Master programme in Economic History
I gave Gold for Iron
Prussia’s economic strategies in the context of the
War of Liberation
Steffen Liedmeyer
steffen.liedmeyer.951@student.lu.se
Abstract: In 1806 Prussia had to face tremendous economic pressure. In this
article an interdisciplinary approach on wartime economy is applied.
Controlling for different spheres that influence the economy during wars,
the success of the Prussian state in the War of Liberation will be discussed.
Prussia’s pre-industrialized status therefore allows observing early measures
for taking influence on the economic progress. Social reforms, market
dynamics, trading strategies were essential elements of strategies conducted
in the recovery process helping Prussia to fight back Napoleon and become
a continental Great Power.
Key words: Wartime Economy, Crowding Out, Smuggling,
Economic Strategies
EKHM51
Master thesis, (15 credits ECTS)
June 2014
Supervisor: Patrick Svensson
Examiner: Anders Ögren
Table of Contents
List of Abbreviations ............................................................................................ II
List of Figures ......................................................................................................III
1 Introduction ........................................................................................................ 1
1.1 Theory on Wartime Economy ....................................................................... 2
1.2 Aim, Analytical Framework and Research Questions ................................... 4
1.3 Sources, Method and Data ............................................................................. 6
2 Historical Background ..................................................................................... 10
3 The Cope Economy .......................................................................................... 13
3.1 Living Conditions in Prussia ....................................................................... 13
3.2 The Revolution From Above ....................................................................... 14
3.3 Negative Policy Integration and Market Dynamics..................................... 18
4 The shadow economy ....................................................................................... 23
4.1 The Concept of Illicit Trade ........................................................................ 23
4.2 Maritime Trade in the Baltic Sea ................................................................. 25
4.3 Sweden as Intermediary............................................................................... 29
5 The war economy ............................................................................................. 34
5.1 Financial Strategies ...................................................................................... 34
5.2 The Crowding Out Effect ............................................................................ 37
6 The Emotional Economy ................................................................................. 40
6.1 Reform and Restriction based Spirit ............................................................ 40
6.2 The emotional Approach ............................................................................. 41
7 Conclusion ......................................................................................................... 44
References
Appendices
I
List of Abbreviations
Rtlr.
= Reichstaler (Prussian Currency)
Frcs.
= Francs (French Currency)
1 Rtlr. ≙ 3.72 Frcs.
--------------------------------------------------------------------------------------------BMA
= Bond Market Approach
Cf.
= Confirm
et al.
= et alii
FAZ
= Frankfurter Allgemeine Zeitung
i. a.
= inter alia
NYT
= New York Times
rbb
= Radio Berlin-Brandenburg
STR online
= Sound Toll Registers Online
s. v.
= sub verbum
II
List of Figures
Figure 1: Logged Number of ships arriving to Baltic ports, 1786 - 1820 (Source:
Own extractions from the STR online) ................................................... 25
Figure 2: Number of ships from England arriving to Danish and Russian ports,
1808 – 1813 (Source: Own extractions from the STR online) ............... 28
Figure 3: The progress of maritime trade from England to Sweden/ Finland, 1750
– 1850 (Source: Own extractions from the STR online) ........................ 30
Figure 4: Number of ships arriving from England to Swedish Ports, 1806 to 1814
(Source: Own extraction from STR online) ............................................ 31
Figure 5: Number of ships under Swedish colors sailing from England to Sweden,
1750 to 1850 (Own extractions from STR online) ................................. 32
Table 1: Numbers of Ships arriving from England to Russian and Danish ports,
1810 and 1813 by month ......................................................................... 29
III
1 Introduction
“To my people
There is no need of explaining to my loyal subjects or to any German, the reasons for
the war which is about to begin. They lie plainly before the eyes of awakened Europe.
We succumbed to the superior force of France. The peace which followed deprived me
of my people and, far from bringing us blessings, it inflicted upon us deeper wounds
than the war itself, sucking out the very marrow of the country. Our principal fortresses
remained in the hand of the enemy, and agriculture, as well as the highly developed
industries of our towns, was crippled. The freedom of trade was hampered and thereby
the sources of commerce and prosperity cut off. The country was left a prey to the
ravages of destitution.” (Frederick William III, 17th March 1813)1
These words Frederick William III. King of Prussia chose to call his people to
arms in March 1813. Almost 25 years after the French Revolution the
developments in Europe culminated in this emotional declaration. The turn of the
19th century was one of the most dynamic times in modern history. The
absolutistic world was hit by the French Revolution which affected the life of
thousands. With bourgeois beliefs in Liberté, Égalité and Fraternité keystones of
the Ancién Regime 2 were questioned. By criticizing the old world order social
tension was caused and inspiration for greater movements created. “In the
beginning was Napoleon” 3 , this is how Nipperdey characterizes Europe in the
early 19th century.
Quickened by ideas of the French Revolution Napoleon managed to run over
Europe and spread revolutionary ideas all over the continent.4 With a new strategy
of economic war Napoleon put pressure on Britain and central Europe. The
continental system 5 was the first highly effective measure aiming at economic
sectors of complete countries. Highlighting the massive impacts in agriculture,
industry and freedom of trade Fredrick William directly mentions several
economic reasons that are essential for Prussia’s prosperity and thus supports the
picture of growing importance and dependency on economy.
1
2
3
4
5
Cf. Appendix 5: To my people.
This term embodies the classical absolutistic monarchy and world order.
Nipperdey, Deutsche Geschichte, p.11.
It is highly discussed whether Napoleon embodied beliefs of the French Revolution. Here, it
just should be highlighted the new character of Napoleon’s expansion.
The continental system was introduced to wage war against Britain. After the Battle of
Trafalgar (1805) France gave up in trying to occupy England, but developed alternative
ways. A trading blockage between England and the continent was established and maritime
trading routes were prohibited. Territories controlled by the French Empire refused trade with
England. After Prussia’s defeat in 1806 Napoleon forced Prussia to join the system. This
affected Prussia which was reliant on the export of agricultural products to England. It was
formally abolished in the Congress of Vienna in 1814 (Cf. Heckscher, The Continental
System; Appendix 2, Overview of the Historical Background, 1750-1820).
Page | 1
Since then economic warfare has arrived in international conflicts and is still
used in political relationships. Economic restrictions are today’s strategy to
weaken countries that act oppositional to common expectations. Especially by
having a look on current developments in Ukraine and reactions of the NATO to
Russia’s behavior within the last months this can clearly be seen. 6 Sanctions
against Russia illustrate the importance of economy in international diplomacy.
These developments prove the brisance of this topic. Russia has to deal with
financial restrictions and increasing pressure on the economy.
In this respect Russia’s situation is closely related to Prussia’s more than 200
years ago. Though Prussia was not an industrialized country in the early 19th
century, financial and trading restrictions cut off connections to important trading
partners. Accordingly, Prussia had to handle huge economic pressure while trying
to reorganize the economy due to the needs within the preparation of the War of
Liberation.
1.1 Theory on Wartime Economy
The theory on wartime economy was already in scientific interest in the early 20th
century.7 Robinson (1900) points out how new conditions have come up in the
developments since the 1800s. New governmental structures cause new problems,
but also new possibilities to compete among each other.8 Robinson argues that the
connection of economy and politics and by this the use of economy in politics is
obvious.9 With rising importance of industry possibilities to exploit the economic
sector for wars rises to the same extent. Beside politics and government Lawrence
identifies trade as an important factor in wartime economy.10 By comparing the
circumstances of states that possess international trade to those without the central
role of international trade during wars is highlighted.11 To deal with the absence of
trade, however, different measures are identified. Taxation, loans and depreciation
of currency are due to Lawrence opportunities to finance growing military
6
7
8
9
10
11
Cf. i.a.: NYT, U.S. Expands Sanctions [April 28th 2014]; FAZ, Amerika und EU verschärfen
Sanktionen [April 28th 2014].
Cf. i.a.: Robinson, War and Economics in History and in Theory; Lawrence, War Economics;
Handman, War, Economic Motives, and Economic Symbols.
Robinson, War and Economics in History and in Theory, p.581.
Robinson, War and Economics in History and in Theory, p.582.
Lawrence, War Economics, p.513.
Lawrence, War Economics, passim.
Page | 2
consumption. Further the increase of import trade, if possible, is mentioned as a
strategy.12 The controlled use of inflation as a successful strategy, also observed
by Shaw and Tarshis, decreases pressure of public debt and after-war deflation.13
Research focusing on World War II then detects the extensive use of Human
Resources14 as an economic aspect. Spoerer and Stamp stress the use of people to
build up wartime economy. This is done by recruiting voluntary workforces 15 as
well as using compulsory labor and concentration camps. Stamp states how these
measures carried the iron- and arms industry.16 Spoerer moreover points out that
compulsory labor was one important factor to keep up wartime economy.17
These rather economic and rational aspects in wartime economy got
challenged by the concept of wars that are classified according to Kaldor as new
wars. Due to this, old wars are said to be rather related to economic greed and
interests whereas new wars are settled on spiritual conviction and cultural or
religious disparities.18 The war in Afghanistan is thus discussed to be a new war in
which religious and spiritual factors are more important than in the rather
economic driven old wars of former times.19 Though Brandis (1953) pointed out
these differences show growing importance of ethics and moral in war
economics20, Koubi states that the non-economic aspects received less attention
than the economic ones.21 Olson furthermore argues that economic performance in
wartime is highly set by political structures and public interest 22 and therefore
highlights interdependence between these various factors. This means, a
connection between economic, public and social aims can hence be identified.
Thus, a range of spheres in economics during wartime can be
distinguished,
that
determines
success
in
modern
wars.
Accordingly,
governmental management efforts measures in economics, public interests and
social requirements. These spheres, thus, have to be analyzed while be aware of
12
13
14
15
16
17
18
19
20
21
22
Lawrence, War Economics, p.518.
Shaw/ Tashis, Economic Mobilization, p.13.
The modern term Human Resources must not neglect the inhuman circumstances in the Third
Reich. Thus this shall be stressed in this remark (Cf. Spoerer, Zwangsarbeit).
Spoerer, Zwangsarbeit, p.5.
Cf. Stamp, Metallindustrie 1939–1945, passim.
Spoerer, Zwangsarbeit, p.4.
Cf. Kaldor, New and Old Wars.
Kaldor, New and Old Wars, passim.
Brandis, Ethical Aspects, passim.
Koubi, Economic Performance, p.68.
Cf. Olson, Rise of Nations.
Page | 3
most essential difference between peace and wartime economy stated by Brandis:
“War has one Primary Aim – victory over the enemy.”23
1.2 Aim, Analytical Framework and Research Questions
Settled on these theories the aim of this thesis is to analyze and discuss wartime
strategies of the Prussian state during the period from 1806 to 1813. This is done
by using an analytical framework for wartime economies proposed by Goodhand
(2003)24. The framework consists of four different spheres: cope, shadow, war and
emotional economy and is related to the aspects the theories figured out.
Consequently, this framework will structure the analysis. Goodhand applies this
framework to the situation in Afghanistan (2001). By criticizing that research on
African wars 25 merely focuses on greed and thus economic aspects, Goodhand
argues for a new analytical framework covering rather widespread elements. The
new developed framework is based on the assumption that the situation in
Afghanistan is different from those before. 26 Starting as a rather religious
motivated war and becoming a resource based economic war the greed model
seems to be insufficient for the situation in Afghanistan. 27 Goodhand further
argues that the assumption of wars to be merely based on well considered
economic calculations ignores the existence of political and emotional elements.
Comparable to Brandis it is stated that these factors also influence wartime
circumstances. Moreover it is pointed out that the greed model distinguishes illicit
and licit activities as being incompatible phenomena. In the new approach,
however, illicit activities are not considered as isolated spheres. Rather it is argued
that politics could establish institutions and ways to benefit from illicit activities.28
The framework of Goodhand is based on analytical needs of wartime
economic theories and fits furthermore in the Prussian circumstances. Though
developed for modern wars and thus new wars the framework of Goodhand
allows analyzing the dynamics of the early 19th century. By highlighting
interdependence within factors and integrating emotional aspects, this framework
23
24
25
26
27
28
Brandis, Ethical Aspects, p.143.
Cf. Goodhand, War Economy.
Cf. Allen, Warfare in Africa.
Goodhand, War Economy, p.1.
Goodhand, War Economy, p.2.
Goodhand, War Economy, p.2.
Page | 4
assures to capture the dynamics in the Prussia. Especially emotional elements play
an important role against Napoleon and the French suppression. Therefore a
framework concentrating on modern wars is adequate in discussing the processes
of national consciousness and the relation to wartime economics. The national
feeling in Prussia got an important aspect for the success of the War of Liberation.
Accordingly, the model by Goodhand offers the ideal way to analyze the
processes in Prussia adequately. Also the fact that illicit and licit activities are not
considered as two isolated spheres supports the adaptability. The assumption that
the Prussian state tends to establish illicit activities to prepare the War of
Liberation is therefore essential. Due to Lawrence’s theory of measures dealing
with absence of trade, illicit trade could be detected in Prussia. 29 The stringent
conditions30 Prussia had to except prevent a sound and efficient preparation only
based on licit measures. The thesis will therefore analyze the four spheres of
Goodhand’s framework in Prussia’s economy by discussing the following
research questions:
In terms of the cope economy referring to the main population that is affected
by war this thesis will focus on how did the Prussian state integrate the
population in the economic strategy and to which extent this economic strategy
was implemented actively or rather based on opportunism. By analyzing
contemporary letters and documents combined with a review of the current
research, these questions will be analyzed. The interdependence of politics,
economy and social challenges detected by Olson emphasizes the importance of
this relationship.
The shadow economy relating to the part of the economic sphere that is rather
illicit or illegitimate will be attended by how the continental system affected the
Prussian economy and to what extent this created new and illicit strategies. This
directly is based on Lawrence’s assumptions and will be analyzed by extracting
data on maritime trade in the Baltic Sea from the Soundtoll Register database.31
The war economic sector considers the financial aspects of the Prussian state.
It will therefore be analyzed discussing the questions how Prussia tried to
29
30
31
Lawrence, War Economics, p.518.
The conditions of Napoleon towards Prussia will be introduced in detail later on (2 Historical
Background).
Soundtoll Registers Online. (http://www.soundtoll.nl/index.php/en/welkom).
Page | 5
strengthen the state’s finances and did Prussia run into a crowding out effect. The
research results for crowding out in Great Britain by Mokyr and Clark in the
Industrial Revolution 32 will be taken as a reflection for the circumstances in
Prussia within these years.
Finally there will be a look at the emotional economy facing the question how
Prussia tried to integrate the whole population and created a national spirit all
over the country. For this different approaches will be presented and discussed by
statements of the population during the preparations for the War of Liberation.
Moreover a call of the Princesses of Prussia will be analyzed relating to the
creation of national spirit. A discussion and a conclusion will follow these
paragraphs giving an overview of the results and further research challenges.
1.3 Sources, Method and Data
The thesis relies on three different types of sources. Besides findings of previous
research on the early 19th century, edited letters from public officers to the King
and between them and data of the Soundtoll Registers will be used. Depending on
the respective chapter these different sources will be conducted simultaneously.
The positions of previous research will therefore be confronted with each other
and furthermore challenged by historical statements of public officers as well as
controlled by data of the Soundtoll Registers. The combination of these three
sources guarantees a discussion of the research questions that considers also the
historical view of Prussian officials and bequeathed data of these years. By this,
current research gets reflected on the basis of central historical documents. At the
same time research that is rather based on Prussia’s history gets confronted with
economic theories and concepts regarding investments and markets. Two different
scientific fields will thus get combined and analyzed by different types of sources.
The validity of concepts that analyze England’s situation in the Industrialization
will be challenged by trying to adopt them to Prussia. Consequently an
interdisciplinary approach that is also suggested by Koubi gets implemented. 33
Lead by the framework of Goodhand this ensures a widespread foundation
focusing on different aspects of wartime strategies.
32
33
For research on effects of the Industrialization on England, confirm: Mokyr, Industrial
Revolution; Heim/ Mirowski, Interest Rate; Clark, England 1727 1840.
Koubi, Economic Performance, p.67.
Page | 6
The fundamental changes that happened within these days in political
systems, economy and sense of justice embody the conventions of the modern
times. The upcoming democratic movement with its convictions of equality and
economic comprehension characterize whole continents. Accordingly, these
massive changes in the social and economic world caused a lot of interest.
Especially the progress of this shift has caused multitude of research.34 Koselleck
published in 1967 a scientific work covering important information about changes
and processes from 1807 to 1850 and embodies thus the core research up to the
1970s. Discussing the importance of the reformers Stein and Hardenberg this
work got a broad agreement in the research. Koselleck’s argumentation that the
reforms are based on pioneering ideas of public officers establishes the fundament
of the classic view. However, since the 1970s this view of the developments
including the predominant role of reformers in the economic progress throughout
the 19th century in Prussia was questioned.35
In consequence Kopsidis argues particularly economic upswing throughout
the 19th century to be no result of reforms, but a consequence of the economic
developments starting already in the 1790s that lead to increased market
integration. 36 Hence the focus was shifted from innovative officers to market
integration processes pushing the reformers in a rather reacting role. Focusing on
economic issues in general the works of Heinrich,37 Büsch and Neugebauer38 are
the most central ones taking care of economics and finances in Prussia. However,
Treue argues that these works are not very detailed to economic history and rather
focusing on the states and reforms.39 Accordingly, a complete work on economic
history has first been published in 1984 by Treue.40 Together with Vogel41 and to
some extent Clark 42 these are the main research publications discussing of
economic history in Prussia. Vogel deals especially with the years from 1807 to
34
35
36
37
38
39
40
41
42
Cf. i.a. Koselleck (1967), Clark, C. (2006) which rather focusing on the reforms in Germany
and their effects; Möller (2000), Kreutzmann (2011) concentrating on the social tension
during this period.
I.a.: Sperber, Civil Society; Oberhaus, Review of Koselleck.
Kopsidis, Entwicklungsökonomie, p.19. Kopsidis, Der westfälische Agrarmarkt, p.194. This
study was based on the work of Fremdling/ Hohorst which concentrated on the years from
1821 onwards (cf. Fremdling/ Hohorst, Marktintegration).
Cf. Heinrich, Geschichte Preußens.
Büsch/ Neugebauer, Moderne Preußische Geschichte.
Treue, Wirtschaftsgeschichte, p.V.
Cf. Treue, Wirtschaftsgeschichte.
Cf. Vogel, Allgemeine Gewerbefreiheit.
Cf. Clark, Iron Kingdom.
Page | 7
1822 highlighting the relation of the reforms by Stein and Hardenberg and
resulting economic effects.
The research on economic warfare in the present got consistently more
important. Focusing on current conflicts in Afghanistan 43 , big European and
World Wars44 or economic circumstances in African countries45, the focus is rather
on modern wars. Naturally, the role of the economy in wars rose in the past, since
the influence of international trade and economy increased. A research paper
directly addressing strategies of Prussia in these years does not exist yet. The
theoretical implications of previous research will be discussed in each of the
chapters following the structure of the Goodhand framework. As several different
theories are introduced, this approach supports the comprehensibility of the line of
arguments.
However, a similar situation occurs in the availability of data for this time.
Conditions comparable to the English one can by far not be presented. Though the
statistical office of Prussia was founded in 1805 by Stein46, there are no sound data
available on which a statistical analysis could be based. Data that was collected
within these years cannot be compared to standards of modern data. As it was
provided for the ruler to control the country and effect of his measures, most data
was gained for this purpose.47 Ergo the data might be biased and thus not capable
for a detailed research. Additionally, the territories of Prussia changed between
1805 and 1807 and again in 1813 dramatically. 48 This, in combination with
devastating wars (1806, 1813-1815), affects the quality of data so that most of the
general data for Prussia is not reliable. Consequently the data of Mützell49 (1825)
provides some details from 1810 to 1816, but is due to missing standards hardly
reliable. Working with information written to the King in letters is, contrarily, less
unpredictable and directions of tendency can be determined. This Thesis, thus,
will concentrate on working with edited letters of public officers to the King and
between each other.
43
44
45
46
47
48
49
Cf. Goodhand, War Economy.
Cf. Førland, Economic Warfare.
I.a. Allen, Warfare in Africa.
Fenske, Reformer und Moralist, p.30.
Posniak/ Rahlwes, Topographisch-statistische Beschreibung, p.173.
Cf. Appendix 1: Map of Prussia in 1805 and losses 1807.
Mützell, topographisch-statistisch-geographisches Wörterbuch.
Page | 8
Besides this, data to analyze the shadow economy have been extracted from
the Soundtoll Registers
50
database. This offers the opportunity to get an
impression of maritime trade passing the Sound51 and by this of how solid the
continental system was. For the following analysis hence data especially on
respective ports in the Baltic area have been extracted. Based on these information
trading connections between England and Baltic harbors will be compared. This
procedure could help to detect possible smuggle on these routes. Ascribable to the
limitations of the database, however, it is not possible to compare cargo of ships
within this period.52 In consequence, the numbers of ships calling the ports will be
analyzed.
50
51
52
Soundtoll Registers Online (STRO: http://www.soundtoll.nl/index.php/en/welkom).
The Sound is a waterway between Denmark and Sweden (Swedish: Öresund).
Cf. Veleuwenkamp, Sound Toll Registers.
Page | 9
2 Historical Background
To get a better impression of the time period the thesis is based on, it is important
to be aware Prussia’s situation at the turn of the 19th century. The Prussian state
as it existed in the late 18th century had a long tradition from the Late Middle
Ages onwards. 53 In 1701, when Prussia became a kingdom, the House of
Hohenzollern ruled the country for generations. Settled in Königsberg54 the state
reached to the east parts of Germany and the region around Berlin, covering the
district at the Baltic Sea.55 Throughout the centuries this territory was extended so
that Prussia reached the largest pre-Napoleonic extension in 1805. The success of
this development let Prussia become one of the most influencing sates in the early
19th century. With a population size in 1806 of 10.7mio56 Prussia was one of the
continental Great Powers.
In political and social aspects Prussia was characterized by the long time
regency of Frederick the Great (1740-1786). 57 He kept his regency in close
relation to France and the regency of the former French king Louis XIV (16431715). By only speaking French and ruling Prussia as an absolutistic king he
succeeded in extending the territories in wars and accumulated an exchequer of
more than 50mio Rtlr. which was nearly double the size of the annual budget of
Prussia in 1813.58
Accordingly, at his death, Prussia was settled on a solid financial basis.
Recognizing that the times are about to change, the population hoped for new
innovation and reforms. This hope, however, did not come true in the regency of
Frederick William II. He, compared to his father, was by far not that successful in
leading Prussia. In his regency Prussia failed to industrialize, as old machines
from England were bought.59 These machines turned out not to be more efficient
than the classical way of producing and had not only high prices, but also
53
54
55
56
57
58
59
The complete history of Prussia from the Late Middle Ages onwards will not be discussed in
this thesis. It shall just be recognized that Prussia in 1701 was based upon the Duchy of
Prussia and the Margraviate of Brandenburg. Cf. i.a. Appendix 1, Map of Prussia in 1805
and losses 1807.
“Königsberg” is the Prussian name for Kaliningrad in the Russian Federation today. In
general, this thesis will use the historical Prussian names, to guarantee comparability to
letters and extracted data.
Cf. Appendix 1: Map of Prussia in 1805 and losses 1807.
Schremmer, Steuern und Staatsfinanzen, p.119.
Treue, Wirtschaftsgeschichte, p.157.
Treue, Wirtschaftsgeschichte, p.158.
Treue, Wirtschaftsgeschichte, p.195.
Page | 10
tremendous maintenance costs. His regency, including decadency and
misspending, generated huge losses in the exchequer. This is the situation in
which Frederick William III. took over the kingdom in 1797 and these
circumstances were commented by the Prussian Queen Louise: “Prussia has fallen
asleep on the laurels of Frederick the Great.”60
The spirit of the French Revolution already spread over Europe and Napoleon
started his political offensive reaching only two years later the position as the first
consul of the French Republic and started to reach for the French expansion all
over Europe.61 Prussia was as a rather agricultural state in the early steps of textile
industry less interesting for Napoleon, but was at the same time the only buffer
between France and Russia.
Aware of this position, Prussia agreed with France on neutrality in upcoming
rivalries between France and opponent countries.
62
Napoleon, however,
undermined the neutrality several times and thus forced Prussia to make a
decision. In August 1806 Prussia joined the alliance of Russia, Austria and
Britain 63 against France, not without setting a final deadline to France for
respecting the Prussian neutrality in September 1806.64
After the deadline passed without any reaction, Prussia declared war against
France on October 9th 1806. Napoleon reacted with turning his whole military
power against Prussia. After being defeated in the Battle of Trafalgar (1805),
Napoleon was turned from trying to capture England and focused on Austria and
Russia. In consequence, the whole power of Napoleon’s soldiers could now turn
against Prussia. With a military that rather consist out of foreign soldiers 65
Prussia’s population did not suffer, but the military force lacked in resistance
militancy. Hence the French military overwhelmed the Prussian army. Five days
after the declaration of war the Battle of Jena and Auerstedt set a final point.
Prussia had to accept tremendous defeats against the superiority of the French
60
61
62
63
64
65
Adami, Schicksalswende Preußen, p.1.
Menant, Napoléon, passim.
Clark, Iron Kingdom, p.292.
Clark, Iron Kingdom, p.306.
Fenske, Reformer und Moralist, p.33.
Since Frederick the Great the Prussian military enjoyed an excellent reputation. Thus, foreign
soldiers applied to fight there (Liedmeyer, Arbeit und Arbeitsmoral, p.9).
Page | 11
Empire. As a result Prussia capitulated only two weeks later on October the 27th
whereas Napoleon occupied Berlin.66
The terms of the capitulation were devastating for Prussia. In the Treaty of
Tilsit in July 1807 the conditions of the Prussian capitulation were fixed. Prussia
lost more than 50% of the territories from 1805.67 Moreover, the military strength
was limited to 42,000 soldiers. Prussia had to help France with 12,000 soldiers
against Russia. The continental system68 that was introduced by Napoleon to fight
economically against Britain is extended to Prussia, so that trade with England
was prohibited. Above all Napoleon set up contribution demands of 140mio
Frcs. 69 that correspond to about 37mio Rtlr. and thus as Koselleck figures out
equals the highest annual income of the Prussian state in the borders before 1806
and one third more than the annual budget of 1813.70
These conditions in combination with over 50% inhabitants less as a result of
loss of territories Prussia was set back to the core of existing. Moreover, without
Tsar Alexander I. insisting on the existence of Prussia as a buffer state between
France and Russia, Clark points out, the Prussian kingdom would have come to an
end. 71 In this situation the Prussian officer Baron vom Stein declares that “the
revitalization of the economy might be the best way to get out of national debt.”72
This means, under French restrictions Prussia started to rebuild the state and
economy.
66
67
68
69
70
71
72
Fenske, Reformer und Moralist, p.35.
Appendix 1: Map of Prussia in 1805 and losses 1807.
Cf. Remark 5.
The height of contribution varies in respective sources. The amount of money is also
readjusted during the years by diplomatic hearings. Therefore it fluctuates between 101mio
and 152mio Frcs. For this thesis, however, the discussion about the height of contribution is
not important. It should just be recognized that these high demands affected the Prussian
economy highly. Cf. Treue, Wirtschaftsgeschichte, pp.225-282.
Koselleck, Reform und Revolution, p.167.
Clark, Iron Kingdom, p.309.
Fenske, Reformer und Moralist, p.30.
Page | 12
3 The Cope Economy
3.1 Living Conditions in Prussia
The sphere of the cope economy as presented by Goodhand contains the
population of the state that is affected by war trying to cope or to survive these
circumstances. 73 Cope economical circumstances are characterized by being
forced to low-risk activities in the agriculture including an erosion of assets that
are usually gathered. Moreover, migration of labor occurs based on the
subsistence of agricultural production that is also affected by low trade. A solution
for these living and working conditions would be generated in peace. Prussia
develops within these years new economic strategies to fight back the French
occupation. As formulated in the first chapter, this section aims at analyzing and
discussing how Prussia supported and integrated the population to these strategic
measures and to which extent this process was self-determined.
Suffering under the conditions of the Treatment of Tilsit including trading
restrictions to England, one of Prussia’s most important export partners in
agriculture, the economic stability, started to disappear. Jacobus and Richter
detect the absence of export trade as the major reason for Prussia’s beginning
crises. 74 As a result of missing export, prices for food and in particular grain
decrease and make farmers selling their products even below base price.
Especially peasants75 that work at the edge of unproductiveness at any time are
struggling with this situation running into huge problems. Consequently, they
earned less money for their products than actually has been invested in the
agricultural production before. Thus inefficiency aggravates the basis of Prussia’s
economy. This effect was even sharpened in 1809 and 1810. Jacobus and Richter
detect that good harvest in these years put additional pressure on prices.76 These
massive impacts started spreading out to the whole country. In contrast to the
ineffectiveness of agriculture, prices for imported goods rose strongly. Investing
in machines from England for the industrial sector or even receiving raw materials
73
74
75
76
Following paragraph: Goodhand, War Economy, p.3.
Jacobus/ Richter, Großhandelspreise, p.33.
There exist several different words for the German word “Bauer” in the English language to
express different rights embodied by the rural population throughout these years: There will
thus be different words chosen. Before the abolition of serfdom they will be specified as
“peasant” (erbuntertänig), After the reforms they will be called “farmers“ (freie Bauern) to
express the difference.
Jacobus/ Richter, Großhandelspreise, p.33.
Page | 13
from abroad got extremely cost extensive. Supported by Otto finding that 75% of
the new born children in Berlin died within this period77 the basic elements of a
cope economy can clearly be detected in Prussia.78 Napoleon’s main objective to
not let Prussia get back to old strength79 hence definitely made an impact.
To improve this situation, however, Prussia had to reflect the circumstances
and develop strategies to improve the population’s situation. Being aware of the
dependency on agriculture for the economic well-being and the fact that this was
determined through wealth and success of the rural system, Prussia was reliant on
people working in the agricultural sector. In Prussia the living conditions of the
rural population were mainly determined by the feudal system. This means, a
system of privileged landlords and unprivileged peasants took care of the
agricultural production. 80 In consequence it is reasonable to assume that by
supporting this sector the well-being and thus the economic power of Prussia
would increase again.
3.2 The Revolution From Above81
Strengthening the agricultural sector means to support different social estates82 in
specific ways. The idea of a revolution from above was generated. Introduced as a
scientific term by Stürmer this concept embodies a carefully modification of the
existing laws by the state. Prussia tried to stabilize the country through reforms
liberating certain parts of the status quo. This step should ensure Prussia not to run
into the danger of a revolution. The absolutistic King tried to restructure and
liberate the circumstances by keeping control. The reforms took place in different
77
78
79
80
81
82
Otto, Befreiungskriege, p.23.
Goodhand, War Economy, p.3, relating to Pain/ Goodhand, Afghanistan, p.2.
Napoleon pointed out that “the contributions and restrictions against Prussia are to keep
Prussia under war conditions.” He has done “so bad things to Prussia” that he “cannot hope
for forgiveness and thus has to avoid Prussia getting back to power” (Cf. Herre, Stein – Sein
Leben, p.190, own translation).
Prussia was in these years no state in which the relation between landlords and peasants was
strictly standardized. Working conditions were highly dependent on the region.
This term was introduced by Stürmer (1975) characterizing changes within Prussia that were
not led by the population raising their voice, but public officers. (Cf. Stürmer,
Kontinuitätsproblem).
The Prussian society was divided into different categories. These social estates contained
different rights and duties. Every social estate had separated career paths. The privileged
nobility was working for the state’s needs in the military and as public officers. Peasants, in
contrast, had almost no rights and worked on farms. This strict system gets opened through
the upcoming reforms. However, an overall treatment of the whole population was therefore
not possible.
Page | 14
sectors of the Prussian state. With the main objective to establish a solid and
wealthy population83 reforms were introduced by Baron vom Stein and Prince von
Hardenberg between 1807 and 1815.
The abolishment of serfdom in Prussia was one of the most important steps in
these reforms and is done in different restructuring edicts in the years 180784, 1811
and 1816. As a result the peasants were able to get independent from their
landlords. In exchange for independence the new farmers85 had to convey a certain
amount of land to the former landlords as compensation for the loss. This means,
the independence of the peasants was no gift. It was, as Thiede argues, a very
expensive achievement for them. 86 The peasants not just had to buy the land, but
also to hand over a certain part of it as compensation. Especially for smaller farms
reaching independence was, thus, nearly impossible. Thiede consequently points
out that this effect is rather small in the changes.87 The abolishment of serfdom
was especially regulated and extended in the Regulation Edict (1811). As Baron
vom Stein highlights in letters the reformed state should be settled on a new
agricultural basis 88, after the rural population improved their situation. Besides
this, to be best prepared for the renewal further measures are targeting on other
social estates.
A further measure aims consequently at the propertied social ranks. This
means citizen of the middle class and nobility were in the focus of additional
reforms. By levying and rising taxes as well as allowing honorary work for nonnoble civilians, Prussia started to integrate the broad population into the
recovering process. In combination with the abolishment of serfdom it is obvious
that independent rural population assisted this reforming approach. By having
independent farmers that work self-governed on their land, Prussia gets the
possibility to tax not only the nobility and urban population, but also farmers.
83
84
85
86
87
88
Thiede, Stein – Ausgewählte Schriften, p.58.
Prussia did not abolish serfdom at once, but had different steps in 1807, 1811 and 1816 to
totally free peasants. To not losing focus of the research questions the edict of 1807 should be
merely discussed in this paragraph, as the deadline for the abolishment of serfdom
(martinmas 1810) is set here. This was the first step to change the economic circumstances in
Prussia and thus the impulse for upcoming developments. (Cf. Appendix 3: The Prussian
Reform Edict of October 9, 1807, 12.). Though this deadline could not be met it states the
tendency of the reforms. The abolishment took two further steps (1811, 1816) to be set up
regulatory frameworks between farmers (Cf. Clark, Iron Kingdom, pp.331-334).
The word “farmer” is used for peasants that got independent from his landlord.
Thiede, Stein – Ausgewählte Schriften, p.67.
Thiede, Stein – Ausgewählte Schriften, p.67.
Otto, Befreiungskriege, p.28; Thiede, Stein – Ausgewählte Schriften, p.90.
Page | 15
This, interestingly, goes along with suggestions in a scientific work of Wagner
(1805) stating that every active civic should contribute to national income by
paying taxes.89
To take care of the rural population that cannot afford independence from
their landlords and thus had to sell land, Prince von Hardenberg released the edict
of economic freedom in the end of October of 1810.90 Starting in November 1810
former peasants, who did not work on farms anymore due to the expensive
independence, got new opportunities of working. The strict working order of the
social estates was opened creating the possibility to work also in the industrial
sector. At the same time economic freedom and the resulting independence of
craftsmen from guilds91 opened the urban economic system for the people that had
to leave the farms. Moreover, economic freedom assured a competitive structure
within the Prussian economy. Additionally, the missing monopolistic structure
pushed growing companies into a competition among each other. Treue in
particular identifies former peasants coming into cities serving cheap labor for
growing enterprises. 92 This clearly indicates the leading role and pioneering
thoughts of reformers taking care of the aspects of cope economy by Goodhand.
The framework directly identifies labor migration as a factor. 93 This can, as
demonstrated, also be figured out in Prussia.
However, the motivation for these reforms is highly discussed. According to
reasons stated in the very edicts94, the former research and in particular Koselleck
was certain of the reformer’s leading role in these edicts.95 Convinced by letters by
Baron vom Stein in which he points out that economic power can be merely
regained in strengthening and reforming the social system to create “functional
estates”96, the impulse for these reforms seem to come from the inner belief of a
new spirited officialdom. Additionally Vogel stresses the importance of
89
90
91
92
93
94
95
96
Wagner, Staatswissenschaft, p.168.
Cf. Appendix 4: The Prussian Finance Edict (October 27th, 1810).
The guild system dictated not only where craftsmen had to work, but also the competitive
structure of the market. Guilds had monopolistic power in their areas and thus competition
did not exist. The recruitment was based on children of members so that it was nearly
impossible to join from the outside.
Treue, Wirtschaftsgeschichte, p.254.
Goodhand, War Economy, p.4.
Cf. Appendix 3: The Prussian Reform Edict of October 9, 1807, preface.
Koselleck, Reform und Revolution, pp.174, 182.
Fenske, Reformer und Moralist, p.41.
Page | 16
individuals and in particular of Prince of Hardenberg.97 Fighting for the necessity
of social reforms and by this the independence and equality of the population
especially Stein and Hardenberg are seen as the core of these developments.
In combination with their conviction in the doctrine of Adams Smith’s
Wealth of Nations Thiede argues the changes in Prussia are pushed by the proactive group of reformers taking the chance to transform the Malthusian society
controlled by a feudal system into a modern Smithian country.
98
This
argumentation is strengthened by Treue pointing out the fact that the reformers
Hardenberg and Stein made several journeys to England and studied Smith’s
theories.99 Moreover the plan of Baron vom Stein in 1805 to establish a parliament
into the state that consists of a House of Lords100 supports this impression and is
according to Thiede a major evidence to the influences. As a result, until the
1970s the research draws a picture that was determined by the great minds of
reformers introducing a pro-active revolution from above.
There are, however, some aspects that are doubtful in this theory of the great
men changing the whole country based just on their own ideas. In the late 1970s
and 1980s the criticism on this view rose consistently. 101 Less caught in the
glorification of reformers including their pioneering ideas and the involved rising
of the national feeling the reformer’s key role get reconsidered. An alternative
approach to explain these developments is introduced in the 90s by Kopsidis. The
reforms are, hence, not anymore in close relation to the Smithian spirit, but are
created due to developments of upcoming market integration that begun in the late
18th century already.102 Although this progress was affected by Smith, reformers
were not actively integrating Smith’s ideas in Prussia. This is highly important for
the question how self-determined Prussia integrated the population into their
economic plans. In case market integration would have major influence on this
integration, Prussia rather reacted to this than acted upon innovative plans.
97
98
99
100
101
102
Vogel, Allgemeine Gewerbefreiheit, p.13.
Thiede, Stein – Ausgewählte Schriften, p.50
Treue, Wirtschaftsgeschichte, pp.267, 270-272; Thiede, Stein – Ausgewählte Schriften, p.50;
Botzenhart, Freiherr vom Stein, p.136.
Thiede, Stein – Ausgewählte Schriften, p.93.
Kopsidis, Agrarentwicklung, p.363.
Kopsidis, Entwicklungsökonomie, P.19.
Page | 17
3.3 Negative Policy Integration and Market Dynamics
Kopsidis identifies that market integration in the 1780s had a major impact on the
developments during the Napoleonic times on Prussia.103 Consequently the impact
of the Prussian reforms is estimated to be rather low. In the work on agricultural
markets in Westphalia Kopsidis therefore focuses on market integration processes
and compares the development of different grain prices within the Prussian
territories throughout the years. The results show that market integration as a
process started already at the end of the 18th century to a certain extent and was
running to1880.104 On the basis of correlation coefficients for cities in Westphalia
and Berlin Kopsidis concludes that high correlation among price levels in the
western part can be calculated for the period from 1784 to 1819. 105 In
consequence, market integration within the agricultural sector can be detected
even in the late 18th century in west-Elbian106 parts of Prussia. In contrast to the
western territories of the former Prussian state, however, the price level of this
area compared to Berlin does not show market integration at all until 1819.107 For
east-Elbian territories this would nevertheless be rather surprising. Big parts of the
eastern territories did not belong to Prussia until 1803.
108
An economic
consistency can obviously not be expected in these times.
The market integration Kopsidis detects is, naturally, on a different level than
today. The results show that the whole process is rather divided into two market
integration phases. 109 According to this, the first phase of market integration
contains the beginning expansion of food markets into superregional markets, as it
now gets possible to supply food to other countries. Dependency on more
international influences in trade comes along with this step of market integration.
The price, in contrast, is still mainly determined by regional harvests in the
agricultural sector though international interests start to have impact on food
markets. This step of market integration could also be supported by the
government in the abolishment of internal tariffs in case of missing technological
103
104
105
106
107
108
109
Zimmermann, Ländliche Gesellschaft, p.143.
Kopsidis, Entwicklungsökonomie, p.19; Kopsidis, Der westfälische Agrarmarkt, p.194;
Fremdling/ Hohorst, Marktintegration.
Kopsidis, Der westfälische Agrarmarkt, p.176.
The terms west-Elbian and east-Elbian relate to the river ‘Elbe’ and divide Prussia by this
geographically.
Kopsidis, Der westfälische Agrarmarkt, p.176.
Cf. Appendix 1: Map of Prussia in 1805 and losses 1807.
Kopsisdis, Der westfälische Agrarmarkt, p.194.
Page | 18
progress to keep transporting costs down. 110 According to Kopsidis, negative
policy integration methods could be used to reinforce the overall situation.
For Westphalia this situation seems to be quite plausible as a rather small and
connected region. Moreover, the missing correlation between Berlin and
Westphalia does not surprise, since at least in the years from 1806 to 1813 the
Westphalian cities did not belong to Prussia anymore. However, the continental
system put a high pressure especially on east-Elbian parts of Prussia so that prices
develop completely different from other parts of the European continent. 111
Nevertheless it is necessary to check for indications of early steps of market
integration in the Prussian state in 1807.
The detection of evidences for such relations also in east-Elbian territories
would support the theory of a reacting officialdom dependent on dynamics in the
population that already took place. In order to get an impression of how Prussia
integrated the population into the economic recovery the detection of such hints is
essential. Berlin, in contrast to the Westphalian territories, still belongs to the
Prussian state. Although Frederick William III. highlighted the industrialized
Prussian kingdom in his speech of 1813 the city was far away from being
industrialized in these years.112 After unsuccessful attempts of establishing steam
machines in upcoming manufactories in Berlin at the end of the 18th century113 not
only the city but also Prussia stayed mainly unindustrialized to 1812 when the
government tried again to introduce machines for production. Accordingly,
merely concentrated on the agricultural sector, the state was highly reliant on
harvests to guarantee the population’s health. Though the Industrial Revolution
does not have such extensive effects in Prussia in 1806, Jacobus and Wagner
show that the continental system had extreme influences on the well-being of
Prussian farmers. 114 Having England as the most important trading partner
especially for agricultural products, the agricultural sector was dependent on the
developments in international trade. A consistent trade determines together with
agricultural production the wealth of Prussia. By this, international trade affects
110
111
112
113
114
The last paragraph: Cf. Kopsidis, Der westfälische Agrarmarkt, p.195.
The restrictions on export trade to England had a negative impact on the prices pushing them
below base price (Cf. 3 The Cope Economy, p.9).
Appendix 5: To my people.
Treue, Wirtschaftsgeschichte, p.195.
Jacobus/ Richter, Großhandelspreise, p.31.
Page | 19
food prices and has a major impact on the wealth of the producing peasants.115 In
accordance with internal tariffs that still existed, there are some indications of
Prussia already being in the status of a country with market integration. 116
Methods of negative policy integration 117 can therefore be observed not only
towards national and international trade, but also in social reforms as deregulation
methods towards the population.
It seems, additionally, to be rather suspecting that Smithian theories get
introduced on purpose of a few public officers that are convinced by the Wealth of
Nations. Though Thiede argues that public officers read Adam Smith and
travelled to England 118 their motivation for the reforms stays rather unclear.
Working in the Prussian officialdom was reserved for the nobility. Enjoying not
only privileges of social estates in private life, but also benefiting in their career
the reformers would act against themselves. Liedmeyer particularly shows
conflicts raised by these reforms in the working life.119 This means, even if the
opening of career paths and strengthening of the rural population is lead by public
officers the intention to abolish the social estates seems to be not plausible. Even
Stein and Hardenberg, though seen as pioneers by the older research, enjoyed
their privileges as noblemen. And, although the economic pressure on Prussia was
extremely high, the state was based on the nobility ever since. Disappointing the
mighty nobility in radical reforms could raise more pressure than it would help to
avoid.120
This walk on a tightrope not to run into resistance of the nobility, the pillar of
the population and economy in Prussia, does unlikely seem to be an act on
impulse. In the contrary, it is rather reasonable to assume that in consequence to
the close trading relationships to Great Britain the reforms in the 1806 settled on a
115
116
117
118
119
120
Jacobus/ Richter, Großhandelspreise, p.33.
Internal tariffs were completely deregulated in 1816. First attempts to abolish these tariffs
made Stein already in 1805 (cf. Botzenhart, Freiherr vom Stein, pp.113–116).
Kopsidis, Der westfälische Agrarmarkt, 164.
Thiede, Stein – Ausgewählte Schriften, p.50.
The leading public officers as Baron vom Stein, Prince von Hardenberg belonged to the
nobility of the Prussian kingdom as General von Clausewitz and Count Neidthardt von
Gneisenau. The working conditions in typical careers of the nobility and tension with
upcoming civil people is analyzed by: Liedmeyer, Arbeit und Arbeitsmoral; Kreutzmann,
Ständische Identität.
Discussing social challenges in detail Frie detects several strategies how the nobility deals
with these changes (Cf. i.a. Frie, Unglück des Adels).
Page | 20
trend that, as Kopsidis stresses, already started long time ago. 121 Also Treue
highlighting that the theories of Adam Smith were taught in the 1790s in Prussian
universities in lessons on cameralistics supports this assumption.122 Implementing
Smithian principles to help the rural population thus cannot be the main objective
of the reformers. Moreover, it can be assumed that the basic principles are well
known and influenced the economy already then.
By analyzing letters and works of Stein it can moreover be shown that these
letters did not refer to Smithian principles before the defeat in 1806. Interestingly,
in his plans of October 1805, suggesting the reorganization of Prussia he searched
for sources to finance the imminent war against Napoleon. 123 According to his
occupation as financial officer he, in November 1805, suggests the use of price
increase to gain money as well as the introduction of paper money. 124 On that
account Stein does not look like the pioneering reformer in Prussia that strives to
improve the situation of the rural population and carry them in their poverty.
Instead, in combination with guidelines for political economics suggested by
Wagner in 1805125 Stein becomes a public officer that tries to open up sources for
the state to gather money. Settling the reforms in the Prussian state on the social
dynamics from the late 18th century caused by the well-educated middle class the
reformers used early steps of market integration to implement changes.
This, naturally, does affect Prussia’s social structure and transforms the social
estates into social classes. As a result, however, this supports the theory of
progressing market integration. To which extent this is an innovative decision or
driven by the necessity of the developments in society has to be concluded
separately. In contrast to Kopsidis and Wolf arguing that these steps were not
necessary for the social development in Westphalia126, the conclusion for the eastElbian part with its strict social order has to be different. The developments of the
market integration have contributed to the social shift towards a more liberalized
society.127 Without the deregulation of the regulatory framework by the Prussian
121
122
123
124
125
126
127
Kopsidis, Entwicklungsökonomie, p.19.
Treue, Wirtschaftsgeschichte, p.217.
Cf. edited letters: Botzenhart, Freiherr vom Stein, pp.113–139.
Cf. edited letters: Botzenhart, Freiherr vom Stein, pp.128–148.
To the question who should contribute to the taxes and dues it is stated in: Wagner,
Staatswissenschaft, p.168, §804: “Every […] civil shall and can contribute that has a stake in
national wealth” (own translation).
Kopsidis/ Wolf, Agricultural Productivity, p.638.
Kopsidis/ Wolf, Agricultural Productivity, p.638.
Page | 21
state the possibility for these developments to become nation-wide is hardly
imaginable.
The reforms of Stein and Hardenberg thus have an important effect on the
developments in Prussia and are central to achieve a solid economic basis.
Nevertheless, the pro-active role of the reformers is doubtful. As a result of the
analysis of Stein’s letters from 1805, the social aspect cannot be observed in the
intent of improving the situation of Prussia. The reforms in the rural system are
rather driven on pressure of emerging market integration and social change. Vogel
concludes the reforms had a clear power-political and economic aim.128 Due to the
market integration theory it must be added to this conclusion that the role of the
reformers also for east-Elbian territories has to be seen as reactive.
Prussia tried to integrate the population into the recovery plans by dint of
several reforms. These reforms were aiming to the different social estates in
Prussia and opened the regulatory framework in society, industry and agriculture.
By this the Prussian state attended different aspects of the cope economy by
Goodhand. The reforms offered rehabilitation assistance for the peasants in the
subsistence agriculture and took care of the labor migration. Furthermore the
interdependence that was pointed out by Olson between politics, economy and
society can be detected. The innovative role and pioneering attitude of Stein and
Hardenberg remains thus disputable. The glorification of the epoch-making
reforms, however, has to be discarded.
128
Vogel, Allgemeine Gewerbefreiheit, p.135.
Page | 22
4 The shadow economy
4.1 The Concept of Illicit Trade
The negative policy integration conducted by the reformers raises the question
how these measures not only opened the society and tried to liberalize the
economy, but also created the basis for illicit activities. The reforms in Prussia
had the main objective to improve domestic circumstances and revitalize the
economy. Economic freedom and a loosened social system naturally not only
support the evolvement of legal economic strategies. Under the pressure of the
continental system that contains massive trading restrictions it is rather reasonable
to assume that merchants searched for a way to sell their products nevertheless.
According to the theory by Lawrence an increase of trade moreover can be
expected. 129 Therefore this chapter aspires to analyze and discuss how the
continental system affected Prussia’s economy and to what extent this created
new and illicit strategies.
The shadow economy, as formulated by Goodhand, focuses directly on such
developments and covers hidden economic activities within war-torn countries. In
particular the transport sector and businessmen are key actors in this part of the
economy benefitting of a weakened state and a rather liberal economic
surroundings. These circumstances then enable a basis for cross border smuggling
by importing high value commodities.130
Transferring this model to the circumstances in Prussia these elements that
encourage a developing shadow economy can be detected. The main trading
partner was England. Accordingly especially maritime trade was essential for the
economy. Consequently Hubatsch highlights that the restrictions on export trade
hit Prussia very hard.131 To improve the situation, social reforms and economic
freedom were introduced and kept in combination with starting market integration
the trade going. Moreover, these measures loosen the economic and social system
and by this weaken the role and influence of Prussia simultaneously. The key
actors of the framework thus exist in Prussia.
129
130
131
Lawrence, War Economics, p.513.
Goodhand, War Economy, p.8.
Hubatsch, Stein und England, p.42.
Page | 23
Accordingly, the conditions for the development of smuggle may have
existed and even increased in these changed circumstances. Relating to the bad
situation of Prussia’s infrastructure and remaining internal tariffs 132 smuggling
overland would be non-profitable in comparison to maritime trade. This is further
coherent as trading routes to the west are largely controlled by the French Empire.
Having the Baltic Sea as the easiest and most obvious opportunity of trading,
smuggle should have taken place there concentrated on maritime trade between
England and Prussia. As these connections were restricted by the continental
system this raises the question how effective the released continental system by
Napoleon actually was.
The continental system was inflicted to Prussia after the capitulation in 1806.
According to the absence of trade with England, the consequences of the omitted
trading income were devastating. Ergo Otto concludes that the continental system
cripples maritime trade and economy 133 tearing down existing trade with the
highest industrialized country, England. Adami moreover highlights extensive
effects on almost the whole Baltic Sea.134 It hereby can be seen that Prussia was
depended on maritime trade and starts to get huge problems. Massive impacts
especially in the agricultural sector have already been shown.
However, the continental system does not only have negative impacts on
Prussia. Instead Treue and Poßelt show that the impact of the trading restrictions
for Prussia can be reasonably divided into two major periods. The first one begins
in 1806 and end around 1810. This period is characterized by a boom in Prussian
maritime trade. Though Prussia has to join the continental system against England
Treue argues thus that the harbors are not controlled at first and thus provide an
increase in trade. 135 The closer to 1810 the more this effects vanishes and
stagnation controls the Prussian economy and trade. Poßelt supports this view and
identifies since 1810 a second period that runs until the abolishment of the
continental system in 1814 after Napoleon’s defeat. Although it can be shown that
the restrictions already lose some power around 1812 when Russia resigned from
this system136 in this period trade disrupts almost completely.
132
133
134
135
136
Treue, Wirtschaftsgeschichte, pp.209–212.
Otto, Befreiungskriege, p.31.
Adami, Schicksalswende Preußen, p.2.
Treue, Wirtschaftsgeschichte, p.243.
Poßelt, Grande Armée, p.188.
Page | 24
4.2 Maritime Trade in the Baltic Sea
To get an impression how effective the continental system was in restricting
maritime trade into the Baltic Sea different data sets have been extracted. These
data sets support the discussion on this. The effect of the trading restrictions get
even more impressive by comparing the actual ship trade in these years to the
periods before and right after the trading restrictions (cf. Figure 1).
The Soundtoll Registers list ships that passed the Sound. The database thus
supports the analysis by offering details about the number of ships entering the
Baltic Sea. These ships had to pay toll to the Danish King for passing with their
cargo. Accordingly these registers are a great possibility to control for the
influence of the continental system. Thus, Figure 1 presents the number of ships
calling several Prussian ports. The regions of Livland and Kurland are presented
also, though not belonging to Prussia, to offer a comparison to the closest
neighbor regions. By having a look at the trading progress, the impact of the
trading restrictions in the Prussian harbors is clearly observable. The evolution of
the graphs shows massive decrease in the number of ships passing the Sound
between 1806 and 1814. In fact, trade to Prussian harbors in this period definitely
had come to an end. Regardless of the ships coming in the years before 1806 to
the ports, maritime trade vanishes completely.
Maritime Trade from England to Prussia
Number of Ships (LN)
7
6
5
4
3
2
1
0
Livland
Danzig
Königsberg
Kurland
Kolberg
Figure 1: Logged Number of ships arriving to Baltic ports, 1786 - 1820
(Source: Own extractions from the STR online)137
137
Appendix 6: Absolute Numbers of Ships calling the Baltic ports.
Page | 25
Interestingly, the graphs show how fast the restrictions spread to the east of
Prussia. Kolberg that is located in the western part of Prussia suffers already in
1806 from the absence of maritime trade. The more eastern a city is located, the
later this effect occurs. Especially in comparison to the graph for Livland the
differences are remarkable. The neighbor province of the Prussian kingdom
suffers merely in the years 1808 and 1809 were only one ship reached the harbors
of the whole province. A complete absence of ships cannot be observed though.
However, in comparison to trade before 1808 the slump is still devastating.138 In
general, the years between 1808 and 1812 are characterized by a colossal decrease
in maritime trade in Prussia coming from England.139
To control the assumption of Treue and Poßelt the numbers of ships are
logged to look on percentage changes. Arguing for a boom in trade from 1806 to
1810 the graphs are expected to show a remarkable jump in the number of ships
passing the Sound. This, however, cannot be observed. The evolution of the
graphs is rather inconspicuous until the establishment of the continental system in
1806. The hypothesis that the trading blockage consists of different trading phases
for Prussia cannot be supported. The boom in Prussian ports thus has to come
from inner Baltic trade as other regions of the Baltic Sea did not act as
substitution destinations.
140
Moreover, due to internal tariffs and a bad
infrastructure overland trade there seems to be no alternative.
However, it can easily be seen that the continental system must have a major
impact on the Prussian economy. As barely ships reached Prussia’s ports, the
analyzed distress of the population that was highly reliant on export trade, does
not surprise. Moreover, the motivation to change these circumstances by the
attempt to introduce smuggling is self-evident.
Accordingly, especially Treue and Poßelt write about smuggle occurring in
1810 in Prussia’s maritime trade. 141 Despite the fact that in 1810 Napoleon
deployed the Prussian officer Heydebreck to take care of the correct execution of
the continental system it seems that smuggle has taken place. In fact, according to
138
139
140
141
Cf. Appendix 5 Absolute numbers of maritime trade.
Maritime trade coming from other countries shows the same effects. Regardless of the
direction, to or from Prussia, the impact is striking. Other possible trading routes will be
discussed later on.
Cf. Appendix 5: Absolute numbers on maritime trade.
Cf. i.a.: Poßelt, Grande Armée, p.189; Treue, Wirtschaftsgeschichte, .passim.
Page | 26
Poßelt Heydebreck is said to be the initiator of smuggle between England and
Prussia. 142 By charging extra tolls on ships that are allowed to enter Prussian
harbors or high demands on cargos from England that are imported as prize143 of
English ships144, Heydebreck gained money. Even helping Prussia financially not
only in paying contributions, but also funding military expenses to prepare the
War of Liberation Treue detects in Heydebreck the financier of the recovery
process. 145 As in this case smuggling does not harm, but help the Prussian
economy and at the same time undermines French authority it seems reasonable
that Prussia supported illicit trade. Between November 1810 and March 1813
Heydebreck’s earnings shall aggregate to 15.3mio Rtlr. According to Treue this
covered almost the whole contribution demands of these years 146 and thus
generates an important pillar for the revitalization of Prussia’s economy. Treue
even states that 25.49% of these earnings are ironically gained by reselling the
commodities to France.147
Additionally, there is some evidence on which cargo was the primary
smuggling good. In a letter, Prussian public officers planned receive deliveries of
arms from England in 1809 in Kolberg.148 Though the Soundtoll Registers allow
no analyzes of cargos in respective years, data on Kolberg shows that this plan
was not realized. With no ship from England arriving, these plans have to be taken
as rather hypothetical.
However, Heydebreck states in 1813 that illicit trade contained of deliveries
from Denmark and Russia. As this definitely can be observed in the Soundtoll
Registers this will be controlled. In addition to written documents the Soundtoll
Register not only helps to figure out how big the effect of smuggling was, but also
give an idea of smuggling routes existing in these years. The fact that smuggling
might have existed in Prussian harbors is to some extend astonishing. As already
shown in Figure 1 there were almost no ships calling at Prussian ports. According
142
143
144
145
146
147
148
Poßelt, Grande Armée, p.189.
A prize describes goods and commodities captured in violation between ships (Oxford
Dictionaries (2014), s.v. “prize”). Naval warfare was thus the explanation to ship goods from
England to Baltic ports.
Poßelt, Grande Armée, p.190.
Treue, Wirtschaftsgeschichte, pp.243, 245.
Treue, Wirtschaftsgeschichte, p.233.
Treue, Wirtschaftsgeschichte, p.236.
Public officer Hardenberg and General Gneisenau planned to import weapons from England
(cf. Förster/ Gudzent, Gneisenau, p.142).
Page | 27
to Heydebreck’s statement, however, Prussian ports are not essential for
smuggling. The illicit trade was rather organized in clearance with Russian and
Danish harbors. However, the assumption that smuggle is rerouted to foreign
ports can be observed by detecting conspicuities compared to Danish and Russian
ports.
Maritime Trade from England to
Denmark and Russia
129
Number of Ships
140
120
100
80
60
40
20
9
11
0
2 2
1 4
1 1
1
7
1808
1809
1810
1811
1812
1813
0
Denmark
Russia
Figure 2: Number of ships from England arriving to Danish and Russian ports, 1808 – 1813
(Source: Own extractions from the STR online)
By taking a look on Figure 2 it gets clear that there is no remarkable
difference to Prussian harbors. The impact of the continental system is disastrous
on incoming trade from England as well. The numbers for Denmark do not
support the assumption formulated. Only a few ships call the harbors of Prussia in
this period. Russia, in contrast, shows a small peak in number of ships calling the
ports. Especially in 1813 many ships arrived. As Treue detected that the
occurrence of smuggle is limited in between November 1810 and March 1813149,
naturally, not all of the ships arriving can be taken into account. Due to seasonal
climatic changes it might be possible that the Baltic Sea was not navigable for
ships. In this case, only the years 1811 and 1812 would be merely important for
maritime trade (Table 1). By controlling for trade in 1810 and 1813 it can be
149
Treue, Wirtschaftsgeschichte, p.234.
Page | 28
Table 1: Numbers of Ships arriving from England to
Russian and Danish ports, 1810 and 1813 by month
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
1813
Russia
Denmark
1810
Russia
Denmark
0
0
0
0
0
0
1
0
0
0
83
5
45
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
0
0
0
1
0
0
0
0
0
1
0
0
0
0
1
0
0
Source: Own extraction from the STR online
shown that trade into the Baltic Sea to harbors of Russia and Denmark was rather
marginal. Accordingly, smuggle consists at most out of the ships in 1811 and
1812 plus one ship to Denmark in November 1810. This means 15 ships calling
Russian and Danish harbors should produce about 11.4mio 150 Rtlr. of toll for
smuggling commodities to Prussia. This amount seems to be extremely high to be
just generated by these ships’ smuggling goods. Also by considering ships that
directly call Prussian ports from England this would add four ships. It is hardly
imaginable that these few ships could produce about 11.4mio Rtlr. This means,
smuggle in maritime trade cannot be observed with regard to the information
given by Heydebreck. Even if every ship would carry smuggled cargos it seems
unrealistic to earn so much money.
4.3 Sweden as Intermediary
However, interesting evidences on trading routes are presented by the itinerary of
General Gneisenau. On his journey to England he does neither take the direct way
to England by ship nor travels through Denmark. He rather travels according to
the routes of Heydebreck at first to Russia, but also stops in Stockholm.151 Due to
this, Sweden might play an essential role as a connection to England. Sweden that
is not bound in the continental system offers possibilities to ship cargos between
Great Britain and the Baltic Sea. As inner Baltic trade cannot be observed by the
Soundtoll Registers, outgoing cargos from Sweden to Russia stay hidden.
However, by having a look at maritime trade to Sweden and Finland the evolution
150
151
The total tax income by smuggle is said to be 15.3mio Rtlr. Consisting of 3.9mio Rtlr.
Trading income to France this can obviously not be taken as income of maritime smuggling.
Thus, 11.4mio Rtlr. are earned by illicit trade over Denmark and Russia.
Förster/ Gudzent, Gneisenau, p.29.
Page | 29
350
300
250
200
150
100
50
0
216
242
1750
1754
1758
1762
1766
1770
1774
1778
1782
1786
1790
1794
1798
1802
1806
1811
1815
1819
1823
1827
1831
1835
1839
1843
1847
Number of Ships
Martitime Trade from England to Sweden/Finland
Figure 3: The progress of maritime trade from England to Sweden/ Finland, 1750 – 1850 (Source:
Own extractions from the STR online)152
of the graph is comparable to other areas in the Baltic Sea. Interestingly, in 1810
the numbers of ship jumps from only 2 ships arriving in 1809 to 52 in 1810.
Though none of the ships in 1810 calling Swedish and Finish ports can contribute
to the discussed months, the arrivals in 1811 and 1812 show that Swedish ports
still have relatively high trade with England. 43 ships arrived in 1811 and 1812
Swedish ports after departing in England. Furthermore it is striking that at the
beginning and the end of the continental system the number of ships calling these
ports peak. In 1806 216 ships reached Swedish and Finish ports and in 1815 even
242 ships. This high level is firstly reached in the 1840s again. Although the
values in 1806 might be explained by ships affected of the continental system and
thus switch to Scandinavian ports, there are conspicuities occurring. Especially
the temporary peaks during the time of intact trading restrictions in 1810 with 52
ships arriving and 36 ships in 1812 could be an indication for smuggling. These
results support furthermore the hypothesis of Kock arguing that maritime trade in
these years was mainly between Swedish and English ports. In particular
Gothenburg, Malmö and Ystad were the main harbors in this maritime trade. 153
Though the Registers do not support this hypothesis (cf. Figure 4) this is primarily
caused by limitations of the database. Ships going to Göteborg or Malmö do not
pass the Sound and thus are not registered in the data. Moreover Kock states that
foreign ships sailed under Swedish color to be able to trade with England.
152
153
Finland being contained in this graph does not falsify the statistics. Finland does not show
high numbers of ships arriving so that neither tendency nor dimension of calling ships is
affected. Moreover, Finland belonged until the Swedish Russian war (1808–1809) to
Sweden. After Sweden’s defeat Finland got part of the Russian Tsardom. Finland, thus, has
to be considered. The decision to rank Finland’s values among those of Sweden is based on
the fact that the graph starts in 1750 when it was part of Sweden.
Whole Paragraph: Kock, Skånska Privatbanken, pp.14-15.
Page | 30
Number of Ships
Maritime Trade from England to Swedish Ports
100
90
80
70
60
50
40
30
20
10
0
Stockholm
Gothenborg
Malmö
Ystad
1806 1807 1808 1809 1810 1811 1812 1813 1814
92
51
0
0
28
6
14
5
91
1
1
0
0
0
0
0
0
0
7
2
0
0
3
0
0
0
2
2
2
0
0
0
0
1
0
0
Figure 4: Number of ships arriving from England to Swedish Ports, 1806 to 1814 (Source: Own
extraction from STR online)
The data for Ships under Swedish color between 1750 and 1850 show some
conspicuousness (cf. Figure 5). Comparable to the data for maritime trade in
Stockholm there are temporary peaks framing the important years. With peaks in
1806 and 1814/1815 an effect can definitely be observed. For the years of the
continental system, however, the peaks are rather small. Nevertheless, in 1810 51
ships sailed under Swedish colors. These ships again cannot be taken into account
based on the months they sailed in. However, in 1812 even 33 ships sailed under
Swedish colors. This supports Kock’s results as it is a relatively high number for
the years of the continental system. A further strategy in sailing under foreign,
particularly Swedish, color can reasonably be assumed on the basis the data.
Consequently, it is easy to imagine that maritime trade between Prussia and
England was organized on a route containing Sweden for smuggling commodities
to Prussia. Sweden and, according to Figure 4, Stockholm seem to be central for
illicit trade. With 6 ships in 1811 75% of all ships calling Sweden’s and Finland’s
ports go to Stockholm. In 1812 still 38.9% of all ships to Sweden and Finland
came to Stockholm. This means one trading route is detected between Stockholm
and England. For the ports in the East of Sweden the limitations of Registers
prevent a final result. However, the connection via Russia to Sweden existed for
Page | 31
Maritime Trade under Swedish color
from England to Sweden
Number of Ships
250
200
150
100
51
33
50
1750
1754
1758
1762
1766
1770
1774
1778
1782
1786
1791
1795
1799
1803
1807
1811
1815
1819
1823
1827
1831
1835
1839
1843
1847
0
Swedish Flag
Figure 5: Number of ships under Swedish colors sailing from England to Sweden, 1750 to 1850
(Own extractions from STR online)
journeys. As a result the data stresses that this connection was highly used during
the continental system. The occurrence of illicit trade is most likely. Furthermore,
by combining the 43 ships of Sweden and Finland with the 19 of the other Baltic
countries as sources for illicit trade the amount of 11.4mio Rtlr. seems to be much
more realistic. Due to this the picture of the illicit trade should be expanded to the
whole Baltic Sea to get an impression of the extent of smuggle within these years.
Considering these results it is reasonable to assume smuggling in maritime
trade undermining the continental system. To argue that not every ship is
registered in the Registers seems to be no satisfying explanation. Though illicit
trade might not be registered as illicit, every ship entering the Baltic Sea had to
take the Sound, as other routes would lead through Denmark and by this through
Napoleon’s confederate countries. Sailing under foreign colors rather explains
another strategy. Consequently, can very easily be seen how powerful the
continental system was. The statement of Heydebreck having organized
smuggling seems to be plausible. Prussia ergo even supported smuggling to
establish an additional source of money under pressure of trading restrictions.
Treue moreover states that France helped by paying for smuggling goods to carry
Prussia’s recovery process. 154 It is obvious that these trading connections could
also be used to get weapons and subsidies from England.
154
Treue, Wirtschaftsgeschichte, p.236.
Page | 32
In relation to the research questions it can be concluded that the continental
system had devastating consequences for Prussia’s economy. Prussian ports
struggled with a major decrease in ships arriving. The boom detected in the first
years by Treue and Poßelt, however, cannot be confirmed in maritime trade. An
increase could not be observed in the Registers. Accordingly, the only possibility
would be to assume a tremendous increase in trade within the Baltic Sea. Ships
entering or leaving the Baltic Sea, however, cannot explain this boom. As a result
a temporary trading boom based on maritime trade passing the Sound must be
discarded.
The conclusion relating to smuggle is another. In Heydebreck’s declaration it
is stated how and when smuggling was organized in maritime trade. Though
neither data on incoming ships to Prussia nor Russia or Denmark support the
hypothesis, another possibility to import English commodities can be detected.
The connection of Gneisenau’s journey to England existed also for trading. The
occurrence of smuggle supported by Prussia is therefore most likely. The strategy
to increase trade mentioned by Lawrence can ergo be detected in form of
smuggling. The statement of Heydebreck that smuggle was organized via
Denmark and Russia, in contrast, is doubtful. Possibly this indicates increased
inner Baltic trade relating to Kock’s assumption. Shipped commodities from
within Sweden or to Russia and Denmark remain hidden in the data.
Page | 33
5 The war economy
5.1 Financial Strategies
Taking the look at war economy the main focus will now be on production and the
financial sector of the economy, analyzing and discussing the question of what
strategies were used to strengthen the state’s finance and if these strategies caused
a crowding out effect. Prussia was besides the previously discussed factors also
reliant on money that helped to finance expenses necessary to wage war against
France and pay back contributions.
War economy consists, according to Goodhand, of different aspects.
Suggested by Goodhand and Lawrence155 there are several measures to improve
the financial situation. At first there exists an option for taxing the population and
trade. These taxes could be raised directly or indirectly and thus offer the
possibility to gain money in different ways. Moreover printing money is a
measure highlighted by Goodhand usually observed in war economy. Using their
right to print money, states try to inflate the currency and pay back debts easier.156
Forced loans and subsidies are also contained within these strategies of financial
reproduction. Important to consider is that policies for reproduction in the
financial sector must be implemented on a regional and on a global scale.157 This
lowers pressure on the domestic economy and by this reduces the risk to run into
huge problems.
Observing that even illicit activities get supported by Prussia it is easy to
understand how urgent the need for money was. Botzenhart consequently points
out that the first priority of Prussia was to get money.158 As the Prussian economy
faced the worst economic circumstances so far, every opportunity to gain money
had to be implemented. It should be thus possible to detect several concepts.
Settled on a reformed population and economy, Prussia got more opportunities to
deal with this situation. Besides the aims to help the rural population, another
rather financial motivation can be detected in the reforms. Peasant that were
willing to get independent had to pay compensation money to their landlords.
According to Treue showing that there was no private bank system the nobility
155
156
157
158
Lawrence, War Economics, p.513.
Goodhand, War Economy, p.5.
Goodhand, War Economy, p.7.
Dönhoff, preußische Kriegswirtschaft, p.52.
Page | 34
was in charge to offer financial support.159 Stein pointed in his letters (1805) even
out that these domestic loans were completely used.160 Thus compensation money
created new sources to get loans. Already before the first war against Napoleon
(1806) the preparation has eaten up all loan possibilities. The nobility had to
receive money to be able to grant credits for Prussia again. Stein moreover
stressed that credits in foreign countries are rather to be avoided.161 This was tried
to achieve by the compensation money payments. Even the emancipation of the
Jews in Prussia is closely related to this. As Treue shows Jews are usually very
wealthy. By emancipating them Otto shows an additional source for loans since
1812.162 These measures show clearly how Prussia tried to gain as much money as
possible from the population. The fact that Prussia still had to borrow money
abroad demonstrates how essential the shortage of money was. According to
Treue more than 50% was received as foreign credits especially from England. 163
In consequence Hubatsch concluded that Prussia was highly reliant on England
financially.164 Stein and Hardenberg thus were not successful in avoiding credits
abroad.
The reforms created more equality in the social system. Privileges have been
cut and the rights of the rural and urban population strengthened. By this also tax
duties were equalized and Prussia got hence the power to tax the whole country.
Though Wagner in 1805 advised not to raise taxes if not indispensable, 165
Hardenberg introduced several taxes. Taxes for war, luxury goods and income as
well as capitation had to be paid regardless of social status. However, these taxes
did not have the desired earnings, as due to Treue only 22% of the spending in
war was based on domestic money. As clearly observable financial straits have
outdone the aim of a wealthy agricultural basis. Though economic freedom
opened markets and abolished the feudal system, these reforms contained annual
licenses that had to be bought annually to legalize businesses. Accordingly,
financial interests dominated the reforms.
159
160
161
162
163
164
165
Treue, Wirtschaftsgeschichte, p.237; Otto, Befreiungskriege, p.29.
Botzenhart, Freiherr vom Stein, p.137.
Botzenhart, Freiherr vom Stein, p.114.
Treue, Wirtschaftsgeschichte, p.273.
Treue, Wirtschaftsgeschichte, p.278; Westphalen, Oberpräsident Vincke, p.50.
Hubatsch, Stein und England, p.42.
Wagner, Staatswissenschaft, p.166.
Page | 35
Furthermore, the introduction of paper money, an additional aspect of war
economy related to Goodhand, can be observed. Already planned by Stein in
1805, Hardenberg established paper money in 1810.166 Interestingly, the letter of
Stein in November 1805 seems to be closely related to the work of Adam Smith
that characterizes paper money as a possibility to raise national income and push
the industrial sector. 167 Stein referred generally to the situation in England. In
consequence this must be seen in contrast to Kopsidis’ findings.168 The influence
of market integration processes on this step is rather circumstantial. Especially
England’s pioneering economy caused that Prussian public officers tried to adopt
British methods. This means, at least in this perspective the financial reforms tend
to be influenced by Smith. Wagner’s work in 1805 supported moreover the
decision to introduce paper money as a helpful way to pay back liabilities.169 Thus
paper money in domestic trade and salaries170 enabled Prussia to get back fullbodied coins to pay particularly liabilities abroad.
However, it is obvious that introducing paper money is not without risk.
Though Wagner’s work explicitly suggests the introduction of paper money, the
risks of inflation are stated.171 That Prussia actually runs into inflation problems is
shown by Treue.172 Being caught in huge economic problems and since 1810 in a
major economic downturn it could be argued that inflation can be seen as an
indication of economic depression. As Lawrence points out, an increase in money
costs reduces the consumption of the whole population and by this harms
especially the poorest part of it. 173 This was definitely not desired by Prussia.
However, the measures implemented by Prussia for financial stability cover the
whole width of Goodhand’s war economy spectrum. Prussia first tried to keep
existing structure running in basing the finance on domestic loan system. To
rehabilitate this system, social structure and regulatory frameworks were opened
in exchange for independence fees. The additional measures as the introduction of
paper money to increase the amount of full-bodied money and the loans abroad
166
167
168
169
170
171
172
173
Hubatsch, Stein und England, p.38.
Smith, Wealth of Nations, pp.238-239.
Cf. Kopsidis, Der westfälische Agrarmarkt, passim.
Wagner, Staatswissenschaft, p.177
Botzenhart, Freiherr vom Stein, p.135.
Wagner, Staatswissenschaft, p.177.
Treue, Wirtschaftsgeschichte, p.236.
Lawrence, War Economics, p.519.
Page | 36
with huge percentages in the final finance plan indicate Prussias tremendous
problems.
5.2 The Crowding Out Effect
According to Schumpeter a possible economic depression requires an intervention
of the state into the economic sector.174 In other words: within these measures to
gain money and prepare war might be possible active regulations of Prussia
detected to stabilize the economy. Previous research especially on England 175
discusses the occurrence a crowding out effect during the Napoleonic Wars
affecting the Industrialization. By Clark concluding that a partial crowding out
effect has taken place176 it gets interesting to which extent this effect also occurred
in Prussia.
The strategies conducted display clearly how Prussia tried to gather money.
Due to the reforms public officers definitely started to act in terms of financial
policies. In rather recessive economic environment main policy measures should
be in fiscal expansion policy. Taxes and independent fees were levied in 1808 and
1810. Consequently after 1810 the attempt of Prussia to positively influence the
economy and increase population’s wealth by investing in the country should be
detected. Elements of fiscal expansion that are, according to Tervala, based on tax
revenues flowing into the market can, however, not be observed. 177 In contrast,
Prussia even levied new taxes and thus stressed the financial situation of the
population. As Treue points out, particularly rich manufacturers, actually able to
invest into the economy, were harmed by forced loans with imposed conditions
taking their money.178
Prussia established new liberalized conditions, but at the same time got
extremely active in financial markets. Not being able to accumulate more money
by taxes, as Dönhoff highlights179, Prussia had to act according to Bond Market
Approach 180 . Spector declares the BMA as only possibility for countries that
174
175
176
177
178
179
180
Schumpeter, Konjunkturzyklen, pp.152, 158-159.
Cf. Mokyr, Industrial Revolution; Black/ Gilmore, Crowding Out; Clark, England 1727–
1840.
Clark, England 1727–1840, p.29.
Tervala, Fiscal Policy, p.267.
Treue, Wirtschaftsgeschichte, p.278.
Dönhoff, Preußische Kriegswirtschaft, p.55.
Spector, Macroeconomic Models, p.7.
Page | 37
cannot raise their money without entering the bond market. In relation to this
Treue shows that new taxes generate no revenues anymore in 1810.181 A BMA can
definitely be assumed for Prussia in this situation. However, this approach raises
danger to crowd out investments.
Treue argues that more than 50% of the money needed for recovery was
based on loans or subsidies from England. 182 This means these loans are not
provided by domestic markets and therefore do not affect Prussian interest rates.
As a consequence to this, a crowding out effect in Prussia would be rather
unlikely. With the major share of loans not being domestic it must be questioned
to what extend the interest rate was affected.
In contrast, the reforms rehabilitated domestic capital market. As Koselleck
figures out, due to a lack of domestic bank systems, Prussia’s nobility was the
primary source for loans.183 Farmers paid fees to landlords thus restored domestic
capital stocks. By this, Prussia got the possibility to use this source for domestic
loans again. In combination with forced loans to fixed conditions inflicted on rich
entrepreneurs crowded out investments got likely. Money taken from the broad
population to pay contribution can obviously not be invested into Prussia.
Especially farmers that achieved creditworthiness through reforms to build up
their agricultural production had consequently no opportunity to receive any
loans. A rising interest rate as an indicator for a crowding out, however, is rather
plausible to occur. Even if forced loans for Prussia will not allow a higher interest
rate for loans, private investors interested in borrowing would have different
conditions. The lack of money on the capital market, though a central capital
market did not exist, naturally affected the interest rate. As a result, private
investors would be displaced by Prussia or discouraged by bad credit conditions.
Not being able to invest anymore in own companies does crowd out potential
investments in the industry. Crowding out in private and industry investments can
ergo be observed in Prussia’s economy.
Heim and Mirowski concluded for England that a crowding out effect just has
taken place in some areas of the economy.184 This argument is supported by Clark
181
182
183
184
Treue, Wirtschaftsgeschichte, p.233.
Treue, Wirtschaftsgeschichte, p.278.
Koselleck, Reform und Revolution, p.171.
Heim/ Mirowski, Interest Rate, p. 139.
Page | 38
stating that the capital market in England was segmented and thus governmental
debts would not spread to other segments of the capital market. 185 As Kopsidis
shows market integration does not influence the Prussian economy on a largescale. This could also be applicable to Prussia.186 The width of Prussia’s methods,
however, supports a different conclusion. In taking money from farmers,
entrepreneurs and noblemen potential for investments of the whole population got
cut off. For that reason different areas of the capital market got affected by
Prussia’s financial policy so that the conclusions of Heim and Mirowski as well as
of Clark cannot be extended to Prussia. A crowding out effect in Prussia
influencing the whole population and the entire capital market has taken place.
Prussia tried to stabilize the financial basis of the state. After taking the
liquid money from the population in form of taxes other measures were
introduced. The capital market was based on noblemen offering grants to the state.
Prussia restored the money in reserve of this capital market by several reforms
that opened financial resources of the rural and urban population. Even paper
money was introduced into the internal economy to pay debts abroad with replace
gold coins. In taking fresh money off the capital market, Prussia acted as an
investor and therefore raised the interest rate of loans for other investors. As a
result a crowding out effect was caused putting pressure on Prussia’s population
again.
185
186
G.Clark, England 1727–1840, p.11.
Kopsidis, Entwicklungsökonomie, passim.
Page | 39
6 The Emotional Economy
6.1 Reform and Restriction based Spirit
The last aspect in the Goodhand framework is the emotional economy. Stating the
importance of spirit in wars besides rational reasons187 the concept of emotional
economy is introduced. Especially relating to the war in Afghanistan the role of
convictions is stressed. However, as emotions are argued to be very important in
wars the War of Liberation could be more successful if it was based on an
enthusiastic population fighting back Napoleon. The emotional sphere is thus
important to integrate to get an adequate impression of the circumstances. This
chapter therefore aims to analyze how Prussia tried to establish a common feeling
in the population towards the state.
In the early 19th century a general national identification with Prussia in the
population did not exist. Although Stein declares in 1807 that his mother country
is Germany,188 this statement is rather unusual. As Germany did not even exist in
these years the statement could rather be taken as identification based on other
aspects than geographically borders or sympathy for Prussia. However, his
colleague Altenstein in 1808 stated in a letter the “voice of the nation” 189 would
not exist in Prussia. Especially considering that big parts of Prussia were
incorporated in 1803190 it gets clear that an overall national spirit could not exist.
Additionally, Napoleon was not necessarily seen as a threat. Though curtailing the
concept of the French Revolution, he stood for new and liberal ideas that embody
thoughts of the broad population. Even contemporary celebrities as the
philosopher Hegel and poet Goethe supported Napoleon. 191 Goethe moreover
wrote to his publisher Cotta after meeting Napoleon that he has “to admit not
being possible to face anything superior or more pleasant than meeting the French
Emperor.”192 Herre states that Goethe’s admiration for Napoleon even increased
after receiving a French badge of honor by him. 193 Frederick William III. thus
could not just build up resistance against France on a united country. A major aim
hence was to encourage the population rising against Napoleon.
187
188
189
190
191
192
193
Goodhand, War Economy, p.12.
Otto, Befreiungskriege, p.26.
Altenstein, Bemerkungen über den Aufsatz Kunth, p.505.
Cf. Appendix 1, Map of Prussia in 1805 and losses 1807.
Herre, Stein – Sein Leben, pp.209–210.
Goethe to Cotta, 2. December 1808 (own translation; Cf. Goethe, Briefe 1786–1814, p.572).
Herre, Stein – Sein Leben, pp.209–210.
Page | 40
There are different theories on how this was achieved. Otto in particular sees
an important factor in the rural population. The bad living conditions in the
agriculture united the broad population against France and the trading restriction.
The resistance consequently is rather seen as something grown under pressure.194
Absence of maritime trade and according less agricultural products shipped to
England affected especially the rural population. For Koselleck the key is the
broad interest of the population in the Prussian state.195 Caring about their home
country this would create a spirit of belonging and a common basis for resistance.
This explanation rather focuses on the established reforms again. Thiede and
Fenske agree to this approach adding the fact that Prussia announced the
introduction of a constitution several times. In letters of Stein to the Prussian King
in 1807 and 1808 the possibility of a constitution was actually discussed. 196 It is
reasonable to assume that against the background of the reforms the support of the
population towards Prussia increased. Interestingly, Otto’s approach focused on
trade and finance, whereas Koselleck, Thiede and Fenske concentrate on reforms.
Hence, all elements of Goodhand’s framework are contained without recognizing
emotions as a possible impact on Prussia’s common feeling.
6.2 The emotional Approach
An alternative approach, in contrast, is to take emotions into account. Honor,
pride and sympathy could be also seen as a reason for the development of national
spirit. Following this approach, clearly a first step in the public perception
generated the Prussian royal couple. Due to the circumstances after the defeat,
Queen Louise sold her jewelry and diamonds in 1808. 197 Obviously it is
controversial whether this step was voluntarily done, but a signal function to the
Prussian population can reasonably be assumed. The young Queen was extremely
popular and consequently had major influence on public cognition. This sympathy
culminated after Louise’s unexpected death in 1810 in glorification and supported
an upcoming national spirit. Thus, Queen Louise is certainly a pillar for
nationwide spirit.
194
195
196
197
Otto, Befreiungskriege, p.31.
Koselleck, Reform und Revolution, p.170.
Thiede, Stein – Ausgewählte Schriften, p.91; Fenske, Reformer und Moralist, p.41.
Otto, Befreiungskriege, p.31.
Page | 41
A further method of Prussia to strengthen the common feeling and unite the
country can be detected in March 1813. Just a few days after Frederick William
III. calling Prussia to take up arms, another call was released by the Princesses of
the Prussian territories: ‘I gave Gold for Iron.’ In contrast to compulsory military
service for men, women could not be united in an army. National spirit in the
whole population had to be gained in separated steps. Aiming at every woman in
Prussia that had to send husband, son, brother or father to war, the Princesses
requested these women to contribute to the War of Liberation. Gold rings, chains
and anything else of value should be sent in. Melted down these jewelries were
then used to help Prussia to buy food or uniforms for the soldiers fighting. In
exchange Prussia offered iron rings with “Gold gab ich für Eisen 1813”
engraved.198
Playing a rather small role in research yet this call contains one of the most
impressive indications for developing national spirit. Though Clark and
Marshall199 discuss the importance of this concept briefly, the focus of Clark lies
particularly on economic effects. The economic impact was determined by Clark
by having an effect of 6.5mio Rtlr. 200 For gold handed over voluntarily this
amount is astonishing. By requesting also to hand in fabric or sew uniforms it
could be argued that moreover a second production sector was established. The
women gave their work motivated by national spirit to support Prussia. This,
naturally, also has to be taken into account to women’s financial contribution. In
consequence Clark underestimates the effect. The 6.5mio Rtlr. only contained the
metall value not sewed uniforms or submitted fabrics.
However, besides economic effects the call had a much deeper impact. It
rather contributed to growing national identification of Prussian women. Marshall
even detected peer pressure among these women. Women avoided falling into
disgrace by not participating in this call especially when the men return home
from war. In fact, Marshall stated that the iron ring was kept as the biggest
treasury as a sign of supporting the nation201. This supports the impressions of the
tremendous effect on Prussian women. Müsebeck edited also some letters of
women sending in jewelry. Beside spiritual succor for the soldiers, submitted gold
198
199
200
201
Müsebeck, Gold gab ich für Eisen, pp.216–219.
Clark, Iron Kingdom, p.374; Marshall, A History of Germany, p.421.
Clark, Iron Kingdom, p.374.
Marshall, A History of Germany, p.421.
Page | 42
was dedicated to the “eternalized Queen [Louise].”202 Identification and sympathy
for the country and the glorification of the Queen can already be seen here.
It is hard to figure out a particular strategy of Prussia to establish a common
feeling. National spirit is something that grew from within. Thus theories how this
happened are highly different. Otto’s approach that settled on trade and
dissatisfaction in the population that suffered from bad living conditions. This
approach based on side-effects of Koselleck’s approach and focuses rather on
announcement of a general constitution for Prussia. Hope on the one hand and
dissatisfaction on the other should contribute to the common feeling. Rather
neglected in the research, however, identification, honor and pride seem to
influence this development as well.
The development of national spirit, thus, seems to be influenced by several
aspects. The reforms and the announcement of a general constitution clearly had a
massive influence on the population. But it can be questioned to which extent
Prussia would have succeeded in uniting the whole population without the
emotional sphere and the glorification of Queen Louise. Though men can be
united in military fighting for the same convictions, women and children have to
be reached differently. With the Prussian Princesses calling to the whole
population not only an economic factor was gained, but the whole population got
involved into the success of the War of Liberation and by this the development of
nationality was supported. Prussia thus had succeeded to evolve a national spirit
with by combining rational with emotional measures. A combination of the
different theories therefore seems to be the best approach.
202
Müsebeck, Gold gab ich für Eisen, p.223.
Page | 43
7 Conclusion
The analysis of the War of Liberation in Prussia offers interesting results. By
using the framework by Goodhand the circumstances in Prussia get analyzed
according to the modern theories of waging war in a new way. The spheres of
cope, shadow, war and emotional economy directly aim on important elements of
the Prussian economy and thus detect new perspectives and challenges for the
scientific research.
As the results show the established scientific research has to be reconsidered
in various aspects. The cope economy analysis shows particularly the need to
expand the historical research with economic theories and vice versa. The
classical view of pioneering reforms gets reversed by financial and powerpolitical motivation observable in letters. Moreover, Kopsidis’ approach of market
integration processes can clearly supported. This interdisciplinary approach
covers historical insights with results on market theory and thus embodies
necessary expansion to both theories.
In terms of trade it must be concluded that existing approaches have to be
discarded to a certain extent. The theory of a booming economy between 1806
and 1810 by Treue and Poßelt has to be discarded. The data clearly stresses the
high efficiency of the continental system and therefore causing major doubts on
this theory. The occurrence of smuggle as described in contemporary letters,
however, could be shown and Kock’s results on ships sailing under foreign
countries supported whereas in contrast the theory on Malmö and Göteborg as
being important smuggler ports could, due to the limitations of the Registers, not
be observed. Especially for research on maritime trade the Soundtoll Registers
offer huge potential for further research concentrating on how illicit trade
undermined the French authority and which strategies were developed.
The occurrence of a crowding out effect could also clearly be shown. In
contrast to the controversial results of Clark, Mokyr and Heim and Mirowski for
the situation in England, in Prussia the results seem to be rather clear. In taking
the whole population’s money for loans, possible private investments were
suppressed and prohibited on a large scale. Concluding for a partial crowding out
effect according to England, hence, seems not to be satisfying. Rather an overall
crowding out effect can be detected.
Page | 44
Especially in the emotional sphere of the War of Liberation the Goodhand
framework offered a new perspective. In showing that emotions played an
important role in the development of the national spirit the rather rational
explanations focusing on reforms and constitutions have to be extended. The call
of the Prussian Princesses highlighted which influence the whole nation on the
success of the war had. In requesting support of the population not only an
economic factor was generated, but also national spirit was created. In
combination with the glorification of Queen Louise it gets clear that the
established models covered merely economic aspects and therefore lacked in
capturing the whole process. An integration of these factors would strengthen the
explanatory power of these approaches.
In general, the measures suggested by the theory on war economy can be
clearly identified in the Prussian economy. Prussia tried to establish an economic
basis that supported the state’s needs in the best possible way. Based on a strong
economy the aim to fight back Napoleon was generated. The results show
particularly the complexity of this process. The interdependence of different
spheres that was highlighted by Olson determines also the picture of the Prussian
wartime methods. The Goodhand framework supported the separation of methods
into different effects and highlighted areas influenced by these measures. By this
it offers new perspectives on the Prussian wartime economy and presents new
challenges for upcoming research. The biggest challenge for upcoming research
on Prussia in this time is best formulated by Mokyr’s conclusion on England: The
“highest return strategy is to get more data detected to get a better impression of
these years.”203
The glorious time of Frederick the Great was gone and Prussia got woken by
Napoleon. By accepting this situation, changes were produced by huge efforts in
reforms and restructuring. Supported by incipient market integration, Prussia
managed within only five years to recover from this disaster and fought back
Napoleon. From the glorious defeat of a kingdom with different individual
territories in 1806, Prussia grew to a united nation. These years are essential for
the later take off of Prussia and the rise to a European Great Power. Though
203
Mokyr, Industrial Revolution, p.319.
Page | 45
officials try to cut down reforms and reestablish the old system again after 1815,
the democratic movements from 1832 onwards are based on these years.
Page | 46
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Appenix 2:
Spiegel Online (2014): Zeittafel: Daten preußischer Geschichte, last requested:
31st May 2014: http://www.spiegel.de/sptv/special/a-117065.html).
Appendix 3:
Robinson, J.H. (ed.) (1902): Translations and Reprints from the Original Sources
of European History, Vol.II, No. 2: The Napoleonic Period. Philadelphia:
University of Pennsylvania, 1902 , pp. 27-30.
Appendix 4:
Decker, G. (1810):Gesetz-Sammlung für die Königlichen Preußischen Staaten
1810, Berlin, translated by Thomas Dunlap ,pp. 25-28, 31.
Appendix 5:
Robinson, J.H. (ed.) (1902): Readings in European History, A collection of
extracts from the sources chosen with the purpose of illustrating the progress
of culture in Western Europe since the German Invasions, Vol. II. Boston,
New York, Chicago, London, pp. 522-23.
Appendix 6:
Soundtoll Registers Online (2014), University of Groningen, last requested: 31st
May 2014, http://soundtoll.nl/index.php/en/).
Appendices
Appendix 1: Map of Prussia in 1805 and losses 1807 (cf. rbb, Preußen, Chronik
eines deutschen Staates)
Appendix 3: The Prussian Reform Edict of October 9th, 1807
Edict Facilitating the Possession and Free Use of Landed Property, as well as
the Personal Conditions of the Landsmen
We, Frederick William, by the Grace of God King of Prussia, etc., etc.
Hereby make known and give to understand:
Since peace has been established we have been occupied before everything else
with the care for the depressed condition of our faithful subjects and the speediest
revival and greatest possible improvement in this respect. We have considered
that in face of the prevailing want the means at our disposal would be insufficient
to aid each individual, and even if they were we could not hope to accomplish our
object, and that, moreover, in accordance with the imperative demands of justice
and the principles of a judicious economic policy it behooves us to remove every
obstacle which has hitherto prevented the individual from attaining such a state of
prosperity as he was capable of reaching. We have farther considered that the
existing restrictions both on the possession and enjoyment of landed property and
on the personal condition of the agricultural laborer especially interfere with our
benevolent purpose and disable a great force which might be applied to the
restoration of cultivation, the former by their prejudicial influence upon the value
of landed property and the credit of the proprietor, the latter by diminishing the
value of labor. We desire therefore to reduce both kinds of restrictions so far as
the common well-being demands and accordingly ordain the following:
1. Every inhabitant of our States is competent, without any limitation on the part
of the State, to own or mortgage landed property of every kind. The noble may
therefore own not only noble but also non-noble, citizen and peasant lands of
every kind and the citizen and peasant may possess not only citizen, peasant and
other non-noble, but also noble tracts of land, without in any case needing special
permission for any acquisition whatever, although henceforth, as before, every
change of ownership must be announced to the authorities. All privileges which
are possessed by noble over citizen inheritances are entirely abolished, as well as
the restrictions and suspension of certain property rights based upon the personal
status of the holder.
Special laws shall still continue to regulate the right of those to acquire land who
are by reason of their religious beliefs precluded from performing all the duties of
citizenship.
2. Every noble is henceforth permitted, without any derogation from his station, to
engage in citizen occupation and every citizen or peasant is allowed to pass from
the peasant into the citizen class or from the citizen into the peasant class.
3. A legal right of pre-emption and of prior claim shall exist hereafter only in the
case of superior proprietors, of the lessors of estates on perpetual leases or to copy
holders, and of co-proprietary owners, and where a tract of land is sold which is
confused with or surrounded by other holdings.
4. The possessors of alienable landed property of all kinds, whether in town or
country, are allowed, after due notice given to the provincial authority, reserving
the rights of those holding mortgages and those enjoying rights of pre-emption
(3.), to separate the principal estate from its appurtenances, and in general to
alienate lands piecemeal. In the same way co-proprietors may divide among them
property owned in common.
[...]
6. If a landed proprietor finds himself unable to restore and maintain the several
peasant holdings existing upon an estate which are not held hereditarily either on
a perpetual lease or of copyhold, he is required to inform the authorities of the
province, with the sanction of which the consolidation of several holdings into a
single peasant estate or with outlying land shall be permissible so soon as serfdom
shall have ceased to exist on the estate. The provincial authorities will be provided
with special instructions to meet these cases.
7. If, on the contrary, the peasants' holdings are hereditary whether in virtue of a
perpetual lease or of copy hold, the consolidation or other change in the condition
of the land in question is not admissible until the rights of the previous owner are
extinguished, whether by the sale of the land to the lord or in some other legal
way. In this case the provisions of (6) shall apply as well to this species of
holdings.
8. Every possessor of feudal or entailed property is empowered to raise the sums
required to replace the losses caused by the war by mortgaging the estates
themselves and not simply the revenue from them, provided that the application of
the funds is attested by the Landrath of the Circle or by the Direction of the
District Department. From the close of the third year after the contracting of the
debt the possessor and his successor are bound to pay off at least a fifteenth part
of the capital annually.
9. Any feudal connection not subject to a chief proprietor, any family settlement
or entail, may be altered at pleasure or entirely abolished by a resolution of the
family, as has already been enacted in regard to the Fiefs of East Prussia (except
those of Ermeland) in the East Prussian Provincial law, appendix 26.
10. From the date of this ordinance no new relation of serfdom whether by birth or
marriage, or by assuming theposition of a serf, or by contract can be created.
11. With the publication of the present ordinance the existing relations of serfdom
of those serfs, with their wives and children, who possess their peasant holdings
by inheritance, or in their own right, or by perpetual leases or of copy hold shall
cease entirely together with all mutual rights and duties.
12. From Martinmas, one thousand eight hundred and ten (1810) all serfdom shall
cease throughout our whole realm. From Martinmas 1810 there shall be only free
persons, as is already the case upon the royal domains in all our provinces, free
persons, however, still subject, as a matter of course, to all obligations which bind
them as free persons by reason of the possession of an estate or by virtue of a
special contract.
To this declaration of our supreme will everyone whom it may concern and in
particular our provincial authorities and other officials are exactly and dutifully to
conform and the present ordinance is to be universally made known.
Source of English translation: James Harvey Robinson, ed., Translations and
Reprints from the Original Sources of European History, vol.II, no. 2: The
Napoleonic Period. Philadelphia: University of Pennsylvania, 1902 , pp. 27-30.
Source of original German text: Sammlung der für die Königlichen preußischen
Staaten erschienenen Gesetze und Verordnungen von 1806 bis zum 27. Dezember
1810. Anhang zu der seit dem Jahre 1810 edirten Gesetz-Sammlung für die
Königlich preußischen Staaten[Collection of the Laws and Decrees issued for the
Royal Prussian State from 1806 to December 27, 1810. Appendix to the Law
Collection for the Royal Prussian State edited since the Year 1810]. Berlin, 1822.
Reprint: Bad Feilnbach, 1985, pp. 170-73.
Reprinted in Walter Demel and Uwe Puschner, eds., Von der Französischen
Revolution bis zum Wiener Kongreß 1789-1815[From the French Revolution to
the Congressof Vienna, 1789-1815]. Deutsche Geschichte in Quellen und
Darstellung, edited by Rainer A. Müller, Volume 6. Stuttgart: P. Reclam, 1995,
pp. 327-32.
Appendix 4: The Prussian Finance Edict signed by Chancellor Hardenberg and
King Frederick William III. (October 27th, 1810)
Edict on State Finances and the New Establishment of Taxes
We Friedrich Wilhelm, by the Grace of God King of Prussia, etc. etc.
Until now, we have been tirelessly preoccupied with ascertaining the best means
for restoring the prosperity of our state, which declined through the last war, for
elevating the credit, and for fulfilling the obligations the state has toward its
creditors; in particular, through very great exertions we have reduced, as much as
was possible, the war in demnity of 120 million Franks payable to His Majesty,
the Emperor of France, such that half will have been paid off by the end of the
current year. With emotion, we have noted evidence of the attachment of all
classes of our loyal subjects to our person, our house, and our government; in
particular, we have also recognized the help that was rendered to us in securing
the abovementioned contribution and in raising the funds otherwise necessary by
our faithful estates and by the trade estate with their utmost willingness. The
difficulties we still have to overcome are considerable, and they still demand no
small sacrifices, to our sorrow.
[...]
We see ourselves compelled to demand from our loyal subjects the payment of
higher taxes, chiefly on consumption and luxury items, although they shall be
simplified, restricted to a few articles, combined with the abolition of arrears and
gate excises, as well as several onerous dues, and borne by all classes of the
nation relatively equally, and they shall be reduced as soon as the need they are
intended to meet comes to an end. In areas that have suffered especially from the
war, especially in the Kingdom of Prussia, we shall take care to ease, with
extraordinary remedies, the burden that will arise from these new consumption
taxes.
Incidentally, it goes without saying that the high dues on colonial goods that have
now become necessary through the Continental System include provisions for
lowering them to the intended rates.
As it is, the oppressiveness of these new impositions shall be moderated as much
as possible in that we intend, by means of a comprehensive reform of the tax
system, to have all of them borne by everyone based on the same principles for
our entire monarchy. In the shortest order, a new land register will therefore also
be drawn up in order to determine the land tax based on it.
Our intent is by no means to increase the land tax that has been levied until now,
only to ensure the equal and proportionate distribution among all those liable to
the land tax. However, all exemptions that are no longer compatible with either
natural justice or the spirit of administration in neighboring states shall be
abolished. That is, properties that have hitherto remained exempt from the land
tax shall be taxed without exception, and we wish that it also be done specifically
on our own demesne possessions. We hope that those to whom this measure will
be applied can find comfort in the fact that in the future they can no longer be
accused of evading the public burden at the expense of their fellow subjects, and
in these considerations: that the land tax to be paid by them in the future is not
equal to the expense they would incur if one demanded from them the knightly
service obligations that were originally attached to their estates, in return for
which the existing, quite disproportional dues are dropped; also, that free use of
the landed property, complete commercial freedom, and exemption from other
burdens that would otherwise have been necessary shall be granted; finally, that
the land tax is already being borne by the owners of estates in a large part of our
monarchy.
For we wish to implement complete commercial freedom in return for the
payment of a moderate patent tax and the cessation of the existing trade taxes,
simplify the customs system, abolish soccage, and where a loss is genuinely
proved in accordance with the principles to be prescribed, the state will pay
compensation in exchange; [we wish] to grant and secure property to that segment
of our subjects who have not hitherto enjoyed its possession, also to completely
abolish a number of oppressive institutions and imposts.
[...]
We have the intent, as the territorial ruler, to designate our demesnes for the
repayment of state debts. To that end, we have decided on their gradual sale.
[ . . . ].
In addition, we have decided to secularize the spiritual estates in our monarchy
and to have them sold, and at the same time to have the proceeds thereof devoted
to paying off state debts by ensuring the complete pensioning of the current
prebendaries and the generous endowment of parishes, schools, and foundations.
Here we have in mind not only the example of nearly all states and the general
Zeitgeist, but also the conviction that we are acting far more in accordance with
justice if we use those estates for the salvation of the state under the conditions
mentioned above, than if we intended, to this end, to draw more strongly on the
wealth of our loyal subjects.
Were it possible to convert our domains quickly enough into cash, the value of the
same would be sufficient to meet our obligations without having to make any
demands on the financial wealth of our loyal subjects.
However, as that is entirely impossible, and since this purpose cannot be fulfilled
alone by loans from abroad, even though we have taken measures to utilize this
source to whatever extent possible, there is no other choice, if the state is to be
saved, then to procure the shortfall in cash from within the land itself.
However, we do not wish to demand this –with the exception of a one-time, very
moderate tax, payable in several monthly installments, on those who support
themselves by the labor of their hand and possess only very small wealth –as an
impost, either on wealth or income, but merely as a loan, for the purpose of
discharging the indemnity to France, from our domains and ecclesiastical
holdings, designated, as already mentioned above, to free the state from its debts.
This loan shall draw a proper interest rate of four percent annually, and we will
secure its repayment through a special mortgaging of demesne offices and
ecclesiastical estates designated for that very purpose, which, moreover, are
collectively liable for it and shall carry out the interest payment. Conditions shall
be attached to this, by which the volume of state bonds, a third of which will be
sold at their nominal value, will be reduced and the value of the remaining ones
will be increased, and the loan shall also not be paid all at once, but within two
years at semi-annual intervals. [ . . . ]
We shall, moreover, direct our steady and greatest care at promoting to the
greatest possible extent, by way of every necessary and beneficial regulatory and
financial arrangement, the main goal that is so dear to our hearts, establishing the
welfare of our loyal subjects. To that end, the next opportunity shall be taken to
establish the coinage on a solid footing, just as we intend to give the nation a
suitably established representation, both in the provinces and for the whole, whose
council we will happily use and in which, in keeping with the our intentions as the
ruler of the land, will happily give our loyal subjects the continuous belief that the
condition of the state and the finances is improving, and that the sacrifices that are
being made to that end are not in vain. In this way, the bond of love and trust
between us and our loyal people will become ever stronger.
Source: Gesetz-Sammlung für die Königlichen Preußischen Staaten 1810 Law
Collection for the Royal Prussian States 1810]. Berlin: Georg Decker 1810,pp.
25-28, 31.
Reprinted in Walter Demel and Uwe Puschner, eds., Von der Französischen
Revolution bis zum Wiener Kongreß 1789-1815 [From the French Revolution to
the Congress of Vienna 1789-1815]. Deutsche Geschichte in Quellen und
Darstellung, edited by Rainer A. Müller. Volume 6. Stuttgart: P. Reclam, 1995,pp.
279-85.
Translation: Thomas Dunlap
Appendix 5: To my people (17th March 1813)
To My People
There is no need of explaining to my loyal subjects or to any German, the reasons
for the war which is about to begin. They lie plainly before the eyes of awakened
Europe.
We succumbed to the superior force of France. The peace which followed
deprived me of my people and, far from bringing us blessings, it inflicted upon us
deeper wounds than the war itself, sucking out the very marrow of the country.
Our principal fortresses remained in the hand of the enemy, and agriculture, as
well as the highly developed industries of our towns, was crippled. The freedom
of trade was hampered and thereby the sources of commerce and prosperity cut
off. The country was left a prey to the ravages of destitution.
I hoped, by the punctilious fulfillment of the engagements I had entered into, to
lighten the burdens of my people, and even to convince the French emperor that it
would be to his own advantage to leave Prussia her independence. But the purest
and best of intentions on my part were of no avail against insolence and
faithlessness, and it became only too plain that the emperor's treaties would
gradually ruin us even more surely than his wars. The moment is come when we
can no longer harbor the slightest illusion as to our situation.
Brandenburgers, Prussians, Silesians, Pomeranians, Lithuanians! You know what
you have borne for the past seven years; you know the sad fate that awaits you if
we do not bring this war to an honorable end. Think of the times gone by, –of the
Great Elector, the great Frederick! Remember the blessings for which your
forefathers fought under their leadership and which they paid for with their
blood,–freedom of conscience, national honor, independence, commerce,
industry, learning. Look at the great example of our powerful allies, the Russians;
look at the Spaniards the Portuguese. For such objects as these even weaker
peoples have gone forth against mightier enemies and returned in triumph.
Witness the heroic Swiss and the people of the Netherlands.
Great sacrifices will be demanded from every class of the people, for our
undertaking is a great one, and the number and resources of our enemies far from
insignificant. But would you not rather make these sacrifices for the fatherland
and for your own rightful king than for a foreign ruler, who, as he has shown by
many examples, will use you and your sons and your uttermost farthing for ends
which are nothing to you? Faith in God, perseverance, and the powerful aid of our
allies will bring us victory as the reward of our honest efforts.
Whatever sacrifices may be required of us as individuals, they will be outweighed
by the sacred rights for which we make them, and for which we must fight to a
victorious end unless we are willing to cease to be Prussians or Germans.
This is the final, the decisive struggle; upon it depends our independence, our
prosperity, our existence. There are no other alternatives but an honorable peace
or a heroic end. You would willingly face even the latter for honor's sake, for
without honor no Prussian or German could live. However, we may confidently
await the outcome. God and our own firm purpose will bring victory to our cause
and with it an assured and glorious peace and the return of happier times.
FREDERICK WILLIAM
Breslau, March 17th ,1813
Source of English translation: James Harvey Robinson, Readings in European
History, A collection of extracts from the sources chosen with the purpose of
illustrating the progress of culture in Western Europe since the German
Invasions, Volume II. Boston, New York, Chicago, London: Ginn & Company,
1904-06, pp. 522-23.
Source of original German text: Schlesische Priviligirte Zeitung from March
20,1813, no. 34, pp. 1.
Reprinted in Walter Demel and Uwe Puschner, eds., Von der Französischen
Revolution bis zum Wiener Kongreß 1789-1815[From the French Revolution to
the Congress of Vienna, 1789-1815], Deutsche Geschichte in Quellen und
Darstellung, edited by Rainer A. Müller, vol.6. Stuttgart: P. Reclam, 1995, pp.
413-16.
Appendix
6:
Absolute
Numbers
of
Ships
calling
the
Baltic
(Own extraction from Soundtoll Registers)
Year
Königsberg
number of ships
43
64
54
52
65
72
86
56
39
49
74
40
45
56
70
78
40
67
80
89
Danzig
Livland
Kurland
Kolberg
96
116
81
83
120
160
137
187
150
132
282
134
186
200
278
246
241
192
245
337
96
112
88
74
92
99
130
119
150
123
271
135
121
110
228
133
141
173
173
235
14
11
14
7
13
16
24
36
27
21
31
13
8
6
12
14
20
14
20
32
1
6
3
1
3
1
3
6
4
5
3
3
4
5
7
3
4
7
5
1806
1807
1808
1809
1810
1811
1812
1813
10
5
42
13
1
225
201
3
35
18
1
1
5
2
6
11
1
1
3
37
1814
1815
1816
1817
1818
1819
1820
52
43
38
49
52
24
37
88
109
77
146
186
133
118
84
156
95
222
388
303
211
19
7
12
14
39
16
15
1786
1787
1788
1789
1790
1791
1792
1793
1794
1795
1796
1797
1798
1799
1800
1801
1802
1803
1804
1805
1
1
9
6
4
1
3
6
ports