Second half of the 19th Century: From entrepreneurs to major businesses
The integration of German-speaking lands in central Europe began when Napoleon consolidated principalities, advanced with the creation of the Customs Union (Zollverein) in 1834 and culminated in German unification in 1871, creating a national market with uniform currency and measurements – all of which lowered the cost of doing business. This process fostered the Second Industrial Revolution, a period of rapid industrialization and economic growth that depended on new technologies, including innovations in steel production, the production of electricity, and the creation of synthetic dyes. The German economy flourished for many reasons: German manufacturers could leapfrog over older technologies and adopt the newest production methods; the relationship to banks and capital markets made access to capital easier for German firms than for British or French firms; German politicians were willing to invest more heavily in scientific research, and German entrepreneurs employed professional managers to run their firms.
Against this background of innovative effervescence, Jewish entrepreneurs found that the barriers to entry in new industries were lower, not least because success was measured in terms of quantifiable results – and numbers spoke louder than prejudice. Provided they could find the requisite capital, many Jewish entrepreneurs harnessed the expertise they had developed and expanded into related fields. As a result, many smaller firms developed into large companies with customers spanning the globe.
In 1815, Nathan Israel started his second-hand furniture store in Molkenmarkt, the oldest square in Berlin. Israel benefited from more general trends in Europe, such as the peace after Napoleon’s defeat, the progressive reduction of barriers to trade, and the ensuing boom in the retail sector. He also used his experience as a junk dealer and the relaxation of commercial restrictions on Jewish merchants, which allowed Jews to set up small stores offering dry goods. Over time, successful retailers like Israel were able to expand their shops, not least because they recognized the importance of the customer experience to their business. Kaufhaus N. Israel soon became one of the earliest examples of the modern department store and was Berlin’s largest for a time.
For more information about Glückel of Hameln see Shared History Project: https://sharedhistoryproject.org/object/hamburg-during-the-life-of-gluckel-of-hameln