Making Way for the Sparkasse—Institutions of Transition Between Personal and Organisational Credit in Nineteenth-Century Germany

Regularly, New Institutional Economics refers to the nineteenth century as an era of an Institutional Revolution. Starting from a robust setting of norms, one assumes an evolution of institutions in the credit market comparable to the well-known shift from personal to impersonal trust. However, this transitional period between private creditors and the emergence of banking businesses has remained neglected, or underexposed—their business practices sometimes portrayed as antithetical. Based on an extensive analysis of notarised debt certificates in the rural areas of Saar-Prussia spanning the “long” nineteenth century, I focus on said period. While before 1820 most loans were granted by private individuals, after 1870 savings banks almost completely took over the credit market. Meanwhile—I hypothesise—farmer-bankers, church factories, and pension funds, transferred the soft institutions already established in the credit market into organisational phenomena, that made the way for the success of the Sparkassen.