The Birth of the Modern World (1870-1914): Political and Economic Transformations

Posted on Aug 15, 2024 in History

1. The Birth of the Modern World (1870-1914)

In the period between 1870 and 1914, the foundations of today’s world were established.

• Europe experienced a period of tense international relations due to rivalries between European countries, particularly Germany and France.
• Spain became a second-class power after it lost its remaining colonies in 1898.
• The industrialized countries of Europe started producing manufactured goods in enormous quantities. At the same time, they began colonizing countries and regions which had a lot of raw materials.
• The rise of consumer society resulted in greater social inequalities.
• The living standards of the upper and middle classes improved, while the working class suffered the effects of economic crises.
• Artists lost interest in the political and social themes which had characterized Realism. Instead, they experimented with new styles like Modernism and Impressionism.

2. Political Tension in Europe

Between 1871 and 1914, Europe experienced a period of uneasy peace. After the end of the Franco-Prussian War in 1871, there were no wars between the European powers. However, relationships between these nations were characterized by increasing tension. At the same time, many countries were increasing their production of arms and military equipment. Germany’s foreign policy became especially important during this period. This policy can be divided into two phases:

2.1 The Bismarckian System (1871-1890)

German Chancellor Otto von Bismarck established a system of alliances with Austria, Russia, and Italy. France’s main objective during this period was to recover the region of Alsace-Lorraine, which it had lost to Germany in 1871. However, for twenty years Bismarck used his alliances to prevent conflict in Europe, including a possible war with France over Alsace-Lorraine.

2.2 The Policies of Wilhelm II (1890-1914)

When he came to the throne, Kaiser Wilhelm II dismissed Bismarck and abandoned his system of alliances. Then Wilhelm II began a policy of expansionism known as Weltpolitik (world politics). This policy created tension between Germany and other European countries, especially in unstable regions such as Morocco and the Balkan Peninsula.

3. The Bourbon Restoration in Spain

The First Spanish Republic ended in 1874 with a military uprising and the proclamation of Alfonso XII, Isabel II’s son, as King of Spain. With the coronation of Alfonso XII, Spain became a parliamentary monarchy. This resulted in a period of stability.

• The conservative Constitution of 1876 established limited male suffrage. There were only two official political parties, the Liberals and the Conservatives, who alternated in power by manipulating election results.
• The king shared legislative power with the Cortes.

A number of significant developments occurred during Alfonso XII’s reign:

• The last Carlist War, which had broken out in 1872, ended in 1876 with the victory of Alfonso XII and his forces.
• Unofficial political groups, such as the Republicans, opposed the government because they felt excluded from the political system.
• Regionalist movements developed in Andalucía, Cataluña, Galicia and the País Vasco.

When Alfonso XII died in 1885, his wife Maria Cristina became regent for their son Alfonso XIII, who was born shortly after his father’s death. During this regency period, a series of colonial wars took place. As a result of the Spanish-American War of 1898, Spain lost its last remaining colonies to the United States: Cuba, Puerto Rico and the Philippines. After what became known as the Disaster of ’98, Spain was relegated to second-class status in international politics. The defeat that Spain suffered in 1898 had serious consequences. Many criticized the government, while the loss of colonial markets was detrimental to Spanish industry and trade. There were also working-class protests against conscription and the unfair rules which allowed people who could pay 2000 pesetas to gain exemption from military service.

4. Finance Capitalism

In late-19th-century Europe, industrial capitalism was increasingly being replaced by a new system known as finance capitalism. Under industrial capitalism, industrial production had been the most important economic activity. Under finance capitalism, activities related to the movement and management of money became the most important source of business profits.

4.1 Changes and Innovations

The emergence of finance capitalism in Europe was the result of a combination of technological, industrial, financial and organizational innovations.

Energy

New sources of energy were discovered that supplemented and even replaced coal and gas.

• Electricity: In 1867, Bergès designed a hydroelectric generator to produce electricity for factories. This led to the construction of large hydroelectric power plants and the installation of electric cables to provide homes and factories with electricity. In 1879, Edison invented the electric light bulb, which soon replaced gas lights in factories, streets and people’s homes.
• Oil: New processes were discovered to refine oil and produce new fuels such as kerosene and petrol. The first oil refinery was built in Cleveland (United States) in 1869, with money invested by John D. Rockefeller, an American businessman. Rockefeller later established Standard Oil, the world’s largest oil company. Oil became particularly important after the invention of the petrol-powered car in the late 19th century.

Technology

A number of other inventions and innovations helped to increase industrial productivity. For example, improved versions of the Bessemer converter made it cheaper to produce steel for railways, cars, industrial machinery and very tall buildings known as skyscrapers. Other technological advances included stainless steel, which is used to make precision instruments, and new types of fibers, such as artificial silk, which revolutionized the textile industry.

New Industries

Electrical technology became an important industry, dedicated to the production of equipment such as generators, engines, wires, lamps and light bulbs. Important German companies, such as Siemens and AEG, were established during this period. New food industries, which preserved perishable food in metal tins, also developed. In addition, the chemical industry started producing a variety of goods, such as perfume, medicines and dynamite.

Finance and Investment

Business owners needed enormous amounts of capital to establish, maintain and expand their industrial operations. They obtained finance from a variety of sources.

• They could request a loan from a bank, in exchange for interest.
• Some banks also made direct investments in industry.
• Businessmen could also form a company and sell shares to investors. In exchange, the investors received part of the profits.
• Investors could buy and sell shares in different companies at the stock exchange.

New Business Structures

During the late 19th century, companies tried to reduce competition by developing new forms of organization. These included:

• Cartels: Associations of different companies working in the same industry which made collective decisions about production and prices.
• Trusts: Giant businesses, formed by various companies working in different industries, which used their size to control the market for their products and eliminate their competitors.
• Holding companies: Large financial companies that earned a profit by buying and holding shares in other companies. Some companies acquired monopolies over certain products or services by eliminating their competition. In some cases, governments gave monopolies to companies in return for money or a share of the company’s profits.