Unhealthy and unsightly though they undoubtedly were, the Mietskaserne were by no means mere repositories of gloom; they were centers of genuine social, cultural, and economic vitality. Many an invention was born in those cramped courtyards, which also served as informal stages for popular theater and musical performances. The painter Heinrich Zille would later capture both the misery and liveliness of this scene in his famous drawings of Berliner Hinterhöfe. As land values increased after 1871, the Mietskaserne spread from the proletarian districts of Wedding and Luisenstadt to the wealthier districts of Charlottenburg, Schöneberg, and Wilmersdorf. The average number of inhabitants per building lot in the city rose from forty-five in 1860 to sixty in 1880. By contrast, in the 1870s Paris had twenty people per lot, and roomy London only eight. Berlin was on the way to becoming Europe’s Barrakenstadt par excellence.
Despite increasingly squalid conditions, housing costs in Berlin shot up dramatically in the wake of national unification (as they would again in the early 1990s). Between 1871 and 1873 Berliners were typically paying three times what they had paid two years earlier. Theodor Fontane experienced as a renter the darker side of Berlin’s boom. His landlord at Hirschelstrasse 14, where he and his family had lived for nine years, sold the house to a banker in October 1872. The banker increased the rent threefold, though the building was a refuse-strewn wreck, its courtyard “looking like it could infect the entire neighborhood with typhus.” Indignant, Fontane moved his family into cheaper quarters at Potsdamerstrasse 134c, but this was not much of an improvement. It was so dilapidated and dirty that cockroaches and other vermin occupied “every nook and cranny.”
In shifting quarters to obtain a lower rent, Fontane was hardly alone: 38 percent of Berlin’s renters moved at least once in 1871; in 1872 the figure rose to 43 percent. City streets were perpetually clogged with carts bearing the belongings of families in search of affordable housing. This constant coming and going took its psychological toll. A Berliner who counted himself among the “orderly people” reported his shame at having to move around “like a nomad” from one hovel to the next, each worse than the last. He concluded that the old adage that poor lodgings could “kill like an ax” was wrong; rather, they killed “like opium or some slow-acting poison that lames the mind and will.”
With the steady increases in rents, more and more Berliners became homeless. Some of them found temporary places in public or private shelters, but by 1872 these institutions were turning people away because of overcrowding. Many cast-outs became Schlafburschen—temporary lodgers who rented a patch of floor in someone’s apartment for a night or two. But this makeshift arrangement was unworkable for larger families, who were obliged to camp out like Gypsy clans under bridges or on construction sites. Sensing a profit in such desperation, packing-carton manufacturers advertised “good and cheap boxes for habitation.” Huge shanty towns sprang up around the Kottbus, Frankfurt, and Landsberg Gates. Occasionally the police moved in and burned out the squatters, pushing them on to other encampments. In summer 1872, when dozens of homeless families rioted against such treatment, mounted soldiers rode in and cut down the demonstrators with their sabers.
Homelessness, destitution, and urban-nomadism, for all their appalling visibility, were hardly the dominant motifs in Boomtown on the Spree. The defining elements were breathtaking commercial expansion, material excess, and municipal hubris. Germany’s economic boom of the early 1870s derived primarily from three factors: the elimination of remaining internal tariffs; the liberalization of rules governing banks and joint-stock companies; and a sudden infusion of 5 billion gold marks in war reparations from France. This last factor was especially important: it translated into two carats of gold for every man, woman, and child in the country. Imperial Germany was born with a golden spoon in its mouth.
As the capital, Berlin got a large share of the new riches. Suddenly the city was awash in investment funds, which attracted all sorts of entrepreneurial types with ideas for putting the money to work. As the Volks-Zeitung reported in 1873, hardly a week went by without a new company, factory, or bank being established. Between 1871 and 1872, 780 new companies were set up in Prussia, most of them in Berlin. Germany’s greatest banks—the Deutsche, Dresdener, and Darmstadter—made their headquarters there. So did the country’s newspaper industry. Rudolf Mosse launched his Berliner Tageblatt in 1871 with the following characteristic comment: “At a time when the eyes of the world look toward Berlin, we present to the public the Berliner Tageblatt. The capital of Prussia has become the capital of Germany, a world city. . . . We must be inspired by the thought that he who writes for Berlin 12 writes for the civilized world.”
To make their enterprises more attractive to first-time investors, Berlin entrepreneurs studded their boards of directors with aristocratic names. As a company founder explains in Friedrich Spielhagen’s novel Sturmflut: “We absolutely need a high aristocratic name. You don’t understand our insular patriotism. A Judas goat must go ahead, but then, I tell you, the whole herd will follow. Therefore, a kingdom for a Judas goat!” Bedazzled by titled goats, the herd followed along, and an amazingly inclusive and democratic herd it was, embracing, as one Berliner recalled, “the shrewd capitalist and the inexperienced petty bourgeois, the general and the waiter, the woman of the world, the poor piano teacher and the market woman.” All found a new place to worship in Berlin’s palatial stock market building on the Neue Friedrichstrasse, an “Everyman’s Temple of Temptation.”
Among the promoters of Berlin’s new wealth could be found a significant number of Jews, who took advantage of the liberalized business climate and full legal rights they achieved with unification to stake out prominent positions in certain branches of the economy. They were particularly prominent in the rise of the department store (the key names here being Wertheim, Tietz, and Israel), the publishing business (Mosse and Ullstein), the stock market, and banking. Jewish families had long been prominent in Prussia’s and Berlin’s banking scene; in 1808 one-third of Berlin’s thirty banks were Jewish-owned, and by 1860 there were twice as many Jewish as non-Jewish banks in Prussia. After unification, Jews controlled about 40 percent of all banks in the Reich, while another one-third were of mixed Jewish and Christian ownership; only one-quarter were in exclusively Christian hands. This phenomenon hardly went unnoticed, and it excited age-old prejudices. Observing the bustling scene around the stock market, one commentator sneered: “Here, too, the Jewish element—no longer restrained, as of old, within particular limits, and today so insolently dominant in Berlin—exercises a continually increasing influence.”
Particularly influential was Gerson Bleichröder, Bismarck’s personal banker and financial adviser. Bleichröder’s father, the son of a gravedigger, had managed to become the Berlin agent of the powerful Rothschild banking dynasty, thereby building a potent banking business of his own. Continuing to exploit the Rothschild connection, and making the most of his ties to Bismarck, Gerson Bleichröder became one of the wealthiest men in the Reich, maintaining a magnificent mansion in the Behrenstrasse and a country estate where he hosted parties that were “great events, Lucullan feasts.” While enriching himself he also worked wonders for the financial portfolio of his most illustrious client. (Despite, and partly because of, his vast land holdings, Bismarck was low on capital at the time of German unification; it was up to Bleichröder to make him “a respectable prince.”) Bismarck rewarded his banker with useful political tips, access to power, and the first hereditary title awarded a Jew in the new Reich, yet he also told anti-Semitic jokes about him behind his back, as if half-embarrassed by the riches his Privatjude had earned him. Bleichröder’s story is a kind of morality tale of Bismarckian Berlin. It exemplified (in the words of historian Fritz Stern) “the precariousness of the German plutocracy: they huddled after wealth and status—and discovered that the former did not confer the latter. . . . Berlin was full of plutocratic parvenus; it was full, too, of Jews who were the pariahs among plutocratic parvenus.”