Far more decisive in its effect on Anglo-German relations was the building of a great German navy, first sketched in the Navy Law of 1898 and fully launched by the Navy Law of 1900. The protagonist of this policy was Alfred von Tirpitz, secretary of state for the navy since 1897. The essence of Tirpitz’s naval policy was a great battle fleet, and he justified this by various strategic arguments. At times he spoke of a “risk theory”—that Great Britain, on bad terms with Russia and France, would not risk a conflict with a German navy even smaller than its own—and at other times he envisaged a “decisive battle” with the British fleet. Essentially, Tirpitz, like other adherents of Alfred Thayer Mahan’s theories on naval force projection, simply held that a great navy was essential to a great power. In the words of Theobald von Bethmann Hollweg, it was necessary “for the general purposes of imperial greatness.” Tirpitz insisted that the navy must be planned on a long-term basis, and the Navy Law of 1900 laid down the lines on which the German navy should develop until 1917. This made it difficult or impossible to modify German building plans when the British later sought a naval agreement. Here again it would be a mistake to put too early a significance on the German navy. So long as the German plans were merely plans, they did not alarm British opinion much. The great naval scare came only after 1908, when the German navy seemed to be approaching British strength.

These naval projects played an essential part in German home policy. In 1897, when the plans were first drafted, German industry was going through a period of depression. One object of the great navy was to provide a stable demand, at the taxpayers’ expense, for German iron and steel. It was a concession to the German steel magnates which balanced Miquel’s favouritism of the Junker landowners, but the navy had a wider appeal. Unlike the army, which retained its Prussian character, the navy was essentially German, an affair of the Reich, and now Tirpitz’s plans won the support of many liberals who would have opposed an anti-British policy on any other issue. Most striking of all, the Centre voted solidly for the second Navy Law (1900), though it drew most of its support from peasants and artisans in areas far from the great ports. With this vote the Centre openly joined the government coalition. It tried to make one condition—that the navy should be paid for by direct taxation. This was the old demand that the Liberals had made in regard to the army. The Centre, too, was unsuccessful in this regard. The conservative agrarians had supported the navy only on condition that it should be financed by increases in the taxes on food or by an increase in the national debt. Direct imperial taxation was the vital issue on which the landed classes maintained a veto almost until the outbreak of World War I. In fact, the navy, like the army before it, was largely paid for by state borrowing. Thus inflationary finance, by which Germany conducted World War I, was the basis of the fiscal policy of the Reich long before the outbreak of war. Implicit in it was the argument, based on the French indemnity of 1871, that the army and navy would in time pay for themselves by imposing terms of conquest on the other nations of Europe.

The First Moroccan Crisis (1905–06)

The policy of “the free hand,” which Bülow conducted on Holstein’s advice, assumed that Great Britain, France, and Russia would always remain on bad terms, because of their conflicts in Africa and the Far East. So long as these conflicts continued, Germany could ignore such a triviality as Italy’s reconciliation with France (1902), which Bülow dismissed as “a dance out of turn.” German calculations were upset by the Anglo-Japanese alliance of 1902, which enabled the British to check the Russians in the Far East without becoming involved themselves. This was shown in 1904 when the Russo-Japanese War broke out. The Germans would have welcomed a conflict between Russia and Great Britain, but they were far from willing to join in the war on the Russian side. The most they were prepared to offer was an alliance with Russia which would become operative when the war in the Far East was over. This offer was made in November 1904 and repeated by William II in theatrical terms when he met the Russian emperor Nicholas II at Björkö in July 1905. The offer had no attractions for the Russians; once they had been defeated in the Far East, their enemy would be Austria-Hungary, not Great Britain. Bülow and Holstein, however, believed that the principal opposition to a “continental bloc” against Great Britain came from France. They therefore decided to use the opportunity of Russia’s preoccupation in the Far East to force France into dependence on Germany. This move was hastened by the Anglo-French Entente Cordiale (April 8, 1904), which had been concluded without inquiring into Germany’s position. The result was the First Moroccan Crisis.

On March 31, 1905, William II landed at Tangier and announced German support for Moroccan independence. The French sought to negotiate. They were answered by a German demand for the resignation of French foreign minister Théophile Delcassé. Faced, as they supposed, by a threat of war, the French gave way. Delcassé resigned, and, on the same day, William II created Bülow a prince. This was the reward for success on a Bismarckian scale. Thereafter things went wrong for Germany. Holstein had launched the Moroccan Crisis in the old style of cabinet diplomacy, without making any attempt to prepare German opinion, which was indifferent to Moroccan affairs. The French received strong diplomatic support from the British, including even military conversations against a possible German aggression, and recovered their nerve.

At the Algeciras Conference (January–April 1906) the Germans were compelled to acquiesce in French predominance in Morocco and to content themselves with a shadow recognition of its independence. Holstein resigned in protest against this compromise, and the German foreign ministry was left virtually rudderless until Alfred von Kiderlen-Wächter became secretary of state in 1909. It had been Germany’s first serious foreign policy crisis in nearly 20 years, and it had ended in failure for Germany. The Bismarckian system had been accepted by Germans because it had offered them success abroad, but now this capital of success had been exhausted. The German government would either have to make political concessions at home or seek success abroad by more violent means.

The Bülow bloc

In 1906 it still seemed possible that Germany might follow the path of liberal reform. Until 1906 Bülow had controlled the Reichstag by a coalition of conservatives and the Centre. This coalition was held together by concessions to the agrarian interest of the one and the confessional interest of the other. In 1906 the Centre put their price too high: they demanded a large share of government appointments for Roman Catholic officials and special privileges for Roman Catholic missionaries in the German colonies. When these terms were refused, they voted against the military grants for suppressing a revolt in South West Africa (October 1906). Since the colonies were a popular cause, Bülow seized the opportunity to break with the Centre and organized instead a coalition between the conservatives and the non-Socialist parties of the left. Even the two Radical groups, which had held out against the government until now, joined the Bülow bloc. Bülow believed that this coalition, in which the left predominated, would also enable him to solve the financial problem. He thought that he would be able to carry direct taxation over conservative opposition. The bloc was successful at the general election of 1907, principally at the expense of the Social Democrats. Bülow now followed a progressive policy in colonial administration and revived the struggle against the Poles, which had always been a popular cause. However, he was still the prisoner of the conservatives. He failed to reform the Prussian franchise, and he was unable to introduce direct taxation.

The logical consequence of the swing toward liberalism in home affairs should have been a rapprochement with England and an estrangement from Russia, as in the days of Caprivi. Bülow certainly attempted to improve relations with Great Britain, but his hands were tied by Tirpitz’s naval plans, which, after the development of the dreadnought, reached their most dangerous point. In fact, Anglo-German relations took a sharp turn for the worse in 1908 and reached a crisis in March 1909, with the great naval scare in Great Britain. In order to get a yearly program of six dreadnoughts against Germany’s four, Reginald McKenna, the first lord of the admiralty, had exaggerated Germany’s building rate. This frightened the public into demanding more than McKenna himself wanted; “We want eight and we won’t wait” became the slogan of the day.

On the other hand Bülow certainly accomplished the estrangement from Russia. In October 1908 Russia and Austria-Hungary fell out over the Balkans, when Austria-Hungary annexed Bosnia and Herzegovina. Despite the criticism expressed by William II, the German government decided to support Austria-Hungary unreservedly and in March 1909 settled the crisis by a virtual ultimatum to Russia. The Bismarckian attitude of indifference in Balkan affairs was decisively abandoned, and later attempts to return to it proved ineffectual. Yet Bülow condemned his own policy when he said, on his resignation, “No more Bosnias.”

The high-water mark of Bülow’s pose as a liberal statesman came in the autumn of 1908. In the “liberal” atmosphere of the Bülow bloc, it became fashionable to blame William II for the erratic course of German policy and for all the failures of the preceding years. Criticism of the emperor became stronger in 1907 after Eulenburg was driven from public life by charges of immorality. In October 1908 the English Daily Telegraph published an interview with William II on Anglo-German relations. This interview, in the usual rhapsodical style of imperial utterances, naively expressed the bewilderment which most Germans felt at the British resentment against German “world policy.” Ordinarily it would have passed unnoticed, but, in the autumn of 1908, with isolation abroad and liberal stirrings at home, it became the focus of every German discontent. William II had in fact submitted the interview to the German foreign ministry before passing it for publication, but Bülow made out that he had been too busy to read it. While ostensibly accepting responsibility, he encouraged the uproar in the Reichstag (November 10–12), and public opinion was satisfied only when Bülow announced that in thefuture William II would “respect his constitutional obligations.”

This seemed a great victory for liberal principles and for Bülow personally. He seemed to have broken the imperial authority which had been too much for Bismarck. But this was true only if Bülow remained in control of the Reichstag, and that soon escaped him. The conservatives resented Bülow’s quarrel with Russia at the time of the Bosnian crisis (October 1908–March 1909), and they resented still more his proposal to introduce an inheritance tax on landed estates. They returned to their alliance with the Centre and defeated the tax by a narrow majority. Bülow wished to dissolve the Reichstag, but this made him again dependent on the emperor, and William II eagerly seized the chance to dismiss him on July 14, 1909. This ended the liberal interlude in imperial Germany. Bülow was the last effective chancellor. After him Germany was administered, not governed, as Metternich’s Austria had been in its days of decay.