Mercantilism in the Reign of Frederick II and Prussian Industrial Politics in Upper Silesia 1740-1786

In late 18th century Prussia, the conditions were laied down that were to form the basis of the economic upturn of the 19th century. This period of transition was marked by a break with the former “mercantilist” or “camerialist” system as it is termed in its specific German form of promotion of trade and industry by the state in the 18th century. It was not mercantilist policy but its avoidance that contributed considerably to the success of industrialisation beginning the late 18th century. The Prussian political economy in the middle of the 18th century, labelled ‘Friederician Mercantilism’ according to Frederick II (1740-1786), is addressed in the context of the international mercantilist system (France and England). The traditional view of German economic history is that “Friederician Mercantilism” laied down the conditions for industrial development in the 19th century. The results of this paper are different: The mercantilist sytem impeded development and, combined with the King’s obstinacy in adhering to the system, did nothing to help pave the way for development into a modern industrial nation. This is demonstrated using the example of the newly acquired Silesian province (1740), which was in no good economic state in the mid-18th century; and the first decades subsequent to Prussia’s acquisition were marked by the belligerent circumstances associated with its takeover. Later, “Friederician Mercantilism” only made a limited contribution to the transformation of Silesia into a modern industrial region. In spite of an active trade policy, the measures implemented by the Prussians in order to boost industry proved to be misdirected: financial, trade, and industrial policies emerged as irrelevant or even disadavantageous to the Silesian province. This was even more so the case for the Upper Silesian coal mining district, which was, over the course of the 19th century, to grow into a powerful industrial centre. The new Prussian administration completely underestimated this area’s potential for development. In the 1770s there was a broad discussion of the economic situation in Upper Silesia that resulted in state activity in the domain of the Upper Silesian iron industry. However, it was shaped by the state’s military and fiscal interests. “Friederician Mercantilism” had no perspective for economic development and it was only with the death of Frederick II in 1786 that the potentiality of Prussia’s and Upper Silesia’s development into a modern economiy characacterised by free enterprise emerged.