This move towards a capitalistic model allowed for the formation of a banking system that could provide the cash to finance small industry or joint stock companies to finance major capital like railways. The freedom bestowed on British citizens paid huge dividends for the British economy.
Britain and Germany, once industrialized, became leaders of world trade. However, Germany had a quick process of industrialization lasting less than twenty years, while Britain's industrialization took almost ninety years to complete. Germany is applauded for its speed and efficiency and Britain is revered for its role in pioneering industrialization. The reason for these different rates of progress can be explained by the order in which they industrialized.
Germany had the luxury of following Britain's lead in industrialization. Germany was able to learn from Britain's mistakes and best allocate its resources employing British processes taught to their industries by British advisors. Germany also felt pressure to play catch up to Britain, and the then Chancellor, Otto von Bismarck, was able to use this to mobilize national support for government involvement in the economy, contrary to the British process. .
In Germany, Bismarck created the world's first welfare state. Bismarck's radical policies for public welfare may have been motivated by quelling socialist sentiment and avoiding expansion of the franchise, but it had the effect of cushioning the transition for most Germans" abrupt shift from rural agrarian to urban industrial society. The state also nationalized the railroad, allowing it to use tax revenues to dramatically increase the rail network before demand for some lines even existed. Coal mines, like those in the Saar basin, were nationalized to ensure their exploitation was not limited by the scarcity of capital. Bismarck used tariffs to align the interests of the industrialists and landed gentry by creating a move for protectionism that increased the market for Germany's young industry.
