The economist Karl Knies (1821–1898), one of the founders of the German historical school, was born in Marburg (Lahn), the son of a police official. He read history, philosophy, and theology at the University of Marburg and in 1846 was awarded a doctorate and the rights of a decent in history and government.
Caught up in the political ferment of the mid-18408, Knies increasingly turned his attention to current social issues, including problems of political economy. By doing so he was following in the footsteps of his mentor, Bruno Hildebrand, then professor of government at Marburg. As a champion of the liberal cause and as the scholar who later wrote the programmatic Die National-ökonomie der Gegenwart und Zukunft (1848), Hildebrand exerted an influence upon Knies that appears to have been profound.
In 1848 the liberal German government that had been swept into office by the revolution appointed Knies to a professorship at the technical college in Kassel and entrusted him with the reorganization of that institution. His appointment ended, of course, with the triumph of absolutism; moreover, when Knies refused to sign a loyalty oath, the reactionary government removed him from the teaching post he still held at Marburg.
Politically suspect to the authorities and without means of support, Knies went into exile in Switzerland, accepting a teaching post in the technical college at Schaffhausen. Continuing his research activities despite difficulties, he remained abroad for about three years. Eventually, in 1855, he was able to return to Germany when the University of Freiburg (Breisgau) offered him the chair of political science (Staatswissenschaften).
In this new environment Knies was to prove him-self not only as a teacher and scholar but also as a popular public figure. Although he was a “foreigner” and a Protestant, in 1861 Baden’s Catholic population elected him a deputy to the second chamber. There he distinguished himself as a foe both of clericalism and of the still existing feudal laws which hampered freedom of economic activity. During the next year he was chosen prorector of the university and, at the same time, appointed by the ducal authorities to the directorship of the newly created board of education. In the latter capacity Knies was assigned the reorganization of Baden’s entire educational system. He proposed that secular control replace much of clerical super-vision, but in spite of support by large sections of the population and by the majority of the teaching profession, Knies was unable to implement his re-forms. He soon became the victim of political intrigue.and was relieved of his directorship. Dis-appointed by these experiences, Knies gladly accepted a chair in government at the University of Heidelberg. He remained in Heidelberg for the rest of his life. Throughout the next thirty years, from 1865 to 1896, Knies’s seminar was one of the principal centers for the study of political science in Germany.
Despite his political activities and personal hard-ships, Knies produced many and varied academic works. During the 1850s his studies ranged from a comparison of modern statistics and old-fashioned political arithmetic (1850) to monographs about the impact of the railways (1853a) and the tele-graph system (1857) on the world at large and the German states in particular. These latter two studies demonstrate the thoroughness of research and the willingness to approach a problem from several vantage points so typical of Knies’s work. At the same time, they betray Knies’s somewhat limited vision; he saw the entire world in relation to the issue of German unity.
The force of mid-nineteenth century nationalism is inseparable from the genesis of the historical method in German political economy. When in 1853 Knies published Die politische Öokonomie vom Standpunkte der geschichtlichen Methode, his dis-taste as a patriot for the cosmopolitanism of the classical school is obvious. In the same spirit, Knies deprecated the dominant role of individual self-interest in the classical system, not only for being one-sided but also for being “subversive” with respect to his conception of a social order—an organically evolving community, which at each stage of its development requires a particular form of economic analysis.
Knies noted inconsistencies in the work of List, Roscher, and even Hildebrand, but he shared their basic ideals and assumptions regarding the social process: he wanted to develop an economic approach and, by implication, an economic policy which would reconcile the peculiarities of German society with the requirements of economic progress. Knies and many of his contemporaries harbored all kinds of petty bourgeois fears that liberal capitalism on the rampage would inevitably lead to a socialist nightmare. Given the power constellation of imperial Germany, it is not surprising that Knies’s methodology and viewpoint became official doctrine in most German institutions of higher learning.
Anyone who reads Knies’s voluminous writings on capital, money, and credit is bound to be impressed by his scholarship, theoretic ability, and pedagogical skills. Yet when he tackled specific economic problems he was unable to live up to the methodology prescribed by the historical school. As Henry Sidgwick put it in his presidential address to Section F of the British Association:
When Knies, for instance, is discussing the nature and functions of capital, money and credit … the lenders and borrowers, whose operations are contem-plated, exhibit throughout the familiar features of the old economic man … we find everywhere the old economic motives assumed and the old method un-hesitatingly applied. The proof of the pudding … is in the eating; but our historical friends make no at-tempt to set before us the new economic pudding which their large phrases seemed to promise. It is only the old pudding with a little more ethical sauce and a little more garnish of historical illustrations. (Sidg-wick  1962, p. 88)
1850 Die Statistik als selbstdndige Wissenschaft: Ein Beitrag zu einer kritischen Geschichte der Statistik seit Achenwall. Kassel (Germany): Luckhardt.
1853a Die Eisenbahnen und ihre Wirkungen. Brunswick (Germany): Schwetschke.
(1853b) 1930 Die politische Ökonomie vom geschicht-lichen Standpunkte. New ed., enl. Leipzig: Buske. → First published as Die politische ökonomie vom Standpunkte der geschichtlichen Methode.
1857 Der Telegraph als Verkehrsmittel: Mit Erörterungen über den Nachrichtenverkehr überhaupt. Tübingen (Germany): Laupp.
(1873–1879) 1931 Geld und Credit. 3 vols. Leipzig: Buske → Volume 1: Das Geld. Volumes 2 and 3: Der Credit.
Böhm-Bawerk, Eugenvon (1884–1912) 1959 Capital and Interest. 3 vols. South Holland, 111.: Libertarian Press. → First published as Kapital und Kapitalzins. Volume 1: History and Critique of Interest Theories, 1884. Volume 2: Positive Theory of Capital, 1889. Volume 3: Further Essays on Capital and Interest was first published as appendices to Volume 2 of the 1909–1912 edition, and was printed in a separate volume in 1921.
Cohn, Gustav 1899 Karl Knies. Economic Journal 9: 489–492.
Eisermann, Gottfried 1956 Die Grundlagen des Historismus in der deutschen Nationalökonomie. Stuttgart (Germany): Enke.
Hildebrand, Bruno (1848) 1922 Die Nationalökonomie der Gegenwart und Zukunft. und andere gesammelte Schriften. Jena: Fischer.
Kalveram, Gertrud 1933 Die Theorien von den Wirtschaftsstufen. Leipzig: Buske.
Karl Friedrich, Grand Duke OF Baden 1892 Carl Friedrichs von Baden brieflicher Verkehr mit Mira-beau und Du Pont. 2 vols. Edited with an Introduction by Karl Knies. Heidelberg (Germany): Winter.
Lifschitz, Feitel 1914 Die historische Schule der Wirtschaftswissenschaft. Bern: Stämpfli.
Schumpeter, Joseph A. (1954) 1960 History of Economic Analysis. Edited by E. B. Schumpeter. New York: Oxford Univ. Press.
Sidgwick, Henry (1885) 1962 The Scope and Method of Economic Science. Pages 73–97 in British Association for the Advancement of Science, Economic Science and Statistics Section, Essays in Economic Method. Edited by R. L. Smyth. London: Duckworth.
Von Mises, Ludwig (1912) 1953 The Theory of Money and Credit. New ed., enl. Translated by H. E. Batson. New Haven: Yale Univ. Press. → First published as Theorie des Geldes und der Umlaufsmittel.
Weber, Max (1903–1906) 1952 Roscher und Knies und die logischen Probleme der historischen National-ökonomie. Pages 1–145 in Max Weber, Gesammelte Aufsätze zur Wissenschaftslehre. 2d ed., rev. & enl. Tubingen (Germany): Mohr.
Weber, Max (1903–1919) 1952 Gesammelte Aufsätze zur Wissenschaftslehre. 2d ed., rev. & enl. Tübingen (Germany): Mohr.
Werner, Ulrich 1938 Der Einftuss der lutherischen Ethik auf die Sozial-und Wirtschaftsauffassung von Roscher und Knies. Berlin: Ebering.