There were some imprtant differences between the economic policy of Norway and that of other Western European nations in the 19th century. The Norwegian historian Francis Sejerstedt claims that a process took place in Norway in this time, in which political will to democartize capitalism and change the rules of society was central.

Compared to other European nations, Norway has traditionally been a much more egalitarian country. The nobility and the king were located in Denmark (the Norwegian nobility that survived the Black Plague were mostly massacred about 100 years after the Plague). This entailed an entirely different social structure in Norway than in the rest of Europe, both in relation to rights and duties and to resources. In spite of this, Norway, as Denmark, had a privilege economy, also known as mercantilism, with everything that entailed of monopolies, privileges and guilds. Before 1814, the economy was centrally directed by the Danish King, but a softening up of the economy had begun already in the late 1700s, in part as an effect of the Age of Enlightenment.

the Norwegian Constitution of 1814 is important if you want to understand the develpoment of the Norwegian economy. First of all, it gave power to other institutuins than the King. This new political organization had consequences for the economic organisation, as new social groups obtain political influence. After 1814, EVERYONE who owned land had the right to vote (provided they were men, of course), no matter how little their patch of land was. (Some cases have been recorded, where people who owned lless than 1 square meter of land received the right of the vote.) The vote was also given to those who leased land for a longer period of time. It has been estimated that about 45 % of Norway’s male population had the right to vote in 1814.

The new constitution also prohibited the handing out of new privileges.

Sejerstedt emphasizes the role of the Christian laymen known as the Hauge Movement, as a central condition for the poilitical and economic development of Norwegian farmers. The Haugians supported the establishment of new enterprises, such as mills, breweries, and so on. Additionally, they made it morraly legitimate to seek profit in a market, something which’d been considered greedy and un-Christian previous to this. In coalition with the farmers in the Storting and various state officials, the Haugians sought to abolish all privileges, so that everyone who wanted could start their own business enterprise.

Thus, a period of liberalization and deregulation followed the Norwegian semi-independence of 1814. They started by abolishing the monopoly on liquor in 1816, but as this led to a veritable inflation in liquor consumption, it was later reintroduced. In 1818, the forest industry was liberalized. The mining companies’ right to taking wood from its local forests were abolished in 1820, and in 1821, all privileges of the gentry were done away with.

From the 1830s and on, farmers completely dominated the Storting. In coalition with some state officials, they sought to abolish all privileges. As we have seen, this was a process that started in 1814, but in 1839 it obtained further momentum as the new political forces adapted the laws to the modernization. New legislation for artisans removed old guild privileges in cities. The trade privileges of cities were abolished in 1842. And in 1854, the sawmill privileges were done away with, something which proved important for the export of timber. Some of these privileges had the support of powerful people, and thus took longer to remove. Some holders of privileges also obtained a six-year period of abolishment, in which they e.g. would pay no tax from their income and so on.

This liberalization gradually increased the freedom to establish new industries. Old barriers limiting who could do what were abolished. Some industries were still regulated, e.g. goldsmiths and apothecaries, but rarely for economic reasons. All of this wwas a part of a new democratization, or liberalization, of the old society.

However, as the society became more and more complex, some regulations had to be reintroduced. But most of these, such as the requirement for artisans to have a master certificate, were there to ensure proper quality of the goods produced rather than serving the economic interests of a few citizens.

At the same time, the society was under heavy pressure. In 1801, Norway had a population of 900,000, while in 1855, this number had increased to 1,450,000. The main reasons for this was the introduction of the potato, and a reduction in mortality, especially that of infants. This pressure destroyed the old system from within, as a supplement to the destruction from above represented by the political changes. The old society was based on agriculture. There had been some fishery, forestry and mining as well, but the agriculture was the main industry. Unlike e.g. Denmark and some parts of Sweden, agriculture never made Norway rich, because of the difficult conditions. But nonetheless, it was the economic basis of the old Norwegian society.

The changes brought with them a new economic and social structure in Norway. Crofters became a new lower class, and in several regions the number of crofters was higher than that of self-owning farmers. Social differences increased, and emigration increased. In team with the urbanization, emigration helped reduce the effects of of the increasing population growth. Agriculture expanded, and so did the exporting industries; timber and shipping. In part, this expansion was a result of the liberalization.

The Norwegian state was in this period very oriented towards modernization. This was the case with most European states at this time, but it was particularly clear in Norway. One of the reasons for this is the Norwegians had no miltary threats hanging over them at this time, which left it as a main task of the state to modernize the nation and create conditions favourable to economic growth. The infrastructure was improved, both those related to communications as well as educational institutions. Some education prior to confirmation had been mandatory since the 1700s, and in the early 1800s this was expanded and improved. Many historians see this as the basis of the expantion in the Norwegian economy later in the century. This is supported by the fact that Norwegian and Swedish immigrants earned better than other nationalities in the US, and that American historians have used the high level of education in Scandinavia to explain this. One would perhaps suspect that the British immigrants earned more than the Scandinavians, seeing as they already knew the language, but Great Britian didn’t introduce mandatory education until the 1880s.

The Norwegian educational system did not only teach children to read and write, practical subjects were also taught. Also, rich and poor received the same education; private schools were practically non-existant. At the same time, higher education was made avaliable to parts of the population. Quality technical schools were founded, although they didn’t quite match the German technical schools. One attempt to overcome this barrier was made when scholarships were gived to students who wanted to study abroad. However, the Norwegian educational system of the 19th century was more focused on the masses than on the elite.

This offensive education policy can be seen as an example of the Norwegian state’s role as an economic organizer rather than an economic actor, as it was to become later.

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In the middle of the 19th century, agriculture, fishery and whaling expanded. Within agriculture and whaling, this was caused by technological improvements, while this was a less important cause of the expansion in the fisheries.

New kinds of cutting techniques (”silk blades”; blades that made it possible to cut a log into several planks in just one cutting, rather than cutting it once per plank) and mechanization revolutionized the timber industry, and made the basis for the Norwegian industrialization. The timber/plank industry evolved into paper production, which in turn helped in the growth of chemical industry.

Another growing industry was shipping. When Great Britain and Holland abolished their nvigation acts, Norwegian shipping exploded. Ships were built in small towns — there were some 50 shipyards between Kragerø and Lillesand — and this also stimulated other kinds of industry. The liberalization of sea transport was beneficial for Norway because the country had low wage rates, investors and a lot of competance in the field of shipping. As mentioned above, the shipyards were integrated in small coastal communities, and producers of parts for the ship was often paid not in money, but in shares on the ship. In other words, a communal organization of the ownership of ships was established; ownership which required massive amounts of capital to establish. When more people contributed, the investment share, and thus the risk, of each investor was reduced. The basis of the organization was Norway’s egalitarian social structure, which provided a fundament for cooperation.

Agriculture wasn’t important as a source of export, but its domestic importance was great. As in many Western countries, only to a larger extent, Norwegian agriculture had strong cooperative traits. It all begun with cooperative insurance, and from the 1830s it continued with banks, dairies, breweries and more. Every county soon had its own bank, which halped finance the modernization of the agricultural industry. This decentralized bank system was highly unusual. E.g. in Sweden, the banks were centred in the capital, Stockholm. These cooperatives created an atmosphere where individuals’ first experiences with the market was as members of a community.

Fritz Hodme has claimed that the economic growth in Norway in this period was driven by export. The international liberalization increased Norwegian exports, which in turn stimulated the entire economy. Sejerstedt, however, argues that the economic growth wasn’t a result of mere passive drifting, but that the economic growth of Norway in this period was a result of policies particular to Norway.

Norwegian economic growth, 1820-1914
In the 19th century, Norway’s economic growth surpassed that of e.g. Denmark and Sweden, and the view of Norway as a poor country in this period, is fallacious. Only Great Britain, Holland and Denmark were richer than Norway [eh, I'm a little unsure of what the scale used to measure this, is, and what, exactly, it refers to. An uneducated guess would be either annual economic growth per capita, or GDP per capita], and if one studies the standard of living Norway’s relative position is even better.

In the period we are examining here, the Norwegian economy experienced a relatively rapid growth from 1820 to 1875, while the growth went slower from 1875 to 1905, at least when compared to other nations. In the latter period, Sweden and Germany had Europe’s most expansive economies. But why did Norway weaken, and why did others do better?

Primarily, this had three causes; the transition to steel ships, a hardening of competition in the lumbering industry, and a crisis in agriculture. Additionally, emigration may have played a role.

Up until 1865, the Norwegian shipping industry expanded. However, Norwegian shipping companies were slow to replace the old wooden sailing ships with modern steam ships, and both the Norwegian shipyard industry and the shipping companies were based in small towns along the south coast, which made it harder to modernize. Additionally, Norwegians were good at both sailing and the construction of sailing ships, but knew little of the construction of engines and steel ships. The shipping companies sought to solve this problem by offering lower prices and buying old ships. But this wasn’t a good long-term strategy. The growth in the Norwegian shipping industry stopped around 1875, bringing the rest of the economy down with it. After all, the Norwegian merchant fleet was the third largest in the world, surpassed only by the US and the UK. And when Norway was a much smaller country than these, it becomes obvious that the relative impornatce of the shipping industry increases.

At the same time, the competition in the international lumber trade hardened as timber from Sweden, Finland and Russia entered Western markets around 1875. Before this, Norway had had a larger timber industry than Sweden, while Sweden had focused on its iron-based industry. The Swedish iron industry had for a long time had privileged rights on exploitation of forest resources, but when these were abolished, the Swedish timber industry blossomed, both in regard to planks and paper. And because Sweden had both larger and richer forests than Norway, the Norwegian timber industry lost in the competiton for markets and customers. The same development took place farther east. Sweden however, had another comparative advantage. Sweden had for a time been the world’s greatest exporter of iron. Iron industry was one of the core industries of the Industrial Revolution, and this industry brought many other industries with it in its wake, such as machine industry. Also, compared to most other European nations, Sweden had a better fundamental education system, something which gave them a further advantage.

As for the Norwegian agriculture, it was hit hard by the combination of a free trade regime and sinking transport costs. Norwegian cereals were ousted on even the Norwegian market by cereals from Canada or Russia. A corn tariff was wanted by the farmers, but the fisheries and the shipping industry blocked it. They feared that if Norweay started protecting its agriculture, the states these industries exported most of their products to would answer with tariffs on Norwegian fish or shipping services. Thus, the consideration of the export industries further worsened the situation of the farmers. However, they managed to adapt somewhat, by shifting their production from cereals to meats and dairy products, primarily through cooperatives. Compared to e.g. Danish farmers, Norwegian farmers were struck harder because the conditions of the Norwegian agriculture were much more marginal: The climate was less fit for growing cereals, and the soil was less fertile, more rocky, harder to prepare for agricultural use, and on top of all of this, much Norwegian farmland were steep slopes, which made it harder to utilize mechanized farming tools.

But between 1905 and 1920, economic growth acceletared again. Water power was central in this expansion, but the growth had a much broader basis than that. The shipping industry expands again after upgrading the fleet, as they already knew the international markets.Soon, the transition is even made from steam to combustion engines, without too much trouble. Once again, Norway has the third largest merchant fleet in the world.

But water power was nonetheless the most important factor. New ways of utilizing an old natural resource provided Norwegian industry with a huge comparative advantage, as the electricity production boosted metallurgical industries.

For a long time, Norway was among Europe’s most liberal states when it came to foreign ownership of natural resources, and from 1895 foreginers start buying Norwegian waterfalls. At the same time, a conflict arose between the owners of factories and owners of forests. The latter group felt that the former group pocketed most of the profits, and they demaned consession laws: They wanted legislation to protect them from the factory owners. Parallelly, foreigners were purchasing waterfalls. In 1906, a panick law is passed. Purchases of forests, waterfalls and mineral rights now have to be sanctioned by Norwegian authorities. This law was primarily aimed at foreign buyers. Then, in 1917, the final Concession Act is passed. It is very strict; control of natural resources is passed on to the state. Only in exceptional cases would new foreign purchases be approved. The law was also advantageous for forest owners, as it made it illegal to separate forests from the farms they traditionally belonged to. Some have claimed that this represented an oppositing situation to the old privilege society, as it benefitted local, small scale farmers rather than large external corporations. “This law would later form the basis for the Norwegian oil industry.) Additionally, the law included a clause stating that ownership of forests, waterfalls and mineral rights would return to the state after 75 years, excepting resources bought before 1917. Much of this legislation is today under siege from the EEA.

In many ways, this strengthens Sejerstedt’s claims about economic control based on views on what benefitted the society as a whole. However, Norway wasn’t entirely exceptional in this regard. South German states (such as Baden-Württemberg) and Switzerland also protected their natural resources, and had traditions for grass roots organizations. Sweden passed similar legislation later, primarily to guard their resources from Norwegian investors, and such laws also exist in some American and Canadian states. States rich on natural resources have long traditions for trying to protect these resources from external interests.