Why Did Early Industrial Capitalists Suggest Minimum Wages and Social Insurance?

The industrial district of Aachen (Prussian Rhineprovince) was the economically most advanced industrial region in Prussia in the early 19th century. The small region of Aachen was leading in terms of industrial employment, technology, and modern industrial organisation.

Surprisingly, regional entrepreneurs also suggested elements of a modern welfare economy. In 1830, they proposed the introduction of collective labour contracts regulating f.e. working hours, and minimum wages, and about 1860 – more than 20 years before Bismarck – they suggested a pension system with equal mandatory contributions from employers and employees. The proposals did not gain support from the Prussian authorities that argued collective agreements violated individual contracting. This very specific constellations, the entrepreneurs demanding social security for labour and the Prussian state defending the liberal principals, contradicts the dominant perception of the development of Bismark’s welfare state.

The paper explains the motivation of the industrialist’s suggestions, which were based on economic reasoning and self-interest rather than on philanthropic motives (they opposed to regulative intervention in many cases, against the regulations on child labour, 1837). While analysing social policy as an entrepreneurial aim, the paper puts also the German welfare state in a new perspective.

• The paper is not available on the website, for people who are interested please ask the author for the paper.

The Business History Seminar is organised by the Business History Centre and has been made possible by financial support from the Erasmus Research Institute of Management (ERIM) and the Erasmus School of History, Culture and Communication.