San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History of Munich
(München), Bavaria in Germany


In the eighth century CE a Benedictine monastery was founded near the site where Munich later developed. It was on a plateau of 1700 feet altitude and near (30 miles) the foot of the Bavarian Alps. In 1157 the Duke of Bavaria, Henry the Lion, allowed the Benedictine monks to found a market and in 1158 he established a mint there. From that market the city of Munich grew. The name Munich, or in German München, comes from the term home of the monks.

The monks' market was located on the left bank of the Isar River, giving the people of that river valley access to the market. The Isar River connects to the Danube River, giving even greater access to and from the monks' market. The monks' market prospered and grew.

In 1225 an important noble family, the Wittelbachs, decided to make it their home. For seven centuries the Wittelbachs dominated the politics of Munich. Munich did not join the Protestant movement and remained Catholic.

In the early 1300's Louis IV, also known as Louis the Bavarian, increased the area of the city. According to local legend beer production in Munich commenced in 1320. In 1327 the town was nearly destroyed by fire. Louis the Bavarian promoted the rebuilding of the town and it recovered.

Munich continued to prosper until 1634 when it was hit by the bubonic plague and one third of the population perished. In 1643 Munich was captured by the Swedish army during the Thirty Years War.

The extent of the city was expanded near the end of the 18th century by tearing down the wall and fortifications.

Munich was the principal city of Bavaria and became the capital of Bavaria. During the reign of Louis I, the King of Bavaria (1825 to 1848), Munich's layout and structure were planned.

In the 19th century for the first time Protestants were allowed to become citizens of Munich.

The Wittelbach dynasty ended in 1918 when Louis III abdicated at the end of World War I.

The Economic Base of Munich

Although the Munich economy produces such mundane things as food, cosmetics and clothing its premier products are precision instruments and optical and electrical appliances. It also has a strong printing and publishing industry. It is also a financial center and wholesale distribution center. Movies are also produced in Munich. Its brewing industry produces a great deal of beer but most of it is consumed locally. Enough is marketed outside of the local area to make beer a significant export for the economy.

The Cultural Element of Munich

Munich has some of the finest museums in the world. There has been great attention paid to public art such sculpture and architecture and the aesthetic layout of the city.. It has the University of Munich which was founded in 1472 but not in Munich. In 1826 the University was relocated to Munich.

Munich Now

Munich is the third largest city in Germany. Only Berlin and Hamburg are larger.

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