History of the Exchange
Fairs, coins and bills of exchange: 11th - 17th century
The roots of FWB® Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) go back to the period of medieval fairs. The Frankfurt autumn fair is mentioned in writing for the first time during the Assumption holiday in the year 1150. The autumn fair is believed to have had its origin in the 11th century as a harvest fair. Since the year 1330, when Emperor Ludwig the Bavarian expanded this privilege to include a spring fair as well, the city became an important centre for commercial and monetary transactions. As a result of the trading activity during the fair, the manufacture of goods on order gradually developed into merchandise production for an open and nationwide market.
Already at the beginning of the sixteenth century, due to its well-known fairs Frankfurt had become so prosperous that Luther termed the city 'the silver and gold hole' of the German Empire. Through the immigration to Frankfurt of Dutch and French merchants who had been persecuted because of their Protestant belief, during the sixteenth century wholesale commerce and the banking sector also became established in Frankfurt. Merchants from all over Europe came to Frankfurt in order to engage in trade.
Since there was still no single currency neither in Europe nor in the German Empire, and the various countries fell apart into numerous small economic regions with their own monetary systems, payment was based on a large variety of coins. Because of this, monetary transactions in Frankfurt proved to be extremely troublesome. The confusing abundance of means of payment and the free exchange rates made it easy to engage in usury and swindles. To counter the deterioration of coinage, merchants at the fair met in 1585 in order to establish uniform exchange rates. Today, this event is regarded as the moment of the Frankfurt exchange's birth.
From that day on, during the fair a group of merchants met periodically to update the uniform and binding exchange rates for transactions in notes and coins. In German, the name Burs or Börse (the equivalent of the French bourse) was documented in writing as a designation for this meeting as early as in 1605.
The German term Börse (and French bourse) comes from the fifteenth century, from the Belgian city of Bruges. The word described a periodic meeting of rich Italian traders at ter buerse plaza – a market place that was named after the patrician family Van der Beurse, who had lived there (Lat. bursa = 'bag' or 'change purse').
The first official quotations sheet which presented the average prices for twelve denominations of currencies for the payment week following the fair, appeared in 1625. The oldest quotations sheet from the Frankfurt exchange that still exists dates from the year 1721. The list already contained exchange rates for 16 coinage types. Initially, the meetings continued to be held on the open field in front of the Frankfurt town hall. It was only in 1694 that the traders moved to the Großer Braunfels building at the Liebfrauenberg, thereby selecting the city's most important and spacious building as their fixed meeting place.
In 1666, the first Exchange Rules and Regulations („Ordnung in Wechsel- und Kauffmannsgeschäfften“) were enacted, which led to the establishment of an official stock exchange administration. Initially, only trading in bills of exchange was undertaken on the Frankfurt exchange.