In the middle of the 19th century, European na­tions and states were in varying conditions and stages of development. Great Britain, the most industrialized country at the time, controlled an expanding overseas empire. Russia held vast territories in Asia. France was overcoming social upheaval. Struggles for independence within its borders weakened the Austrian Empire, while the German and Italian states remained disunited.

The mid-Victorian boom gave way to an era of deflation, falling profit margins, and occasional large-scale unemployment. Both the United States and Ger­many quickly overtoook Britain in the production of steel and other manufactured goods. Since Germany’s unification, German universities had been leaders in scientific research, providing German industry with up-to-date technology that could be used to develop new and better weapons. Britain remained the world’s prime banker, shipper, and shipbuilder, but the steel Germany used to build ships was superior to that used for that purpose in Britain.

In 1888, Wilhelm II became the new kaiser of Ger­many. Wilhelm II was young and extremely ambitious. As the leader of a powerful nation he began to control diplomatic affairs himself. Wilhelm called his foreign policy Weltpolitik, which means “world politics”. A grand but unrealistic aspiration, this policy reflected his desire to make German influence felt everywhere in the world. At this point, Germany was already a strong industrial and military rival to Great Britain. Wilhelm II, however, promoted hostility by aggres­sively pursuing an imperial policy. He declared that Germany must build an overseas empire to have her “place in the sun”.

As Germany founded more colonies, her need grew for a powerful navy. Encouraged by Admiral Alfred von Tirpitz, Wilhelm ordered the construction of a modern battle fleet. Great Britain being an island na­tion inaccessible by land routes, the English govern­ment could ignore a large German army, but once Great Britain saw Germany as a naval rival, friction between the two countries increased quickly.

Since the mid-nineteenth century, Britain had fol­lowed a policy of maintaining a navy stronger than any other two nations’ fleets combined. This programme guaranteed British control of the oceans in wartime. Admiral von Tirpitz’s plan threatened to upset this programme. To keep up with her rival, therefore, Great Britain had to build more and bigger ships, thus spark­ling a race for naval superiority.

France also regarded Germany as a dangerous ri­val. Unlike Great Britain, however, France was more worried about a large German army than about the German navy. The humiliation of 1871, when German troops quickly destroyed the French army, could not be forgotten. France thus responded to Germany’s militarization by building a larger army of its own.

Both Great Britain and France viewed German mili­tary expansion with growing uneasiness.

During the age of colonial expansion, that is up to 1900, Britain had been most frequently in conflict with France, the next most active colonizing power. From 1900, Germany became the main rival. Germany, left well behind in the race for colonies, began to pene­trate what the British had long been accustomed to regard as their own markets.

Britain was the first to develop industry, but by the end of the 19th century the progress of British industry had been slowed down. Britain soon found herself outdistanced. The main reason for her relative decline was the existence of the British Empire and the opportunities it afforded the investment of capital of capital at an unusually high rate of profit. British industry was old-established and old-fashioned in many respects, and could only have beaten off its challeng­ers by a thorough reconstruction. But while foreign investment offered its super-profits, there was no pos­sibility of this reconstruction being undertaken.

The early industrial development of Britain be­came itself a serious handicap. French, American and German industry had to develop in competition with already established British industries, and could do so only by greater efficiency and new technological meth­ods. Where Britain had once led the world in technol­ogy, it now began to be content to rely on her estab­lished position, and in field after field British industry became backward and conservative. There was a strong tendency to rely upon out-of-date but still serviceable plant and methods rather than face the heavy capital expenditure involved in modernization. New industries abroad naturally started with the most modern equip­ment available. Economic rivalry threatened with the further partitioning of the world, though that process seemed to have been completed by 1900. Britain and France had secured the richest booty, both in Africa, Asia and Australia. Germany and Italy, late comers, had to be content with small and less desirable pick­ings. In the Far East, Russia and Japan eyed one an­other, preparing to do battle for Korea and Manchuria.

It was becoming clear that the existing division of spoils could not be permanent: it had been made on the basis of the relative strength of the European coun­tries far back in the 19th century and did not corre­spond to realities any longer.

This was true above all of the division as between Britain and Germany. In the period before the World War I, it was around certain backward but not strictly colonial areas that Anglo-German rivalry centred. Such were the Balkans, where the German share of trade increased from 18.1 per cent to 29.2 per cent while that of Britain fell from 24 per cent to 14.9 per cent, South America, where German trade rose from 16 per cent to 19 per cent while British trade fell from 31 per cent to 28 per cent, and the slowly decaying Turkish Empire. Even within the British Empire, Germany was gaining ground at the expense of Britain.

Since there were no longer any unappropriated territories of any importance left, the redivision of the world could only be effected by war, and war on a gigantic scale since this was a question in which all of the Great Powers were deeply concerned.