The Berlin Securities Exchange in National Context: Actors, Rules and Reforms to 1914

Richard H. Tilly
Universität Münster


In recent years German stock exchanges have projected a poor image, but it is arguable that some of their deficiencies are traceable back to the 19th century, when regulation and tax policies weakened them in favor of the large, universal banks. With this in mind, the paper presents a brief overview of 19th-century development, attempting to explain how and why Berlin became the dominant financial center. It then investigates some of the characteristics of that center's operations, focusing particularly on the role of its official brokers, the system of `unified prices', and on rules pertaining to admission of members and of securities to trading. The next step is to look at the changes brought about by the Stock Exchange Law of 1896 (Börsengesetz). The paper confirms the older view that those changes did indeed favor the large universal banks, but - drawing on some quantitative evidence pertaining to `spreads' and securities prices - it renders the Scotch verdict of `not proven' on the thesis that the reforms had negative economic effects.

It concludes that recent criticism of the German stock exchanges is not applicable to the pre-1914 era.