Fighting Unfair Competition: The Bamberger Riot and the Emergence of Hire Purchase in Switzerland around 1900

Hire purchase is today one of the most popular modes of consumer finance worldwide, yet it is still in many ways stigmatized and controversial. In this respect, nothing much has changed since the late nineteenth century, when this new way of selling goods spread through the industrialized countries of the West. How unacceptable it was, Louis Bamberger—a pioneer of hire purchase in Switzerland—found out the hard way. In 1883, only months after the opening of his department store in St. Gallen, hundreds of angry people gathered in front of it and started smashing windows and looting. Beginning with this incident, which came to be known as the Bamberger Riot, this article traces the history of hire purchase and the controversy around it in Switzerland before the Great War. Focusing mainly on artisans and shopkeepers, I argue that the sudden emergence of hire purchase in Switzerland fundamentally challenged the market ethic and economic rationality of this section of the urban middle class.

The Transformation to the Market: At High Cost, Often with Long Lags, and Not Without Question Marks

ABSTRACTThe shift from a command economy to a market economy is not only a question of following appropriate macro-economic policies but also a matter of instilling a market ethic in the minds of people who had been socialized and rewarded in a non-market command economy. In that system, many concentrated on technical rules of survival. The lumpenproletariat in favoured industries were rewarded even when they shirked or pilfered from state enterprises. The ethics of the lumpenintelligentsia reflected Communist party values, as professional. associations were under party control. The maintenance of such attitudes creates substantial resistance to the transformation of the economy, because a Weberian protestant ethic is lacking. Transition does occur, but the legacy of the old ethic imposes high transaction costs, inefficiencies and inhibits forward direct investment.