After studying in Strasbourg, Halle, Leipzig and Berlin, he passed the first state examination in Naumburg in 1880 in Naumburg and earned his doctorate (Dr. rer. pol.) in 1882 with a thesis on the Making of markets in Germany from the University of Straßburg.
From 1882 to 1890, he taught Public Law, Statistics and Administration Science at the Imperial University of Tokyo and was also an adviser to the Japanese Ministry of Agriculture and Commerce.
In 1892, Rathgen passed his habilitation at the Friedrich Wilhelms University of Berlin and the following years was appointed extraordinary, in 1895 ordinary Professor of the University of Marburg.
From 1900 to 1903, he was temporarily in charge of Max Webers Chair at University of Heidelberg. In 1907, he became a Professor at the newly established Kolonialinstitut (Colonial Institute) in Hamburg. After its transformation into the University of Hamburg in 1919, he took over the chair of Economics, Colonial policy and Public finance and became at the same time its first Chancellor.
From 1913 to 1914, Rathgen taught as an Exchange Professor at Columbia University in New York.
Among his works are "Japans Volkswirtschaft und Staatshaushalt" and "Die Japaner und ihre wirtshaftliche Entwicklung."