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Stock and Commodity Exchanges ["Die Brse" (1894)] Author(s): Max Weber Reviewed work(s): Source: Theory and

Society, Vol. 29, No. 3 (Jun., 2000), pp. 305-338 Published by: Springer Stable URL: http://www.jstor.org/stable/3108485 . Accessed: 02/06/2012 19:24
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Stock and CommodityExchanges [Die Borse(1894)]

Translated by Steven Lestition, Princeton University

From Max Weber, GesammelteAufsdtze zur Soziologie und Sozialpolitik

Tiibingen: Verlagvon J.C. B. Mohr [PaulSiebeck],1924),pp. 256-288. where otherwisenoted, all endnotes and emphasesin the text Except (indicated by italics) are Weber'sown. Occasional paragraphbreaks that are not presentin the originalare also indicatedin the notes.

The purposeand outwardorganizationof the exchanges' The following sketch is intended solely as an initial orientation for those who in their daily lives are relativelydistant from the things described here; it therefore, at the outset, tries to take nothing as known about those matters. A second pamphlet,which will describe structures and relationshipswithin the exchanges and the business transactedby the exchanges,follows. For me it is only a question of whetherthese two pamphletsmeet this particulargoal. Thereforethey intentionally refrain from passing a judgment [on the matter being discussed]. They do so because the practical ineffectivenessof the criticism that the broad mass of the populace levels at the existing conditions that reign on the stock-and-commodity exchanges stems fromthat criticism's tremendous superficiality: namely,its seeingfailings in places where only ignorance, or the contradictionscaused by the diverginginterestsof observers,can find them.This same superficiality has, however,led to the highly dangerousnotion that, whereverone encounters a social institution that is not strictly "socialist"(as the exchanges are not), then one is dealing with an wholly dispensable organization- one that must be judged by its very natureto be a sort of "conspirators' club,"aimed at lying and deception at the expenseof honest laboringpeople; [an institution],therefore,whichbest ought to be - and can be - destroyedin some way.Nothing is more thoroughly
Theory and Society 29: 305-338, 2000. ? 2000 Kluwer Academic Publishers. Printed in the Netherlands.

306 dangerousto a workers'movementthan such impracticalgoals - just mentioned- erectedin ignoranceof actualexistingrelationships. The stock and commodityexchangeis an institutioncreatedby modern large-scale commerce. For modern business, its indispensabilityin general arises from the same reasons and from the same bases upon whichthe modernform of commerceitself has grown.It has for a long time been just as necessary - or in fact just as possible - as has modern large-scalecommerce itself. And why? If we trace the workpracticesof mankindbackto the earliestages, we discoverthat the first and most naturalviewpoint from which man producedthose goods was the goal of meeting its own needs. Man sought to acquire,by his own hands, the work of nature that he needed for his nourishment, clothing, and protectionagainstthe cold and the weather.But, relying only upon himself,the individualwas neverableto defynature.For the maintenanceof bare existence alone, he was already - and always dependentupon social relationshipswith others, just as the child is dependentupon the mother'sbreast. And he just so little chose, by a free act, the society that he needed as the child choses his mother. Society was given to him on life's path; he was borninto his society into the firm union of his family (which did, to be sure, look different than does today'sfamily),standingunderthe unrestricted domination of a patriarch.For the economy of the household included brothers, cousins, sisters-in-lawto the furthest degree, and unfree household servants;they were all subjectedto a military-like power;or else, those whom cold and the death of livestock robbed of their possessions wishedto live by [even]the oldest of all legal principles,namelyhaving to become the slavesof the physicallytriumphantand of the ownersof property.The family of this sort is the oldest economic community. They producedgoods throughcommon work and consumed them in common. And they consumedabove all only what they had produced, for they had nothing else to consume; and they only producedwhat they wished to consume, because they had no use for the surplusthat went beyondthat. If we compare that with the characterof the economic patterns of today, the tremendousdifference,and contradiction,is immediately apparent.The opposite statementis now true: the individualdoes not produce the goods that he himself will use, but rather those that, accordingto his expectation,otherswill need;and thus each individual consumesthe productof others'labor, not of his own. It goes without sayingthat this, in some cases, does not hold: it does not, for example,

307 apply to those who dwell in still undevelopedforest regions, or to the subsistencefarmerin the depths of wholly uncultivatedregions;and it applies to our own [German]small farmersonly to a limited degree, for they live in the first instance largelyfrom harvestsfrom their own land - and they only sell the surplus. But it does hold for those economic organizations that modern times have created above and beyond those earliest ones. The viewpoint from which the modern entrepreneur producesgoods, and must producegoods, is not whether he himselfwill be able to use them, but ratherthe question of whether that he will find a "consumer"; is, the question of whetherothers will use those goods. genuinely The historicaldevelopmentthat has taken place over the course of the last millennia,and that has dissolvedthe old communities,arises from these two sharplycontradictingpatterns.That historical process embedded the economic practices undertakenby the individual into a withinit an increasing number that encompasses community exchange of of othereconomic actorsand activities;it is a circlethat, in the modern era, seeks to expandto includethe totalityof all civilizedpeoples. And that process increases,on the other hand, that very portion of goods, which each individual actor's activities have produced, which that individualdoes not himself need, but rathergives over to others. It is here that tradebecomes active. Alongside the simplemanualproductionof goods, it is necessarythat, in orderfor the needs to be met that these goods aim to satisfy,another [activity]emerges: they must be transportedto those who will use them, and at the moment in time when that use will occur. Under our the present social arrangements, means to that end is the exchangeof goods for sale; and the activity that conveys it is trade. The oldest communitiesof families did not need this, since they patriarchally-led consumed that which they produced,and vice versa. principallyonly did Only with the growthof needs for "articlesof luxury" a businessof exchange begin. Metal tools or instruments,gems, precious metals, and materialsof high value are the oldest objects of trade. Such trade lay in the hands of the itinerant merchant. As a foreigner, he was literallywithout rights and viewed with superstitiousreserve;such an man, while hated, stood underthe protectionof the gods indispensable (analogous to the way there was a custom of praying to poisonous snakes in the ancient orient). In time, the relationshipsbecame more regularizedand alongside the wandering merchant came the great even as we still find them in central periodical "fairs"or "markets,"

308 Asia. Here one could find those who came from differentcommunities thus stood at the cradle of tradingwith each other."Internationality" commercialcapital.Within[existing]communitiesof "thoserelatedby blood and heritage,"and between such communities,"trade"per se was as little known as was the chargingof interest. As still happens todayin tradition-bound villagesfar fromthe city,one loanedseed-grain and farm tools withoutchargingmoney and "betweenbrothers"[so to speak]therewas no fixing of the price of lands accordingto considerations of supply and demand.This sharp contrast continued even as, with a regularizedcultivationof ruralplots, an independenteconomy emergedbetweenpeasantswho livedand workedside by side in villages and on estates, replacingthe large-scalefamily-directedeconomy of clans and lineages.2 But all that changedwith the emergenceof cities. These meant that a pure "business interaction"was inserted into the old communities themselves,as the first step towardtheir disintegration. Alongside the internationalmarkets,in which the luxury articles from abroadwere traded, there emergedthe regulartown markets,in which the native producers of food products and the urban producers of handicraft products met and exchanged their goods. This mode of economic interaction thus recognized and needed a process of "bartering" as one of its regularized elements.But the fraction of the goods that the individualproducedand broughtto marketwas still a small one; for those working at trades in the city were, simultaneously,still largely also farmers;and the peasantconsumedthe greaterportion of his own producehimself, with only the surpluscoming to market.But, alongside the craftsand tradesthat suppliedthe city and the few miles of its hinterland,another element soon appearedin the towns. The foreign and wanderingmerchantwas replacedand pushed out by the locallyresident,nativegroup of merchantsthat supplied goods from abroad through the mechanism of regularizedtrading relationships,goods thatlocal or domestictradesandenterprises not themselves did produce. There emerged [on the one side] a professionalcommercein imports and, on the other side, great handicraftenterprisesthat carried on a businessexternally,as exporters,in the surplusthat existed of local or domestic products.This requireda knowledgeof foreign marketsand of the important means by which to serve them. Both were lacking to handworkers.A capitalist presented himself to their service as a merchant he capitalist;3 took theirproductsand tradedthem;they were dependent upon him, and since he also knew how to obtain bulk quantitiesof raw materialsmore cheaply,he also suppliedthem with


such things - and, stipulatedtherebythat they also work for him in the future. From the master craftsmanthere now emerged a dependent worker the cottageindustries it of [Hausindustrieller]: was the first step towardthe modernfactory. Withthat, all the seeds of moderndevelopmentswere in place. - But, only as "seeds," be sure.4 to For, in the arena of trade, the bulk of commercial exchanges still concernedthemselveswith objectsof high value. If we were to make a present-day comparison,we would need to imaginefor ourselvescontemporarycommerce lying primarilyin champagne,silk goods, and similaritemsservingthe needsof the wealthyclasses.In truth,however, an overviewof the foreigntradeof each majorstate [today]shows that it is now otherwise:"mass-articles" make up the greatestvolume. [For example],grain - Englandwould have no bread at all if foreignlands did not yearly ship it billions [of bushels]of grains. Coal and iron Italy would, by its own resources,neitherhave coal for its ovens nor iron-tools.Cotton - not a single article of the clothing that a modern Europeanworker wears can be finished without either yarn or raw cotton. But no cotton threadswill be spunor wovenwithinthe regional economy in which it was harvested;no iron ore will be smeltedby the mine ownerswho first took it from the earth;only a minisculeportion of coal will be used by the coal-miningcompanyitself; and even with grain, one estimates that more then half of the world's tremendous production is consumed by people other than those cultivatingthat land;and that more than a fifth of it is exchangedbetweennations.It is stock and commodity exchanges that serve this gigantic process of exchange.It is at a modernmarketthat the business sellingtranspires, of as a set of regulargatherings- or, at stock-and-commodity exchanges, daily gatherings- occurringat a particularplace.5 What differentiatesthese "exchanges" from what people usually call "markets"? us take the sharpestdifference Let possible:i.e., comparing it with the local market offering meat and produce in a small rural town. At such a market,the peasant or farmerusually tradeswhat he himselfhas produced,and offersthe goods themselves,directlyat that place, to a buyer;the latter,who intendsto use the items himself,pays for the items right then and there. [By contrast],on the exchanges,a deal is struck over a set of goods that are not present, and often "in transit"somewhere, or often yet-to-be-produced; and it takes place between a buyer who usually does not himself wish to "own"those goods (in any regularfashion) but who wishes - if possible before he receivesthem and pays for them - to pass them along for a profit,and

310 a seller, who usually does not yet have those goods, usually has not producedthem, but wishes to furnishthem for some earnings of his own. The grain that is traded on a given day on the exchangelies in large part still in the grain elevatorsof North America, or it is swimming across the ocean; and it is sent along to the mills, and then on to the bakers, by the purchaserhimself. At the smaller markets, it is almost always only producersand users who trade directlywith each other. On the exchanges, it is almost always only merchants who however,stock exchanges engagein the trading.Despite this difference, and marketsare the same in essence, especiallythroughthe analogous and purposesthey serve.For, they are locationswherethe "supply" the "demand" a set of goods ought to meet. If we returnto the example for of the small market:on the one side are the small farmers,who have produceto sell (the supply)and wish to buy the articles of the urban craftsmen(demand)and, on the other side, there are the urban consumers who purchasefood (demand)and the craftsmenwho wish to sell, and must sell, their own products (supply).These outstretched hands must be able to meet and, to that end, the marketis indispensable. The stock- and commodity exchangeshave the same purpose and goal. Except that their scope is infinitelymore enormous.They are the marketfor modern mass-consumptionarticles,of which there exists a continuouslyenormous supply, and thereby also an equally enormous demand. Upon this differencerests the differencein the of procedures the exchangescomparedwith the local markets.If I wish to buy a house, I will not buy a "housein general,"but a very specific, given house; and I would want to receive no other one, even if that otheris "worth" as muchas the first.If I purchasea fish that I wish just to eat, I will at least wantto see it beforehand, see that it is worththe to And for that reason, I go to the market.By contrast,if a wholeprice. sale grain companywishes to sell a specifictype of grain, for which it believes there is a specific use, in a quantityof 1,000 metric tons, a is processanalogous[to the onesjust described] usuallyneitherpossible, nor even necessary.In generalit is usuallyonly a matterof receivinga particular quantity of grain of a particular,agreed-upon type and quality - whether that be after an initial sample is displayed, or whether that be simply because it is continually being offered, and thus appearsto be of a specificquality. Typesand their qualityare thus united; the seller does not first bring the goods to the place and then sell them, but usually the reverse:first he sells them ("carteblanche" ["in blanco"],as one says), and then he seeks to furnishthose goods within the period of time that is requiredto fulfill the contract. He supplies them at the agreed-upontime; if they meet the agreed-upon


quality,the buyer- or the person to whom the latterhas subsequently sold them - takes possession of them. If that is not the case [i.e., the quality or the agreed-upon delivery time are inadequate],then the purchasersends them back as not meeting the agreement("not deliverable").This is the way it is with all articles that are traded on the exchanges.If a Germantradingfirmneeds a quantityof Russianpaper money,in orderto pay off a debt in Russia, it becomes not a matterof obtaininga particularitem - such as is the case with someone buying a house or a specific riding horse; but ratherany ruble-note,if it is genuine,performsthe same service - for, as the expressiongoes, one items on the exchanges;that is, such normallydeals with "negotiable" things where it is not a matter of supplying particular individual objects, but rathera contractually-stipulated quantityof the contractype and quality. tually-stipulated Let us firstlook more closelyat the sorts of goods that usuallyform the objectsof trade on the exchanges.People usuallydivide them into two or main groups:on the one hand,"products," goods in the usual sense of the term;and on the other hand, types of money,as well as notes of of exchange,stocks and bonds - that is, "securities" varioussorts. One thus distinguishesthe "commodity from exchange" ["Produktenbirse"] the "stock exchange"["Effektenborse"]. differencehas the same The meaning as if one distinguisheda fishmarketfrom a meat market,or from a fruit-and-vegetable market.Both kinds of exchangescan exist at one and the same location, and be organized together in some fashion - as, for examplein Berlinand Hamburg.Or, they can exist at differentlocations - as is the case in Paris and London. Each major type can itself be furtherdivided:for example,the stock exchangeinto an exchangefor commercialnotes of exchangeas well as one for other sorts of securities(as in London);and the commoditiesmarketcan be divided into specialized marketsfor grain, sugar, iron, fats and oils, etc. - as is often the case in America.Finally,in generalnot all, or even many,of the types of goods and securitiesthat are "ableto be traded" are in fact tradedon each exchange;naturally,it is often only those or, predominantlythose - that are producedin a particulararea, or that are shipped in or out of a particularport [that are traded].For example,in seacoast cities, [the trade often centerson] the fishmarket; or, in Essen,in westernGermany's coal-area,[thereexists]an exchange on whichonly coal and holdingsin mines are traded;or, in Magdeburg, in the midst of the sugar-beetgrowing area of Saxony, one finds an exchangefor sugar.Only in the greatcentralexchangesis commercein all majortradingcommoditiesconcentrated.

312 On the commodities exhangeswe first find grain and vegetablesof all sorts [being traded],together with the productsimmediatelyderived from them, especiallyflour.The largestmarketfor that in Germanyis, alongsidethe Berlinexchange,that of Mannheim,throughwhich travels all overseasgrainbeing shippeddown to Rhine River. In addition: sugar - where the greatestmarketsalong with Berlin are (as already mentioned)Magdeburgand then Hamburg(as an exportingsite). For alcohol - Berlin and Hamburg(an export-site)divide the market;for petroleum - Bremen (as an import-site) divides preeminence with Berlin; for cotton - the same two; for wool yarn, especially readycombedyarn - Leipzig plays a major role, as a place of production; for coffee- the greatestimport-site,and thus trading-site, Hamburg; is - the marketsin the western regions [of Germany] for coal and iron that producethose productsare of major importance.And to this list could be added other articles of less importance,but that would lead too far fromthe topic. Trading stocksnaturallyconcentratesin those in that are the sites of large banking houses: in Germany,only places Frankfurtam Main and Hamburghave any great importancealongside Berlin. We must look at the objectsthat are bought and sold on the "securities a exchanges" little more closely. A trade takes place there in: (1) types of money and paper with a and both monetaryvalue,whichour industrial entrepreneurs merchants receive as payment from abroad and use in turn to make payments abroad.In this group naturallybelongs coins and the paper-moneyof foreignstates (for example,the papermoney of Russia);but there also commerbelongsthe oldest of all objectsof commerceon "exchanges,"
cial notes of exchange. What are these?

One does not graspthe form they have [economically] from looking at theirlegal meaning.The most importantform of the note of exchange, the so-called "drawn bill of exchange" ["Tratte"]or the "draft" ["gezogene"Wechsel],presentsitself as the instruction,for example, of a merchant named Schulze (in Berlin), to, again for example, a merchantnamed Smith(in London),to pay a certain sum on a certain day to a thirdparty,Mr. Miillerin Berlin,or to his "order" that is, to someone to whom the note is to be given over, at Muller'slegally-valid instruction.6 In legal terms, however, this simply means: Schulze promisesto Miillerand his orderto be legallyliable for Smithpayinga particularsum at a particulartime; and its far more importantprac-

313 tical purpose - and, one for which it had alreadybeen used 700 years before this - is the following. Schulzein Berlinis an exporter;he had sold German goods to the English importer,Smith, in London, and now had to ask for paymentof the sale price (let us say, 100?). Miiller in Berlin is an importer. He had purchased English goods from an English exporter, Jones, in London, and imported them, and thus incurred a debt to the latter amounting to the purchase price (for convenience sake, let us say the same, 100?). The mutual commerce between Germany and England amounts to hundredsof millions of marks in value per year; and there are thousandsof the four sorts of people whom we've describedas Schulze,Smith, Miiller,and Jones. If the purchase prices were all paid in cash, unbelievableamounts of in money,weighingmanythousand(metric)hundredweight gold, would have to be sent back and forth, which would make for nonsensical expensesand place the money in dangeron the seas, while also keeping it fromuse for the durationof the voyage.For this reason,one operates in the followingway: Schulzein Berlin,who is to receivemoney from Smith in England,"draws" bill of exchangeof 100? "on"Smith;that a is, he instructs him to pay Miiller for his order. He gives this bill [Wechsel]to Miiller in Berlin, who has money to pay to Jones in London, and he [Schulze]makes himself liable to Miiller for Smith paying either Miiller or whoeverhis order might be. Miiller pays him for the 100?7 and sends the draftto his creditor,Jones, in London, by designatinghim on the draft as his "order" a notation on the draft that one calls an "endorsement" oder "Indossament"]. Jones in ["Giro" London receives the sum of the draft from Smith in London and, throughthis payment,obtainshis money.Schulzegets his money from Miilleras the sale price for handlingthe bill of exchange;the business is "settled."8 of the Schulzesin our example (creditorsof English All on" debtors,that is sellersof bills of exchange"drawn London)and all of the Miillers(debtorsof Englishcreditors,thus purchasersof bills of exchange "drawnon" London) now meet each other on the large market where such big sums "on London" are able to be sold and purchased- namely,on the exchange commercialbills. Only there for can theybe assuredof findingeach other.Businesswith othercountries in withwhomwe exchangegoods transpires just sucha manner.A trade in commercial bills of exchange occurs continuously in London, in Paris, in St. Petersburg,and in New York in enormous sums - and, this tradeis indispensable.Comparedwith the approximately billion 3 DM of coined money and paper money that is in circulationin Ger13 manyeach year,thereare approximately billion DM worth of transnotes of exchange." actions in "commercial

314 (2) The second-oldestobject of trade on the securitiesexchangesare in the "bonds," the narrower sense of the word:the governmental paper of and the debt-certificates communitiesand other publiccorporations that are relatedto it. That today the state and local communities,almost withoutexception, create debts, is known:the [German]Empireand the variousGerman states togetherare around8.5 billion in debt, England(withoutincluding its colonies) 15 billion, France 20 billion of state-debts;and all these debts must be servicedwith interestpaid to the states'creditors. The indebtednessof a state is today not some sort of misfortune,a or straightforward sign of "bad administration" of insufficentwealth. If a state wishes to build a greatrailroadfor, let us say, 50 billion DM, if it would be neitherjust nor understandable it sought to raise this a tax - for example, in Germanyof 1 mark per person. It is through not simply the present generationthat is alive that uses the railroad; and, it is not simply the presentMinisterfor Financewho will collect the income from it. Therefore,it is right that we also act on behalf of our heirs, and that occurs when we borrow the money, pay interest, and graduallypay the whole sum back out of taxes over a longerterm. The burdenof the tax is therebydivided up between the present and the future.For example,Prussiawould otherwisehavehad to cover the cost of the 5 billion [DM] which it expendedfor the purchaseof railroads over a period of 10 years throughsomethinglike 500 million in special yearlytaxes - and that would have been a foolish and impossible undertaking.It is something wholly different,and a matter of poor financial management,when a state has to borrow money for needs that continually recur; for example, paying the costs of its bureaucratsand its army. In that case, the generationthat is living shifts the burdensto the succeedinggeneration,which must then bear it; the state would therebybe managingits budgetwith a deficit,which the next generationis expectedto pay.9 needs is accomplishedby the Borrowingmoney for the first-mentioned state - and by administrative "circles"[Kreisel],'? town communities, etc. - throughthe sale of bonds, in which the state promisesto pay, to everyonewho at a particulartime announcesand provesthat they are holdersof such debts,11 specificrate of interest(i.e., 3, 3.5, 4 percent, a etc. of a sum of the debt) at a specific payment date (for example, January1 or July 1).Whoeveracquirespossession of the bond legally (through etc.)thus becomesa creditorof the state.The debtor purchase, (state, community, etc.) promisesto pay back the debt eitheraccording

315 to a specific timetable,so that a certain numberof the debt-coupons will be redeemedeach year and repaid("amortized"), it reservesfor or itself simply the right to announce [when and how the debt will be repaid]but takes on itself no correspondingduty [to do it on a particular schedule];the latter is the case with our Imperial and Prussian The state loans (the so-called "consols"[Konsols"]12). state (or, urban can do that because, for the holders of the state community,etc.) bonds, it is not a matter of getting their money back; far more, they wish to receivethe interest[on the bond-note];they are membersof the propertiedclasses, who in this way "investtheir money."That means, they wish to secure for themselvesthe right to the receipt of a tribute in from those who are burdenedby these interest-payments; this case, who raisemoney the taxpayersof the state or of the urbancommunity, for the interestpaymentson state and communitydebts throughtaxes. And the same holds for the "obligations"issued by railroads or industrial entrepreneurs.For example, Krupp recently gave out 24 million [DM] of bonds, in orderto purchasea competingfactory;and the obligationsissuedby railroadsandjoint-stockcompaniesare enormous. The interest[on the bonds]in this last case is raisedby the users of the railroad:throughthe freight,by the purchasersof those goods; throughprices;and finally,in the way that a portion of what the enteras prise takes in does not flow to the entrepreneur earnings or to the workeras wages, but must flow back to those who are entitled to the All interest-"tribute." of the named groups are "taxed" in order to cover the intereston the capital[thatwas raised]. These modern interestobligationsare the productof a long development. At one time interest itself was the sign of unfreedom.One did not chargeinterest"amongbrothers." The foreign conquerorlevied it levied on as a head-taxon an individual's person, in the form of a fee13 it land; alternatively, was exacted by the lord of the land from those who were landless, and thereforenot fully-free,to whom the land was lent. Ownershipof landedpropertyis the oldest sourceof the rightsto interest.Today it is, to be sure, still the same - the ground-rentsin cities especiallyshows that; but that other type of commandof tribute [i.e., intereston what has been loaned out] is now even more powerful. The Its characteristic to be "impersonal." peasant14 is paid rent to the lord of his land, who ruled him personally and whom he knew. But papers does not know those today, the possessor of interest-bearing whose income is taxed for his sake; and the estate-ownerwho receives money in returnfor a mortgageplaced on his propertydoes not know those who have loaned to this bank the money that was given out; and

316 [thesesame unknowncreditors]receivein return"mortgagepapers"that is, interest-bearingdocuments, for which the totality of the properties mortgaged by the bank and paying interest stand as of interest-bearingsecurities.The impersonality the relationshipbetween the one who commands interest and the one owing interest payments is the most characteristicaspect of these contemporary tribute-duties.For this reason one speaks of the rule of "capital" and not of that of the capitalists. are the ownersof these papers, Who, now, to which is linked the right to the interest-tribute? That is a matter of the social structureand the division of wealth within individual peoples and one must bewareof believingthat it is necessarilytied to a thin layer of "coupon-cuttingidlers."In France, for example, the ownership of state treasury bonds and similar papers reaches way down to the lower levels of the people, in whose hands one never sees such papers in our country.The reason for that lies in part in the existence there of a far broader group of still-prosperouspeasantry than we find among us [in Germany];but undeniablyit also lies in the usual limitation, among the French,of the numberof children("twochild system," which hinders the crumbling of wealth through the division of inheritance- but that doubtless,on the other side, carries with it the danger of serious negative social repercussions[schwerer sittlicherSchdden].15 can calculatethat, in Germany,with about One 50 million persons(comprising11million families),about 10million of them possess passbooks for savings accounts, about 2.5 to 4 million receiveinterestfrom capital in some form, and of these about 1.5 to 2 million receivethat interestin the form of interestpaid on securitiesor "dividends." We have alreadyreferred this second majorform in whichtributeis to the We paid to "capital": "dividend." must look at it somewhatmore closely. Stock certificatesand the certificatesof value similar to them (i.e., shares in mining companies - the so-called "Kuxe";shares in shipping firms - the so-called "Schiffsparten," have a different etc.) character than the previously-mentioned whichrepresent "obligations," the rights held by creditors.[Stock and other certificates]represent share-rightsin an enterprise(a railroad,a factory,etc.). Historically, 16 what occurredfirstwas, for example,that the "company" thatjointly owned a mine itself also took charge of excavatingthe mineral ore through collective work; or that the shipowners, to whom a ship belonged, all (or at least in part) personally made the ship voyage. Later, as ownershipof a large vessel or the systematicworking of a mine came to requiresignificantadditional"resources" that end, for

317 the property-owning group graduallyseparatedoff from the working hired wage-workers). group (today: Today,decisions about the affairs firmare madeby the bandof those who possess shares;each [shareof a holding] individualreceives from them, proportionatelyaccordingto his shares,whateveris dividedup as a "yield"after the firm'sincome has covered wages and the other needs of the mining company.And if income does not cover expenses, each [shareholder] must propor[associatedwith the Kuxen] tionally pay "supplementary payments"17 or else give up their sharein favorof someone else.18 The situationis differentwithjoint-stockcompanies,a form of association amongcapitaliststhat was firstused to a largeextentin Germany for the building and running of railroads;subsequently,it has been used for enterprises of all sorts. The associate, the "stock-holder" makes only a specific,determined contributionas his portion, usually in the form of cash; he is thus not required,in the case of losses, to make additionalpaymentsas is the case with companies[as discussed above].The sum of these contributionsis then used by the directorate of the company - itself normallyelected by the "generalmeeting"of the stockholders in orderto, for example,builda railroad,or purchase a factory,etc. Such an entity is then run by the directorateon behalf of the account of the stockholders.An alternativeis for one of the associates of a newly-founded company,and who has heretoforebeen the factory [or railroad, etc.], to have it transferredover to running him, after a monetary estimate has been agreed upon as an "investment." And this person [whopurchasesthe offshootenterprise] receives a specific portion of stock-sharesas part of the agreement,while the others investmoney for their stock-shares the new company].If the [in new companyneeds still more money,and if it does not wish to drawin additionalnew stockholders- and thus give out "newissues"[of stock] - then it must take on debts.It can do so, if it gives out interest-bearing bonds of debt. An inexperienced "obligations": person can easily confuse the stock-shareswith these latter, the bonds. And, outwardly,the "stock shares"also seem like a debt bond, for the formerdo speak of a monetary contribution (for example, of 1,000 DM). But that does not mean, as it does with the obligations,that the stockholderhas to demand this 1,000 marks from anyone, as their creditor; rather, it means far more that he has contributedjust so much in money, or in for other "investments," the company;or that he has paid in that much in cash; or that, for example, the factory in which he has invested, is carriedin his account for that amount. All he has to demand,so long as the companycontinues to exist, is only his portion of its earnings,

318 the "dividend" and this, naturally, only if the companymakesa profit (thatis, afterthe drawingup of its finalfinancialaccount,its "balance," its wealth has increased.For the rest, he has a proportionalsharein its wealth and thus receives this share, if the company is dissolved - or "liquidated" which can bring more or less than this 1,000marks [in the above example], or nothing at all, depending upon whether the companyhad losses or gains up until then or whetherit had nothing or left (afterpaymentof the debtsit had incurred), a lessersum remaining than the unpaiddebts.For,just as with the individualbusinessman when he gives up his business,wealth only remainsleft over after the business owner has paid off his creditors;so in a similar fashion, the society of stockholdersmust first satisfy their creditors before they retainanythingfor themselves.One thereforealso calls the debt bonds of joint-stock companies "preferences" that is, rights that precede others- becauseit is understoodthat the rightsof creditors(naturally) come first, followedby those of the stockholders.In orderthat something remainleft for the creditors, joint-stockcompaniesare forbidden wealth, by a process of dividing by law from decreasinga [company's] up presumedearnings among the existing stockholders,beneath the sum of the "foundingcapital"- that is, the sum of [the company's] value - that it had attained by the paymentsand investmentsof the stockholders.If 100 stock-shares each given out for 1,000DM, that are means that at least a value of 1,000 DM in money or in other investments was collected for each stock-share,and all together at least 100,000DM. When one thereforedrawsup the "balance-statement"when one calculatestogetherthe monetaryvalue of the propertyof the company,for example,the land on which the factory is built, and the machines, etc.; the finished goods on hand, the orders [for goods], amountsof readycash the companyhas, etc. - makingup the "assets" - and then deductsthe "liabilities," theremust be a sum total of assets over liabilities of at least 100,000 DM; otherwise, the company has sufferedlosses. And it is only when there is a [company]wealth of more than 100,000 DM, that this surplus can be divided up as a

In a company'sfinancialstatements("balance-sheet"), is easy to act it against the prescriptionsof the law throughtoo high an evaluationof [a company's]wealth and to arouse the deceptiveappearanceof disguising the [actual quantity of] "foundingcapital" in order that a dividend be distributedillegally,even when no profit was made; the would be stocks would then appearto be of high value and purchasers paying an overly-highprice for them.20It more often occurredtwenty

319 of years ago, in the "FoundingEra" [i.e., "Griinderzeit" the German 1871and after], that the "founders" that is, the first stockEmpire, holders - if these were shaky banking firms who gladly wished their stocksto be grabbedup by the publicat more than theirvalue,paid too much for the factories, etc. that their company was purchasing,because they conspired"underthe table"with the previousowners.The characterof capital - which was operatingeven here "impersonal" mitigatedagainst all of this, however.The individualstockholdercould [to be sure]not have a voice in the managementof the business; if a factory,a mine, etc. was being operatedby a joint-stockcompany,he had no contact with the workers,and they knew himjust as little as he knew them. He did not get to see the company'sbooks, but only heard reportsby the companymanagementat the generalmeeting of stockholders. The majorityof stockholdersremained at ease and did not even appearat the generalmeetings. The shares in the company are (normally)handed over by a simple transferof papers (the stock certificate)and thus pass from hand to hand. The stockholders do not know each other. And yet they are co-owners of the same enterprise,and it is on behalfof these changing stockholdersthat thousandsof workers(whom the owners will never encounter in their lives) are under normal circumstancesemployed. And these individuals,the actual entrepreneurs and whose represenof tativeis only the "director the board"- have as good as no influence over the worker'scondition; and without being in any way especially consciencelessmen, they scarcelyfeel responsiblefor these workersin any case. The number of enterprisesof this form is still continually growingand, for large-scalefirmsthat need largeresources,they are as for a rule wholly indispensable; the concentrationof wealth in a single pair of hands, as in the case of [the firms of] Krupp and Stumm, is a rareexception.The resourcesfor enterprisesof such a magnitudemust normallybe raisedfrom the investmentsof a greatnumberof people and, from people who are not at all in a situationwherethey dedicate their personalparticipationto the enterprise,and would in fact understand nothing at all of it. These individualsonly have an interest in receiving a "tribute"in the form of dividends. And once again one must here refrainfrom believing that the owners of stock shares are perhapsnecessarilyto be foundamong the groupof "greatcapitalists." In England,workersalso own stock shares;among us, and with our far lesser situation of wealth, the danger precisely arises that too many stocks shares will fall into the hands of people who do not have too much to lose, but who are attractedby the occasional high dividends

320 that they read, heard about, or saw advertised- and who think that because there is, for example,"1,000 DM" written on the stock share that that amountwill at some point come back to them, and that they will receiveit from someone, somewhere. Those are the majorforms of the specialwaresthat form the objectof on One sees that they the market-commerce the "securities exchanges."
are securitized claims,21 and the modern organization of the economy

leads to the fact that an increasingnumberof these are producedand The "putinto circulation." engineerof an electricityplant, for example, his very workto producethe dividendpaymentthat a signing helps by clerk22at a paper mill receives, as a stockholder[in the electricity company];and [that engineer]himself perhaps owns stocksharesof this papermill, so that (in return)the workof the latter [i.e., the clerk] is owed to him; and both perhaps own state debt certificates and thereforelevy a tax upon the totalityof taxpayers,includingthe "propertyless"who do not, for their part, have any such payments[Tribute] coming into their hands.We also would find, underpresenteconomic conditions,just such a mutual owing-of-payments [Tributpflichtigkeit] in operationif we imagineto ourselvesthat all possess propertyin an equal fashion, or somethingapproachingequal levels; then, everyone
would be levying a tax on everyone else [dann steuerte alle an alle]; [by

contrast],now all levy a tax on only a part [of society],on the properis tied. In itself,a mutualowing-of-payments not necessarilya sign that a few "lords of tributes"confront a mass of those bound to pay tributes.The existenceof interestpaymentsand of dividendsin itself is far more only the furtheroutgrowthof the modern "exchange economy" ["Verkehrswirtschaft"],erected upon the peculiar fact that each

of person surviveson the basis of the output [Ertrag] the workdone by others; and the individualworks as well for the needs of others.The [ca. greatestate ownersof the age of Charlemagne 800 A.D.] who had everythingthey needed (and their subjectsneeded),withoutexception, producedon their estates by the craftsmenbelongingto them - everything fromspunyarn,to wovencloth, to iron tools, etc. - werestill able to say,"We,the inhabitantsof this estate, live from the output of our own work, gained from our own ground, and we live only from that and not from any other."Takentogetherwith his workers,the modern ownerof an estate - even the largestof them - can no longerassertthe same thing: outsiders build barns and dwellings out of material brought from outside; the agriculturaltools are purchasedby them; and even the soil itself is no longer the naturally-developed earth, but enriched by imported, artificial types of dung, potash, phosphates,

321 etc., all products of outside work. This work performedoutside [the estate]must be paid for, and is paid for; and this occurs,underpresent of conditions, in the form of a "capital-annuity," the interest that the creditorof the mortgage (from whom the money was borrowed) receives.That is often, for example,the savingsbank, which loans out the money of "smallerpeople"- money that it managesfor them and for which it pays them interest - against the security of a piece of property;and thus the estate-ownerpays interest to the proletarian. To be sure, he mostly pays interest to citizens resident in towns. He harvestsmore grainfromhis estate, but he no longersits atop free sod; he is bound to and entangled with the economic communityof the world outside. And the factory owner or industrialistis [bound and entangled]to a far greaterextent;[for he] lets his workersprocess and work over raw materialsthat outsidershave workedupon, and for the purchase of which he has often had to borrow money. He is then dependent upon others being capable of needing [his products]and desiring to pay him a high enough price [for them]. It is only human for him to think that the product is his product, the earnings are his earnings, the factory is his factory - and, since he is a free man, no one, not even the state, has actuallya right to tell him what to do. In truth, however, it is the communitywhose work he needs, for "his" by product only contains a miniscule portion of the value "created" him. And, once again, it is the community, whose need for the goods of the sort that he brings to marketis the directive,that assigns him the location in the production process that he takes up, [a directive]to which he must listen if he wants to "earn" something. A socialist organizationwould bind all individualsby a single thread which and directthese threadsinto the handsof a centralmanagement, directeach individual wouldthen, accordingto its degreeof knowledge, couldmost purposeto the locationwhereit believedthatthat individual be employed.Today's[economic]structurebinds each individual fully to countless others via uncountablethreads.Each person tugs on the networkof threads,in order to arriveat a position wherehe wishes to be and where he believes his place to be, but even if he were a giant, and had many threadsin his own hand, he would far more be tugged by others over to a place that is actuallyopen for him. But let us returnto our theme. Needs continuallyarise anew for states, communities,landedproperty holders, industrial- or railroad corporations to be able to "accept"

322 or money fromthe sale of interest-bearing dividend-dispensing papers. On the other hand, numerouspersons are, on an ongoing basis, in a position to be able to "invest"their money in such papers. An evergreaterportion of [a country's]national wealth is brought into such "tributaryinstruments,"23 placing it into circulation.Germany'snational wealth - that is, the sum of the propertiesin Germanythat yield any monetaryreturn- is calculatedat around180billion DM, and the foregoingestimations[i.e., laid out in this article]make it probablethat three-sevenths(3/7) of it consists of interest-bearingor dividenddispensingrights, mortgages,stocks, or obligations of all sorts. Each year about 1 billion (1,000 million) marks are saved anew and made For availablefor "investment." more than one-half of this giant con- namely,all of those who have purchasedsome form of the tribution value-bearingpaper describedabove - the securitiesexchangeconstitutes the marketin which they are offeredand sold, just as foodstuffs are sold at food markets.One can see at once the absoluteindispensabilityof this marketand its enormoussize. the for How,however,is this market- [comprising] exchanges products, for commercialbills of exchange,for securities- organized,at least in its outwardform?The oldest of exchanges,in the Netherlandsin the fifteenth century,were simply internationalgatheringsof merchants who had travelledthere and sold their goods. Gradually,however,the journeys of merchants ceased, because they constituted a wasteful expenditureof time. Instead, one sent one's selling or purchaseorders to the location of the exchangesby mail, as is still done today, and there developed a class of merchantswho made a profession out of And, to aid their own process of calculating handlingthese "orders." and reckoning up of accounts, these merchantsalso traded on the exchange. This was a corporation or estate [Stand]of professional exchange-traders.In fact, these persons united in their hands the variousbusinessactivitiestakingplace on the exchange.This occurred simply because they alone knew "the market,"daily having to deal to with, year in and yearout and know - or, at least be presumed know - what goods and value-bearingpaperswere likely to be especiallyin demand, or availableat a cheap price. This occurrednot because the laws [of that region]conferredon them special privileges,but they had a positionthat was analogousto a monopolybecauseany otherpersons who came to the exchange,and who were allowedto participatein the trade taking place there (for example, in Paris and Hamburg, the exchangeis in fact open to all persons,withoutexception),were [nonetheless] only able, with the greatestof difficulty,to derive any benefit

323 from taking part - or even to become informed(fromthe outside as it were) - of the sort of business decisions taking place there. Far more often, such [outsiders]felt themselvesto be "abandonedby God" [as the saying went]. For such a gigantic marketis, understandably, just that much more complicatedthan a typical"weekend farmers' market" as it is largerthan one. In general,anyonewho is not professionally an is exchange-trader all the more forced to turn to an exchange-trader when he wishes to sell or purchase- in orderthat such a person act as for a "commissioner" a fee to transactthe business.There are various in whichthe exchange-trader let himselfbe paid - and we will can ways discussthat matterin the second of these pamphlets. The oldest of the exchangeswere gatheringson an open, occasionally enclosed, plaza. Latermost, and now probablyall, of these gatherings takeplace in greatclosedhalls.Fromearlyon, it was naturally necessary that there be a body or instrumentthat could exercise a "policing" over the market. It is just the same now, for everywherethere are "commissioners" appointedwho uphold the basic order of the place. In addition, however, the older market-and exchange-organizations also had a member - and the overwhelmingmajorityof exchanges, includingthe Germanones, still haveit - whose specialpurposeit was to facilitatethe absolutelymost expeditiousconclusionof business:the The con"broker." differencebetween them and the "commissioners" sisted - and we will discuss in the following pamphlet,how that has changed - is the following: the commissioner concluded a piece of business as an agent for himself, and then balanced his account with the person who had originally "commisioned"him - to whom he turned over the goods, in exchangefor the expenditureplus a "commission" ["Provision"] (that, for example, amounted to 1, or 0.5, or 0.16 of the amount).Such a one is the person throughwhose mediation those outside the exchangescould participatein the trade that took place therein.The broker,by contrast,is simplya mediator,a middleman - and normallyone who operates,at the location of the exchange
itself, only between those who are already present on the exchange. He

received from the exchange-traders whether they were acting for or for themselves, as commissioners someoneoutsidewishingto transact some business- the task of locatingfor him someonewho (forexample) wished to acquire100 sharesof a specificcompanyor 100 metric tons of wheat, and to pay at least "X"marksfor that. His task was to find such a person and, when he had found them, to carry to that person the offer(i.e., what "wasoffered")and to take back the agreementthat it was accepted. He gave to each of the parties a similarly-worded

324 about the business that had just receipt (the so-called "deal-note"24) taken place25 and which he had at firstenteredinto a notebook.And he then received - normally one-half from each party - the usual for ["Courtage"] his exertions:for example,1 or 1/2 "carrying-charge" etc. of a thousandthof the amount paid. Accordingto the conception lying behind the creation of such a position, the brokeris the "instrument"that brings togetherthe outstretchedhands of the supplierand the purchaserso they can grasp each other. His indispensability rests upon the fact that, withouthim, and giventhe largenumberof persons literallyat the exchange- and, at the largest exchanges,more than a thousandare there- the probability that a prospectivebuyerand seller would meet each other is very small, or at least would be tremendously time-consuming. And the monetary value of time, for commercial transactions,has grownenormouslyover the centuries.The individual broker mostly carries out - and we will see this in detail shortly transactionsin a single, or several specific, entities (for example, in stocks of the Discount Company of Berlin [BerlinerDiskonto26so Gesellschaft]); that, when one wishes to do some business in this item, one knows which brokerone has to turn to for that. It is in the handsof a person in that position, so that everythingrelatingto supply and demandcomes together"in the marketplace." In this way the exchanges,like the "market," to it that buyersand see sellersare able to find each other. But that is not the sole basis of their The farmeralso travelsto the marketwith the meaningor significance. he brings to the small rural town nearby;but he does not, products however,take them directlyto the doors of the individualhouses that could possiblyuse them. And he doesn'tdo that for more reasonsthan simply the tremendousloss of time that would be involved.He above all brings them to the marketbecause he wishes to obtain there the highest-possibleprice. It is there that the seller encountersall, or at least most, buyers,and they meet togetherand both sides can equally get an overallsense of whetherany otherof the individualspresentcan offer more favorableterms than the ones the person he was dealing with initiallywas offering.In general,as a result of the "competition" of the prospectivebuyers [Reflektanten] with each other, goods of the same sort and qualitywill, with only minor discrepancies,be bought and sold for approximatelythe same price. The exchanges serve the same function, except that there, for an entity of a specific type and quality,the price that resultsat any given moment - the "rate-on-the27 exchange" for the day or for the hour - has an incomparably greater significanceand impact. Dealers and agricultural managersfrom the

325 whole of eastern Germany look at those pages of the newspapers that publish each day the prices that are being paid on the Berlin commoditiesexchangesfor grain, alcohol, etc. The grain dealer calculates in the following manner:the price of grain per ton (1,000 kgm.) is "X"marks;I can thereforeexpect to be able to sell grain for approximatelythat much.Transportation grain]to Berlincosts "Y"marks; [of if I wish to earn "Z"marksper ton, I can accordinglyexpectto pay my suppliersat most X minusY minus Z marks.He thereforesays to the agriculturalmanager who offers grain to him: I am preparedto pay "so-and-so many marks (namely,at least Y + Z) at today's rate for grain on the Berlin exchange."It is in this manner that the greatest portion of eastern-Germangrain harvests are sold, as well as that almost all the alcohol distilled there is purchasedfrom its producers. For them all, this "rate-on-the-exchange" its level is a matterof life and anddeath.If the exchangesdid not exist, they wouldhaveno possibility at all of controlling, even approximately, how much profit the grain dealers would be making off the grain they take from the managers; they would be whollyleft to the whims of the former.28 [In similarfashion], the holders of valuable"paper"look at the pages of the newspapersthat contain the ratesfor state-backedsecurities,for stocks, etc. to ascertainhow high a value is being set on the exchanges for what they own. Such a person prefersto purchasepapers that are on "able-to-be-traded" the exchangesand largelyonly loans his money indirectly[and not directly]to any economically-soundbusinessman or agricultural managerwho needs it and then collects intereston that In part this is due to the fact that it is wholly chance whether money. such [an investor]will actuallyfind such [a recipientof an investment]. But the investordoes so, above all else, becausehe wouldnot be able to obtain that investmentback at any given moment, but must wait until the debt actuallyfalls due. (It is of coursepossiblethat the investorcan "cedeover"that debt-noteto someone else who is willing to pay him money for it - but it is questionableif he can find such a person, and what the person would be willing to pay for the debt.) With valuable paperthat is regularlytradedon the exchange,however,he is securein [being able] to find, at each moment when he would need money, a the purchaserat the exchange,willing to pay approximately price that he can see listed in the newspaper.The numbers of the exchange listings are for him a thermometerby which he can see at what level he can peg the wealth he owns.

326 The tremendousimportancethat the exchangeshave acquiredfor the national economy - havingbegun to become, and continuingto be so and even more,its regulators organizers- restsupon the abovecircumAnd if the present-daysocial order is to continue to exist in stances. any form roughlysimilarto the one we now know, it is an importance that they mustcontinueto have in the future.But at the same time, we can also see how tremendouslyimportantit is that the creating and determiningof prices (of "rates")take place in a secure and correct manner. All exchanges have set up institutions or mechanisms to communicatethe pricesthat havebeen paid for the goods and valuable papers that were traded on them on individual days. Almost all especiallythe largestGermanexchange,the Berlinexchange- publish an official"rate-newsletter"29 the uniformassistance,everywhere, with of the brokerswho have actually reportedthe business that has been concluded;the content of this newsletteris what is then printedin the In newspapers. the secondpart to this article,we will see in more detail how these "rates"["Kurse"] come to exist, in what way this plays out on the exchanges,and throughwhich persons the commercialtransactions (whosefinal resultis the "rates") occur. The long series of numbers at the back of newspapers,which even readers who are neither capitalists nor businessmemcannot fail to notice, are not only of importancefor the capitalistsand businessmen. Rather,the mannerin whichthe dry numberslisted therechangein the course of a year signifiesthe flourishingand decline of whole branches of production,upon whose situationhangs the happinessor miseryof thousands. Wehaveseen:in the main, the essentialfoundations the institutions and of the exchangesmust be the same, because the purpose of the exthe changesis everywhere same. Despite this fundamental similarityin essentialpurposes,however,the of the exchangesin differentlands exhibitvery noticeable organization the differences, majorforms of whichwe now wish to reviewbriefly. The largestEnglishand Americanexchanges- not all, but preciselythe most important ones - havethe character closedclubsof professional of for bonds and for commoditiesare, as a exchange-traders. Exchanges rule, separated, and these types themselves are often divided into further specialized exchanges. Each forms itself as a society that administersitself, and whichas a ruledecidesitselfwhom it will accept

327 as a member. The individual seats on the exchanges are - as was general, and in part still is, in the churchesin Germany- inheritable and cost verylarge sums;only those who haveacquireda seat and who are accepted into the society can take part directly in the exchange's commerce.All others who wish to transactbusiness there must make use of those who were admitted[to the exchange]as a "commissioner" - [which,in English,is termed]a broker.30 In orderto join such a societyof exchange-traders, must (however) one not only have acquired a seat; as a rule, the society also requires in a significant"security-deposit" "caution"[Kaution]), order that (a whoever does business with those entering into the society is also assuredthat he will be able to receive payment on the debts owed to him.31 exchangeis thusclearlyand openlyorganizedas a monopoly The of the rich;the professionaltradershave empoweredthemselvesalone, in the fashion of a guild, to fix the businesspracticesthat are followed - that is, the conditionsunderwhich, in all cases, any item of business is consideredas "closed" "sealed" the exchange.Neitherthe state, or on nor anyone else (outside the exchange)for that matter,has any say in of that matter.They form a sort of "aristocracy money"in the matter of commerceon the exchanges. Seemingly,the greatest Frenchbonds-exchange,the Parisian,appears to present the sharpestcontrast to the above organization.[At Paris] each and everyone there exists no closed society of exchange-traders; has access to it, as to an open market- if someone gives him credit!and can take part in commercialtransactions.Occasionallyone sees workersin their blue shirts re-selling,at the exchange,the titles to the state treasury notes they have accumulated.Like the [French]state, commerce on the exchange is outwardlyorganized in a democratic fashion. But, that has its limits. For the Frenchbonds-exchangehas been for a long time now a politicalinstitution,whichthe state uses for its politicalgoals - and into whose organization accordingly, involves it, itself at will. Thus, we find on the seven greatest French bondsexchanges,and especially the Parisian,an institutioncalled the "parquet" [parquet- literally,floor of the exchange];that is, a society of "brokers,"called "transaction agents" ["Agents de change"], who are allowed by the French governmentalministry to enter into that Accordingto Frenchlaw,these brokersalone have privileged"society." the right to transact business on the exchangefor the usual fee (the Anyone who needs a broker,must use one of them and "Courtage"). as alreadynoted above - in nine out of ten cases, when anyone wants

328 to do business and find someone quicklyto do it with, must make use of a broker. business, They thereforehavethe monopolyon transacting and are thus certainof havingan income of verylargeproportions.For the entire, tremendouscommerce of the Parisianexchange,there are And since such a brokerhas only sixty such "commissionedbrokers." the right, when he retires,to recommendhis own replacement- and thereby,to hand over his concession (just as apothecariesdo in Germany)- these positions are in fact able to be sold. At present,one has to pay about 2 million francs for such a post. Each brokermust, in addition, deposit a "caution"of 250,000 francs. These brokers-byIt monopoly are thus millionaires.32 is thereforethroughtheir hands that a massive portion - about a half - of all business of the bondsexchangeflows. Their site is within a room, surroundedby barriers, and the great difference between them and the great English and Americanexchangesis that here [in Paris]it is not the whole commerce of the exchange,but to a certain degree only its innermost core, the final link tying together buyer and seller, that is the monopoly of a privilegedgroupof persons. The German exchangesappearquite differentfrom each other. If we take the largest of them - namely,the Berlin, the Hamburg,and the Frankfurt exchanges- we will first find that they are exchangesfor all of business - from securities to products - concentratedand types assembledin the same place; this is somethingthat is not usually the case in France and England.Within the exchangebuilding, naturally, the individual"markets" themselvesapartfrom one another.Thus, set in Berlin,commercein productsis to be found in the furthestback of the three great rooms of the exchange-hall;and, within the exchange for bonds, each of the greattypes of "valued-paper" namely,Russian - each have theirown etc. banknotes,"Diskonto-Kommandit"-stocks, particularplace wheretheirtradingis usuallycompleted.Whenviewed more closely, the Hamburgexchange seems very differentfrom the Prussian [i.e., Berlin]exchange. [In essence], the Hamburgexchange is a market with a roof over it. "The whole of the honorable male public"33can attend it; and anyone who simply comes across it on their way [throughHamburg] in fact walk throughit, as a passagecan to their destination. Seamen and foreign merchants travelling way through [the city] visit it and settle shippingor other business there. who carry on business Alongside the professional exchange-traders either for themselvesor as commissionersfor others, we also find, as regular visitors, the brokers. But there does not exist the sort of [At privilegedmiddlemanas are the Parisian"agents." the Hamburg

329 exchange],it is open to everyoneto practicethe trade of a broker:he only has to hold himself to the general duties of such a position (i.e., keepingcertainkinds of records,in whichhe notes the businessthat he as has transacted,issuing final "deal-notes," mentioned above, etc.). Thus here the principle of a "free market"is put into practice with consistency.The Chamberof Commerce,a representathoroughgoing tive group of the city's merchantsset up by the state, only controlsthe outwardsupervision[of the exchange]. Now the Prussianexchanges- especiallythe Berlinexchange- constitute a unique sort of "hybrid" standingsomewherebetweenthe closed of exchange-corporations Englandand Americaon the one hand, and the condition in Hamburg,on the other.The Prussianexchangesare given a concessionby the state and standunderthe overallsupervision of the Chambersof Commerce.[Themechanismis through]those who are elected by the larger merchants to be their representatives;in Berlin, it is the so-called "senior commissioners of the merchants" der who ["Aeltesten Kaufmannschaft"], are similar[to these large merchantrepresentatives]. These groupsmakethe finaljudgmentaboutthe practicesthat are decisive for carryingout business and (in the main) of they appointthe "organs" the exchange- the commissionersand the it deputies- whose responsibility is to maintainoveralloutwardorder on the exchanges,togetherwith courtsof adjudication34 decide such to as are voluntarilybrought before them. (In certain controdisputes versialmatters,that are not of furtherinterestto us here, the partiesin the dispute are bound, according to the conditions established for doing business on the exchange,to submitthemselvesto the decisions of just such a court of adjudication.)The exchange is not a closed society, but on the other hand, not everyone has admittance to it; rather,to gain that admittance,one needs an "entry-ticket." such But, cards are issued for a small fee to any native [Einheimischen, i.e., who legitimatelyshows that he wishes to visit the Prussian-by-birth] exchange for the purpose of trading, and who is recommendedfor acceptance by a member of the exchange - an invitation that in no way burdens the person who gives it with any responsibilities,and which is therefore obtainable by anyone, without exception. From insultexchangemembers, time to time, peoplewho cause a disturbance, spread false rumors, or are incapable of paying debts are excluded. Thus, a disciplineas strict and harsh as the Englishone does not exist on German exchanges.Even those who have at one point been bankThe representatives governrupt are, after a time, given readmittance. the exchange have few instrumentsof authority in their hands. ing

330 Apart from temporaryexclusion [from the exchange],there are no other penaltiesavailableagainsttraders.35 We also find on the Prussian exchanges, alongside the professional traders, representativesof the banking houses and "commissioned traders,"the brokers.In relation to them, the Berlin exchange also occupies a middle-position,in this case between that of the "agents of granted concessions" (in Paris) and the total deregulation36 the brokers'trade (in Hamburg). Each and everyone can carry on the business of being a brokerand there exist [in Berlin]numerous"free" brokers,whose businessstands underjust as little control as it does in Hamburg.But a special position is occupied by the brokerswho are "swornin" by the state government,after nominationby the authorities of the exchange.These have no sort of privilege and are specifically not - as in Paris - allowedto have exclusiveright to transacting business.One can choose [as a customer]to turn to eithera "sworn-in" brokeror to one who is not. Settingaside some relativelyunimportant privilegesin the matterof compulsorysales, etc., a privilegedposition on the securitiesexchangeonly exists for the sworn-in-broker and insofar as, in the process of determiningthe [published]trading only rates for the day in individualsecurities,they alone may be consulted. In principle - although not always in practice - only the trading agreementsthat they have handledwill be taken into accountin listing and publishingthe prices that were offered,asked, and paid [for securities that day].We will see furtheron [i.e., in part two of this article] that someone concludinga piece of business [on the exchange]will in many cases have an interestin that set of deals being noted when the That is especiallythe case, for prices on the exchangeare determined. for the "commissionedtraders,"whose clients decide, from example, the outside and by means of the newspapers,whetherthe traderhas calculatedthe correct price-cost; that is, whetherit accords with the price noted and published by the exchange itself. Such prospective buyersare, as a rule (althoughas we will see later, not in all types of business), more or less required to rely upon the brokers who are "sworn-in." addition, the latter also have some duties toward the In other brokers:they are not supposedto transactany business deals of their own, nor to authenticateany business [for any clients of their

In Germany,therefore,the sort of wealth that a French"agent"must have is not requiredfor practicinga broker'strade. On the contrary, not frequently merchantswho havebecome bankruptare appointedas

331 brokers,in orderto "workthemselvesback up" throughthat position. In muchthe same way,one must stop short of thinkingthat with us the is group of professionalexchange-traders generallyan estate [Stand] composed of rich people. One can actually say, by contrast, that the differencesin wealth among the exchange traders are some of the greatestthat therecan be in any single estate. On this particularpoint, it is a highly "mixed"society - extendingfrom representatives the of greatestbanks,who havecapitalresourcesof 50 million or more marks behind them, to the most deplorablypetty dealer38who ekes out his existencefrom the smallest swings in prices of the things on which he on speculates.Greatwealthis, fromtimeto time,"earned" the exchange; in already large possessions that most of that, to be sure, occuring tension that shapes graduallygrow, [although]under nerve-wracking the lives of speculatorsin waysthat are far more unenviablethan many But maydreamto themselves. one shouldnot believethat the exchangesomehow carriesin his satchel the "magicwand"that leads to trader in wealth. As a consequence, the estate [Stand]of exchange-traders differences noted above, Germanydoes not, becauseof the tremendous in any way constitutethe sort of (relatively)unifiedclass [Klasse]that membersof the great Englishexchangecorporationsdo. In more than one respect,that very fact is a real detrimentfor us. Someone standing outside the exchange [and looking in] is readily inclined,in judging [whatgoes on there]to place the greatestemphasis on the observationthat, not infrequently, seem to be sought "winnings" almost in the fashion of a lottery - and thus, that such winningsseem speaking)to be "effortless." Togetherwith that, the observa(relatively tion [is also made] that, on the other hand, savingsfrom long years of hard work are lost in "playing the exchange,"to which people are of seduced by "agents" and advertisements disreputablepeople in the commission-houses (people who have not the least competence to participate,professionally,in the exchange'stransactionthemselves). Quite justifiably, the recommendationsthat the Commission (The ExchangeInvestigationCommission) has gatheredtogether over the last two yearsin its investigationof conditionsat the exchangesaims to subject misleadingbehavior- leading to economically irrationaland in on dangerous"gambling the exchanges," the mannerof a profiteerto legal punishments,and to declaresuch business deals to be invalid. Insofar as one can, through such regulations,effectivelypreventthe exploitationof privateindividualsin the generalpublicand preventthe participationof unprofessionalindividualswho are ignorant of what goes on in exchangetrading,then these means must be utilized - and

332 we will discuss some of the specificregulationsin the followingpart of this article.To be sure, however,one must be carefulnot to take the person shouting the loudest as always being the most trustworthy critic;all the less so because certain political circles thatjoin in at the front of any campaignagainst the exchangesknow only too well what is going on and do not hesitate to profit from the "winnings"being gained [on the exchange],even as they themselvesdrag their feet at one making good on their losses. And, unfortunately, ought not to be too optimisticabout the prospectthat the public as a whole will itself resisttakingpart in speculations. But it must above all be rememberedthat it is impossible that the essentialviewpointfromwhichone viewsthe exchanges, the damage and done by the exchangespoliticallyand socio-politically,be that of those who want theirpossessionsto be guaranteed themunder to [customers] all circumstances,who do not wish "to be big shots"and [yet] who [nonetheless]wish to gamble all of their wealth on the exchange. Rather, given the wholly indispensablefunction that the exchanges play in economic life, the followingquestionsare far more important: (1) Despite all their excesses, do the exchangestoday in generalfulfill the economic functionsthat fall to them in the nationaleconomy?(We will consider this question more closely in part two of this article, to follow.)Here we will considerthe prior question,namely:(2) Whether the groups of persons, in whose hands these functionshave been laid accordingto our present way of organizingthe exchanges,are, given the characterof those groups,capableof giving such guarantees? This question is far more important than lamentations over individual deceitful practitioners.We will see (in Part Two) that there are no forms of business, or manipulationson the exchangethat - by their form alone - would be in themselves "real" "unreal," [thatthere or but are] only real or unreal businessmen.It is all a matter of the persons involved.Therefore,there is no more decisive regulation to be used against such abusesthan the introductionof a tribunal[Ehrengerichtes - literally, "court honor"],composedof membersof the professional a of group [aus Standesgenossen]itself, as the Exchange-Investigation Commissionhas suggested.[Thetribunal]would examinethe business practicesof those membersof the group,when complaintsare lodged, and be empoweredto exact penalties for violating a code of conduct [Ehrenstrafen] and, eventually,exclusion from the exchange itself. But: an effective tribunal presumes that there is already present a common and analogousconception of honor within the estate [Stand] itself.Withouta doubt,thatis not the situationwithus [i.e.,in Germany]

333 and cannot be, given the structureof our exchanges,which open their doors to everyonewithout distinction. Above all, there is not even a rough similaritybetween persons who come to the exchanges,given their [unequal]financialsituationsand their wholly differentoutlooks on things.39 in The Londonexchangeis organized"plutocratically" that, as we saw, a significantamount of wealth and securitydeposits are requiredas preconditionsfor admittance to business on the exchange. But one should not think that, because our [German]exchangespermit those who are approachingpennilessnessentrance into our exchanges,the dominanceof large-scalecapital on our exchangesis somehow diminished. That is the farthest possible from being the case. Quite to the contrary, that [dominance] simply exercises itself among us in a concealed form - and, therebywith a far lesser pressurefor a feeling of responsibility. big capitalist,when criticized,points to the "disThe reputableelements"who take part in tradingon the exchanges.Now are [one may say that]these "elements" certainlynot only foundamong the less-wealthysegments of the exchange-traders, nothing goes for less hand-in-handwith an honorable attitude than the size of one's purse. One thing is certain: today only "stronghands"- that is, the large-scale capital-holders- are able to perceive the functions that commerceon the exchangesserves.The much-criticized concentration of large capitalsums in the hands of the banksis, withincertainlimits, absolutelyindispensablefor the present-daystructureof our national economy. The small speculator who seeks to make earnings out of small differencesin prices, and who makes the exchangeinto a place wherefor the first time he goes chasingafter the sort of wealth that he does not possess, is not fulfillingany aim of the nationaleconomy as a whole.Whatevermight fall to him as earnings,the national economy [also]pays, in wholly unnecessaryfashion, to a superfluous parasiteas well.We will see [i.e., in parttwo] to whatgreatdangerslargecapitalists operatingon the exchangescan at times subjectthe wealth or possessions of the populace,and [wewill also discuss]whethersomethingcan perhapsbe done to limit that danger,and whatthat mightbe. But while the participation[of the large-scalecapital owner]is wholly indispensable and while any national economy that possesses no concentrated forces of capital simply falls into dependencyuponforeign capitalists, the small speculatoron the exchangesis a person who would be better servedby directinghis work towardvirtuallyany other useful activity. He above all hindersthe formationof a class of exchangetraderswho in would be morehomogeneous their preparatory training,their prac-

334 tical education, and their position [on the exchanges]- a class that would be in a position to form a [self-instituted] "tribunal" that could have the energy to educate effectively[the traders]and have its judgments respected.The pronouncements a tribunalthat is composed of on out of the mishmashthat now constitutesour "public" the exchanges will neverhaveits pronouncements the for respected; precondition that, a unified"conceptof honor,"is lacking. My own personal opinion,40 that I state with full reservations(because I think people can rightly and questionit), is thereforethat honorableness honestyis the strength of any social organization. On our, and all other, exchanges, the dominantforce is infact the greaterquantityof money [to be gained], and it cannot be otherwise.Therefore, may wish to give the playing one
field over to it, simply in terms of formal organization, and make

entranceinto the exchangesmoredifficultby requiringstrongermonetary guarantees;one would not strengthenthe position of the large capitaliststhereby,but simplymake possiblefor the firsttime a control over and the emergence of a unified view of what are or are not "honorablebusiness practices"on the exchanges.Those who take the exchangetradersto be a club of conspirators,[plottingto take away] the fruits of other people's labor, will shake their heads in disbeliefat this idea. One must say to those people:you do not know them [i.e., the of It traders]. is a matterof creatingthe possibility bringingthe elements of undoubted that honestyor honorableness this estate,like everyother, has in itselfmore into play;and it can be debatedwhetheran organization of the exchangesmore along the lines of the English is a suitable meansto that end. I am at this time inclinedto answerin the affirmative. The exchangeis the monopoly of the rich, and nothing is more foolish than to disguise this fact by admitting propertyless,and therefore powerless,speculatorsand in that way to allow large capital holders to shift responsibility awayfromthemselvesand onto those others.41 One can hope that, throughan energeticsupervision the state, one by can arrive at similar ends. The possibility of a seemingly unlimited interventionby the Ministerfor Commerceis now made available,in Prussia,by law.It is thereforeall a matterof howthe supervisionought to be exercised.In Austria there exists a state commissar42 who, up until now, has achieved virtually nothing. If an exchange-tribunal is established, it would be preferablethat it have a state commissar afterthe fashionof a state prosecutor. appointedas a publicprosecutor To place thejurisdictionitself in the handsof the membersof the estate [Stand- i.e., the group of exchangetraders]itself would, by contrast, probablybe a mistake. If one cannotexpect the highest possible con-


ception of business honesty within the estate itself, then the whole institutionbecomes a comedy and would better remain non-existent. It has furthermorebeen suggestedthat the various leading organs of the exchanges - the "Elders"[4eltesten],the "commissionersof the etc. exchange," - all have state commissionersappointedto supervise their dealings.In this case, it would be less a matterof imposing state controls than of placing state requests[directlybefore the exchanges] and being able to negotiatewith the merchantgroups about them. In Germany,such a procedurehas not yet been closed off, or been made impossible.But even with all of the above suggestions,a reallydecisive step has not been taken[i.e., towardresolvingthe exchanges' problems]; and even less so do they amount to a control of commercial business. [Suchcontrol]is consideredby some people to be easier than it in fact is. [For example], one can station some guards around a food and produce market in order to protect against deceptive labelling or weighingof food, etc. It is difficultto say, however,what one wants to achieve by sending more numerousor more intelligentstate commissioners to the exchangesto be on the alert against "junksecurities"43 being displayedat tradinghours there. One must be clear about one thing: a general, overall supervision of the exchanges remains an empty word. It is [really]a question of which specific proceduresone can and will control - or, regulatethroughlegislativeinterventionand, for example,which sorts of business, or which business between whichpeople, one wants to preventand can actuallyprevent.44

Acknowledgments The translatorwould like to thankProfessorRichardTilly (Universitat Miinster)for his helpful suggestionsfor translationsof severalof the technical terms in Weber'sarticle.The shortcomingsthat remain are the responsibility the translator. of Notes
1. First publishedin the Gottinger Arbeiter-Bibliothek ["TheGottingen Libraryfor edited by FriedrichNaumann in 1894.The edition publishedby MaWorkers"], rianneWeberin 1924designatedit by the Romannumeral"I,"suggestingthat this was the initialpartof a two-partarticle.As the historicalintroduction makesclear, however, the two articles Weber published in the GottingerArbeiter-Bibliothek his appeareda significantdistance apart(two years)and Weberhad reconfigured note.) plan for the second articleconsiderably that time.(Translator's by

2. Weber's does not havea paragraph text breakhere,but rathera dash [-], indicating a shift to a new stage of the topic. (Translator's note.) 3. The Germantermhereis Verleger. (Translator's note.) 4. Weber'stext does not have a paragraph breakat this point, but again only a dash. (Translator's note.) breakat this point. (Translator's text 5. Weber's does not havea paragraph note.) 6. For example,"ToMr. Smithin London.Againstthis draft[Wechsel] on July 1, pay, 1895,to Mr. Miillerin Berlinor to orderthe sum of 100 pounds sterling.Dated, Berlin,April 1, 1895.Schulze." 7. Wewill deal with the deductionAbziige] ("Diskont")that it is customaryto make, in and the shiftsin the rateof notes of exchange, the secondpart [of this article]. 8. It can happen that Smith, for whateverreason, does not pay the draft bill [den Wechsel] Jones,in whichcase Joneshas "recourse" to nimmt]against ["Regress"... Miiller,as the latterdoes against Schulze.Schulzewould then be requiredto pay und the expensesand originalpayment[Kostenersatz Zahlung]to Miiller,together with interest,and retains,for his part, the moneyowed to him by his debtor,Smith - who, withoutsufficient reason,has not paid. In sucha case, the effortto settlethe businesstransactions througha commercialbill of exchangehas failed;but, this is of course,a rareexception. 9. Weber'stext does not have a paragraph break at this point, simply a dash [-]. (Translator's note.) in 10. The "circles" wereformaladministrative units,originating the early-modern [i.e., 14th-15thcentury]period of German history,which were largelystaffed by the local and regional nobility. In size, they approximatedthe post-1945 German "lands"[Ldnder] that is, largerthan Englishor Americancountries,but smaller than the larger princely territorialstates of 18th-19th century Germany (i.e., Prussia,Bavaria,Saxony,etc.).(Translator's note.) 11. To facilitatethis, so-called coupons [Kupons] that is, small-cutpaper segments [abschnitte] are mostlygivenout, fromwhichsomeonedetachesa portionat each paymentperiod and exchangesit for the interestpayment- so that one does not haveto producethe bond certificate itselfeach time. 12. Webster's New World was first appliedto Dictionarynotes that the term"consols" the British governmentstock, establishedin 1751,throughthe consolidationof variousgovernment securities- and hencean abbreviated phrasefor "consolidated annuities."The German term was apparentlya borrowing from the English. (Translator's note.) 13. Als Bodenzins. (Translator's note.) 14. Zinsbauer. (Translator's note.) 15. In Englandas well, workerspossessinterest-bearing There papersnot infrequently. it is the greatindustrial of with the organizations theTradeUnions, in combination favorableconditions of productionfound in English industry,and especially the status of the state as a world-dominating power, which securewages for the sea workerswhich,underthe circumstances, allow the accumulation wealth. of 16. "Gewerken." note.) (Translator's 17. "Zubusse." note.) (Translator's 18. The possessionof a share[Kuxes] whichis transferable is just as riskya matter for the purseof the shareholder workingunderground for the life of a worker: as is to greatyieldsalternatewith the requirement "payback." 19. Weber'stext does not have a paragraph break at this point, simply a dash [-]. (Translator's note.)

20. It is therefore errorto believethat the stockholders an wouldat least normallyhave a significant interestin a correctstatementof the company's balanceaccount.Only a part of the stockholders those who wish to retainthe stocksharesforthe long do: termas a "capitalinvestment." others,a dividendfalselyset at too high a level For bringsa doublebenefit:on the one hand, such a person receivesmore as an initial part of the company'searningsthan he would otherwisereceive;and then he still finds buyerswho, becauseof the high dividendspaid on the stockshares, purchase them fromhim at more cost than they wouldotherwisedo. 21. Verbriefte (Translator's Tributberechtigungen. note.) 22. The Germanterm is Prokurist.It refersto an officerof a companyauthorizedto or sign in the company'sname - we might today say an "executivesecretary" clerkwho has the power to sign documents. Weberis clearlyseeking higher-level an example of the sort of emergingnew "whitecollar"middle class who would shortlybe studiedby SiegfriedKracauerand others as an importantnew component of the early20th centurysocietyand economy.(Translator's note.) 23. Tributrechten. (Translator's note.) 24. "Schlussnote." (Translator's note.) 25. Incidentally,it is nonethelessworth mentioning- given the numerouscriticisms that are levelled,with somejustification,at speculationon the exchanges- that all the innumerable businessdeals that are completedare concludedthroughverbal ... and without any regularrequirement that a agreements[miindlich vollziehen], witnessbe involved.And it almostneveroccursthat anyone,eventhe most dubious of speculators,disputesthat an agreementoccurred,even when that deal meant a considerable for him. Anyonewho did do so wouldhenceforth incapableof loss be businesson the exchange[v6lligunmiglichaufder Borse],for the fountransacting dation of its existenceis the absolutetrustworthiness an individual's of word. 26. "Discounted" bills of exchangearethose for whichinterestis not paid, becauseit is a bill that does not yet requirepaymentto be made;or, it can be the purchaseof a bill of exchangethat is not yet due (so, the intereston the bill is also omitted).The Diskonto- (or Disconto-) Gesellschaftwas one of the earlyjoint-stockbanks that banks.It latermergedwith the Deutsche emergedto competewith privately-owned Bankin 1929.See FritzStern,GoldandIron:Bismarck, and Bleichrider theBuilding of theGerman Empire (NY: RandomHouse;Vintage,1979),p. 10.(Translator's note.) 27. "Borsenkurs." (Translator's note.) 28. Weber's does not havea paragraph text breatat this point. (Translator's note.) 29. "Kursblatt." (Translator's note.) 30. In New Yorkeveryonecan, to be sure, enter into the exchange-halls; but, within arenasurrounded barriers those, thereis a steep,ampitheater-like and, withinit, by only authorizedexchange-traders congregateand transactbusinessthere.One can approachthese individualsand, if one enjoys the credit of one of the exchangefor traders,can give him the commission[Auftrag] a piece of business.No one can enterthe roomsof the Londonbonds-exchange, commissioners, exceptthe brokers, or dealers(i.e., exchange-traders) havebeen officiallyacceptedas such. who 31. Eitherwealthyindividualsmust stand creditfor him - as in London, the requirement is two persons who each have 500 pounds sterling(10,000 marks)- or [he himself]must make a deposit in money or valuablepaper.Whoeveris unableto fulfilltheirpaymentrequirements business mostlyremainsexcludedfromexchange for the duration; thereseeminglyis also sterndisciplinemetedout to those who and are guiltyof dishonestpractices. 32. Although the commercetransactedat Paris is so huge that the 60 commissioned

338 brokers cannot handle it alone, and thus either willingly or unwillinglymust Yet toleratenon-concessioned brokers- the so-called Coulisse.* the commissioned brokersso control things that Frenchlaw does not officiallypermitthe Coulisse; each non-concessioned brokeris subjectto a financialpenaltyand is supposedto fromthe temple." be "driven The concessionedbrokerscan, in any case, make sure that all the largerand more lucrativeportions of commercialtransactionsremain in their own hands, insofar as they are able to handle that business. [*Coulisse or room"backstagein a theater. Translator's literallymeans"wings," the "dressing note.] 33. By puttingthis phrasein quotes,it is unclearwhether Webermeansto indicatethat this is the actualphraseused by the exchange,or the averageHamburgcitizen,to describetheir operation.The phrase,in German,does in fact stipulateexplicitly that only malecitizensare allowed.(Translator's note.)
34. Scheidegerichte. (Translator's note.)

35. Througha purelyprivateagreement- for examplewith a large numerof firms the "seniorcommissioners" have recentlybegun to set a "reprimand" [Aeltesten] action - for example,concludinga piece defamatory ["Riige"] upon a particularly of business,on commission,withoutnotifyingthe principals[i.e., buyerand seller] firmsweremisledby embezzlements) involved- (whereby some of the above-named
[Untreue... verleitet werden]. If someone so accused ("reprimanded") simply denies

36. 37.

38. 39. 40. 41.

and rejectsit, the whole businessis finished- for there exists no writtenlaw that to empowers exchanges issuesuchpenalties]. [the (Translator's note.) Freigabe. At a laterpoint, we will see that this prescription as well as the reasonswhy this - is circumvented a daily basis, despitethe oath that the brokers on prescription havetaken.[Weber's does not havea paragraph text breakat this point, only a dash note.] [-]. Translator's Schacher. (Translator's note.) Weber'stext does not have a paragraph breakat this point, but only a dash [-]. (Translator's note.) This opinioncoincideswith that of the most importantspecialistson this topic. Casesthat runcontraryto this areno reasonto erectbarriers aroundthe exchanges and not to make them, as is the Hamburgexchange,into a marketthat is open to all. The character the Hamburgmerchants, of which,as a group,havehad a strong and positive tradition stretchingback several centuries,has seen to it that the wholly free exchangethat operatesthere does not belong to the most troubledor but best exchangesof its type. shakey[unsolidesten], to one of the relatively

42. Staatskommissar. (Translator's note.)

43. The Germanwordliterallymeans"garbage" [Unrat]. (Translator's note.) 44. The goal of the foregoing statements was to show that, [in the case of such it it proposals] infact cameto suchmatters; wasthusa matterof somehowpenetrating into the innerworkings [das Innere]of commercialbusiness.In the second part of this article,we will concernourselveswith the way in whichexchangetransactions are broughtto a conclusion[i.e., literally, "woundup"],the forms that that takes, and with the way the "exchange rates" and pricesare set and with the functionsof the great banks in the commerceof the exchanges.[The goal is] to get an approximateidea of whatcan be achievedhere,and whatgoals can be, and oughtto be set for reformsin the areaof stock-and commodity-exchanges.

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