Early History of the German Economy

Today, the Germany economy is one of the healthiest in Europe. A member of the European Union, Germany has the fifth highest gross domestic product (GDP) in the world, and enjoys a lively trade with its fellow members. However, this was not always so. Although today it is relatively sdiv, the German economy has gone through enormous fluctuations and periods of intense change in order to achieve the position it occupies in the modern world. From the Middle Ages through to the Reunification, the economy in Germany has been evolving and changing, for both good and ill.

During the Middle Ages, Germans were forced to compete for limited resources in a closed system. As such, the German economy was on tenuous ground. Still, a delicate balance between government, commerce, and production was maintained well enough that the economy grew and prospered during this period. A heavy emphasis was placed on guild operations, which controlled production and distribution of goods, as well as trade between neighboring states. Many German states had to trade with their neighbors in order to acquire the materials they could not make for themselves. The strict guild laws, which stated that a person could not pursue a trade or work as a craftsman until he had been apprenticed and had demonstrated competence, elevated the level of quality that German goods exhibited.

During the Industrial revolution, which had a late start in Germany, the governments of the German nation states became directly involved in the German economy more than at any point in history, subsidizing factories and supporting economic development. During the second industrial revolution, which introduced new techniques and technologies to the industrialized nations of the world, the post-Unification government under Chancellor Otto von Bismarck supported these changes, contributing funds to heavy industry and crafts and trades alike because it became necessary to ensure that all parts of the empire were prosperous. At the turn of the century, German industrialists combined their efforts with bankers, mercantilists, the military, and the crown in order to create a surge in German commerce, which is still regarded as an economic miracle.

The first major crisis for the German economy came after World War I, when the Treaty of Versailles sparked the major bouts of inflation and depression that would eventually spell ruin for the Weimar Republic. The value of the German currency, the Papiermark, which was worth 8.9 marks per 1 US Dollar in 1918, fell to an incredible 4.2 trillion marks per 1 US dollar by the mid 1920s. Following this, the Great Depression cemented the collapse of the German economy, and brought about the conditions that led to the rise of Adolph Hitler and the Nazi Party.