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The Political Stock Market in the German Kaiserreich — Do Markets Punish the Extension of the Suffrage to the Benefit of the Working Class? Evidence from Saxony

Published online by Cambridge University Press:  27 November 2014

Sibylle Lehmann-Hasemeyer ,
Philipp Hauber  and
Alexander Opitz
Sibylle Lehmann-Hasemeyer
Affiliation:
Professor of Economic and Social History, University of Hohenheim, Wollgrasweg 40, 70599 Stuttgart. E-mail: slehmann@uni-hohenheim.de.
Philipp Hauber
Affiliation:
Masterstudent at the Barcelona Graduate School of Economics, Ramon Trias Fargas 25-27, 08005, Barcelona. E-mail: philippottohauber@gmail.com.
Alexander Opitz
Affiliation:
PhD student at the Department for Economic and Social History, University of Hohenheim, Wollgrasweg 40, 70599 Stuttgart. E-mail: alexander.opitz@uni-hohenheim.de.
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Abstract

We approach the issue of the economic effects of democracy by examining which expectations investors held about the effect of democratization in the Kingdom of Saxony in 1896 and 1909. We do this by linking their investment behavior on the Berlin Stock Exchange to political events in Saxony. Here the electoral law was changed twice: In 1896 a very restrictive franchise was introduced, which was abolished in 1909 and replaced by a more democratic electoral law. Our study reveals that the Berlin Stock Exchange reacted to political changes and elections in Saxony. This is an important finding since historical research has claimed that the increased democratization in the German Kaiserreich measured in a larger participation of the population was not accompanied by a larger political influence of the parliaments. Furthermore we can show that for capital owners the possible negative effects seemed to outweigh possible positive effects of democratization. This is the first time that it has been possible to provide quantitative evidence for such antidemocratic sentiments.

Type
Articles
Information
The Journal of Economic History , Volume 74 , Issue 4 , December 2014 , pp. 1140 - 1167
Copyright
Copyright © The Economic History Association 2014 

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Footnotes

This research was conducted while the corresponding author was funded by the German Research Foundation in the project “Aktienerstemissionen und Kapitalmarktentwicklung im Deutschen Reich, 1871–1913.” We wish to thank the Editor and three anonymous referees for comments that substantially improved the paper. Furthermore we are grateful for the comments of Carsten Burhop, David Chambers and the participants at the EuroHistock III in Bonn, the Economic History Seminar in Cologne, the Economics Seminar in Hohenheim and wirtschaftshistorischer Ausschuss des Vereins für Socialpolitik. The usual disclaimer applies.

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