Power, Politics and Peace of mind: The study of how German financial integration into the global economy before 1914 shaped debates about German national security

Before the outbreak of the First World War in 1914, Germany's escalating financial integration into the global economy heightened concern surrounding Germany's war readiness. This thesis aims to examine German national security in relation to financial interdependence by examining the impact of war scares on German financial markets, debates about financial power and financial integration, and German civilian and military leaders’ plans to mitigate the impact of war on financial stability. First, as financial markets can offer a gauge on financial risk, this thesis examines the effect of war scares on German financial markets by analysing bond prices, bank share prices, industry shares and bank interest rates during war scares between 1905 to 1912. For example war scares in 1911 and 1912 alarmed investors; market panic, in turn, alarmed decision makers. Second, this thesis analyses the debate, amongst officials and within the public sphere, about the benefits and risks of increasing German financial integration into international capital markets. Germany’s deepening global financial integration offered pportunities for German diplomacy to utilise capital exports as a tool in achieving foreign policy aims. Yet during times of crisis or war, the risk of suspension from participating in foreign capital markets was high. Third, this thesis assesses how various state, military and civil institutions prepared for the financial risks associated with the breakout of a future major European war. Despite Germany’s lack of financial war-readiness during the First World War, this thesis will show that before 1914, civilian and military leaders understood the importance of preparing and strengthening Germany’s financial system for future belligerent action.