Roots of Institutional Transformation: Hamburg in the late 16th and early 17th centuries

Abstract: This study examines the beginnings of Hamburg’s institutional transformation from a predominantly Hanseatic-style city to a Northern European financial and economic center. Existing literature has repeatedly pointed out the importance of migrants in the diffusion of economic institutions in the early modern period. In Hamburg’s case, commercially-minded migrants from Western Europe came to Hamburg in the 16th and early 17th centuries and brought with them institutional preferences that were eventually adopted into Hamburg’s institutional framework. Scholars have theorized that Hamburg’s economic and political openness were major reasons for this migration and associated institutional development. Evidence presented in this study does support the notion that foreign merchants and businessmen had a significant impact on Hamburg’s institutional development. However, the study finds that Hamburg’s comparative advantage in political, economic, and religious openness as a pull-factor for migration is uncertain. As an alternative explanation, the study presents a hypothesis that immigration may have been more driven by geographic factors. Certain traditional institutional elements, namely the power and preferences of the ruling class and the city’s medieval-style toll privileges, complemented Hamburg’s position in a changing geographical structure of trade, and made the city a logical place for foreign merchants to settle.