Mercantilism and the Jews

When tolerance became profitable

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Reprinted with permission from The Course of Modern Jewish History (Vintage Books).

Mercantilism: A Commercial Revolution

During the 17th and 18th centuries, a significant and far-reaching revolution occurred in European life. It was a commercial revolution, precipitated when the feudal and agricultural economy of Europe was inundated by vast new supplies of money. The monies of Mexico and Peru provided gold and silver ingots for the Old World in quantities heretofore undreamed of. The more this currency poured into Europe's veins, the more Europe became dependent upon it for a rising standard of living. 

Money provided luxuries in food and dress for the city dweller. For the peasant in the field, money meant an opportunity to pat off feudal obligations and to own a plot of soil free and clear. For the king, above all, money represented hired armies and bureaucrats, and independence of a jealous and covetous nobility. In the 17th and 18th centuries, money was indispensable to the purposes of such monarchs as Frederick William, the Great Elector of Brandenburg, and Louis XIV, the Sun King of France--men for whom absolutist authority in their realms was hardly less than an obsession.

Moreover the typical monarch of the Baroque Age viewed money as a commodity which could not be shared with his dynastic neighbors but which had rather to be horded. It was important, therefore, that the balance of trade be kept favorable, in order that more industrial and agricultural produce be exported than imported.

dollar billsEach ruler sought now to monopolize the trade and wealth of Europe, to build up a reservoir of industries, markets, and raw materials. Many a bloody battle of the early modern era was fought for remote and pestilent islands that were endowed with spices or mineral resources. This process of gouging out unshared empires of trade at the expense of one's neighbors was called mercantilism.

Mercantilism and Religion

By the opening of the 18th century the typical mercantilist, preoccupied with accumulating money, was little concerned with matters of religion and religious heresy; for in the world of mercantilism the issues of morality and religion were irrelevant nuances. Certainly no self-respecting mercantilist state could countenance persecution; after all, the suppression or eviction of any one religious group might well throw an entire economy out of gear. The mercantilist age was an age of comparative religious toleration because such toleration usually proved more profitable. The divisions of theology were less compelling now than the multiplication of revenues.

Because money was the great equalizer, it was inevitable that Christian Europe should begin to view its Jews in a completely new light. Here was a people who understood commerce, a people uninhibited by feudal ties or ecclesiastical traditions. Never having been bound to an agrarian economy, the Jews have been compelled, as a result, to pioneer in business and finance.

The practical monarchs of Western Europe were aware of this fact; they recognized the usefulness of an experienced mercantile people, a footloose urban people with international connections, avid, even desperate, to exploit opportunity wherever it might be found. Hence the age of mercantilism, which was also the age of absolutism, coincided with the transfer of the Jewish problem from the religious to the political sphere.

Viewed as an additional source of national power, certain classes of Jews were extended grudging toleration by the rulers of the Netherlands, England, even later of France and Bran­denburg‑Prussia. Of course the new toleration was not granted to all Jews, or even to most of them. The great majority still was involved in peddling, and was confined to the slum or ghetto neigh­borhoods of Europe's cities. But the growth of a class of "excep­tion Jews" revealed the dichotomy of attitude of many European monarchs.

Frederick II of Prussia: A Model Enlightened Despot

Frederick II of Prussia was an example of this kind of ambivalence. He was perhaps the most brilliant of the enlightened despots, a man who created a strikingly taut and efficient cameralist administration,who fancied himself the patron saint of European rationalism.

But Frederick personally despised the Jews. In his Political Testament of 1752 he described them as the most dangerous of all sects, "avaricious, superstitious, backward," a group that stood in the way of the general progress of mankind. We have seen the degrading disabilities he imposed on his captive Jewish population. [Such disabilities included restrictions on family life (marriage and family movement were strictly regulated), domicile, and synagogue construction, to name a few]

Nevertheless, Frederick was perfectly capable of sublimating his prejudices in order to make effective use of the Jews in the mechanism of his state. This sense of dynastic responsibility explained his determination to prohibit Jews from engaging in some branches of trade, and his willingness, on the other hand, to permit them into other branches. It explained the fact that he made life miserable for them by the most cunning variety of re­strictions and, at the same time, singled out individual Jews for bounties, concessions, and special privileges, appointed them as court purveyors, entrusted factories and companies to them, and used them as the intermediaries in his export trade.

For Frederick was first and foremost a mercantilist; he was willing to exploit any group capable of contributing to a wealthy Prussian state and an efficient Prussian bureaucracy. When, in 1763, therefore, Frederick grudgingly permitted younger children of Jews to join their older brothers or sisters beyond the ghetto walls, he demanded in return that the parents either establish factories or "promote the marketing of home products outside the countryside." Because agrarian Po­land was a source of raw materials and a natural market for Prussian manufactured goods, the king resolved to use his Jews, long familiar with the Polish commercial world, as his principal intermediaries.

Small Groups of Jews Moved from Pawning to Peddling to Retail

The policy of Frederick the Great was paralleled by many mon­archs and princes in the early modem era. Despite a cruel grillwork of prohibitions and tax burdens, selected Jews of one German state after another were granted privileged status, rights of domicile outside the ghetto, rights of exemption from Jew‑taxes--if in return they created valuable industries and trade connections for their rulers.

Of course, only small groups of Jews were equipped to meet these standards; but their numbers were growing. In the group of Westphalian countries known as Paderbom, for example, Jews had long been limited to trade in pawned articles and gold and jewels. These restrictions had resulted from the pressure of Chris­tian guild merchants and artisans.

But by the early eighteenth cen­tury the guilds had largely atrophied, for they had been unable to meet the economic demands of a growing population. The Jews ventured tenuously into this vacuum. They moved from pawn-broking to peddling, from peddling to retailing. Some Jews eventually became fairly prosperous exporters and importers.

Viewing with pleased surprise the wealth that these Jewish merchants pro­vided for Westphalia, the dukes began to rescind many of the remaining restrictions upon Jewish activity. As a result, some Jews entered the fur trade, the trade in agricultural products, the traffic in linen and yarns. Groups of especially favored Jewish merchants were allowed to remain outside the ghetto for longer intervals to trade in Westphalian fairs without the usual disabilities, and could raise their children in comparatively decent surroundings.

Gluckel of Hameln, Model Merchant

The improvement in Jewish economic status is most graphically described in the diary entries of an eighteenth‑century German Jewess, Gluckel of Hameln. During the early years of Gluckel's life in Hanover, her husband and brothers earn their livelihood as petty traders, trudging form door to door in Hamburg, buying old gold and selling it to jewelers or merchants. The wife of one of Gluckel's neighbors sells feminine knickknacks, Galanteriewaren, at the Kiel fair, while other Jewish neighbors deal in ribbons, hardware, and cutlery, in small loans and secondhand jewelry.

Gradually Gluckel's relatives and friends enter the retail trade in cattle and old clothes. Near the end of her life some of them even begin to buy goods from Amsterdam, Danzig, and Poland, and sell them in the leading German fairs. They undertake contracts for delivering silver to gov­ernment mints; they sell cash and bills of exchange on a scale that approaches banking.

Of course, the majority of Jewish disabilities remained. As a rule, Jews still were confined to ghettoized areas, subjected to op­pressive and degrading taxes. Most of them were quite poor. But increasing numbers of Jews were beginning to edge into the world beyond the ghetto. Taking advantage of the growing indifference to theological and religious matters that characterized 18th century life, they began, at least in small measure, to share the profits of the new commercial order. The economic security won by a minority of Jewish entrepreneurs provided a material basis for the political, social, and cultural emancipation that was to follow.

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Howard Sachar

Howard M. Sachar is the author of numerous books, including A History of Israel, A History of the Jews in America, Farewell Espana, Israel and Europe, and A History of Jews in the Modern World. He is also the editor of the 39-volume The Rise of Israel: A Documentary History. He serves as Professor of Modern History at George Washington University.