Germany and the Geopolitics of the Great War
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foolishly attempted a ‘corner’ on the entire German wheat market, planning to capitalize on the consequences of the financial troubles in Argentina. This only aggravated the financial panic in Germany as their scheme collapsed, bankrupting in its wake the esteemed private banking house of Hirschfeld & Wolf, and causing huge losses at the Rheinisch-Westphaelische Bank, further triggering a general run on German banks and a collapse of the Berlin stock market, lasting into the autumn of 1891. Responding to the crisis, the Chancellor named a Commission of Inquiry of 28 eminent persons, under the chairmanship of Reichsbank President Dr. Richard Koch, to look into the causes and to propose legislative measures to prevent further such panics from occurring. The Koch Commission was composed of a broad and representative cross-section of German economic society, including representatives from industry, agriculture, universities, political parties, as well as banking and finance. The result of the commission’s work, most of it voted into law by the Reichstag in the Exchange Act in June 1896, and the Depotgesetz of that July, was the most severe legislation restricting financial speculation of any industrial country of the time. Futures positions in grain were prohibited. Stock market speculation possibilities were severely constrained, one result of which has been the relative absence of stock market speculation since then as a major factor affecting German economic life. The German Exchange Act of 1896 established definitively a different form of organization of finance and banking in Germany from that of Britain or America—Anglo-Saxon banking. Not only this, but many London financial houses reduced their activity in the restrictive German financial market after the 1890s as a result of these restrictions, lessening the influence of City of London finance over German economic policy. Significantly, to the present day, these fundamental differences between Anglo-Saxon banking and finance, and a ‘German model’ as largely practiced in Germany, Holland, Switzerland and Japan, are still somewhat visible.3 THE NECESSITY FOR SHIP AND RAIL INFRASTRUCTURE Thus, while Britain’s national industrial and finance policy, especially after 1873, fostered industrial retardation of technological progress, that of Germany fostered quite the opposite. By 1900, the trends of divergence between the two countries were evident to all. But a
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