Germany began the nineteenth century as a collection of thirty-eight sovereign states with a predominantly agrarian economy. In Prussia, the largest of the German states, the agricultural sector comprised approximately two-thirds of the population, while those in industry and commerce made up less than 25 percent. In Württemberg, also an overwhelmingly agrarian state in 1840, over 80 percent of the state's wealth found its origin in agrarian pursuits, while only 8 percent of assets were based in handwork and a scant 0.6 percent made its way to factories. These numbers suggest a dearth of modern industrial activity before the middle of the nineteenth century; yet the decades prior to 1870 were characterized by a marked move out of agrarian and into industrial sectors – a process brought about by several distinct factors.

THE EARLY INDUSTRIAL PERIOD (1848–1870)

Laying the foundation for the transition to industry was the relatively strong capital accumulation that took place between 1815 and 1848 – the first extended period of calm since the start of the Thirty Years' War (1618–48). Productivity advances in agriculture between the 1820s and 1870s, particularly after the publication of Liebig's manual on the uses of chemistry in agriculture in 1840, allowed the release of labor from agrarian pursuits. The 1834 creation of a customs union among the German states (the Zollverein) increased the extent of the market for all producers and “dealt the death blow to the medieval economic system in Germany.”