Until the early 19th century, Germany, a federation of numerous states of varying size and development, retained its pre-industrial character, where trade centered around a number of free cities. After the extensive development of the railway network during the 1840s, rapid economic growth and modernization sparked the process of industrialization. Under Prussian leadership Germany was united in 1871 and its economy grew rapidly. The largest economy in Europe by 1900, Germany had established a primary position in several key sectors, like the chemical industry and steel production. High production capacity, permanent competitiveness and subsequent protectionist policies fought out with the US and Britain were essential characteristics.
By the end of World War II, Germany's economic infrastructure had been largely destroyed. West Germany embarked on a program of reconstruction supported by investment under the U.S. Marshall Plan and guided by the economic policies of the Minister of Economics Ludwig Erhard, contributing to the Wirtschaftswunder (economic miracle) of the 1950s and 1960s. East Germany became part of the Eastern Bloc and operated under a centrally planned socialist economy, with living standards generally lagging behind those of Western Germany. Following German reunification in 1990, the country underwent significant structural changes as the former East German economy was integrated into the market economy.
Today, Germany has a highly skilled work force and the largest economy in Europe. It is one of the world's largest exporters of high-value manufactured goods, including cars, machinery, pharmaceutics, chemical and electrical equipment. Germany had a gross domestic product (GDP) of US$3.67 trillion in 2017.
Medieval Germany Medieval Germany, lying on the open Northern European Plain, was divided into hundreds of contending kingdoms, principalities, dukedoms/duchies, bishoprics/dioceses, and free cities. Economic prosperity did not mean geographical expansion; it required collaboration with some, competition with others, and an intimate understanding among government, commerce, and production. A desire to save was also born in the German experience of political, military, and economic uncertainty.Horst Fuhrmann, Germany in the High Middle Ages (Cambridge University Press, 1986)
Towns and cities
Total population estimates of the German territories range around 5 to 6 million by the end of Henry III's reign in 1056 and about 7 to 8 million after Friedrich Barbarossa's rule in 1190. The vast majority were farmers, typically in a state of serfdom under the control of nobles and monasteries.Fuhrmann, Germany in the High Middle Ages (1986) ch 1 Towns gradually emerged and in the 12th century many new cities were founded along the trading routes and near imperial strongholds and castles. The towns were subjected to the municipal legal system. Cities such as Cologne, that had acquired the status of Imperial Free Cities, were no longer answerable to the local landlords or bishops, but immediate subjects of the Emperor and enjoyed greater commercial and legal liberties. The towns were ruled by a council of the - usually mercantile - elite, the patricians. Craftsmen formed guilds, governed by strict rules, which sought to obtain control of the towns; a few were open to women. Society had diversified, but was divided into sharply demarcated classes of the clergy, physicians, merchants, various guilds of artisans, unskilled day laborers and peasants. Full citizenship was not available to paupers. Political tensions arose from issues of taxation, public spending, regulation of business, and market supervision, as well as the limits of corporate autonomy.David Nicholas, The Growth of the Medieval City: From Late Antiquity to the Early Fourteenth Century (Longman, 1997) pp 69-72, 133-42, 202-20, 244-45, 300-307 Cologne's central location on the Rhine river placed it at the intersection of the major trade routes between east and west and was the basis of Cologne's growth.Paul Strait, Cologne in the Twelfth Century (1974) The economic structures of medieval and early modern Cologne were characterized by the city's status as a major harbor and transport hub upon the Rhine. It was governed by its burghers.Joseph P. Huffman, Family, Commerce, and Religion in London and Cologne (1998) covers from 1000 to 1300.
Hanseatic League
The Hanseatic League was a commercial and defensive alliance of the merchant guilds of towns and cities in northern and central Europe. It dominated marine trade in the Baltic Sea, the North Sea and along the connected navigable rivers during the Late Middle Ages (12th to 15th centuries).Donald J. Harreld, A companion to the Hanseatic League (Brill, 2015). Each of the affiliated cities retained the legal system of its sovereign and, with the exception of the Free imperial cities, had only a limited degree of political autonomy. Beginning with an agreement of the cities of Lübeck and Hamburg, guilds cooperated in order to strengthen and combine their economic assets, like securing trading routes and tax privileges, to control prices and better protect and market their local commodities. Important centers of commerce within the empire, such as Cologne on the Rhine river and Bremen on the North Sea joined the union, which resulted in greater diplomatic esteem. Recognized by the various regional princes for the great economic potential, favorable charters for, often exclusive, commercial operations were granted.Translation of the grant of privileges to merchants in 1229: During its zenith the alliance maintained trading posts and kontors in virtually all cities between London and Edinburgh in the west to Novgorod in the east and Bergen in Norway. By the late 14th century the powerful league enforced its interests with military means, if necessary. This culminated in a war with the sovereign Kingdom of Denmark from 1361 to 1370. The principal city of the Hanseatic League remained Lübeck, where in 1356 the first general diet was held and its official structure was announced. The league declined after 1450 due to a number of factors, such as the 15th-century crisis, the territorial lords' shifting policies towards greater commercial control, the silver crisis and marginalization in the wider Eurasian trade network, among others.Istvan Szepesi, "Reflecting the Nation: The Historiography of Hanseatic Institutions". Waterloo Historical Review 7 (2015). online
Between 1347 and 1351 Germany and Europe were haunted by the most severe outbreak of the Black Death pandemic. Estimated to have caused the abrupt death of 30 to 60% of Europe's population, it led to widespread social and economic disruption and deep religious disaffection and fanaticism. Minority groups, and Jews in particular were blamed, singled out and attacked. As a consequence, many Jews fled and resettled in Eastern Europe. The death of large parts of the population caused a major collapse of the labor force. Human power became a rare commodity and the social and economic situation of average workers improved for several decades as employers were forced to pay higher wages.
Change and reform
The early-modern European society gradually developed after the disasters of the 14th century as religious obedience and political loyalties declined in the wake of the Great Plague, the schism of the Church and prolonged dynastic wars. The rise of the cities and the emergence of the new burgher class eroded the societal, legal and economic order of feudalism. The commercial enterprises of the mercantile patriciate family of the Fuggers of Augsburg generated unprecedented financial means. As financiers to both the leading ecclesiastical and secular rulers, the Fuggers fundamentally influenced the political affairs in the empire during the 15th and 16th centuries. The increasingly money-based economy also provoked social discontentment among knights and peasants and predatory "robber knights" became common. The knightly classes had traditionally established their monopoly through warfare and military skill. However, the shift to practical mercenary infantry armies and military-technical advances led to a marginalization of heavy cavalry.
Early modern Germany
Unlike most Western European countries, Germany as a domain of the Holy Roman Empire, which lacked a strong centralized leadership, did not embark on the exploration of the world during the Age of Discovery in the 16th and 17th centuries, nor did it establish a trading fleet, trading posts and colonies during the subsequent era of colonialism. As a consequence Germany's society remained stagnant as its economy played only a secondary role with limited access to international markets and resources, while in France, Britain and the Netherlands, worldwide trade and colonial possessions greatly empowered mercantile and industrial groups and led to the rise of a bourgeoisie, who was able to benefit from the new economic opportunities.
Thirty Years' War The Thirty Years' War (1618–1648) was ruinous to the twenty million civilians and set back the economy for generations, as marauding armies burned and destroyed what they could not seize. The fighting often was out of control, with marauding bands of hundreds or thousands of starving soldiers spreading plague, plunder, and murder. The armies that were under control moved back and forth across the countryside year after year, levying heavy taxes on cities, and seizing the animals and food stocks of the peasants without payment. The enormous social disruption over three decades caused a dramatic decline in population because of killings, disease, crop failures, declining birth rates and random destruction, and the emigration of terrified people. One estimate shows a 38% drop from 16 million people in 1618 to 10 million by 1650, while another shows "only" a 20% drop from 20 million to 16 million. The Altmark and Württemberg regions were especially hard hit. It took generations for Germany to fully recover.Geoffrey Parker, The Thirty Years' War (1997) p 178 has 15-20% decline; Tryntje Helfferich, The Thirty Years War: A Documentary History (2009) p xix, estimates a 25% decline. Peter H. Wilson, The Thirty Years War: Europe's Tragedy (2009) pp 780-95 reviews the estimates.
According to John Gagliardo, the recovery period lasted for about fifty years until the end of the century and was over by the 1700s. At that time, Germany probably had reached its pre-war population (though this is disputed). Then, there was a period of steady though quite slow growth to the 1740s. Afterward came a period of rapid but not exceptional economic expansion, that mainly occurred in the great states in the east (Austria, Saxony, Prussia) rather than in the small states of central or south Germany.Germany Under the Old Regime, John Gagliardo
Peasants and rural life