Not many nations have succeeded in managing the transition from an agrarian to an industrialised society. Most of the European countries, such as Hungary, Spain and Greece, which continued to depend on agriculture while coal mines, iron works and textile factories were becoming established, slipped into poverty. By contrast, Denmark developed into a prosperous agricultural nation – and what is most surprising: in terms of per-capita income, the Danes were just as prosperous before the Industrial Revolution!

Perhaps this also explains Denmark’s extraordinary development path. As far back as the early Renaissance, Danish farmers cultivated relatively large tracts of land, which brought them modest prosperity. And as the country lacked not only the classic raw materials of coal and iron ore, but also other resources like wood and water power, agriculture was  central to the country’s prosperity. Therefore, the Crown supported the independent farmers, in whom they saw a reliable source of tax revenue, and rescinded the feudal obligations and tithes of farmers in the second half of the 18th century. At the same time, large landowners divested themselves of vast amounts of land, so that most of the independent farmers held tracts of land large enough to permit efficient cultivation. As a consequence, Denmark became an important grain exporter.

As these revenues did not accrue to the large landowners, as in many agrarian nations, but to a large class of independent farmers, they stimulated domestic demand and promoted trade and crafts. Thus, the expansion of agriculture contributed a great deal to feeding the population, which increased significantly in the 18th and early 19th centuries.

The second pillar of prosperity was international trade. In the 18th century, the neutral Danes profited first from the war between the great powers England and France and then from the American War of Independence; their merchant fleet grew to become one of the largest in Europe. The triangular trade between the Danish overseas colonies also proved to be extremely profitable: Slaves were shipped from the African Gold Coast (now part of Ghana) to three small Danish islands in the Caribbean, where most were forced to work in the sugar cane plantations. In addition to sugar, the merchants then brought tobacco and coffee back to Copenhagen, which soon became the hub of the colonial goods trade in the Baltic region. Although the Danish share of the transatlantic slave trade was only about 1%, it gave a noticeable boost to the economy of the small country. In 1792, Denmark became the first European country to ban the trade in humans, but it continued illegally.

Ultimately, Denmark’s successful economic development was also linked to the high levels of education of the country’s population. Compulsory education was introduced in 1814, and in 1844 the pastor and educator Nikolai Grundtvig initiated an adult-education movement that was adopted in large parts of Scandinavia. Agricultural schools followed, starting in 1860.

1849 marked the introduction of a constitutional monarchy, and with it, extensive liberalisation. Rights of ownership were guaranteed, contractual freedom and freedom of association were established. Barriers to business such as the privileges of the guilds and the Öresund toll, which made shipping across the strait between Denmark and Sweden more expensive, were eliminated. The open-market policy was also continued even when a wave of cheap foreign grain flooded Europe at the end of the 19th century due to falling transport costs: Denmark refused to impose import tariffs. Instead, farmers switched relatively quickly from grain export to exporting animal products, in particular butter, bacon and eggs – which proved to be surprisingly sustainable.

The cooperatives, which farmers throughout the country founded starting in 1882, proved important in this connection. The large cooperative meat-packing and dairy operations were more efficient than individual farmers and guaranteed consistent quality – which promoted exports: at that time, England imported one third of its butter from Denmark! Before the outbreak of the First World War, agricultural products accounted for 60% of Danish exports, and industrial products only 10%.

Processing of agricultural products led to the establishment of a specialised agricultural technology industry. The breakthrough was the invention by Lars Christian Nielsen of a continually operating centrifuge for skimming cream from milk in 1878 at the Maglekilde machine-tool factory in Roskilde. In the laboratories of Copenhagen’s Carlsberg Brewery, botanist Emil Christian Hansen discovered the diversity of the different yeast strains and developed a process for breeding the entire yeast for a brewing process from a single cell of the desired type.

A conventional industrial production landscape developed in the 1890s. Copenhagen, with its iron works, textile factories and expanding districts of workers’ housing, was its undisputed centre. Soon, one third of all Danes were living in cities, as new factories were being established in the provinces as well: in addition to food production, this included cement factories in Aalborg, railroad construction in Randers as well as paper factories and smaller shipyards. Still, it was not until the 1950s that more Danes were employed in industry than in agriculture.