Abstract: The Risks and Benefits of Local Business Entrenchment: The Fur Industry as a Local Production System in Leipzig, 1918-1933
This paper views the restructuring of the international fur industry in the 1920s and its bearings on the Leipzig fur cluster. According to handbook literature, macroeconomic restructuring entails more continuous and formalized collaboration among economic actors in a regional cluster. The paper has attention for new business practices and formation of firm groupings that enabled commerce with the Soviet Trade Agencies. In particular, attention is paid to the networks between local finance and industry in the readmission to the Russian market. The Soviet preference for larger-sized contracts and deals stimulated cooperation between bank divisions in Leipzig and fur industrialists. The new arrangements in the cluster and increased collaboration between economic actors and firms allowed for a boom in the fur industry in the second half of the 1920s. It will be shown, however, that the growing entanglement and amalgamation of interests of local finance and business was a risky regional business model. The paper casts attention to growing asymmetries produced by the strengthened networks, in particular how the recovery of the fur industry went along with an externalization of risks upon local banks and how this reinforced the effects of the economic depression of the 1930s on the fur industry.