The economic boom which began in Germany after the Franco-Prussian War 1870/71 did not bypass Potsdam. From 1860 to 1890 the population increased by a third. The urban area expanded along the outbound roads and new suburbs were created: Berliner, Brandenburger, Teltower and Nauener Vorstadt. Important science institutions settled in the new suburb Teltower Vorstadt between 1868 and 1892: the Geodetic Institute, the Astrophysical Observatory, the Magnetical and the Meteorological Institute.
Under the governments of the Emperors William I, Frederick III and William II, Potsdam’s character continued to be formed by court, army and administrative authorities. Industry and trade had no influence on the cityscape.
Between 1913 and 1916 Cecilienhof Palace – named after Crown Princess Cecile – was built in the New Garden. This was the last of the Hohenzollern palaces.
In 1914 the Emperor William II signed the declaration of war in the New Palace. Following the November Revolution of 1918 and the abdication of the emperor, Potsdam lost its function as a royal capital. Many social hardships were visible in Potsdam during that time. The housing shortage was a particular problem which was alleviated by the construction of further settlements.