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By the time of the World War the German steel cartel, or Stahlwerksverband, which included the Krupp armament works, was practically coterminous with the entire German steel industry. Fettered at home, competition was directed outward, against the industries of other nations; and throughout Germany the professors were quarreling over the concepts of State Socialism and State Capitalism, and wondering which was which. Meanwhile the Kaiser and court were fearful that the Socialists in the Reichstag (the Social Democratic Party had 112 seats out of 397 in 1912) might forget their "revisionist" doctrines and adopt the naked class war propounded by Karl Marx. Lacking internal flexibility and with the shaky Austro-Hungarian Empire messing up the possibilities of progress to the east, the German economic system had seemingly reached its limits of growth as far back as 1914, Germany's "assisted capitalism" had run head-on into Germany's poverty of resources—a circumstance which was to have an ominous parallel 25 years later.
In 1871 Germany raised enough food to feed her population of 40,997,000. But the years between the Franco-Prussian and the World Wars saw a three-fold growth of the city population, while the rural population stood still. After 1900 the trend frightened the military clique into demanding increased tariff protection for the farmer, and just before the famous shot was fired at Sarajevo the Kaiser's advisers were only reasonably certain that the food situation could withstand a war.
By 1918, however, industrial Germany's dependence on imported animal fodders had become all too apparent in the wizened faces of the German children. Lack of feed for German cows cut the Berlin milk supply by two-thirds, and 9,000.000 German pigs had to be slaughtered in the war's first year because there was not even garbage for them to eat. As early as 1916 ration cards for fats and meat had been introduced, and the "turnip" winter was at hand. In coal and steel production War-time Germany held up, partly because of the capture of Belgian and French mines and blast furnaces. But the immense capacity of Pittsburgh, made available to the Allies even before the United States' entry into the war, easily beat down the Ruhr and the German State lost its first war.
Before the World War Germany was a rich creditor nation, with an estimated 35 billion marks invested abroad. Although she imported more than she exported, income from this overseas capital and revenues from a merchant marine second only to England's were more than enough to make up the difference. To back a note circulation of 1,800,000,000 marks the Reichsbank held 1,370,000,000 marks in gold—double the coverage considered normal in 1914. Another two billion marks in gold currency were in circulation among the people. These liquid reserves made it easy for Germany to market her war bonds—and had she won there would never have been an inflation as insane as that of 1923.