The German-Jewish Economic Elite (1900-1933)

Abstract

In the early twentieth century, a dense corporate network was created among the large German corporations ("Germany Inc."). About 16% of the members of this corporate network were of Jewish background. At the center of the network (big linkers) about 25% were Jewish. The percentage of Jews in the general population was less than 1% in 1914. What comparative advantages did the Jewish minority enjoy that enabled them to succeed in the competition for leading positions in the German economy? Three hypotheses are tested: (1) The Jewish economic elite had a better education compared to the non-Jewish members of the network (human capital). (2) Jewish members had a central position in the corporate network, because many of them were engaged in finance and banking. (3) Jewish members created a network of their own that was separate from the overarching corporate network (social capital). The density of this Jewish network was higher than that of the non-Jewish economic elite (embeddedness). Our data do not support any of these hypotheses. The observed correlation between Jewish background and economic success cannot be explained by a higher level of education, a higher level of social capital, or a higher proportion of Jewish managers engaged in (private) banking.

Keywords: corporate networks, big linkers, Jewish community, market order, Germany

JEL Classification: L10, N14, P16, Z10