The Reformation and economic prosperity

Divided by Beliefs, United by Commerce

Issues

#09 Freundschaft
2017

Text

Till Hein

Pictures

Lars Hammer

The Reformation brought turbulent times to Europe and the world, and not only on the religious stage: people who shared a common creed went their separate ways, the old order was dismantled and reconstructed. New bonds and alliances were forged, paving the way for a truly globalized economy. Could the schism between the Catholics and Protestants have fathered the capitalism we know today?

The reformation
In autumn of 1517, Martin Luther was nailing his 95 famous theses to the door of the Castle Church in Wittenberg, challenging the orthodoxy of Catholicism. At the same time 9000 kilometers further west, the first Spaniards were landing on the Mexican Coast and Portuguese traders were reaching Taiwan. Two years later, as Luther continued to divide the church, Hernán Cortés was conquering the Aztec Empire in Mexico. In subsequent years the Europeans created a wide-ranging colonial system – and minerals from America and Asia were soon fueling world trade. Historians agree that the cornerstone of globalization was laid in the 16th century. But could there be a causal relationship between the Reformation and the blossoming of the global economy?

The deliberations of the famous German sociologist Max Weber (1864-1920) explore this line of thinking. In his 1904 work "The Protestant Ethic and the Spirit of Capitalism" he argued that there was an "inner kinship" between capitalism and the form of Protestantism championed by John Calvin. According to Weber, Protestants have a "specific propensity for economic rationalism" – something that fosters an entrepreneurial spirit. By way of evidence, he stated that capitalism in predominantly Protestant countries such as the Netherlands, England and the United States had developed early and burgeoned. More than anything else, Calvin's guiding principle of “unconditional election” and the “chosen” people is seen as having promoted the pursuit of profit as an expression of godliness. The provincial town of Geneva, where Calvin served as a preacher from 1541, turned into a bustling economic hub within just a few decades. And the whole of Switzerland prospered commercially during the Reformation. The country's watch industry and particularly its international banking institutions bear testament to this today.

Despite this, Weber's central tenet has not gone unchallenged. After all, in the early modern era the staunchly Catholic Venice was the epitome of a successful trading center. The Jesuit Catholic State in South America also flourished. And in the German city of Augsburg, where the Reformation garnered an exceptional number of disciples during the early 16th century, Jakob Fugger – the international trade and finance pioneer and head of the world's leading bank – remained a Catholic. By contrast Martin Luther, the most important reformer, was an opponent of globalization. His only goal was to establish missions in the new territories discovered overseas. In his eyes, international trade and finances were the work of the devil because the imports of foreign luxury goods such as gold jewelry, velvet and silk meant that German money was leaving the country. Fearing that a lack of funds at home would push down prices and cause deflation, Luther exhorted his fellow Germans not to buy these exotic wares. The future, to his mind, was rooted in rural tradition rather than global trade. He strove to "muzzle" the Fuggers of the world and curb their influence over society.

Indeed, according to many experts, the emergence of Switzerland and other countries as major trading and economic powers during the sixteenth century had less to do with the new theology of the Reformation and more with the mass influx of skilled workers that the schism within the Catholic Church had sparked. In the sixteenth and seventeenth centuries, hundreds of thousands of Protestants fled bloody religious wars over the Reformation. They relocated to countries like France and Italy, and many found a safe haven in Switzerland. Most of these refugees were educated and highly qualified. Above all, the Calvinist Huguenots from France breathed new life into the Swiss economy.

Highly educated Protestant refugees also settled in North America, Sweden, the Netherlands, Britain, Germany, Russia and South Africa. Some historians believe that the insignificant farming village of Berlin would never have become Germany's major metropolis without its Huguenot immigrants.

However, while religious schisms have impacted economies, the reverse has also been true on occasion, with economic conditions sometimes opening the door to new faiths. For example, salt merchants were introduced the writings of Martin Luther in the Salzkammergut Mountains at a time when his name was still largely unknown in the rest of modern-day Austria. The wages of salt miners there were so low that they could not afford so-called 'indulgences' – the practice whereby people could effectively buy forgiveness for their sins. Luther rejected the idea that people could purchase peace of mind and, with his teachings quickly achieving popularity among miners, the Protestant faith established a foothold in the Hallstatt region as early as the 1520s. Given the desperate shortage of salt industry workers, the Catholic rulers tolerated the "Protestant agitation" for decades.

Whatever the theological disputes, people who trade with each other are rarely enemies. So while the municipality of Venice publicly burned Luther's writings in 1527, Protestant church services were still permitted in the Fondaco dei Tedeschi on the Grand Canal, where the German merchants had their headquarters. And the Venetian merchants were almost friendly towards their partners from the North. Quite simply, business always came first.

Carpe diem
The history of Gebrüder Weiss also began in the Reformation era. The events at Lake Constance back then illustrate how entrepreneurial thinking can sometimes override the most testing of circumstances. The company evolved from the "Milan Messenger" express service which carried letters, goods and passengers through the Viamala Gorge and over the 6,900-foot high Splügen Pass between Lindau and Milan. From the 16th century onwards, the Lindau residents who operated the service were replaced by official couriers from nearby Fussach in Vorarlberg.

How did this come to be? With the Reformation gaining ground, the city of Lindau became Protestant in 1528. However, Catholic Milan would not tolerate 'heretics' and the religious inquisition in the city soon made life difficult for the Protestant couriers from Lindau. Fussach on the other side of Lake Constance had remained Catholic, so the merchants in Lindau selected its residents to operate the services instead. These included members of the Vis (Weiss) family, ancient ancestors of the company’s current owners Gebrüder Weiss. Over the generations they seized the opportunity, circumnavigated the theological infighting, and helped to provide responsibly managed transport services across the Alps.


Till Hein, born 1969, is a freelance science journalist based in Berlin.

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