The Reichstag establishes a tariff wall to protect German industry
The economic boom triggered by the unification of Germany was followed in 1873 by an almighty bust: prices fell, share prices tumbled, businesses went bankrupt and unemployment rose. Domestic causes of the crisis were exacerbated by cheap imports of British industrial goods and Russian and American grain. Lobbyists urged Chancellor Bismarck to abandon his policy of free trade and set up tariffs to protect domestic industries and farmers. The Reichstag passed the necessary legislation on 12 July 1879, introducing protective tariffs on iron, grain, wood, tobacco, tea and coffee.
The new policy led to higher prices, and the profits were invested into a campaign of modernization. However, wages stagnated and poverty fuelled a wave of overseas emigration. Wages did not recover until the mid-1880s.
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