II.HISTORY: FAIRS, EXCHANGES, STOCK MARKETS
In the history of stock exchanges, modern observers will notice four main
epochs or periods: the Middle Ages and the Early Modern Era (A.), Absolutism and Mercantilism (B.), Industrialization (C.), and National Legislation and
European Harmonization (D.).
Like any regulatory regime that has grown over a longer period, the historical development of stock exchange law can only be understood by combining chronological surveys with the diachronic analysis of the key factors.
Our plan is to contribute to such studies by giving a chronological overview
of the events that we consider relevant or typical. We complement our selection of events by choosing a broad variety of methods and approaches that
may be applied to explore the history of commercial exchanges and, more
specifically, the evolution of stock exchange law. Each of the following four
sections will therefore follow an individual concept and a distinct order.
A. The Middle Ages and the Early Modern Era
What were the first commercial ‘exchanges’ in history? Any answer is a
matter of definition and therefore inextricably linked to the question of what
distinguishes exchanges from other markets and fairs
. Given the conceptual
FRANK SCHÖNEMANN, DIE ORGANISATIONSSTRUKTUR DER BÖRSE: VON DER ÖFFENTLICH-RECHTLICHEN ZU EINER PRIVATRECHTLICHEN BÖRSENVERFASSUNG (2010) (Ger.).
35 See Fair Administration and Governance of Self-Regulatory Organizations, 69 Fed. Reg.
71,126 (proposed Dec. 8, 2004).
524 Virginia Law & Business Review 7:513 (2013)
uncertainties regarding the characteristics that constitute an exchange,36 it is
not surprising that opinions differ on the first occurrence of commercial exchanges.
Common trading places and other types of markets are an essential device of the ζῷον πολιτικόν (zóon politikón) and as such as old as mankind.
37
Already in antiquity there were regular markets and fairs with regional exchange and beyond.
38 This made many observers believe that commercial
exchanges in general39 or for corporate shares in particular 40 were already
known in ancient times. While this assumption is still widespread today,
41 it is
typically not based on first-hand historical research but rather on statements
and opinions from a time when the expressions ‘bourse’ or ‘exchange’ lacked
the technical meaning that they convey today. More recent research has
shown that the idea of ancient exchanges, both for stock and commodities, is
a myth that lacks any basis in the sources.42 Even at the height of the ancient
36 See supra Part I.A.
37 Fleckner, Exchanges, supra note 4, at 659.
38 See, e.g., JOAN M. FRAYN, MARKETS AND FAIRS IN ROMAN ITALY: THEIR SOCIAL AND
ECONOMIC IMPORTANCE FROM THE SECOND CENTURY BC TO THE THIRD CENTURY AD
(1993); LUUK DE LIGT, FAIRS AND MARKETS IN THE ROMAN EMPIRE: ECONOMIC AND SOCIAL ASPECTS OF PERIODIC TRADE IN A PRE-INDUSTRIAL SOCIETY, (1993).
39 1 THEODOR MOMMSEN, RÖMISCHE GESCHICHTE 421 (2nd ed. 1856) (Ger.);
1/1 LEVIN
GOLDSCHMIDT, HANDBUCH DES HANDELSRECHTS 67 (3rd ed. 1st Supp. 1891) (Ger.);
MAX WEBER, DIE RÖMISCHE AGRARGESCHICHTE IN IHRER BEDEUTUNG FÜR DAS STAATSUND PRIVATRECHT 99 (1891) (Ger.); WILLIAM WARDE FOWLER, SOCIAL LIFE AT ROME IN
THE AGE OF CICERO 74, 92 (1908).
40 WILLIAM CUNNINGHAM, AN ESSAY ON WESTERN CIVILIZATION IN ITS ECONOMIC ASPECTS (ANCIENT TIMES) 164 (1898); MICHAIL I. ROSTOWZEW, GESCHICHTE DER
STAATSPACHT IN DER RÖMISCHEN KAISERZEIT BIS DIOKLETIAN 44 (1902) (Ger.); 1
MICHAIL I. ROSTOVTZEFF, THE SOCIAL AND ECONOMIC HISTORY OF THE ROMAN EMPIRE
31 (continued by Peter M. Fraser, 2nd ed.,1957).
41 ERNST BADIAN, PUBLICANS AND SINNERS: PRIVATE ENTERPRISE IN THE SERVICE OF THE
ROMAN REPUBLIC 102-03 (1972); ROMUALD SZRAMKIEWICZ, HISTOIRE DU DROIT DES AFFAIRES, PARIS: MONTCHRESTIEN 42 (1989) (Fr.); ULRIKE MALMENDIER, SOCIETAS PUBLICANORUM: STAATLICHE WIRTSCHAFTSAKTIVITÄTEN IN DEN HÄNDEN PRIVATER UNTERNEHMER 249 (2002) (Ger.); ULRIKE MALMENDIER, Roman Shares, in THE ORIGINS OF
VALUE: THE FINANCIAL INNOVATIONS THAT CREATED MODERN CAPITAL MARKETS 38
(William N. Goetzmann and K. Geert Rouwenhorst eds., 2005)
; Henry Hansmann, Reinier H. Kraakman and Richard Squire, Law and the Rise of the Firm, 119 HARV. L. REV. 1333,
1361 (2006).
42 There is only one source that might be referring to a sale of a share in a business association from one of its members to a third person, see Cic. in Vatin. 12.29 (56 B.C.) (“eripuerisne partis illo tempore carissimas partim a Caesare, partim a publicanis?”) (Rom. Rep.).
But both the context and the reasons for this transaction remain obscure, see Fleckner,
supra note 5, at 473-80.
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economy, there were no marketplaces where traders could buy and sell negotiable items with a high degree of standardization,43 the key function of exchanges.44 In other words, there were no ancient ‘bourses’ or ‘exchanges’ in
the technical sense, and the history of commercial exchanges commences in
the Middle Ages, when the first venues with standardized trading appeared.
1. Trading Sites
As early as the beginning of the sixteenth century (1524), Martin Luther
(1483-1546) called the city of Frankfurt the “silver and gold hole” (“das sylber
vnd gollt loch”; in modern German: “Silber- und Goldloch”) because he
believed that German capital flowed abroad through Frankfurt’s famous trade
fair.
45
At the same time, the first commercial exchanges had already been established or were about to be founded: Bruges (1409), Antwerp (1460), Lyon
(1462), Amsterdam (1530), Toulouse (1546), Cologne (1553), Hamburg
(1558), Nuremberg (1560), Rouen (1566), London (Royal Exchange, 1570),
Frankfurt (1585), Danzig (1593), Lübeck (1605), Königsberg (1613), Bremen
(1614) or Leipzig (1635).46
In this first founding wave, the initiative came primarily from the dealers.
As a consequence, the early exchanges were, in modern terms, “customercontrolled” from their very beginning, and often had the character of guilds.
47
2. Trading Items
More detailed investigations into the origins of commercial exchanges are
43 MOSES I. FINLEY, THE ANCIENT ECONOMY 137, 195, 197 (2nd ed. 1985); DE LIGT, supra
note 38, at 97 n.143, 104; Fleckner, supra note 5, at 450-94.
44 See supra Part I.A.2.
45 “Gott hatt vns deutschen dahyn geschlaudert / das wyr vnser gollt vnd sylber mussen ynn
frembde lender stossen / alle wellt reych machen / vnd selbst bettler bleyben / Engeland
sollt wol weniger gollts haben / wenn deutschland yhm seyn tuch liesse / vnd der könig
von Portigal sollt auch weniger haben / wenn wyr yhm seyne wurtze liessen / Rechen du
/ wie viel gellts eyne Messe zu Franckfurt aus deutschem land gefart wird / on nott vnd
vrsache / so wirstu dich wundern / wie es zu gehe / das noch eyn heller ynn deutschen
landen sey / Franckfurt ist das sylber vnd gollt loch / da durch aus deutschem land fleusst
/ was nur quillet vnd wechst / gemuntzt odder geschlagen wird bey vns ....” MARTINUS
LUTHER, VON KAUFFSHANDLUNG VND WUCHER, *2-3 (1524) (Ger.).
46 We have taken this data from the standard works and sources, but recognize that a uniform approach would most likely lead to minor adjustments for some exchanges.
47 Fleckner, Stock Exchanges, supra note 4, at 2541-42, 2551-52.
526 Virginia Law & Business Review 7:513 (2013)
most auspicious if they focus on the functions of exchanges, i.e., which goods
were traded where and how, rather than on the structure or even the designation of a particular venue. With this approach, modern observers will stay
away from unconsciously projecting modern ideas into the past, a problem
that regularly occurs when current terminology (such as ‘bourses’ or ‘exchanges’) is used to describe former practices. This strategy seems particularly
promising to explore the history of marketplaces for securities that have been
issued by business associations. Otherwise the modern dichotomy of stocks
and bonds will obscure older forms of capital investment or alter their perception.
An important historical example are the deposits with the Casa delle
Compere e dei Banchi di San Giorgio (in English often referred to as the
‘Bank of Saint George’), a financial institution founded at the beginning of the
fifteenth century in the Italian city of Genoa. Many modern observers consider the Casa di San Giorgio an early stock corporation and compare its capital
providers with modern shareholders.48 Whether such assumptions are warranted may be decided elsewhere.49 In this context, though, it is interesting to
note that the Roman jurist Sigismondo Scaccia (1619) reports of 420,000
shares (loca) that the Casa di San Giorgio had issued.50 After further verification, this information could constitute a starting point for considerations as to
whether these loca were freely transferable, whether they were traded, and
whether there was a central trading site.
Functional investigations along these lines will probably lead to a number
of insights that go beyond the traditional picture of the commercial exchanges’ history.
48 1 OTTO GIERKE, DAS DEUTSCHE GENOSSENSCHAFTSRECHT 991 (1868) (Ger.); GOLDSCHMIDT, supra note 39, at 28 n. 42, 254, 270 n.125, 291 n.180, 292 n.182, 295 n.191, 296-
98, 311;
MAX WEBER, WIRTSCHAFTSGESCHICHTE: ABRIß DER UNIVERSALEN SOZIAL- UND
WIRTSCHAFTSGESCHICHTE 240, 250-51, 253 (6th ed. 2011) (Ger.).
49 For more skeptical accounts, see, for example, 2 HEINRICH SIEVEKING, GENUESER FINANZWESEN MIT BESONDERER BERÜCKSICHTIGUNG DER CASA DI S. GIORGIO VI, 31
(1899) (Ger.), but see 1 HEINRICH SIEVEKING, GENUESER FINANZWESEN MIT BESONDERER BERÜCKSICHTIGUNG DER CASA DI S. GIORGIO 185-88 (1898) (Ger.) and 2/1 WERNER
SOMBART, DER MODERNE KAPITALISMUS: HISTORISCH-SYSTEMATISCHE DARSTELLUNG
DES GESAMTEUROPÄISCHEN WIRTSCHAFTSLEBENS VON SEINEN ANFÄNGEN BIS ZUR
GEGENWART 153 (2nd ed. 1917) (Ger.).
50 SIGISMUNDUS SCACCIA, TRACTATUS DE COMMERCIIS, ET CAMBIO § 7, Glos. 3 n.7, 682
(1619) (It.) (“in hac domo sunt quatuor centum vigintimille loca comperarum Sancti
Georgij”).
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3. Trading Rules
The dispersion and content of trading rules varies greatly over time and
from place to place.
The German territories from early onward had rules on markets, such as
in the most influential law collection of the Middle Ages, the Sachsenspiegel
(13th century),51 or subordinated in the ius commune that had emerged from the
Roman law tradition.52 Trading centers also started regulating brokers (since
the 13th century),
53 as in Hamburg (16/17th century).54 None of these rules,
though, would be considered ‘stock exchange law’ as defined at the beginning
of this article or ‘securities law’ in a broader sense.55
The main reason why no such provisions were enacted is that on German
soil, no large trading company came into existence whose shares and imported goods could have been heavily traded, such as of the English East-India
Company (of 1600)56 or the Dutch equivalent, the Vereenigde Oost-Indische
Compagnie (of 1602).57 Aside from Germany’s fragmentation and its unfavorable geographical position for overseas trading, there were considerable
social reservations that hindered large commercial enterprises. Luther’s criticism of the Frankfurt fair as the “silver and gold hole” (“sylber vnd gollt
loch”) has already been quoted;
58 also worth mentioning in this context is his
condemnation of commercial partnerships,59 culminating in the gloomy forecast: “Should the partnerships persist, then justice and honesty will perish.
51 Sachsenspiegel, Landrecht at Lib. II Cap. 26 § 4, Lib. III Cap. 66 § 1 (Ger.), reprinted in
KARL AUGUST ECKHARDT, SACHSENSPIEGEL: LANDRECHT (2nd ed. 1955) (Ger.).
52 See, e.g., Cod. Iust. 4.60 (Valent./Valens, 5th cent. AD) (Rom. Emp.); Cod. Iust. 4.63.4
(Hon./Theod., 408-09 AD) (Rom. Emp.).
53 See GOLDSCHMIDT, supra note 39, at 250-54; PAUL REHME, GESCHICHTE DES HANDELSRECHTES 152-55, 210-12 (1914) (Ger.).
54 For overviews, see GOTTFRIED KLEIN, 400 JAHRE HAMBURGER BÖRSE 8 (1958) (Ger.);
REHME, supra note 53, at 198-99. For a more detailed account, see ULRICH BEUKEMANN,
DAS HAMBURGISCHE MÄKLERRECHT (1912) (Ger.).
55 See supra Part I.B.
56 Charter to the East-India Company of 31 December 1600, 43 Eliz., 6 (1600) (Eng.),
reprinted in CHARTERS GRANTED TO THE EAST-INDIA COMPANY, FROM 1601 – ALSO THE
TREATIES AND GRANTS, MADE WITH OR OBTAINED FROM, THE PRINCES AND POWERS IN
INDIA, FROM THE YEAR 1756-1772 3-26 (1774).
57 Het Oost-Indische Octroy of 20 March 1602 by de Hooch-Mogende Heeren Staten
Generael der Vereenichde Nederlanden (1602), reprinted in 1 GROOT PLACAET-BOECK col.
529-38 (1658), also reprinted in (facsimile) VOC 1602-2002: 400 YEARS OF COMPANY LAW
1-16 (Ella Gepken-Jager, Gerard van Solinge & Levinus Timmerman eds., 2005).
58 LUTHER, supra note 45, at *2-3.
59 Id. at
*26, *28-31.
528 Virginia Law & Business Review 7:513 (2013)
Shall justice and honesty persist, then the partnerships must perish.”
60 This
coincided well with the self-perception of a large number of German merchants, who of course hoped to make money like any merchant, but—and
this attitude distinguished them from businessmen abroad—typically on their
own and not as a small cog in a large enterprise. A telling testimony is the
often-cited response of the Hanseatic cities to an imperial request “that according to their traditional practice, everyone can try his luck on his own, and
that it is outrageous to do business with a joint stock, under the supervision
and management of a board of directors, and with principals and ships of the
company.”61 Many similar accounts could be added, documented for instance
in one of the most influential treatises on European commercial law, the Tractatus politico-juridicus de iure mercatorum et commerciorum singulari (1662) by the
Lübeck lawyer and mayor Johann Marquard (1610-1668).62
There were more reasons to enact capital market or even stock exchange
rules in the thriving commercial centers of Europe. For instance, the
measures against certain trading patterns in the Netherlands, particularly
against short selling in the shares (“Actien”) of the aforementioned Dutch
East India Company (1610),63 are well known
