By the early nineteenth century, Germany counted manufactories by the thousands and had, in Prussian mining, begun to employ the steam engine for pumping. As the industrial revolution arrived from across the English Channel, German entrepreneurs proved receptive and adaptive to it. Investment of capital in coal-driven industrialization, which in Germany pivoted on expensive railroad technology, required nineteenth-century innovations in banking and state policy. Masses of artisan producers depending on their own muscle-power eventually came to ruin through mechanized competition, though others found jobs in the new factories. Labor recruitment into burgeoning German industry required an end to peasant subjection. Governments began, hesitantly, to carry out the subject farmers’ personal legal emancipation and transformation of their feudal tenures into freehold farms, typically against compensation in cash or land to their former lordships.
As we will see, Prussia pioneered this two-fold process, launching in the years 1807-1816 a bureaucratically micro-managed freehold-conversion process that stretched to 1848 and beyond. Austria and the south German states found it easier to improve the peasantry’s personal legal standing than to endow them with freehold farms, in whose absence the productivity gains of capitalist market agriculture, and the migration of emancipated labor from village to industrial site, were slower to materialize. Still, everywhere in the early nineteenth century redundant hands gravitated away from agriculture. As the technology of the Industrial Revolution came into reach, German entrepreneurs seized it, confident of possession of a cheap industrial labor force, though a contingent of indispensable adult skilled workers commanded higher wages.
In the eighteenth century, the greatest innovations, alongside absolutist industries and middle-class entrepreneurs’ manufactories, occurred in large-scale agriculture, especially on northern and eastern aristocratic estates and state-owned domain farms. Here widespread abandonment of traditional fallow-based cereal cultivation yielded a novel “convertible agriculture” (known earlier in the Low Countries and coastal Germany). Cereals now rotated with new fodder crops (turnips, potatoes, clover), while plowland alternated with pasture, significantly raising large-scale farming’s output and profitability.
Such “agricultural capitalization,” as it has been called, was often the work of leaseholders of middle-class origin managing the nobility’s (and princely governments’) large estates. They, alongside many noble proprietors (or “gentlemen farmers”) working with commoner bailiffs, took the risks of technological innovation for the profits it promised. These and other agricultural investments, including arable expansion through wetland drainage funded by princely governments, helped moderate the rise of grain and other food prices accompanying population growth after the mid-eighteenth century. Favorable producer markets coined profits among agriculturalists, including millions of traditionalist village farmers locally selling their modest surpluses, thus invigorating demand in Germany for low-end manufactures.