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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

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  • Lehmann-Hasemeyer, Sibylle
  • Hauber, Philipp
  • Opitz, Alexander

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.

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  • Lehmann-Hasemeyer, Sibylle & Hauber, Philipp & Opitz, Alexander, 2014. "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," The Journal of Economic History, Cambridge University Press, vol. 74(4), pages 1140-1167, December.
    • Handle: RePEc:cup:jechis:v:74:y:2014:i:04:p:1140-1167_00
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    Cited by:

    1. Becker, Sascha O. & Hornung, Erik, 2020. "The Political Economy of the Prussian Three-Class Franchise," The Journal of Economic History, Cambridge University Press, vol. 80(4), pages 1143-1188, December.
    2. Braggion, Fabio & Dwarkasing, Narly & Moore, Lyndon, 2020. "Value creating mergers – British bank consolidation, 1885-1925," CEPR Discussion Papers 14663, C.E.P.R. Discussion Papers.
    3. Lehmann-Hasemeyer, Sibylle H. & Neumayer, Andreas, 2018. "The persistence of ownership inequality. Investors on the German stock exchanges, 1869 – 1945," Working Papers 8, German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin.
    4. Alexander Opitz, 2018. "“Comrades, Let's March!”.† The Revolution of 1905 and its impact on financial markets," European Review of Economic History, European Historical Economics Society, vol. 22(1), pages 28-52.
    5. Braggion, Fabio & Dwarkasing, Narly & Moore, Lyndon, 2022. "Value creating mergers: British bank consolidation, 1885–1925," Explorations in Economic History, Elsevier, vol. 83(C).
    6. Lehmann-Hasemeyer Sibylle & Opitz Alexander, 2024. "Data Sources on the 19th and Early 20th Century German Capital Market: Challenges and Opportunities," German Economic Review, De Gruyter, vol. 25(4), pages 371-391.
    7. Opitz, Alexander, 2015. "Democratic prospects in Imperial Russia: The revolution of 1905 and the political stock market," Hohenheim Discussion Papers in Business, Economics and Social Sciences 15-2015, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    8. Lehmann-Hasemeyer, Sibylle H. & Neumayer, Andreas, 2018. "The persistence of ownership inequality: Investors on the German stock exchanges, 1869-1945," Hohenheim Discussion Papers in Business, Economics and Social Sciences 20-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.

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