Early Capitalism

Early Capitalism

After the annexation of Galicia to the Habsburg Empire the Austrian administration launched its own project of the urban modernization of Lviv. New streets were laid and put in order, theaters and swimming pools were built, designed to provide newly arrived officials with "metropolitan" entertainments. New social practices for the nobility, such as balls and charity, were introduced. However, during the first half of the nineteenth century official innovations could be seen mainly in the central part of the city. The Austrians developed Lviv primarily as a center of government and administration. In the suburbs, they were interested only in places for military warehouses, barracks, and prisons, refurbishing former monasteries and convents with this in view. During the first half of the nineteenth century the city lacked resources and ideas both for broad adoption of truly progressive practices of that time and for modern infrastructure. Thus, the development of the northern suburb, which was called Zhovkivske in Austrian Lviv, depended only on the capabilities and enthusiasm of the local population or casual investors.

      As of the early nineteenth century, the early modern local space of Pidzamche was more progressive in economic terms when compared with what is now the central part of Lviv, but more backward when considered in the context of West and Central Europe. By that time, Pidzamche could no longer boast of modern European trends. Perhaps the only exception was the production of alcohol. Ignacy Chodynicki, a Lviv nineteenth-century historian, claimed that in 1812 there were four large factories of liqueurs and vodkas in Lviv; however, in his opinion, only two of them had the right to be called factories, including the world famous Baczewski factory (Chodynicki, 1829, 463 ). Also, many breweries functioned, in particular in Pidzamche, one of them is mentioned by Stanisław Schnür-Pepłowski, a contemporary historian: this is a brewery built by Jan Karpf, a German entrepreneur, in 1792 on the place of the demolished Armenian church of St. Anne (Schnür-Pepłowski, 1896, 174). On the Misjonarzów (Missionaries) square (the area of the intersection of prosp. Chornovola and vul. Pid Dubom) the city mead distillery functioned.

     Though the Austrians limited the influence of the nobility on the city affairs and cancelled the guild restrictions for craftsmen (Дудяк, 2013, 522), in Galicia it was agriculture that they placed their hope in and not industry (Saryusz-Zaleski, 1930, 11). However, in order to add weight to the "German element" in the province, the central government encouraged Austrian entrepreneurs to move there.

     The influx of German officials, merchants, and entrepreneurs contributed in the development of commercial, industrial, and public life. German entrepreneurs, however, were not necessarily eager to build factories or plants. A lot of foreign investments in Zhovkivske suburb were made in agriculture, so in the early nineteenth century there were large farms and vegetable gardens there. We know of the existence of several farms owned by Germans named Schneider and Heisler in the vicinity of what is now vul. Donetska, where the Schneider family house, built in the late nineteenth century, has survived till our days under the number 11. S. Schnür-Pepłowski mentioned also vegetable farms owned by German entrepreneurs on vul. Zamarstynivska (Schnür-Pepłowski, 1896, 182). He also observed that German gardeners in Lviv had no real competition in the first decades of the nineteenth century.

     By 1850 only nine factories were built in Lviv (Історія Львова, 1956, 57). Therefore, the local industry was supported mainly by large craftmen's workshops and partially by mechanized manufactories (a transitional form of production between the workshop and the factory), which numbered over forty at that time (Кісь, 1968, 162). Thus, vul. Tkatska (Weaver's Street), as evidenced by its name, housed several shops of weavers who continued to produce fabrics manually.

     The only important event of the contemporary economic life were the "Lviv Contracts," an annual fair of regional significance. Agreements concluded there concerned mainly selling big quantities of vegetables to the more developed industrial centers of the Austro-Hungarian Empire. The general economic stagnation in Lviv is evidenced by the fact that many officials subleased their homes to the "Lviv Contracts" guest participants. For them, this was almost the only way to cope with the rent during the year. Similarly, it was the successful sale of goods during the "Contracts" that the material well-being of the manufacturers of furniture, clothing, or carriages in the following year depended on (Schnür-Pepłowski, 1896, 49).

     While the Lviv craftsmen elite did not notice the new realities and tried to bring back the success of the old economic schemes, it was the Jewish community, also focused on "business affairs" but not fettered with the burden of traditions, that became the main engine of capitalism in Lviv. Jewish entrepreneurs were used to invest in retail trade of day-to-day goods though it was not too presentable (thus deserving contempt from those aiming to buy "luxury" expensive items). This was consistent with the economic niche, which the Jews were driven into by the representatives of Christian nobility in previous centuries. However, in the conditions of the initial accumulation of capital in Lviv, this strategy proved to be rather productive. This allowed Jewish traders to gradually develop, by way of evolution, capitalist practices on the local ground, without waiting for the introduction of adopted patterns "from above and from the outside." For a long time, Lviv Christian traders took the tactics of their Jewish counterparts contemptuously, despite the fact that the latter reproduced the general logic of the initial development of capitalism in West Europe more adequately. The Jewish approach to commerce was described in 1877 as follows: "The Jews, with their usual skill, (...) fill the city with more and more worse and cheaper goods. They have instilled a well-known slogan of the German business, "Bad but cheap!", in the local trading ground and gain quite a lot on this. Fine shops owned by Christians merchants are increasingly empty. Our merchants have almost completely left the market at the Krakivska gate, while Jewish trading pioneers are more and more present at the Halytsky market, on the Kapitulna and Mariacka squares, on ul. Karola Ludwika; there are some areas of trade, which are dominated almost exclusively by the Jews, and there are more and more stores where Christian merchants sell Jewish goods" (Merunowicz, 1877, 78).

     There were attempts to fight with the effective but unworthy "Jewish basic capitalism," concentrated on the commercial space of the Krakidały. The Wool Fair was opened in 1837, conceived as a way to leave out Jewish dealers who bought wool at low prices directly from small producers, visiting their yards. The city invested three thousand zlotys in this fair, and the participants were exempt from fees in the hope of significant future benefits. However, the fair failed to change the already established patterns, and in 1855 it was moved to Brody (Schnür-Pepłowski, 1896, 50). A similar fate befell the St. Agnieszka Fair organized in about the same time; eventually, it also ceased to attract customers. Meanwhile, resources were accumulated gradually among the "basic" entrepreneurs of the Zhovkivske suburb allowing big Jewish factory owners and financiers to penetrate into the Lviv market in the late nineteenth century.