Published by EH.Net (July 2020)

Thomas Max Safley, Family Firms and Merchant Capitalism in Early Modern Europe: The Business, Bankruptcy and Resilience of the Höchstetters of Augsburg. New York: Routledge, 2020. xii + 287 pp. $140 (hardcover), ISBN: 978-0-367-13710-6.

Reviewed for EH.Net by Timothy W. Guinnane, Department of Economics, Yale University.


In January of 1524, several members of the Höchstetter family and their friends gathered in Augsburg to sign a new agreement to regulate their ongoing business. The firm, “Ambrosius and Hans, the Brothers Höchstetter and Associates,” combined the leading members of a commercial family that had been operating in the area for over a century. In 1528, Ambrosius I Höchstetter (as the records call him) reached out to his wealthier and more famous rival, Anton Fugger, for counsel and assistance. Ambrosius recognized that his firm faced an insolvency crisis that had become an open secret during 1527. By 1529, the Höchstetters faced a protracted bankruptcy that resulted in their firm’s demise and considerable losses for its creditors. Ambrosius himself died an unpleasant death in prison in 1534.

While their ancestors had concentrated on textiles, the Brothers Höchstetter engaged in a broad range of financial and commercial dealings. Increasingly, they made loans to sovereigns, who in turn afforded the family preferential mining rights. A failed attempt to monopolize the supply of mercury precipitated the collapse, although other problems contributed.

The legal environment shaped the outcomes in two ways. First, although Augsburg was a major commercial center, it had little business law at the time, forcing enterprises to rely on the local common law (ius commune). Augsburg’s law was not up to a bankruptcy of this magnitude and complexity, although the city learned its lesson and adopted rules to cope with a wave of failures later in the sixteenth century. Second, the partnership agreement in question implied that in this firm, as with almost any firm at the time, most of the partners bore unlimited liability for the firm’s obligations. Everything the Höchstetters and other partners owned could be seized to satisfy debts, from commercial property to personal real estate and household items. The only exception was the property a wife brought to the marriage as her dowry.

The proceedings reflected egregiously bad behavior by Ambrosius I and other Höchstetters. Safley stresses that even when their conduct was legal, it offended contemporary norms of business conduct. Fugger helped Höchstetter to repay debts to politically or commercially important creditors to the detriment of others. Fugger apparently saw cooperation with Höchstetter as a way to ingratiate himself with powerful business interests and political patrons, as well as to eliminate an important rival. The Höchstetters used fictitious sales to put personal property beyond their creditor’s reach. Ambrosius continued to borrow money when he knew his firm was insolvent, relying on the ignorance of some lenders to pay off debts he viewed as more important. The family also concealed personal property that creditors saw as their only hope once the firm’s business assets were gone. A chest supposedly filled with silver spent considerable time travelling among houses belonging to Ambrosius and others, for example.

Political context matters a great deal in this case. Augsburg was a Free Imperial City. The “Free” meant that it had no ruler other than the Emperor. This gave the city some scope for action, but that scope was limited by a fact important to the initial Höchstetter success: the Hapsburgs were the Höchstetters’ most important patrons, responsible for their preferential treatment in mining and other ventures. Too late for Ambrosius I, the Emperor ordered all Höchstetters released from prison in 1541 after a doubtful representation that Augsburg was holding them illegally.

A different kind of context also matters. In 1521, a disgruntled former business associate tried to satisfy what he saw as a rightful debt by organizing an armed attack on Höchstetter goods in transit. Different jurisdictions did not recognize each other’s judgments, and extra-legal “enforcement” was not unknown. Thus it is not surprising that some Höchstetter associates prospered after the bankruptcy, never escaping suspicion that they did so using capital hidden from the firm’s creditors. Joachim I (a partner in the bankrupt firm and son of Ambrosius I) escaped Augsburg and went on to be made Denmark’s master of mines. He claimed, implausibly, that the capital he used to establish his post-Augsburg career was not the bankrupt firm’s. The Höchtstetter factor in Tyrol, Wolfgang Vittel, inherited nothing and had no partners, but was able to invest large sums in building and commercial projects in Hall. When he died in 1540, the Emperor ordered important assets sold to a Höchstetter at an implausibly low price, perhaps returning the funds in name to the family that had always owned them in reality.

Safley writes a clear, direct prose that eschews terminology that might alienate readers. He respects the limits of his evidence, noting instances where he is drawing a reasonable inference from an incomplete documentary record. And he acknowledges earlier work, including a remarkable chronicle of Augsburg by the Benedictine Clemens Sender (1475-1537). Economic historians will especially appreciate his discussions of capital markets in early-modern Europe. Ambrosius and his partners borrowed from many different wealthy people, some with clear kin or other ties to the family, others apparently unrelated. Many lenders were not from Augsburg, setting the Höchstetters apart from other commercial families that drew their capital more locally. More interestingly, Höchstetters borrowed small sums from many, fairly modest people.

Safley makes a strong case for studying bankruptcy. Ordinarily one would worry that any lessons drawn from failures would only pertain to firms that had reason to fail. The concern remains in this case; the Höchstetters, Safley emphasizes, were unusually aggressive by contemporary standards, and thus widely unloved even before their failure. The bankruptcy means that we know a great deal more about the Höchstetters than other businesses, however. Their failure exposed information ordinarily kept secret or written only in documents unlikely to end up in archives.

This study represents a model of analytical care and scrupulous respect for sometimes-recalcitrant sources. It would serve as an excellent introduction to the world of early-modern business enterprises. Safley notes, correctly, that scholars have not paid enough attention to bankruptcy. Family Firms and Merchant Capitalism makes a good start toward remedying that deficiency.



Timothy W. Guinnane is the Philip Golden Bartlett Professor of Economic History in the Department of Economics at Yale University. Recent publications include “Enterprise Form: Theory and History” (with Jakob Schneebacher), Explorations in Economic History (2020).

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