Capitalism, Politics, and Railroads in Prussia, 1830-1870
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Historical Perspectives on Business Enterprise Series Letterhead from the Rhenish Railway in the 1830s Courtesy Rheinisch-Westfalisches Wirtschaftsarchiv, Cologne Capitalism, Politics, and Railroads in Prussia, 1830-1870 JAMES M. BROPHY Ohio State University Press Columbus An earlier version of chapter 5 and part of chapter 8 originally appeared in Central European History. Copyright © 1998 by The Ohio State University. All rights reserved. Library of Congress Cataloging-in-Publication Data Brophy, James M. Capitalism, politics, and railroads in Prussia, 1830-1870 / James M. Brophy. p. cm. — (Historical perspectives on business enterprise series) Includes bibliographical references (p. ) and index. ISBN 0-8142-0751-0 (cloth : alk. paper) 1. Railroads and state—Germany—Prussia—History —19th century. 2. Business and politics—Germany—Prussia—History —19th century. I. Title. II. Series. HE3079.P7B76 1998 385'.0943'09034-dc21 97-29251 CIP Text and jacket design by Nighthawk Design. Type set in Times Roman by Tseng Information Systems. Printed by McNaughton & Gunn, Inc. The paper in this publication meets the minimum requirements of American National Standard for Information Sciences — Permanence of Paper for Printed Library Materials. ANSI Z39 48-1992. 987654321 For Susan CONTENTS Preface ix One Capital and Political Authority in German History 1 Two Private or State Owned? The Railroad Question, 1830-1848 22 Three The Search for Mutual Accommodation, 1848-1857 53 Four The Conflict over Night Trains 75 Five Banking and the Business Class 87 Six The Railroad Fund, 1842-1859 107 Seven The Juste Milieu, 1857-1870 135 Eight Conclusion 165 List of Abbreviations 177 Notes 179 Bibliography 247 Index 269 PREFACE Anthony Trollope's biting satire of London's establishment, The Way We XJ L Live Now (1875), turns on a monstrous railroad scheme and a conti nental financier, allowing the author to display the layers of hypocrisy in the pretensions of birthright, capital wealth, and political power. The rail road world also acts as the mise-en-scene of Emile Zola's La bete humaine (1890), a setting that credibly intertwines murder, corrupt justice, and politi cal manipulation. The final scene of a runaway train evinces Zola's view of humanity's helplessness in the face of vast industrial power. And when, in the aftermath of the 1873 stock-market crash, German politicians needed a figure to absorb the public fury over stock swindles, the preeminent choice was the German railroad magnate Bethel Henry Strousberg, whose collapsed railroad empire symbolized the unscrupulous greed of the modern age. Whether in fic tion or in actual deed, the politics of building railroads gripped the minds of nineteenth-century Europeans. The unprecedented share capital, the magni tude of profit, and the interpenetration of railroad capitalism with state power and ruling elites did indeed change "the way we live now." The current work, too, examines the politics of making money in the rail road industry. Centering on the relationship of railroad entrepreneurs with the Prussian state during the industry's critical phase of growth and consoli dation, this study presents how a capitalist economy was established within a political system stamped by Prussian conservatism. It provides a new view of business politics by exploring the political practices of railroad business men, who, in their aim to profit from Germany's largest industrial sector, both struggled against and cooperated with the Prussian state. The business poli tics of the railroad industry played a critical role in German political culture, state building, and bourgeois civil society. For this reason, as the introductory chapter will make clear, this political history of business elites contributes to a number of current discussions. By cutting across the customary bound aries of business, economic, and political history, this book illuminates how business elites' search for a "mutual accommodation" between capital and political authority affected the political development of the Prussian-German nation-state. This study consists of eight chapters. The opening chapter poses the prob lem and presents the historiographical context. I have endeavored to provide ix x • Preface an informative overview for readers not conversant with the problem of Ger man exceptionalism or with the influential works that have framed the dis cussions of nineteenth-century political economy. In providing access to this well-developed body of literature for scholars not specializing in German his tory, this study hopes to sharpen future comparative studies on entrepreneurs and statebuilding. Chapters 2, 3, and 7 are narrative chapters that provide a chronological analysis of government-business relations over forty years. Chapters 4, 5, and 6 are thematic chapters, focusing on specific issues of rail road politics regarding government regulation, joint-stock banking, and state railroad finance. The final chapter offers a synoptic conclusion, while briefly discussing the ramifications of railroad nationalization in 1879. The book sur veys railroad politics throughout Prussia but devotes substantial attention to the Rhineland owing to available repositories of private railroad companies. I have incurred numerous debts of gratitude while researching and writ ing this book, and it gives me great pleasure to acknowledge them. I am especially grateful to the German Academic Exchange Service (DAAD), which launched the project with a summer grant and subsequently provided a year-long research stipend. I also thank the International Research Exchange Board (IREX), which facilitated six months of research in the former Ger man Democratic Republic, enabling me to mine systematically the files of the Prussian Trade Ministry. A generous research grant from the Univer sity of Delaware brought me back to German archives in 1993 and 1995, for which I am appreciative. The archivists at the former Zentrales Staatsarchiv in Merseburg were extremely accommodating during my long stay, and I fur ther thank Dr. Eberhard Illner and the fine staff at the Historisches Archiv der Stadt Koln for their unstinting cooperation. Alfred and Irmgard Eschweiler, Ralph and Ulrike Verch, Dr. Jorg-Werner Kremp, Martina Frey, Dr. Gerhard Eschweiler, Professor Silke von der Emde, Professor Bert Wachsmuth, Herr Doktor and Frau Doktor von der Emde, and Horst and Margret Wachsmuth were all instrumental with their assistance and friendship during my research visits. The cooperation that numerous librarians extended to me at the Ber lin Staatsbibliothek, Cologne's Universitatsbibliothek, Indiana University, and the University of Delaware is also cordially acknowledged. There are a number of individual historians whom I wish to thank. At every stage of this project Otto Pflanze provided indispensable advice, editing, and criticism. Over the last twelve years, it has been a pleasure and a privi lege to draw on his enormous learning of German history. David E. Barclay, Eric Dorn Brose, and Geoff Eley read and commented on the manuscript, and their comments undoubtedly improved it. I also thank the two anonymous ref erees for the Ohio State University Press, who provided excellent suggestions for the final version. I also thank George Basalla, Lawrence Duggan, Willard Preface • xi Fletcher, and David Shearer, colleagues at the University of Delaware, whose concern for this book make the department of history at Delaware a pleasure to work in. Both as scholars and as parents, Elizabeth Bergen Brophy and James D. Brophy have helped over many years with sound advice and sus tained encouragement. Finally, my greatest thanks goes to my wife, Susan M. McKenna, whose indefatigable support and counsel bolstered me throughout the ordeal of researching and writing this book. This book is dedicated to her. CHAPTER ONE Capital and Political Authority in German History he question who ought to rule . belongs in the realm of philosophi Tcal speculation; practical politics has to do with the simple fact that it is power alone that can rule."l August Ludwig von Rochau's famous pronounce ment in 1853 marked a shift in liberal political thought. A radical democrat turned moderate liberal, Rochau sought to awaken the German bourgeoisie to the realities of state power after the failure of the revolution of 1848. The weakness of the constitutional movement in 1848, he argued, had been its re liance on right rather than might, on the irresistibility of moral idealism rather than on the politics of power. It was irrational, Rochau wrote, to expect power to subject itself to law: "To rule means to exercise power, and only he who possesses power can exer cise power."2 He dismissed as unrealistic the assumption of German idealism that ideas triumph when their time has come. And yet he clung to the belief that the middle classes would eventually triumph. State power, he maintained, was conditioned by the "relationship of social forces," the most important of which were "wealth, intelligence, and education."3 Of these, wealth would ultimately be decisive. "The aristocratic tie to the land as a force in the state has fallen," he wrote, because "landed property is more and more outweighed by the daily growing mass of movable capital."4 In Rochau's scheme of Real politik, then, it was not the moral force of liberal idealism that would clear the path to power but the growth of a new economic order that would compel Germany's rulers to yield to the interests and values of the middle classes.5 The "Structural Continuity Thesis" Rochau's thoughts on social relations in the 1850s describe the beginning of what has now come to be called the "structural continuity thesis."6 The power 1 2 • ONE of capital to recast society and politics endowed the German business class with undeniable importance. The expansion of commodities, capital, and ser vices in regional and international networks since the 1830s was changing Germany into a modern market economy. The owners of factories, banks, insurance companies, and railways determined the investments, innovations, distribution of resources, and division of labor.