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The Entrepreneur, the Family and Capitalism Some Examples from the Early Phase of Industrialisation in Germany

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Part of the German Yearbook on Business History 1981 book series (BUSINESS, volume 1981)

Abstract

The spirit and practice of capitalism emerged from non-capitalist structures and processes and were nourished by them for a long time. Max Weber illustrated this i. a. in his discussion of the relation between the Protestant ethic and the spirit of capitalism; Joseph Schumpeter generalised it and stressed the importance of pre-capitalist élites for the emergence and maintenance of the bourgeois capitalist economic and social systems. Many others have taken up the same idea, developed it further, differentiated and supplemented it. It would seem appropriate to examine it in terms of the relation between the family and (industrial) capitalism.1

Keywords

Family Firm Family Business Middle Class Family Industrial Capitalism Factory Owner 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

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    In the sample given by Stahl (Elitenkreislauf, in: Tradition, Vol. I, 1959, p.241), owner-entrepreneurs of the second or a later generation became shareholders in a family business on average at the age of 24. See below and Note 62.Google Scholar
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    R. Engelsing: Bremisches Unternehmertum, in: Schriften der Wittheit zu Bremen II, Bremen, Hannover, 1958, pp.7–112, here p.49. This is the great economic significance of belonging to religious minorities which were socially closely linked but geographically widely distributed.Google Scholar
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    The German concepts are “ganzes Haus” and “Hausgemeinschaft”, translated here by “household”, resp. “bürgerliche Familie”, translated by “middle class family”. On the choice of concepts see Mitterauer/Sieder, pp.18–23, esp. p.22f.; O. Brunner: Das “Ganze Haus” und die alteuropäische “Ökonomik” in O. Brunner: Neue Wege der Verfassungs- und Sozialgeschichte, 2nd edition, Göttingen, 1968, pp.103ff.Google Scholar
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    More precisely “full marriages”, those where the couples remain together until the end of the presumed fertility period of the wife (45 years of age). See A. von Nell: Die Entwicklung der generativen Strukturen bürgerlicher und bäuerlicher Familien von 1750 bis zur Gegenwart. Thesis, Bochum, 1973, p.29.Google Scholar
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    on the tradition of the patriarchal and autocratic head of the household: Möller: Kleinbürgerliche Familie, p.10ff. On the change in the role of women during the transition from the 18th to the 19th century see esp. K. Hausen: Die Polarisierung der “Geschlechtscharaktere” — eine Spiegelung der Dissoziation von Erwerbs- und Familienleben, in: W. Conze (ed.): Sozialgeschichte der Familie in der Neuzeit Europas. Stuttgart, 1976, pp.367–93.Google Scholar
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    See the examples in Zunkel: Der rheinisch-westfälische Unternehmer, in: W. Conze (ed.): Sozialgeschichte der Familie in der Neuzeit Europas. Stuttgart, 1976, p.71, 73; Berdrow: Familie Krupp, p.284 (on the christening of Alfred Krupp in 1812); Schramm: Neun Generationen, p.206ff.Google Scholar
  112. 49.
    See G. Hahn: Untersuchungen über die Ursachen von Unternehmensmißerfolgen. Thesis, Cologne, 1956, p.37f.;Google Scholar
  113. 49a.
    Zunkel: Der rheinisch-westfälische Unternehmer, Thesis, Cologne,1956, p.73. On the objective limitations on the role of the family as support during the Napoleonic wars from 1806–15 see Schramm: Neun Generationen, p.365. When Friedrich Krupp lost his house and his position in 1809 the young family moved into the mother’s house, where other married brothers and sisters were living (Berdrow: Familie Krupp, p.249). Paul Bredt moved back into his parents’ house with his five children in 1879 when his wife died suddenly. See Bredt: Das Haus Bredt-Rübel, p.85.Google Scholar
  114. 50.
    For an example of one of the rare unmarried entrepreneurs: Gottfried Henckels, 1804–58, for whom obviously his relations with the Gichtelianer sect sufficed, fulfilling the role the family would otherwise have taken, even aiding the recruitment of senior staff (Kelleter: Henckels, pp.138ff., 153). Werner E. Mosse assumes that there was less long-term cohesion in Jewish families, although there are spectacular cases of the contrary, than in comparable non-Jewish families. C. Wilson points out that the solidarity of non-conformist religious sects in England furthered economic growth. He goes on: “The Meeting House or Chapel extended the ties of the family, and you lent or borrowed within your known community with a confidence hardly yet to be extended beyond such limits.” (The Entrepreneur in the Industrial Revolution in Britain, in: Explorations in Entrepreneurial History, Vol. 7, 1954/5, pp.129, 45, here 131).Google Scholar
  115. 51.
    There are many instances from Hamburg in the later 18th and early 19th century in Schramm: Neun Generationen, e. g. pp.202, 206ff., 381. On the relation between Werner Siemens and his fiancée and later wife Mathilde, daughter of a professor, in the 1850s see the correspondence between them in Heintzenberg: Aus einem reichen Leben, pp.48–98, esp. pp.50, 51, 52, 62, 63, 70, 72, 82f., 85, 87; on the close relation between Werner Siemens and his brothers and its importance for the business pp.13, 14f., 19, 33, 64, 68, 320. Werner Siemens, the elder, had promised his mother shortly before her death to provide for his younger brothers and sisters, (pp.60, 95). A similar promise was given by three brothers on the death-bed of their widowed mother in 1855: Schramm: Neun Generationen, p.217. For the issues under discussion here the relations between brothers and sisters were more important than those between married couples.Google Scholar
  116. 52.
    Werner to Carl Siemens 4.11.1863 in: C. Matschoss (ed.): Werner Siemens. Ein kurzgefaßtes Lebensbild nebst einer Auswahl seiner Briefe. Vol. 1, Berlin, 1916, p.218;Google Scholar
  117. 52a.
    similarly on 25.12.1887, C. Matschoss (ed.): Werner Siemens. Ein kurzgefaßtes Lebensbild nebst einer Auswahl seiner Briefe, Vol. 2,1916 p.911, and to his son Wilhelm, his successor in the business, on 22.12.1883,Google Scholar
  118. 52b.
    in: Heintzenberg (ed.): Aus einem reichen Leben, 1916, p.320.Google Scholar
  119. 53.
    See H. Siemens: Stammbaum der Familie Siemens. Munich, 1935, p.26 (quotation), p.18. Eligible acc. to §2 of the statutes were those persons numbered in the family tree and their legitimate offspring, but not adopted children.Google Scholar
  120. 54.
    See Schramm: Neun Generationen, 1935, p.429 (portraits), 238 (the tradition of handing on names, which after the early 19th century gradually gave way to the desire for greater individualisation);Google Scholar
  121. 54a.
    Moennich: Aufbruch ins Revier, 1935, p.61 (family legends). The family Bible with its entries was used as a source by Bredt: Haus Bredt-Rübel.Google Scholar
  122. 55.
    See R. Braun: Sozialer und kultureller Wandel in einem ländlichen Industriegebiet (Zürcher Oberland) unter Einwirkung des Maschinen- und Fabrikwesens im 19. u. 20. Jahrhundert. Erlennach/Zurich/Stuttgart, 1965, pp.106f. This shows how small families which were differently structured and had particularist inclinations rather hindered the development of larger enterprises and groups of enterprises.Google Scholar
  123. 56.
    See e.g. Adelmann: Führungsschichten, p.181.Google Scholar
  124. 57.
    Zunkel: Der rheinisch-westfälische Unternehmer, p.73; Schramm, loc. cit., also mentions family days, p.253.Google Scholar
  125. 58.
    Berdrow: Familie Krupp, p.258.Google Scholar
  126. 59.
    See Möller: Kleinbürgerliche Familie, p.305f.Google Scholar
  127. 60.
    On these claims and this idealisation of the bourgeois family of the time: Schwab: Art “Familie”, loc. cit., p.291–97; Mitterauer/Sieder: Vom Patriarchat, p.160.Google Scholar
  128. 61.
    Von Nell: Entwicklung loc. cit., p.74, 75; for comparative figures see pp.72, 107, 108. The Bielefeld data is from a random sample of 14 marriages from 1830 to 1910, by K. Ditt (Note 30).Google Scholar
  129. 62.
    See Stahl: Elitenkreislauf, loc. cit., p.242. Heirs generally began to take over their father’s business on average a year earlier (at 29).Google Scholar
  130. 63.
    With the effect of putting off his marriage from Werner Siemens in a letter of 13.3.1852, in: Heintzenberg: (ed.): Aus einem reichen Leben, p.60. Several authors have noted that the tendency of the bourgeoisie not to marry until a certain degree of commercial success had been achieved was apparent at the end of the 18th century as well. See Möller: Kleinbürgerliche Familie, loc. cit., p.171, esp. Note 6.Google Scholar
  131. 64.
    See Zunkel: Der rheinisch-westfälische Unternehmer, loc. cit., p.73, esp. Note 46; see also Schramm: Neun Generationen, loc. cit., p.248 and on Charlotte Wilhelmine Honsberg in Wuppertal around 1800, “weak in the head but very anxious to marry” Bredt: Haus Bredt-Rübel, loc. cit., p.45f.Google Scholar
  132. 65.
    See examples ibid., pp.381f. (1813/14); Kelleter: Henckels loc. cit., p.154f. on the marriage of one of the heirs in 1840; Mönnich: Aufbruch, loc. cit., p.95; the letters from Werner Siemens to his fiancée, later wife (Note 51 above). One often has the impression that there were economically more rational alternatives for the entrepreneur in some cases. This also applies to Alfred Krupp’s late marriage to Bertha Eichhoff, daughter of a public servant, and certainly to that of his son Friedrich Alfred to Margaretha von Ende in 1882 which the father had prevented for years (Berdrow: Familie Krupp, pp.316, 369f.).Google Scholar
  133. 66.
    See also H. Münch: Adolph von Hansemann. Munich, Berlin, 1932: Bredt: Haus Bredt-Rübel, p.73.Google Scholar
  134. 66a.
    For an example see W. Kurschat: Das Haus Friedrich & Heinrich von der Leyen in Krefeld. Thesis, Bonn, 1933, p.32.Google Scholar
  135. 67.
    Werner Siemens seems to have taken it for granted that his eldest son Arnold, born in 1853, would take on the business. His second son, Wilhelm, born in 1855, was apparently first intended to go into parliament or act as the “scientific spirit of the business”. The third, Carl Friedrich, was not born until 1872, in the father’s second marriage and was too young to be considered for the succession, which was decided in the early 1880s. However, the eldest son proved little suited to the task. The succession then came to the second son, whose diary entries during his youth show considerable torments of self-doubt. Nevertheless, he went into the business in 1879 (without finishing his studies), where he took over various functions (with interruptions due to illness) and took over the direction of the firm in 1890. The founder, born in 1816, had therefore to carry on as head of the firm, which was growing rapidly and increasingly over-straining him, for a few years longer than he intended. See A. Roth: Wilhelm von Siemens. Berlin, Leipzig, 1922; and the diary of Wilhelm von Siemens in the Werner von Siemens Institut (Archiv) 4/Lf 775.Google Scholar
  136. 67a.
    For an example of a hard education as heir to a business which went ruthlessly over the boy’s preferences, see that of Friedrich Krupp, son of Alfred Krupp: N. Mühlen: Die Krupps. Frankfurt, 1965, p.59f.Google Scholar
  137. 68.
    On the other hand it must be borne in mind that industrial enterprises and capital are on principle easier to divide than the land owned by the nobility and the rights this brings. See the excellent discussion of these problems by H. Reif, in: J. Kocka et al.: Familie und soziale Plazierung, Opladen 1980, p.34–44.Google Scholar
  138. 68a.
    He also discusses the case of the nobility J. Kocka et al.: Familie und soziale Plazierung, Opladen 1980, pp.67–126, and in his book (see Note 2).Google Scholar
  139. 69.
    See W. Berdrow: Alfred Krupp, Vol. I, Berlin, 1927, pp.221–7;Google Scholar
  140. 69a.
    on brother Friedrich W. Berdrow: Familie Krupp 1927, p.361f. See also Note 78 below.Google Scholar
  141. 70.
    See the figures in Stahl: Elitenkreislauf, p.284.Google Scholar
  142. 71.
    For instance in the Düren paper industry: Decker: Betriebliche Sozialordnung, p.31, 104, 105 (esp. Note 43).Google Scholar
  143. 72.
    For examples see H.A. William: Carl Zeiss 1816–1888. Munich, 1967, p.91–102;Google Scholar
  144. 72a.
    on obligationslaid on sons and grandsons see Kurschaft: Haus von der Leyen, 1967, p.17 for the will made by Heinrich von der Leyen (Krefeld) in 1782.Google Scholar
  145. 73.
    See S. Haubold: Entwicklung und Organisation einer Chemnitzer Maschinenfabrik. Thesis. Bonn, 1939, pp.32ff.;Google Scholar
  146. 73a.
    H. Rachel & P. Wallich: Berliner Großkaufleute und Kapitalisten. Vol.2, Berlin, 1967, pp.222, 223; Witt: Triebkräfte, p.97.Google Scholar
  147. 74.
    See Herrmann: Entwicklungslinien 1967, p.15, for an early example in 1834;Google Scholar
  148. 74a.
    see also Mönnich: Aufbruch 1967, p.91ff. on Hoesch 1871;Google Scholar
  149. 74b.
    Kelleter: Henckels, 1967, p.181 on the change to a partnership limited by shares (1882);Google Scholar
  150. 74c.
    on the possibility of changing the legal form to that of a “GmbH” and Stumm’s influence on the 1892 legislation: Hellwig: Unternehmer, 1967, p.423f.;Google Scholar
  151. 74d.
    on the frequency of the change even in the second generation Stahl: Elitekreislauf, 1967, p.258.Google Scholar
  152. 75.
    For an example see the “Siemens’sche Vermögensgemeinschaft” of 1897 (or earlier) which collected the family capital, had statutes, and was administered by two employees. Clearly this was the only way to handle the family’s claim to disposition and management, which was anchored in shareholdings, in view of the size of the enterprises, their spread and the capital involved. So a semi-public sphere developed between the level of the enterprise and the really private sphere of the individual members or branches of this huge family. See Kocka: Unternehmensverwaltung, 1967, p.453.Google Scholar
  153. 76.
    I. e., if the enterprise was not sold to satisfy the claims of the heirs.Google Scholar
  154. 77.
    See A. Paulsen: Das ‘Gesetz der dritten Generation’. Erhaltung und Untergang von Familienunternehmungen, in: Der praktische Betriebswirt. Jg. 21, 1941, pp.271–280, here 278f., and above.Google Scholar
  155. 78.
    From 1870 to 1879 in Henckels: Kelleter,, in: Der praktische Betriebswirt. Jg. 21, 1941, p.175ff. After the death of the father there were law-suits over the inheritance. For a time the widow thought of selling to meet the various claims.Google Scholar
  156. 79.
    In the 1880s at Siemens. See J. Kocka: Siemens und der aufhaltsame Aufstieg der AEG, in: Tradition, Jg. 17, 1972, pp.125–42.Google Scholar
  157. 80.
    Leopold Schoeller & Söhne in 1862 in Düren. See Decker: Betriebliche Sozialordnung, in: Tradition, Jg. 17, 1972, p.31.Google Scholar
  158. 81.
    Examples from Krupp and Siemens in Berdrow: Familie Krupp, p.349ff. Kocka: Unternehmensverwaltung, in: Tradition, Jg. 17, 1972, p.352ff.Google Scholar
  159. 82.
    See R. Braun: Sozialer und kultureller Wandel, p.106f.; H.J. Habakkuk: Industrial Organisation since the Industrial Revolution. Southampton, 1968, p.12;Google Scholar
  160. 82a.
    D. S. Landes: The Structure of Enterprise in the Nineteenth Century, in: XIe Congrès International de Science Historique. Stockholm, 21.–28th August, 1960).Google Scholar
  161. 82b.
    Rapports V. Upsala, 1960, p.115. See also the scepticism of the Stinnes brothers and sisters with regard to the joint stock company: they were only prepared to accept this in 1848 as an emergency and transitional arrangement until the family business could be re-established: Hermann: Entwicklungslinien, in: XIe Congrès International de Science Historique. Stockholm, 21.–28th August, 1960, p.14f.Google Scholar
  162. 83.
    See Braun: Sozialer und kultureller Wandel, in: XIe Congrès International de Science Historique. Stockholm, 21.–28th August, 1960, p.106.Google Scholar
  163. 84.
    Exact dating is not possible of course here. But roughly the reference is to the last decades of the 19th century and the 20th.Google Scholar
  164. 85.
    Weber: Protestantische Ethik, loc. cit., p.188.Google Scholar
  165. 86.
    Stahl’s quantitative examination (Elitenkreislauf loc. cit., p.255f.) of management through successive generations would appear to confirm this “law of the third generation”, which certainly did not apply in the pre-industrial age: in or immediately after the third generation direction of the enterprise often passed out of the family’s hands (esp. p.264). Examples of the collapse of entrepreneurial families, which had been successful for generations or their retirement from business life around the middle of the 19th century can be found in Zunkel: Der rheinisch-westfälische Unternehmer, p.112ff.; see also Kurschat: Hans von der Leyen, p.90ff., 135f. Hypotheses in Paulsen: Das ‘Gesetz der dritten Generation’, esp.274f. (the dangers of success) and p.278f. (inheritance problems).Google Scholar
  166. 87.
    Familientradition im Maschinenbau. Untersuchungen über die Lebensdauer von Unternehmungen, in: Wirtschaftskurve. Jg. 1939, Heft 1, pp.29–50, here pp.32, 34.Google Scholar
  167. 88.
    Examples from the Wilh. Reich in Kocka: Entrepreneurs and Managers, loc. cit., p.583f. H. Böhme, Emil Kirdorf: Überlegungen zu einer Unternehmerbiographie in: Tradition, Vol. 13, 1968, p.294.Google Scholar
  168. 89.
    See Schumpeter: Kapitalismus, in: Tradition, Vol. 13, 1968, p.258ff.Google Scholar

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© Gesellschaft für Unternehmensgeschichte e. V., Köln 1981

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