning and political lobbying.