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4. Economy and Labor
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The 1815-66 period saw the growing implementation of a free market economy in the German states and the abolition of barriers to market freedom, such as seigneurial rights in agriculture, the guild system in the crafts, and protective tariffs in international trade. These changes, however, were hard fought, and opponents of different aspects of the free market economy put up a vigorous fight against economic liberalization.

Great Britain was the great model for nineteenth-century advocates of the free market economy, and the leading spokesman for free trade in Germany in the 1815-66 period was an Englishman, John Prince-Smith (1809-74), who moved to the Prussian town of Elbing in 1831 to teach English and eventually became a Prussian subject. Prince-Smith was one of the founders of the Congress of German Economists, a debating and lobbying group that vigorously promoted free trade. Following are excerpts from Prince-Smith's 1843 and 1845 essays on free trade and protectionism, in which he argued the virtues of free trade and the importance of government non-interference in the economy. Prince-Smith was careful to connect his endorsement of the free market both to the heroes of Prussia's early nineteenth-century reform era (the Prussian reformers were, in fact, supporters of a free market economy), but also to link it to the first building of railroads and the development of factory industry in Central Europe during the 1840s. Also included in this section is an excerpt from a later essay from 1863 on the nature of the market, in which Prince-Smith discussed a quite different aspect of economic development, arguing that a free market would increase economic growth and improve the condition of the working class.

The introduction of a free market economy in nineteenth-century Germany involved two different and distinct kinds of freedom, and advocates of one were not always supporters of the other. One was freedom of trade and commerce (Handelsfreiheit), which involved ending tariffs, import prohibitions, and other limitations on goods flowing from one state to another. The other freedom was freedom of occupation (Gewerbefreiheit), the freedom to practice any trade or craft, and closely connected with it, the freedom to take one's residence where one wished. The chief enemy of freedom of occupation was the guilds, whose members were determined to restrict the number of people who could practice crafts and to regulate very closely the practice of such crafts. Germany's city-states, Frankfurt, Hamburg, Bremen, and Lübeck, were strongholds of the guilds. The economy of these cities was largely dependent on international trade, and their governments were strong proponents of freedom of commerce, but they were also generally opposed to freedom of occupation. [Karl] Victor Böhmert (1829-1918) was an economist and business journalist, and was active in the Congress of German Economists; in the late 1850s, he was also editor of the Handelsblatt, a commercial newspaper in Bremen. (Böhmert would later be named professor at the Dresden Institute of Technology and director of the Saxon State Bureau of Statistics.) In his 1858 book on freedom of occupation, excerpts from which are reproduced here, he confronted Bremen's supporters of the guild system. Böhmert quoted guild proponents who asserted that guilds reinforced the middle class, prevented the growth of an impoverished proletariat, and improved the moral qualities of life among craftsmen and workers. He argued that exactly the opposite was the case, that freedom of occupation would encourage these worthwhile conditions, while the regulations of the guild system would prevent them.

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