Commodity and stock exchanges

The Danish word "børs" comes from Dutch beurs - a purse - which gave name to the merchant family van der Borse of Bruges who carried three purses in their coat of arms.

Already ancient Rome knew places where merchants would meet and conclude deals. This was also common in the largest towns and at fairs in the Middle Ages. Usually, the goods involved were physically present when the deals were concluded, but occasionally, delivery would take place at a later date.

In the 13th and 14th centuries, buildings in several cities were designated particularly for the merchants’ trade, and these buildings were called exchanges. Among the most important exchanges were those of Antwerp and London. At the same time it grew increasingly more common that the commodities were not present at the exchanges.Instead, deals were concluded in the form of agreements to deliver commodities of a specific, standardised quality.

The 15th century saw the beginning of trading in shares and other securities, primarily instruments of debt and international bills of exchange. The centre for such transactions was Amsterdam, which gradually developed close contacts to all of Europe. Trading would take place in an exchange courtyard surrounded by an open arcade with 46 columns. Between the individual pairs of columns and at different spots in the courtyard, specialised trading within around 100 different commodities would take place, for example tea, precious metals, glass, wool, bonds, bills of exchange, and maritime insurance.

Also in Copenhagen, merchants were bargaining face to face about the price of a wide variety of commodities at the exchange established by Christian IV. At the Copenhagen exchange, trades were also concluded money against money. Some merchants would finance the equipment of a ship to collect merchandise from the Far East. They would buy shares in the cargo of the ship and if the ship returned, they would benefit handsomely from their investments. If a need for credit arose, the debt amount would be noted on a slip of paper, which was then negotiable. The price would depend on the "quality" of the debtor.

During the 17th century, the exchanges were in many cases divided into commodity exchanges and exchanges where securities were traded, the so-called stock exchanges. The commodity exchanges primarily traded in standardised qualities of agricultural products and raw materials for industrial use. Once the electric telegraph had been invented, pricing grew increasingly uniform among the individual exchanges. Gradually, some exchanges specialised in single commodities and gained a dominant position in the world market. This is true for the Chicago grain exchange, the cotton exchange in Liverpool, and the London Metal Exchange.

Amsterdam was the centre of securities trading up until the 1790s, but due to the wars fought in Europe in the following years, it lost its leading position to the London Stock Exchange, which had been set up in 1773. In the 17th century the volume of securities in the international market increased strongly. This was both due to the fact that a very large number of industrial, trading and transport companies were set up in the form of limited liability companies, and also to the fact that many public authorities and public utilities would take up loans in the national and international capital markets. This had the effect that - besides the London Stock Exchange - a number of other centres arose, albeit with lower trading volumes, for example in Paris, where there had been a stock exchange since 1724, and in Berlin, where the stock exchange was founded in 1738.