Economic history of Germany
Middle Ages
Medieval Germany, lying on the open North-
ern European Plain, was divided into hun-
dreds of contending kingdoms, principalities,
dukedoms, bishoprics, and free cities. Eco-
nomic survival in that environment, like polit-
ical or even physical survival, did not mean
expanding across unlimited terrain, as in the
United States. It meant a constant struggle
that required collaboration with some, com-
petition with others, and an intimate under-
standing among government, commerce, and
production. A desire to save was also born in
the German experience of political, military,
and economic uncertainty.
Even under these difficult conditions, Ger-
many had already developed a strong eco-
nomy during the Middle Ages. It was based
on guild and craft production, but with ele-
ments of merchant capitalism and mercantil-
ism. The trade conducted by its cities ranged
far and wide throughout Europe in all direc-
tions, and Germany as a whole often had
trade surpluses with neighboring states. One
reason for these exports was the sheer neces-
sity for the small states to sell abroad in or-
der to buy the many things they could not
produce at home.
The German guilds of the Middle Ages es-
tablished the German tradition of creating
products known for quality and durability. A
craftsman was not permitted to pursue a
trade until he could demonstrate the ability
to make high-quality products. Out of that
same tradition came an equally strong pas-
sion for education and vocational training, for
no craftsman was recognized until he had
thoroughly learned a trade, passed a test,
and been certified (often via an apprentice-
ship training).
Industrial revolution
The Industrial Revolution reached Germany
long after it had flowered in Britain, and the
governments of the German states supported
local industry because they did not want to
be left behind. Many enterprises were gov-
ernment
initiated, government
financed,
government managed, or government subsid-
ized. As industry grew and prospered in t