City of inventions and wealth
Nobody said that history will always be fair. Since it became evident that German car companies have been manipulating emission tests, diesel engines have had a pretty bad reputation. But once upon a time, this special combustion engine, which was invented by the engineer Rudolf Diesel in the late 19th century, was considered a shining example of technological progress. For decades, it excelled in its efficiency and many experts still consider it more environmentally friendly than people would have you believe.
This innovative engine was not developed in a cosmopolitan metropolis, but the comparatively tranquil and introspective city of Augsburg. Born in Paris, Rudolf Diesel came from a family that originated in Augsburg. He benefitted greatly from his work with the Maschinenfabrik Augsburg (now MAN) and its director, Heinrich von Buz. It was under his leadership that the city on the Lech River not only gave rise to the diesel engine, but also the first German rotation press for printing newspapers and the first refrigeration system, developed by Carl von Linde.
From the creation of the diesel engine to the promotion of doubleentry bookkeeping, the production of calico on an industrial scale and water management, the small city of Augsburg has been a source of innovation throughout the Ages.
The late 19th century was not the only period of industrial excellence in which the city of Augsburg shone as a cradle of innovation. For centuries, the city of currently 300,000 inhabitants – relatively small in international terms – was the source of one ground-breaking idea after another, of a technological, commercial and social nature.
The Fugger dynasty and first use of the value chain
A key role in these developments was played by the most famous dynasty to have walked the streets of Augsburg: the Fugger family and its best-known patriarch, Jakob Fugger (1459-1525). Also known as Jakob Fugger the Rich, his sobriquet was wholly justified as he was one of the richest men of his time. Fugger owed his affluence and extensive political influence first and foremost to his inventiveness. For example, he introduced the Germans to double-entry bookkeeping, which he first encountered on a visit to Venice. The accounting technique provided Fugger with the ideal tool for continuously overseeing the commercial accomplishments of his different lines of business.
Fugger had an outstanding ability to exploit his growing number of financial options to expand his industrial power base. One example of this was when he gave a rather generous loan to Archduke Sigismund of Austria, but instead of asking for the loan to be repaid, it was settled in mining rights and stakes in mining operations. This allowed the Fugger family to occupy a pivotal position not only in long-distance trading and banking, but also in mining and metal processing. As the historian Guido Komatsu describes, the dynasty put these resources to exceedingly innovative use: “Because the Fugger family processed and sold the metal it produced itself, it spanned the entire value chain, so its profits were immense.”
Similar success was enjoyed by the Welser family, which also lived in Augsburg. In 1505, the Welsers bought a stake in the Portuguese Carreira da Índia – the lucrative Indian spice race that generated significant financial returns. Not unlike its local competitor, the Fugger dynasty, the family used this money to enter into full-scale banking. It then systematically engaged in what these days would be called globalisation. It became involved in a large number of European trading centres, started trading sugar cane from Madeira and, in 1528, even received colonial rights for the Province of Venezuela from the Spanish king.
From canals to calico printing
A good two centuries later, the pursuits of Johann Heinrich Schüle (1720-1811) were also shaped by courage, a thirst for action and an international outlook. A trained clerk, Schüle became one of the leading proponents of the blossoming textile industry in Augsburg. His speciality was printing calico, based on the Indian technique of printing plain-woven cotton. It was Schüle who introduced copper plate printing to Germany. This made it possible to produce more intricate drawings than the conventional technique of using wooden models. The move turned him into Europe’s leading producer of calico.
"There are plenty of examples that highlight how Augsburg has provided rich soil for the seeds of innovation over the centuries."
Augsburg was able to maintain its position as a hub of the European textile industry into the 20th century thanks to another innovation. In the Middle Ages, the city of Augsburg started developing a water management system that was second to none. The system was even named a UNESCO World Heritage Site in July 2019. Augsburg’s ingenious canal system is now considered one of its defining features and it was built straight through the city to supply power to textile manufacturers.
The city fathers of Augsburg also broke new ground with the drinking water supply. In 1416, they erected a special water tower next to the Red Gate which was still in use as late as the 19th century. Augsburg also played a pioneering role in social causes, as testified by the famous Fuggerei, a housing estate built by Jakob Fugger. Its terraced houses, which were built for impoverished citizens of the city between 1514 and 1523, still attract tourists from around the world to this day. Fugger’s initiative was an act of what we would now call corporate social responsibility. Not only did it help promote social equality, a vision that showed how astoundingly modern Fugger was in outlook, the homes were also good for his image and with that, his company.
From Augsburg to the whole wide world
There are plenty of other examples that highlight how Augsburg has provided rich soil for the seeds of innovation over the centuries. It’s therefore not surprising to also see a company like PATRIZIA undergo continuous development and evolve into a leading player in the European real estate market – not from an HQ building in Frankfurt, Berlin or London, but from this ‘little city’ on the Lech. The innovative spirit of Augsburg lives on.
Another thing that the enterprises of today can learn from the past is that you have to continually tread new paths if you want to stand firm in your market. Not all of Augsburg’s innovations were destined to survive as long as its canal system, the Fuggerei or MAN, which incidentally now belongs to Volkswagen. For example, in the late 18th century, Schüle’s calico printing company got into deep water. And things were even more dire for Welser: in 1546, two of its representatives in Venezuela were murdered by colonial insurrectionists and in 1614, it’s once flourishing trading company went into administration.