Railroads: The Transformation of Capitalism

The Role of the State: French and German Railroads

Throughout the nineteenth century, as France underwent transformative political changes from monarchy to republic to empire, a strong bureaucratic state prevailed. As private initiatives developed in the railroad industry in France, the state continued to play an increasingly prominent role. Historian Charles Freedeman notes that the railroad law of 1842 “provided for state acquisition of the right of way and preparation of the road bed (the infrastructure), with private companies laying the rails, providing the locomotives and rolling stock, and operating the lines (the superstructure).”12

  • Annuaire Officiel des Chemins de Fer. 1 (1847-1848). Kress Collection of Business and Economics, Baker Library Historical Collections.
  • ...Understanding the process of industrial change requires due attention to its political context, just as understanding the process of political change must take account of its industrial context.
 

It was the single bureaucratic system that controlled and permitted the building of lines, provided overall coordination and efficiency, and prevented competition or independent interests from developing in France. Historian Frank Dobbin asserts, “republican theorists articulated a . . . theory of democratic political order in which efforts of private groups and local governments to direct the economy threatened the sovereignty of the representative, central, state.”13 As early as 1838, Henri Fournel, a member of the Saint-Simonian political and social movement, wrote that in regard to the railroad system in France, “no one . . . question[ed] the intervention of the Government. . . . [B]y unanimous consent it pertained to the state alone to stand aloof from local preferences to consider solely the general interest.”14

  • Girault de Saint-Fargeau. <em>Guide Pittoresque du Voyageur en France</em>. Paris: Firmin Didot Frres, 1837. Kress Collection of Business and Economics, Baker Library Historical Collections.
  • The Inception of the World's Railroads</em>. Kress Collection of Business and Economics, Baker Library Historical Collections. Gift of J.P. Morgan.
 

Railroads helped Germany, like the United States, become a leading industrial power by the early twentieth century and complete its transformation from an agrarian to an industrial state. Regional trains emanating from Berlin and Cologne led to other German states as well as to European countries to the north, south, east, and west, connecting vast areas and markets. In the 1830s and 40s early railroad development in Prussia was not controlled by the state. Rather, German investors (including the Rothschilds and Mendelssohns), investment banking houses, and other European investors provided private capital.

  • Prussia (Germany). Ministerium der -ffentlichen Arbeiten. Berlin und seine Eisenbahnen, 1846-1896. Berlin: Springer, 1896. Baker Old Class Collection, Baker Library Historical Collections.
  • Deutsche Reichsbahn-Gesellschaft. Hundert Jahre Deutsche Eisenbahnen. Berlin: Deutschen Reichsbahn, 1935. Baker Old Class Collection, Baker Library Historical Collections.
  • Prussia (Germany). Ministerium der -ffentlichen Arbeiten. Berlin und seine Eisenbahnen, 1846-1896. Berlin: Springer, 1896. Baker Old Class Collection, Baker Library Historical Collections.
  • Prussia (Germany). Ministerium der -ffentlichen Arbeiten. Berlin und seine Eisenbahnen, 1846-1896. Berlin: Springer, 1896. Baker Old Class Collection, Baker Library Historical Collections.
 

State officials, historian Colleen Dunlavy reasons, “initially left railroad construction entirely in private hands, a situation that railroad men used with considerable success to fend off regulation, lest it scare away private capital.”15 Her scholarship has revealed that railroads at that time were run with a more liberal policy than previously believed, with minimal intervention from the government. Significant government support and control did not play a role until the 1870s, when Prussia, now part of a newly unified Germany, nationalized its railroad industry.

 
  1. Colleen A. Dunlavy, Politics and Industrialization: Early Railroads in the United States and Prussia. Princeton: Princeton University Press, 1994, p. xii.
  2. Charles E. Freedeman, Joint-Stock Enterprise in France, 1807-1867: From Privileged Company to Modern Corporation. Chapel Hill: University of North Carolina Press, 1979, p. 67.
  3. Frank Dobbin, Forging Industrial Policy: The United States, Britain, and France in the Railway Age. New York: Cambridge University Press, 1994, p. 43.
  4. See Georges LeFranc, “The French Railroads, 1823"1842,” Journal of Economic and Business History (1930): 321, in Frank Dobbin, Forging Industrial Policy: The United States, Britain, and France in the Railway Age, New York: Cambridge University Press, 1994, p. 115.
  5. Colleen A. Dunlavy, “Organizing Railroad Interests: The Creation of National Railroad Associations in the United States and Prussia,” Business and Economic History, Second Series, 19 (1990): 134.