Toward the end of the Middle Ages, the Hanseatic League gradually dissolved. Hamburg then went its own way and by 1550 had surpassed even Lübeck in economic importance. A stock exchange was founded in 1558 and the Bank of Hamburg in 1619; a convoy system for shipping was inaugurated in 1662, Hamburg’s merchantmen being the first to be escorted on the high seas by men-of-war. About the same time marine insurance was first introduced into Germany. There were two causes for this new ascendancy: first, the wars of religion in the Low Countries in the second half of the 16th century had prompted many Dutch merchants to emigrate to the Unterelbe (Lower Elbe) region, with the result that Hamburg was henceforth to be the focus of their already established international commerce; second, the city had been so efficiently fortified in the decade 1616–25 that it could pursue its business untroubled throughout the worst crises of the Thirty Years’ War (1618–48). By the end of the 17th century, Hamburg, with 70,000 inhabitants, was the largest city in Germany after Cologne.

The Treaty of Gottorp, concluded with the Danes on May 27, 1768, released Hamburg from theoretical subjection to the king of Denmark and so paved its way to being acknowledged, in 1770, as an “immediate” imperial city of Germany (that is, having no overlord other than the emperor). In addition, the treaty ceded to Hamburg the islands, from Veddel to Finkenwerder, that lay between the city and the left banks of the Elbe River and that, a century later, were to be the site of new docks. Hamburg, however, was not to enjoy its new advantage for long: the Napoleonic Wars overthrew the old order in Germany, and in 1810 the little state was annexed to Napoleon’s French Empire.

After Napoleon’s downfall (1814–15), Hamburg became a member state of the German Confederation, with the designation “Free and Hanseatic City of Hamburg” from 1819. Prosperity was quickly recovered, as Hamburg’s trade was extended to newly opened territories in Africa, Asia, and the Americas. Even the great fire of May 1842, which devastated one-fourth of the city, did not check the booming economy, and the harbour was converted into one accessible at any time, without ships’ having to depend on the state of the tides in the Elbe Estuary. Under the German Empire, founded in 1871, the political status of Hamburg was maintained, and development proceeded unchecked. The splendid Baroque houses of the densely populated Brook Island were demolished in the 1880s to make room for the warehouses of the new free port. By the end of the 19th century, in the course of which the population grew from 130,000 to 700,000, Hamburg had expanded far beyond its previous limits, absorbing such former suburbs as Sankt Pauli and Sankt Georg and spreading its tentacles into the countryside, toward Eimsbüttel, Eppendorf, Harvestehude, and Barmbek.

Hamburg entered the 20th century determined to maintain and to strengthen its position as “Germany’s gateway to the world”; new docks and wharves were constructed on the left bank of the Elbe River. The outbreak of World War I in 1914 brought progress to a standstill, however. Hamburg’s international trade collapsed, and its merchant fleet of 1,466 ships was virtually confined to port. After the war the victorious Allies demanded nearly all of Hamburg’s ships by way of reparation from Germany.

For many years after the war, Hamburg could undertake no further development because it had already exhausted all the potentialities of its territory. The Greater Hamburg Ordinance of January 26, 1937, changed this situation by allowing Hamburg to incorporate the neighbouring cities of Altona, Wandsbek, and Harburg, which until then had belonged to Prussia. The immediate prospect of expansion, with the development of these areas on a basis of large-scale planning, was shattered by the outbreak, in 1939, of World War II, during which repeated air raids demolished 55 percent of Hamburg’s residential area and 60 percent of the harbour installations and killed 55,000 people. When the war ended in 1945, only the most strenuous efforts could supply the elementary needs for Hamburg’s survival.

Reconstruction proceeded rapidly, however. Symptomatic of the city’s postwar commercial efflorescence was the vast new business district City-Nord, built in the 1960s. At the same time, nightclubs on the Reeperbahn became proving grounds for British rock and roll bands—most notably the Beatles—who took advantage of a direct ship route from Liverpool, England. In 1962 the city experienced a flood, which killed more than 300 people and destroyed much of the old part of the city. In the mid-1960s, Hamburg’s population exceeded 1,800,000, though it has fallen in the decades since, owing to a population shift toward the suburbs. With continued immigration of foreigners to the city, Hamburg’s foreign-born population reached 10 percent by the 1980s.

The unification of Germany in 1990 increased trade between the city and eastern and central Europe. During the 1990s the city underwent continued modernization. In 1993 Hamburg hosted a multimedia festival, an exhibition on the use of modern communication methods in business and the arts. The following year the city became the seat of a Roman Catholic bishopric.

Hamburg’s cherished traditions, together with its thriving business and cultural life and the energy of its inhabitants, make it one of the most vibrant cities in the world.