Cologne Economic History Paper

The 'Cologne Economic History Paper' is a new working paper series of the Department of Economic and Business History, University of Cologne.

AuthorCarsten Burhop
Title

New Stock Issues in Germany 1882-1892. A Comment to Professor Fohlin

Published
Abstract

In a paper published in the Journal of Economic History, Professor Caroline Fohlin investigates the spread earned by underwriters in conducting IPOs at the Berlin Stock Exchange between 1882 and 1892. According to Professor Fohlin, underwriters acquired new shares at par value from issuers and sold off at much higher prices to investors, earning on average 32 percent. I provide evidence on the basis of archival material that Professor Fohlin overestimates the underwriters’ return, since the spread was more or less equally shared between underwriter and issuer. Moreover, my findings suggest that the spread varied over time due to changes in corporate law.  

PDFCEHP 04-2012

Author

Tobias Cramer

Title

Building the "World's Pharmacy": A Co-evolutionary Approach to the Rise of the German Pharmaceutical Industry 1871-1914

Published

-
Abstract

The German pharmaceutical industry dominated global output and new drug creation from the late 19th century to World War I. German firms focused increasingly on innovative medicines with a high scientific content which are supposed to generate a high value-added. A main contribution of this paper is thus a detailed analysis of the composition and profitability of each company’s product portfolio. Monopoly profits were not only assured by intellectual property protection but also by intensifying cartelization. This paper challenges the interpretation that the industry’s research capabilities alone explain the rise of the German pharmaceuticals industry by analyzing a co-evolutionary process of firms, science and institutions.

PDFCEHP 03-2012

Author

Carsten Burhop, Sergey Gelman

Title

Liquidity measures, liquidity drivers and expected returns on an early call auction market

Published

-

Abstract

This paper analyzes the determinants of illiquidity as well as its impact on asset pricing for purely call-auction traded stocks on the Berlin Stock Exchange using 22 years of daily data (1892-1913).We use the Lesmond et al. (1999) measure of transaction costs to proxy illiquidity. Our results show that transaction costs were low and comparable to today’s costs. Liquidity was negatively correlated with information asymmetry, particularly being low for small and distressed stocks and in crises times. Furthermore, liquidity concerns were a major driver of asset pricing: we find significant illiquidity level and illiquidity risk premia as well as an explicit premium for the absence of liquidity providers.

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CEHP 02-2012

Author

Carsten Burhop, Nikolaus Wolf

Title

The German Market for Technology during the “Second Industrialization” (1884-1913). A Gravity Approach

Published

-

Abstract

Using  newly  collected patent  assignment  data  for  late  19th and  early  20th century Germany and a standard econometric approach from the international trade literature – the  gravity  model – we  demonstrate  the  existence  of  border  effects  on  an  historical technology market. We show that the probability of patent  assignments was  negatively affected by the geographic distance between assignor and assignee as well as by the fact that  the  two  contracting  parties  were  separated  by  a  state  or  international  border. Surprisingly,  we  show  that  the  effect  of  a  state  border  within  Germany  was  nearly  as large as the effect of an international border.

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CEHP 01-2012

Author

Carsten Burhop, Thorsten Lübbers

Title

The design of licensing contracts: Chemicals, Pharmaceuticals, and Electrical Engineering in Imperial Germany

Published

Business History

Abstract

We investigate a sample of 180 technology licensing contracts closed by German chemical, pharmaceutical, and electrical engineering companies between 1880 and 1913. Our empirical results suggest that strategic behaviour seems to be relevant for the design of licensing contracts, whereas inventor moral hazard and risk aversion of licensor or licensee seem to be irrelevant. Moreover, our results suggest that uncertainty regarding the profitability of licensed technology influenced the design of licensing contracts. More specifically, profit sharing agreements or producer milestones were typically included into licensing contracts.

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CEHP 03-2011

Author

Carsten Burhop, David Chambers, Brian Cheffins

Title

Is Regulation Essential to Stock Market Development? Going Public in London and Berlin, 1900-1913

Published

-

Abstract

This study of initial public offerings (IPOs) carried out on the Berlin and London stock exchanges between 1900 and 1913 casts doubt on the received “law and finance” wisdom that legally mandated investor protection is pivotal to the development of capital markets. IPOs that resulted in official quotations  on the London Stock Exchange performed as well as Berlin IPOs despite the Berlin market being more extensively regulated than the laissez faire London market. Moreover, the IPO failure rate on these two stock markets was lower than it was with better regulated US IPOs later in the 20th century.

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CEHP 02-2011

Author

Sibylle Lehmann

Title

Taking Firms to the Stock Market: IPOs and the Importance of Universal Banks in Imperial Germany 1896-1913

Published

-

Abstract

The article offers a quantitative analysis of the impact of large Universal banks on the market for Initial public offerings and provides evidence that banks such as Deutsche Bank and Dresdner Bank which largely dominated the market for loans, did not dominate the German stock market. Indeed the stock market seemed to have been efficient: price competition between banks seemed to have been quite strong, firm loyalty depended on performance rather than reputation of banks and most firms listed on the stock market survived the first years.

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CEHP 01-2011

Author

Martin Fiedler / Howard Gospel

Title

The Top 100 Largest Employers in UK and Germany in the Twentieth Century. Data (ca. 1907, 1935/38, 1955/57, 1972/73, 1992/95)

Published

-

Abstract

The working paper contains data on the Top 100 British and German firms measured by employment in five different years. Our analysis and interpretation of the tables has been published in the journal Jahrbuch für Wirtschaftsgeschichte 2/2010, pp. 27-43: “Big Business im 20. Jahrhundert: Die 100 größten Arbeitgeber in Großbritannien und Deutschland in vergleichender Perspektive”

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CEHP 03-2010

Author

Ralf Banken

Title

Die quantitative Entwicklung deutscher Warenhäuser von 1948-2000: Daten

Published

-

Abstract

Wie insgesamt für den gesamten Einzelhandel, so fehlt es auch für die Entwicklung der Warenhäuser in der Bundesrepublik bis heute nicht nur an einer Gesamtdarstellung, sondern auch an einer ausreichenden Datenbasis, speziell über einen längeren Zeitraum.1 Dies überrascht, da diese Einzelhandelsbetriebsform ja stets von Großunternehmen dominiert wurde, für die sich die Quellen- und Datenbasis in Deutschland normalerweise deutlich besser darstellt. Dieses Desiderat der für die Wirtschafts- und Konsumgeschichte der Bundesrepublik so wichtigen Warenhäuser soll die folgende Zusammenstellung zumindest für die wichtigsten Indikatoren der Warenhausentwicklung in langjährigen Datenreihen und den Zeitraum 1949 bis 2000 beseitigen.

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CEHP  02-2010

Author

Ralf Banken

Title

The Growth of business integration in the Western European mining regions of France, the Netherlands, Belgium, Luxembourg and Germany, 1890-1914

Published

-

Abstract

The paper discusses the causes of the growth of supra-regional  business integration since the 1890s. Essentially, mutual delivery agreements, the geographical proximity of the mining regions, and considerably improving means of transportation made increasing business integration possible. At the same time, competition among enterprises and mining regions intensified since 1890/1895 due to progressing business concentration and the cartelization of several markets within the region. Both the competition for a secure and efficient production of raw materials and initial products as well as for reliable sales of semi-finished products at stable prices advanced the mutual integration of businesses. Only after 1905, the purely economic reasons for supra-regional investments and integration in the Western European mining regions became more and more mixed with the demands of national policies. However, these could only impede, but not stop, the accelerating process of business integration before WW I.

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CEHP_01-2010

Author

Diane Dammers, Hendrik Fischer

Title

The Performance of German Big Business in the 20th Century

Published

-

Abstract

The paper deals with the development of big business in Germany during the 20th century. It shows the first results of the German team of the research project “The Performance of European Business in the 20th Century”. The paper analyses how the structure of big business changed: it shows the decline of heavy industry and finally the rise of service sectors. Secondly the paper analyses the profitability of the German large scale enterprises and raises the question if German big business truly was less profitable than the English as suggested in literature.

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CEHP_01-2009

Author

Ralf Banken

Title

The Quantitative Development of West German Retailing 1949-2000. Data

Published

-

Abstract

This paper contains data on the quantitative development of the West German retailing from 1949 until 2000 and a detailed description of the data. The data show explicitly the development of the West German Mass Consumption Society in this period.

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CEHP_03-2007

Author

Alfred Reckendrees

Title

Consumption patterns of German house-holds. A time series of current household accounts, 1952-98 (based on published household accounts of the Federal Statistical Office)

Published

-

Abstract

-

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CEHP_02-2007

Author

Toni Pierenkemper

Title

Mercantilism in the Reign of Frederick II and Prussian Industrial Politics in Upper Silesia 1740-1786

Published

-

Abstract

In late 18th century Prussia, the conditions were laied down that were to form the basis of the economic upturn of the 19th century. This period of transition was marked by a break with the former ?mercantilist? or ?camerialist? system as it is termed in its specific German form of promotion of trade and industry by the state in the 18th century. It was not mercantilist policy but its avoidance that contributed considerably to the success of industrialisation beginning the late 18th century.

The Prussian political economy in the middle of the 18th century, labelled ?Friederician Mercantilism? according to Frederick II (1740-1786), is addressed in the context of the international mercantilist system (France and England). The traditional view of German economic history is that ?Friederician Mercantilism? laied down the conditions for industrial development in the 19th century. The results of this paper are different: The mercantilist system impeded development and, combined with the King?s obstinacy in adhering to the system, did nothing to help pave the way for development into a modern industrial nation.

This is demonstrated using the example of the newly acquired Silesian province (1740), which was in no good economic state in the mid-18th century; and the first decades subsequent to Prussia?s acquisition were marked by the belligerent circumstances associated with its takeover. Later, ?Friederician Mercantilism? only made a limited contribution to the transformation of Silesia into a modern industrial region. In spite of an active trade policy, the measures implemented by the Prussians in order to boost industry proved to be misdirected: financial, trade, and industrial policies emerged as irrelevant or even disadavantageous to the Silesian province. This was even more so the case for the Upper Silesian coal mining district, which was, over the course of the 19th century, to grow into a powerful industrial centre. The new Prussian administration completely underestimated this area?s potential for development. In the 1770s there was a broad discussion of the economic situation in Upper Silesia that resulted in state activity in the domain of the Upper Silesian iron industry. However, it was shaped by the state?s military and fiscal interests. ?Friederician Mercantilism? had no perspective for economic development and it was only with the death of Frederick II in 1786 that the potentiality of Prussia?s and Upper Silesia?s development into a modern economiy characacterised by free enterprise emerged.

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CEHP_01-2007

Author

Alfred Reckendrees

Title

Diverse Paths to Factory Production, 1780s-1840s: the Woollen Cloth Industry in the West Riding of Yorkshire and in the West of the Rhineland (Prussian Rhineprovince)

Published

-

Abstract

This paper compares the industrial development of the two leading British and German woollen cloth regions in the late 18th and the beginning of the 19th century. It focuses on the implementation of the industrial capitalism?s paradigmatic new system of production, the factory system. At the stage of the ?Industrial Revolution? the West Riding of Yorkshire and the west of the Rhineland (Prussian Rhine-Province; an industrial district marked by the cities of Aix-la-Chapelle, D?ren, Montjoie, and Eupen) had become the predominant industrial woollen cloth regions of their countries. The West Riding was much larger than its German counterpart and its figures of production were, of course, much higher. Both regions pioneered however the mechanisation of the national cloth industries ? considered that there was no German nation-state before 1871.

The industrialists of the West Riding introduced spinning and carding machinery about 25 years earlier than the clothiers in the west of the Rhineland. However, about 1830 the scope of the typical factory had become comparable. The industry of the British region was much larger than the cloth industry of the Rhenish region, but the Rhenish factories acquired a comparable range of mechanical production and achieved even a higher degree of vertical integration. Large Rhenish clothiers producing in centralised factories increasingly exploited power machines that operated nearly all kinds of textile machines, nevertheless the looms were still operated by hand. The weavers were mostly centralised into factory workshops, but there was still a remarkable domestic production. Yet this domestic production as well as the artisan production was affiliated to the factory system. As a result of the rapid improvements in the west of the Rhineland, the two regional industries competed seriously on the cloth markets of the world.

The implementation of the factory system in the two regions followed different lines that are analysed in this paper. The differences are explained by the structure of the respective traditional system of cloth production and by different types of products, the similarities are explained by production costs and changing market conditions.

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CEHP_01-2006