IBF Paper Series

IBF Paper Series 01-17
Carsten Burhop, Rheinische Friedrich-Wilhelms-Universität Bonn / Joachim Scholtyseck, Rheinische Friedrich-Wilhelms-Universität Bonn / Moritz Schularick, Rheinische Friedrich-Wilhelms-Universität Bonn / Paul Thomes, RWTH Aachen

Editorial

Preface by the Board of Editors.
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IBF Paper Series 02-17
Gerd Hardach, Philipps-Universität Marburg

Sparen in der ‹Nullzinsphase›. Privatanleger und der Kapitalmarkt in Deutschland im Ersten Weltkrieg
Saving in the ‹Zero Interest Period›. Private Investors and the Capital Market in Germany in the First World War

This paper offers a look back at the period of zero interest and even negative interest during the First World War. In contrast to the current period of low interest rates, during the war there was an illusion of interest: while savers did receive nominal interest on their deposits, however, the savings deposits lost value due to the war inflation such that it was effectively negative interest. Even at the end of the war only very few savers were aware that they had experienced a period of declining interest. Rather, they assumed that the purchasing power of the mark and the exchange rate would soon settle down at the pre-war level. The full scope of the dilemma for private investors during the zero interest period became apparent only in the post-war inflation. Although various options between inflation and deflation were still discussed during the revolution and at the beginning of the Weimar Republic, the monetary and fiscal path subsequently taken resulted in the uncontrolled inflation that had significantly greater effects on private investors and the capital market than the war inflation that directly preceded it.
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IBF Paper Series 03-17
Carsten Burhop, Rheinische Friedrich-Wilhelms-Universität Bonn

Die betriebliche Altersvorsorge zur Zeit der Bonner Republik
Corporate Retirement Plans during the Bonn Republic

Alleviating the consequences of the war were at the center of social policy during the early years of the young republic. Yet up to 1956 pensions rose only slowly and irregularly so that old-age poverty remained widespread. The transition to a dynamic pension system based on gross earnings with the 1957 Pension Reform was the major step from a social state battling need and poverty to the caregiving welfare state. The minimum pension – abolished in 1957 – was reintroduced with the 1972 Pension Reform, paving the way to the early retirement society. This paper investigates the development of corporate pension plans up to the end of 1970s. Using Volkswagen and Merck as case studies, it shows that companies reacted to changes in the economic situation earlier than did the legislature and adjusted their social benefits systems accordingly. Parallel to the transition to the dynamic pension system based on gross earnings during the late 1950s, corporate retirement plans experienced an expansion, that is to say, following the 1957 Pension Reform, private benefits were not yet replaced by public benefits. This did not change until the expansion of the social state during the 1970s. The objective of including the Works Councils in the corporate pension discussion was to curb corporate social benefits.
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IBF Paper Series 04-17
Harald Wixforth, Bielefeld / Bremen

Die Beziehungen der Norddeutschen Wollkämmerei und Kammgarnspinnerei zu den Banken
The Relationship of the Norddeutsche Wollkämmerei und Kammgarnspinnerei (Nordwolle Group) with the Banks

Research into the relationship between banking and industry has long held the view that banks had dominated their clientele from industry, trade and retailing and they had established a position of power that was almost impossible to reign in. More recent studies question this assessment and deliver impressive evidence that the relationship between industry and banks was often characterized by information asymmetries. For example, major companies often withheld information about their earnings performance during credit negotiations so that the banks had to make large risk provisions which reduced their profitability. This was also true for the Nordwolle textile group, which had financed the expansion of its business during the Weimar Republic primarily from outside capital, first and foremost using loans from various banks. In obtaining these loans, the Group's management succeeded repeatedly in playing competing banks against one another. Even major banks such as Danat-Bank, Berliner Handelsgesellschaft, and probably Dresdner Bank as well, placed major bets on getting Nordwolle to commit itself as a client. As long as the banks could be talked into believing that company was profitable and continually expanding, the banks were ready to grant new loans. Not until the spring of 1931, after indications about the Group's actual situation had made the rounds did the banks push through extensive audits of the company's financial statements. That the efforts to rescue Nordwolle ultimately remained fruitless was not least a result of the new-found caution in awarding additional loans.
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IBF Paper Series 05-17
Peter Gleber, Berlin

Die Genossenschaftliche Institutssicherung – ein notwendiges Instrument zur Stärkung des Kundenvertrauens und des Risikomanagements im dezentralen Bankenverbund
Cooperative Institutional Protection – a Necessary Instrument for Strengthening Customer Trust and Risk Management in Local Banking Groups

The protection scheme of the cooperative financial network goes back to the guarantee funds of the German ‹Volksbanken›, the world's oldest privately-financed protection system for banks. The core task of institutional protection is to protect the cooperative banks and hence the protection of the member's and customers' deposits, investments and savings. The local roots of the credit cooperatives rest in the 19th century. During the so-called formative phase, protection schemes were established for the newly-created cooperative lending networks of ‹Volksbanken› and rural cooperative banks, which have been a joint cooperative financial network since 1972. Since that time, the cooperative banks' combined protection scheme has developed into a unique protection system with complex tools for risk management.
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IBF Paper Series 06-17
Sibylle Lehmann-Hasemeyer, University of Hohenheim / Jochen Streb, University of Mannheim

Does Social Security crowd out Private Savings? The Case of Bismarck’s System of Social Insurance

Imperial chancellor Bismarck’s system of social insurance (with its three pillars health, accident and pension insurance) was an important role model for social security systems across Europe and in the US. How the introduction of the German system changed economic expectations and decisions of the German workforce has not been researched, though. This article closes this gap by analyzing the development of Prussian savings banks’ deposits in the late 19th century with the help of a difference-in-difference-like approach. We show that, in the Prussian case, social security crowded out private savings considerably. As counterfactual voluntary savings would have been far from sufficient, however, Bismarck’s social insurance system was still needed to fight the misery workers and their families potentially faced in old age or times of sickness.
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IBF Paper Series 07-17
Detlef Krause, Frankfurt am Main

Hamburg als Standort der privaten Universal-/Großbanken im 19. und frühen 20. Jahrhundert
Hamburg as a Site of Private Full-service/ Major Banks in the 19th and Early 20th Centuries

The Hamburg banking sector experienced considerable structural changes in the period from 1850 until into the 1930s. Around 1856 and 1870, a large number of new banks were founded, mostly in the form of stock corporations. Starting in the 1890s, the banking center saw a consolidation with foreign banks locating there and the commencement of foundings of branches. What is striking is the bilateral integration of Hamburg with Berlin, the financial center. While the banking relationships with the imperial capital meant a relative loss of importance for the local Hamburg banks, it also brought a considerable overall benefit to Hamburg as a financial center. Typical for the Hamburg financial center was the major and long-standing significance of the merchant banker, whose business was rooted primarily in the mercantile trade. Also striking was the large number of small private banking businesses in the 1920s.
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IBF Paper Series 08-17
Patrick Bormann, Rheinische Friedrich-Wilhelms-Universität Bonn

Der Bestand ‹Preußische Zentralgenossenschaftskasse› im Geheimen Staatsarchiv Preußischer Kulturbesitz, Berlin (GStA PK, I. HA. Rep. 177)
The ‹Prussian Central Cooperative Bank› (Preußische Zentralgenossenschaftskasse) collection in the Secret State Archives of the Prussian Cultural Heritage Foundation, Berlin (Geheimes Staatsarchiv Preußischer Kulturbesitz, GStA PK, I. HA. Rep. 177)

The history of the German cooperative banks has enjoyed renewed attention in recent years. This applies specifically to the current cen-tral cooperative bank, DZ BANK, whose origin lies in the Prussian Central Cooperative Bank (‹Preußenkasse›) founded in 1895. What previous research has in common is that it did not draw on the major, long-forgotten, 171-meter long ‹I. HA. Rep. 177, Preußische Zen-tralgenossenschaftskasse› archive collection in the Secret State Ar-chives of the Prussian Cultural Heritage Foundation (‹Geheimes Staatsarchiv Preußischer Kulturbesitz›). The present paper is the result of a first viewing of these mostly-intact, archival records, which open new approaches for historians researching the cooperative movement during the period from the 1890s to about 1928. The emphasis of the extant documents lies on the middle tier of the three-level structure of the credit unions, with the central banks and regions which have hardly been investigated in previous research due to the lack of meaningful sources. The classification of the majority of the records by central bank permits not only a focus on regional history, the archives as a whole are also a rich primary source for the study of the relationship between the central banks and the ‹Preußenkasse›. The same applies to the topic of agricultural lending, where the surviving documents range from critical individual cases to analyses of different geographical areas, and on to the implementation of numerous lending programs. When and if researchers will gain access to the files in the collection through suitable finding aids is currently not yet foreseeable however.
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IBF Paper Series 09-17
Arno Bäcker, Hauptverwaltung der Deutschen Bundesbank in Hamburg, Mecklenburg-Vorpommern und Schleswig-Holstein / Christian Hecker, Hauptverwaltung der Deutschen Bundesbank in Hamburg, Mecklenburg-Vorpommern und Schleswig-Holstein

Die Geschichte des Finanzplatzes Hamburg – Anmerkungen aus Sicht einer Zentralbank
Remarks on the History of Hamburg as a Financial Centre from a Central Bank’s Point of View

Two features of the history of Hamburg as a financial centre are of particular interest from the perspective of a central bank: The estab-lishment of Hamburger Bank in 1619 as a proto-central bank and the handling of two liquidity or financial crises in the 19th century. Hamburger Bank provided the regional economy with a stable unit of account by creating the Mark Banco. It was defined by a fixed amount of silver. Hamburger Bank took in deposits which were credited in Mark Banco. Therefore, the Mark Banco could also be used as an easy medium of exchange between creditors. As a result, de facto Hamburger Bank also served as a basic payment system. The stability of its unit of account and its settlement services made the bank attractive beyond local borders in supra-regional trade. It may well be argued that Hamburger Bank became a catalyst for the region’s economic development. However, the bank did not have the means, nor did it have a public mission to help out in the financial crises which ensued following the big fire of Hamburg in 1842 and the international economic crisis of 1857. These events showed, inter alia, that liquidity and counterparty risks had been neglected by the mer-chant bankers of the day despite the backdrop of increased interna-tional trade and economic complexities. Furthermore, the resolution of the crisis of 1857 by public means was already viewed in a critical way by contemporaries who understood that such interventions could create future risks for the financial centre by means of moral hazard.
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IBF Paper Series 10-17

Rezensionen
Reviews

Reviews on Dieter Engels (Hrsg.): 300 Jahre externe Finanzkontrolle in Deutschland - gestern, heute und morgen. Festschrift zur 300. Wiederkehr der Errichtung der Preußischen General-Rechenkammer (Andreas Thier); Joachim Scholtyseck: Die Geschichte der National-Bank 1921 bis 2011 (Harald Wixforth); Thorsten Beckers: Kapitalmarktpolitik im Wiederaufbau. Der westdeutsche Wertpapiermarkt zwischen Staat und Wirtschaft 1945–1957 (Friederike Sattler); Rudolf Bogensperger: Eine Sparkasse (nicht nur) für die Wiener. Die Geschäftspolitik der Zentralsparkasse der Gemeinde Wien im Kontext der Entwicklung des österreichischen Sparkassensektors (Christian Dirninger).
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IBF Paper Series 11-17
Harald Wixforth, Bielefeld / Bremen

Umbrüche, Kontinuitäten und Strukturwandel am Finanzplatz Köln nach dem Zweiten Weltkrieg
Upheavals, Continuities and Structural Change at Financial Center Cologne after WWII

Cologne has also benefited as a financial center from the specific momentum of the "economic miracle" since the 1950s. On the one hand, previously existing structures such as the excellent position of private bankers could be built on in Cologne, on the other hand, new business fields such as retail customers gained significance. In addition, new actors such as the Bank für Gemein-wirtschaft (Bank for Social Economy) established them-selves, as did special institutions for leasing and other financial services. Whether the private banks in Cologne were among the winners of the structural change that continued until the crisis in the mid-1970s, or rather the savings banks or credit unions instead, would have to be investigated empirically through comprehensive profita-bility analyses of individual banks. If one considers the end of renowned private banking houses, or even larger institutions such as Dresdner Bank it appears, currently anyway, that the local savings banks benefited most from the structural changes. Assessing whether such an opinion holds true already for the mid-1970s, as the savings bank organization was confronted with considerable problems, requires additional research.
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IBF Paper Series 12-17
Tobias A. Jopp, University of Regensburg

How does the Public perceive Alliances? The Central and Allied Powers in World War I

World War I was fought by numerous countries siding together as the Central Powers and, respectively, the Allied Powers. The former established around the German Empire and Austria-Hungary and grew to four allies when the Ottoman Empire in late 1914 and Bulgaria in late 1915 entered the scene; the latter centered on the alliance between England, France, and Russia and was informally extended to many more countries as they entered into the war ad-hoc by signaling common interests with the core Allied Powers. This article addresses an oft-neglected dimension of the alliance formation phenomenon, namely how alliances were perceived by the public, in contrast to military leaders’ perceptions of each other. Were the Central and Allied Powers perceived as credible alliances – monolithic blocks – right at the time? We seek to determine the degree of “alliance integration” among pairs of countries by applying cointegration analysis based on securities prices. It is assumed that prices of countries perceived as “integrated” should show signs of co-movement. More specifically, we focus on the Amsterdam market for foreign government bonds providing us with a neutral’s view on that matter. Our analysis is based on the yields for 13 belligerent countries’ representative bonds traded during the war, but also before and after. Among other things, we cannot corroborate that investors recognized two monolithic blocks simply fighting the war.
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IBF Paper Series 13-17
Korinna Schönhärl, Universität Duisburg-Essen

Bis repetita non placent. Griechische Finanzkontrolle im 19. Jahrhundert und in der Gegenwart
Bis repetita non placent. Greek Financial Controls in the 19th Century and the Present

In June 2017, in the negotiations between Greece, the European Union and its Member States, the European Central Bank, and the International Monetary Fund, it was decided that the highly-indebted country in Europe's southern periphery should receive an additional disbursement of 8.5 billion euros from the 2015 aid package. The negotiations are another chapter in the endless disputes that have kept Europe in suspense since it first became apparent during the 2009 global economic crisis that Greece would no longer be able to service its foreign debt. One historical reference that the media repeatedly reported in this connection was the work of the International Finance Commission for Greece, which was established five years after Greek's bankruptcy in 1893 to ensure that Greece serviced its international debt. If one compares the Commission's work from 1898 with that of the troika in 2009, a number of parallels stand out: the actual or barely prevented sovereign default as the starting situation; the failure of all Greek attempts to get a handle on the situation without outside help, as well as the establishment of the commissions under extreme political pressure. There are also parallels with respect to the governance of the institutions: they were composed of politicians who protected the interests of private creditors and who could not always agree on a common strategy, as well as the restriction of Greek financial autonomy by foreigners. Most of the differences disappear however: The completely different global economic relationships at the end of the 19th and the beginning of the 21st century, the different natures of the Latin Monetary Union and the Eurozone, the large number of international and national political participants in the organizations with an equally broad range of different objectives, the different ways of working, and finally, the differences in the application of the conditionality principle.
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