World War I
Arms race

German economic and industrial strength continued to expand rapidly post-1871. Backed by Wilhelm II, Admiral Alfred von Tirpitz sought to use this growth to build an Imperial German Navy, that could compete with the British Royal Navy. This policy was based on the work of US naval author Alfred Thayer Mahan, who argued that possession of a blue-water navy was vital for global power projection; Tirpitz had his books translated into German, while Wilhelm made them required reading for his advisors and senior military personnel.

However, it was also an emotional decision, driven by Wilhelm's simultaneous admiration for the Royal Navy and desire to surpass it. Bismarck thought that the British would not interfere in Europe, as long as its maritime supremacy remained secure, but his dismissal in 1890 led to a change in policy and an Anglo-German naval arms race began. Despite the vast sums spent by Tirpitz, the launch of HMS Dreadnought in 1906 gave the British a technological advantage. Ultimately, the race diverted huge resources into creating a German navy large enough to antagonise Britain, but not defeat it; in 1911, Chancellor Theobald von Bethmann Hollweg acknowledged defeat, leading to the Rüstungswende or 'armaments turning point', when he switched expenditure from the navy to the army.

This decision was not driven by a reduction in political tensions but by German concern over Russia's quick recovery from its defeat in the Russo-Japanese War and subsequent 1905 Russian Revolution. Economic reforms led to a significant post-1908 expansion of railways and transportation infrastructure, particularly in its western border regions. Since Germany and Austria-Hungary relied on faster mobilisation to compensate for their numerical inferiority compared to Russia, the threat posed by the closing of this gap was more important than competing with the Royal Navy. After Germany expanded its standing army by 170,000 troops in 1913, France extended compulsory military service from two to three years; similar measures were taken by the Balkan powers and Italy, which led to increased expenditure by the Ottomans and Austria-Hungary. Absolute figures are difficult to calculate due to differences in categorising expenditure since they often omit civilian infrastructure projects like railways which had logistical importance and military use. It is known, however, that from 1908 to 1913, military spending by the six major European powers increased by over 50% in real terms.
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