Merchants, proto-firms, and the German industrialization: the commercial determinants of nineteenth century town growth

The role of merchants in shaping the German industrialization is often acknowledged, yet scarcely researched. A small number of case-studies of merchant families and individual towns have shown the significance of merchants as capital providers, industrial entrepreneurs, and political actors, yet no supra-local study into the wider significance of this social group for the German economy exists. This dissertation introduces a new source, a business directory from 1798, to construct micro-data on 6099 individual merchant and manufacturing enterprises across 56 towns in Germany. The resulting dataset is the earliest supraregional evidence on the spatial variation of urban merchant communities in Germany to date. Furthermore, this paper provides a detailed overview of the types of eighteenth-century merchants and analyses under what exact circumstances merchants became industrial entrepreneurs. Using multivariate OLS regressions, it finds a strong association between a greater share of proto-firms in a town in 1798 and its growth rates across the nineteenth century. The findings point to a hitherto overlooked link between the qualitative structure of late eighteenth century merchant activity, the elasticity of supply of early industrial entrepreneurship, and the spatial variation of urban growth experiences in nineteenth century Germany