Dual revolution and Saxon cotton industry fixed geographical distribution, guild regulation, and quality improving spirits

Economic history studies often assume that the guild system has a negative impact on economic development and technological innovation. Some argue that the spillover introduction of liberal institutions from the French Revolution into Germany had a lasting effect on the latter country’s economic development. However, Saxony is a good counterexample to their argument. This paper shows that in both the short and the long run, geographical distribution of cotton production remained unaffected and emerged as a powerful center for the textile industry. In terms of production volume, the indirect impact of the French Revolutionary War and the direct impact of the Industrial Revolution were enormous. In the short run, institutional aspects such as guild regulations did not have a significant impact on the Saxon textile industry. However, in the long run, it is likely that the regulations restricted the industry’s development. Despite guild regulations, industrial promotion policy by government can stimulate “quality improving spirits.” Saxony's trade policy is not a story that can be concluded by the dichotomy of the introduction or non-introduction of freedom of trade. Therefore, dummy variables such as 0 or 1 for the introduction or non-introduction of freedom of trade trivialize the discussion.