6 - The Slow Decline of Philanthropy and Civil Society

Summary

PHILANTHROPY REACHED ITS PEAK in Germany on the eve of the First World War. With 50 billion marks in philanthropic assets, Germany had become a superpower in the field of civic engagement by its citizens. Neither the United States nor England was able to challenge Germany's undisputed leadership role. In the second half of the nineteenth century German cities and philanthropic institutions attracted the attention of prominent intellectuals such as the American George Fisk Comfort and social reformers such as the Canadian Elgin Gould. They were part of an extensive transatlantic network in which ideas about philanthropy and public institutions flowed back and forth.

With the continued conversion of private wealth into philanthropic assets, the need for government bonds steadily increased. Germany's federal, state, and municipal governments felt encouraged if not obliged to sell more and more bonds to fund their operations and to provide safe forms of investment for philanthropic assets. The deficit funding of government operations had, thus, become both a necessity and a convenient way to expand government spending without raising taxes. Even though the federal debt created through the sale of bonds reached nearly five billion marks in 1911, the finances of Germany's federal government were not in danger. Taxes provided between 37 and 57 percent of the funds needed to secure the operations of the federal government in 1874, 1885, 1895, and 1900. The remaining 63 to 43 percent had to come from other sources of income, including the sale of government bonds, which accounted in these four years for less than 5 percent (table 6.1). This form of deficit funding of government operations had become a constitutive element of the financial system and of the political culture of the Wilhelmine Empire. When the German government was faced in 1914 with the question of how to finance the war, there was no doubt that war bonds would play an even greater role and that endowments and foundations would shoulder a significant part of the war costs through the enforced acquisition of the bonds.

The Role of Philanthropy in Funding the First World War

With the decision of the German government to finance the war that broke out in August 1914 through the selling of war bonds, philanthropic assets were quickly recognized as a valuable financial resource for the funding of the conflict.