Historical preface to Max Weber, ``Stock and Commodity Exchanges'' STEVEN LESTITION Princeton University

The two pamphlets on stock and commodity exchanges that Max Weber composed in 1894 and 1896 for the ``Go«ttingen Workers' Library'' (edited by Friedrich Naumann) re£ected the young academic's e¡ort to take a stand on an important issue in the complex and changing socioeconomic and political landscape of late nineteenth-century Germany. Debate in Germany over the nature and social impact of stock and commodity exchanges had ¢rst grown acrimonious in the wake of the major economic downturn of 1873^1879, which put an end to the boom times of the Empire's ``founding era,'' as well as the rather spectacular charges of political manipulation and collusion levelled at Bismarck and the German ¢nancial elite by a range of conservative and socialist critics.1 Following brief economic upturns, major slumps occurred again in 1882^1886 and 1890^1894, giving rise to pessimistic perceptions that Germany (and parts of the international economy) had entered a ``great depression''; the causes of that were attributed to everything from ``overproduction,'' ``unfair competition,'' or the ``abrupt transformation in the production and circulation of the whole world,'' to a deterioration in domestic social order.2 It was in the context of prolonged hard times and the polarizing e¡ects of Bismarck's strategy of promoting an interest-group based politics, dependent upon strong central state leadership, that conservative critics of the exchanges proposed in the Reichstag in 1887 that an Imperial ``committee of inquiry'' be set up to examine the commercial practices and social interests operative at the exchanges. The stated goal was to seek out ways to ameliorate what were viewed as abuses of the national marketplace by exchange traders and the damage done to important interest groups in German society (especially the ``agrarians'').3 To a degree, this issue was overshadowed in coming years by the constitutional and power struggles surrounding Bismarck's e¡ort to remain in power and by Theory and Society 29: 289^304, 2000. ß 2000 Kluwer Academic Publishers. Printed in the Netherlands.

290 matters like the naval and military budgets, the tax structure of the Empire, and completion of a unitary civil law code (the Bu«rgerliche Gesetzbuch) for the empire that had been created in 1870.4 However, beginning in 1891, the collapse of some otherwise reputable banks in 1891^1893, the publicity surrounding some spectacular personal bankruptcies, and public outrage over the suspension of payments on state debt bonds issued by the governments of Argentina, Portugal, and Greece combined to spur legislators of the National Liberal and Conservative parties to renew calls for the Reichstag to pass some legislation to combat ``speculation'' on securities as well as commodities exchanges. The Imperial government responded in quick order by preparing legislation and by summoning a ``commission of experts'' in February 1892 to hold investigative hearings on the issue. The Exchange Inquiry Committee (headed by the Reichsbank president, Koch) held ninety-three sessions over the course of a year and a half, deposed some ninety-¢ve witnesses, and submitted a massive, 4-volume report of its hearings and ¢ndings to the Imperial Chancellor in November 1893. There they con¢rmed the view of some of the parliamentary critics that a ``seduction to speculation on the exchanges'' had reached ``a wholly intolerable level'' and that the losses su¡ered there by ``thrifty average people'' had accumulated to the point of posing a broad social problem.5 The issue of whether and how to legislate a reform of commercial exchange structures or practices came at a time of transition in German politics itself. The young new emperor, Wilhelm II (reigns 1888^1918), had dismissed Bismarck from the chancellorship in 1890 and began moving toward a personal rulership of an essentially autocratic nature. In the meantime, however, various political parties were attracted by the possibility of ¢nding ways by which some of the power that had developed in the hands of the Imperial government and bureaucratic ministries since 1870 might devolve back to parliamentary parties or coalitions of parties. This would ultimately fail, under the resistance of the Emperor to any diminution of his autocratic power and the inability of the Conservatives, Center, and factionalized Liberal parties to resist the attraction of continuing to promote their constituencies' economic and social interests through cooperation with the imperial government and state ministries. Under the new chancellor who succeeded Bismarck, Caprivi (previously the Minister-President of Prussia), the political and economic interest groups that had become active in the 1880s found a clear set

291 of new issues in the trade treaties (lowering tari¡ barriers in exchange for an easing of restrictions placed on German industrial goods abroad) Caprivi had set out to negotiate with various European states. The fact that this took place against the background of a sustained agricultural crisis in 1892^1895, with lowered (and unstable) prices and sti¡ened international competition (driven by modernization of agricultural methods and new crops), led to the formation of an ``Agrarian League'' (Bund der Landwirte) to pressure the government to shift away from ``free trade'' and toward the support of ``agrarian interests.'' 6 In the Winter of 1893/94, the Imperial Government completed its legislative proposals that incorporated the Inquiry Commission's ¢ndings. In practice, the new exchange law became a way for the Imperial and Prussian governments to ``compensate'' agrarian interests for the ground they felt they had lost during the Caprivi era. Following a failure of an e¡ort to build a ``coalition of the center'' in the Reichstag, Caprivi eventually resigned in October 1984. His replacement, the aging Prince Hohenlohe-Schillingfu«rst, e¡ectively marked the beginning of Wilhelm II's e¡ort at ``personal rule'' and the failure of e¡orts to shift political power back to parliamentary coalitions. Henceforth, Wilhelm and his governments would build upon Bismarck's earlier e¡orts to de-politicize the existing political parties, place the emperor's power beyond their reach, and use the appeal of a nationalistic imperialism or the contestation over economic interests to undercut developments that might enhance parliamentary power.7 The government proposals for securities and commodity exchange reform moved slowly through the parliamentary process while arousing considerable attention from the press and various organized interest groups. By January 1896, the legislative process had ¢nally gotten to the point of formal hearings in the Reichstag on the bill. In those hearings, the government's position was accepted by a broad range of parties ^ Conservatives, Center, National Liberals, and even initially the Social Democrats (although with some suggested changes); only the left liberals (the Radicals) opposed the legislation, while the South German parties abstained. Between January and June 1896 the legislation was sent to a 21-member parliamentary commission for hearings (including the ¢rst and second ``readings'' of the legislation in the parliament). There the Conservative Party's e¡ort to go beyond the government's legislation to tighten restrictions on and supervision of exchange activities was defeated. Nonetheless, merchants in Hamburg, Stettin, and elsewhere felt strongly enough that the commission was

292 guilty of arriving at its conclusions in the absence of any e¡ort to learn the viewpoint of the merchants involved in such commerce that they formed a ``defense association'' to counter the attacks of the agrarian groups. A roll call vote of June 1896, however, banned futures trading in grain ^ a key additional demand of the agrarians. The full bill passed the Reichstag with opposition only from the Radicals and independents of the left and was signed into law by the Emperor in June 1896 and went into force on January 1, 1897.8 The debate among the various interest groups had convinced the Reichstag and Bundesrat that, before they took advantage of the power granted to them by the new bill to legislate new ordinances, they should set up an ``Exchange Committee'' (Bo«rsen-Ausschuss) composed of ``expert advisers'' to consult on such matters. One half of the members (sitting for either 3 or 5 years, depending on di¡erent versions of the legislation), were to be nominated by the exchanges, one-half nominated by the Reichstag itself after consultation with ``agriculture and industry'' (meaning, i.e., the various interest-group lobbies). The committee, however, was not to be set up as a new ``shadow central bureaucracy,'' to rival the state ministries responsible for commerce, but simply to report to the Chancellor on their ¢ndings.9 Max Weber, whether because of his academic and professional contacts (through the Verein fu«r Sozialpolitik), or because his various writings of 1894^1896 had caught the attention of government o¤cials, was appointed (along with his older colleague from Go«ttingen, Wilhelm Leitz) to work on this new ``Exchange Commission'' ^ as well as on the subcommittee set up to examine the grain trade on the exchanges in particular.10 Weber not surprisingly got caught up in the sharp exchanges among the di¡erent members of the commission ^ especially, as he said in a letter to his wife Marianne, with the agrarian representatives who pressed for greater protectionism ^ and was not ultimately appointed to the ¢nal ``Exchange Commission'' that was set up in July 1897, after the new law had o¤cially gone into e¡ect. The opportunity this appointment might have brought to get engaged in the broader political arenas he sought had, unfortunately in his view, not materialized.11 But how was it that the young scholar had turned into something of an expert ^ and a willing publicist ^ on the matter of regulating stock and commodity exchanges? And what combination of political and social concerns then led him to o¡er support to Friedrich Naumann's project of a ``Christian Socialist'' movement (the sponsor of the ``Go«ttingen Workers' Library'' series in which the pamphlets appeared)?

293 Weber had done his initial three semesters of university training (in 1882^1883) at Heidelberg, where he studied jurisprudence, macroeconomics, and history (along with some philosophy and theology). After his year of national military service (1883), he had resumed his studies in Berlin, moved to Go«ttingen for one term (winter of 1885/86) to prepare for ¢rst-year [Referendar] legal exams), and then returned to Berlin again in the summer of 1886. In his studies, Weber was essentially combining a practical legal training with a grounding in a historical approach to political economy, a tradition that was wellestablished in Germany by that time.12 Between 1886 and 1889, Weber (then aged 25) completed his doctoral dissertation under Professors Levin Goldschmidt and Rudolf Gneist on the topic ``The Development out of the Household and Trade Communities in the [Medieval] Italian Cities of the Principle of Joint Liability and the Separate Fund in the Public Trading Company.'' 13 As he then began his practical training as a Referendar at the Royal District Court of Charlottenburg (in Berlin), and ¢nished his legal education by passing the exams for admittance to the bar, Weber also prepared his Habilitation thesis under the Berlin commercial law professor August Meitzen. The Habilitation, ``Roman Agrarian History and Its Importance for the [Roman] State and Civil Law'' was completed in 1891. Weber sought to keep multiple career options open. Continuing his activities as a lawyer at the Berlin Supreme Court, he also grasped the opportunity to give lectures and classes (in the summer of 1892, winter of 1892/93, and summer of 1893) on commercial law ^ including ``Commercial Exchange Law'' [Wechselrecht] ^ and Roman civil law at the University of Berlin when his former teacher, Goldschmidt, became ill. This combination of scholarship and practical engagement in the professional (and, indirectly, business and government) arena suited Weber's personal standpoint. While he lived at his parents' home in Berlin (from 1869 to 1882, and again 1884^1894), he was able to come in contact with a broad circle of political and academic ¢gures in the capital.14 Weber's father had himself begun his career as a lawyer and then city magistrate (in Erfurt and Berlin) but also soon undertook a parliamentary career as a deputy in the National Liberal Party in the Prussian Chamber of Deputies (from 1868 to 1882, and 1884 to 1897) and in the German Reichstag from 1872 to 1884.15 During the mid-1880s, just as Max began his studies at Heidelberg and Berlin, his father was active as a member of the central ``steering committee'' of the National Liberal Party.16 Two important developments in Max Weber's professional career provide the background for his engagement with the issue of stock

294 exchange reform and its implications for late nineteenth-century German politics. In 1890, he received a commission to work on the inquiry sponsored by the Verein fu«r Sozialpolitik [Society for Social Policy] into the condition of agricultural workers in the East Elbian regions. His summary report of the ¢ndings of the Verein's inquiry in 1892 quickly established him as one of the leading scholars in the ¢eld of contemporary Prussian agrarian conditions. Weber then reached out, through a series of articles and addresses over the next few years, to publicize to a broader audience his views about the practical policy implications of the now-threatened economic and social position of the large agrarian landholders of the east.17 Then, in the fall of 1894, he was appointed to a tenured professorship in macroeconomics (Nationalo«konomie) and ¢nance at the University of Freiburg. By that point, Weber had apparently convinced himself that a teaching post in commercial law ^ although, ideally one in Berlin18 ^ was the most attractive way of pursuing the combination of scholarly and practical (ultimately also, political) interests he had. In moving to Freiburg and the post in economics and ¢nance, Weber found compensation in the fact that (as he wrote to Marianne Weber) the ¢eld of economics was still relatively ``elastic'' and ``young'' in comparison with jurisprudence; and, as taught in Germany, it bordered closely on disciplines such as history, cultural studies, and philosophy. And Weber also made the calculated judgment that it would in fact be a more fruitful discipline from which to develop a political and social-policy orientation for his work.19 During his two years at Freiburg (and before he moved to a new post at Heidelberg in December 1896), Weber taught ``General and Theoretical Macroeconomics,'' ``Macroeconomic Policy,'' and specialized courses in ¢nance, such as ``On Money, Banking and Stock Exchange Transactions'' (winter 1895/96), ``The History of Macroeconomic Analysis'' (summer 1896), and ``Stock and Commodity Exchanges and their Law'' (winter 1896/97).20 With the recognition he had received through his report on East Elbian agricultural conditions, and because of the new academic work he was pursuing on the intersection of economics, law, and public policy, it is not surprising that Weber was either commissioned, or perhaps volunteered, to write a review of the four-volume ``Exchange Inquiry Commission's'' report for a journal edited by his Berlin commercial law teacher, L. Goldschmidt and some others: Zeitschrift fu«r das Gesammte Handelsrecht [Journal for All of Commercial Law]. Weber carried out this project (between 1894 and 1896) with thoroughness, producing four articles totalling 330 pages in all. (He would subsequently also write

295 extensive articles: one in 1895 on the ``Recommendations of the Exchange Inquiry Commission''; and one in 1897, on the ``Exchange Law'' that had just been passed [in the Handwo«rterbuch der Staatswissenschaften].) Weber followed the structure of the commission's own report very closely, analyzing everything from the personnel on the Exchange Inquiry Commission, the implications of the way in which they had met (without the public or the press able to be present), to the overly-structured, repetitive nature of the witnesses' replies to a ¢xed set of predetermined questions (the commission drew up a detailed questionnaire that it submitted to its witnesses beforehand), and the absence of any engagement with the extensive scholarly literature on the subject of exchanges and their commerce.21 In both of the pamphlets he wrote for Naumann's ``Workers' Library'' (and in the four articles in the commercial law journal), Weber followed the structure adopted by the commission: an initial overview of the external ``organization of the exchanges,'' followed by a detailed examination of the form that business transactions took on the exchanges (i.e., via brokers, commissioned agents, futures trading, etc.). It is impossible to determine from the evidence that remains whether Weber wrote the two pamphlets on the stock and commodity exchanges at Friedrich Naumann's suggestion, or whether the idea originated with Weber himself. The editor of the new volume of Weber's collected works dealing with his writings on the exchanges thinks that the latter is more probable.22 Given that Weber had learned how important an issue ``speculative trading'' in grain on the exchanges was for the agrarian interest groups that had formed since the 1880s, and given his own planned review of the Exchange Inquiry Commission's report for the commercial law journal, the writing of a short (16 page) pamphlet or two might not have appeared to Weber as too onerous an additional task to undertake. But, what was Weber's interest in contributing a relatively non-technical piece for the Evangelical (or Christian-Social) Workers movement at this point? The answer appears to lie in a combination of methodological and political-social concerns. Methodologically, the debate over the nature and social utility of trading on the exchanges showed all of the limitations of judgments being formed out of a mixture of valuepositions and empirical analyses, without the borderlines and tradeo¡s of either approach being accurately weighed. His engagement with the Evangelical-Social movement, beginning in the late 1880s, represented a counterpart to that: the movement threw into relief the range of other

296 (non-Christian) value-choices that various social and political actors were in fact making (even if dressing them up with ``objective'' and ``rational'' explanations) while raising provocative questions of late nineteenth-century society's own cultural and spiritual direction. Weber's own contributions were intended to help overcome the criticism that, as the Protestant clergy now sought to become more aware and engaged with ``the social question'' (i.e., of the conditions of the working class), they did so in a dilettantish manner; he sought to show how the modern social sciences approached such issues empirically and analytically. Thus the Evangelical-Social Congress's stated goals were rife ^ just as were the Verein fu«r Sozialpolitik's ^ with the sorts of tensions that would provoke Weber to articulate his stance on ``value-neutrality'' in the exercise of ``scienti¢c'' analyses: ``to measure social life according to the moral and religious demands of the Gospel and to make the latter more fruitful and e¡ective for contemporary economic life ... [and to do this on the basis of] a prejudice-free investigation of social conditions.'' 23 That the movement also had the goal of limiting the impact that the Social Democratic movement had on workers was also a positive factor. This paralleled Weber's interest in these years in the Kathedersozialisten [``socialists of the lectern'']: both were motivated by a desire to ¢nd some political direction outside the liberal parties, but one that would avoid exacerbating the already dangerous separation of the bourgeoisie from the concerns of the proletariat. Weber's ultimate goal appeared to be to gain a hearing for the views of the traditional educated elites (clergy, teachers, state bureaucrats) ^ and indirectly, for ``scienti¢c expertise'' ^ while also helping to educate and promote a new, more realistic and open-minded leadership elite from among the working and middle classes alike. It was at the Christian-Social Congresses of 1890 and after that Weber would have made the acquaintance of the younger generation of socially-minded theologians who attracted him to the movement, Paul Go«hre, Martin Rade, and Friedrich Naumann. In some ways, he sought to use the Congress as a vehicle to disseminate his own views on national policies (e.g., toward the East Elbian agricultural workers and state settlement projects in the east), and to join in a collaborative e¡ort (with the Verein fu«r Sozialpolitik) to expand the Verein's information base via a questionnaire distributed to the Protestant clergy of the area. However, he was also willing to be co-opted into doing work on behalf of the Congress: becoming the co-editor (with his uncle, Otto Baumgarten) of its semi-o¤cial organ, the Evangelisch-Sozial Zeitfragen [``Contemporay Evangelical-Social Questions'']; undertaking a series of

297 lectures (especially on issues of rural agriculture) that drew a large attendance and good press coverage; defending Go«hre in print when the latter was subjected to one-sided criticism by an older conservative theologian; taking part in ``theological'' discussions in a journal called ``Friends of the Christian World''; and signing a petition against reintroducing older restrictions on the activities of the Protestant clergy. Weber was eventually even willing to o¡er ¢nancial support to Naumann, when his resources became thin, or when Naumann later chose to campaign for a Reichstag seat (1898).24 Overall, the Christian-Social movement would have con¢rmed views that Weber was developing: namely, that broad ``cultural'' factors, and especially religious and moral values, played an important role in supporting or restricting other sorts of practical interests ^ whether those be economic class-interests, national power interests, or matters of social honor and prestige. At the same time, he could have the satisfaction of seeing the in£uence that his combination of scholarly and political views might have on this segment of the educated and (in some cases) leadership elite. At the beginning of his relationship with Naumann, Weber found himself criticizing the stance of an Evangelical-Social Workers Union's position paper that had called for state legislation to monitor more closely all commercial business and to take action against ``trading in futures'' as a mere ``gambling'' [als Spielgescha«fte] in commodities that were essential for general public consumption. Weber was also critical of the way in which Naumann could recommend a ``parallel study of Marx and Jesus Christ'' and yet fail to see any merit in recommending the historically-descriptive sort of macroeconomics that had become so important at German universities.25 By the time Weber had moved to Freiburg, however, and delivered his empirical and yet polemically value-laden Inaugural Address (``The National State and Economic Policy'') in May 1895, he would have had the satisfaction of seeing that Naumann was being won over to a nationalism and imperialism that took the problem of securing overseas markets for German industrial exports far more seriously than before.26 The series in which Weber published his pamphlets on the exchanges was not the ¢rst of that kind, but had its immediate predecessor in the Berliner Arbeiterbibliothek [``The Berlin Workers' Library''] that Max Schippel had been editing since 1889. Naumann's original plan was to begin, in the fall of 1893, with about ¢ve pamphlets, consisting of 16 pages each, with contributors to include some of those active in the Evangelical-Social Congress (like Go«hre), pastors, as well as professors

298 (such as Weber, Hans Delbru«ck, and Gerhart von Schulze-Gravernitz). In fact, the ¢rst and only pamphlet published before Weber's contribution was Naumann's own ``Jesus als Volksmann'' [``Jesus as Man of the People'']. An attempt to show that the Gospel stories of Jesus's life could function as both a ``fermenting agent'' [Sauerteig] in society and as a spiritual and psychological compensation for the working classes in their su¡erings, the pamphlet quickly went through four editions of some 90,000 copies. As Weber worked on completing his own pamphlet, he found that he could not ¢t what he had to say into the space of 16 pages; he convinced the publisher to expand that to two double-size pamphlets (32 pages each). But even then, in the process of composing the second of the pamphlets (in 1895), Weber found that he had to omit his projected discussion of the role of banks in the commerce of the exchanges, such as he had promised toward the end of the ¢rst pamphlet ^ perhaps because of lack of space or, more likely, lack of time to develop su¤cient expertise in the area.27 The delay of two years between the appearance of the ¢rst pamphlet (August 1894) and the second pamphlet (fall of 1896) meant that Weber's plan for his project had time to undergo several alterations. For example, some of the possible directions for reform that had been options in 1894 were now rendered irrelevant by the legislation that had been signed by the Emperor in June 1896; and the passage of the ban on futures trading in grain on the exchanges now became an even more central issue.28 In composing his pamphlets, Weber could make use not only of the detailed accounts contained in the four volumes of the Inquiry Commission's reports, but a series of broadly-descriptive and yet theoretical articles by a member of the commission, the professor of public policy [Staatswissenschaften] at Go«ttingen, Gustav Cohn, and other writers.29 Stimulated by the rising tide of criticism of the securities and commodities exchanges in the late 1880s and early 1890s, Cohn had discussed topics such as ``Reform of the Exchanges'' (Deutsche Rundschau, October^December 1891), ``Exchange Reform in the German Empire'' (January^March 1894), and ``About Speculation at the Exchanges'' [Uëber das Bo«rsenspiel] (Jahrbuch fu«r Gesetzgebung, Verwaltung und Volkswirtschaft im deutschen Reich, 1895). His approach was to provide some empirical as well as philosophic-theoretical perspective on what was otherwise often portrayed as only a zero-sum struggle between mutually irreconcilable interests. Due to the respect Weber expressed for Cohn's views30 and the fact that he appears to

299 have utilized some of Cohn's descriptive metaphors,31 it is likely that Weber read and saw the bene¢ts of adapting that mixed approach in his own articles. Yet, at the same time, Weber would have likely been dissatis¢ed with Cohn's systematic implementation of the view that the ``science of macroeconomics'' was itself directly and inescapably a ``moral'' study as well. But Cohn (like other writers and groups at the time, as noted above) had his own di¤culties in balancing the interplay of value-standpoints with conceptually-dependent observation and analysis. Taking o¡ from Zola's description of the mindset of speculation on the exchanges in his 1891 novel L'Argent, Cohn had argued against the proposition that the only perspective to adopt toward the exchanges was the stark set of alternatives o¡ered by the Social Democrats and Marxists: either to accept wholly the monopolistic power and £uctuating play of speculation of capitalists seeking pro¢ts, or to shift to its polar opposite ^ the collectivist vision of an expropriation of the power of private capital for the sake of general social welfare (i.e., the transformation of all capital into ``social capital''). Cohn proposed that the true alternative was between accepting the exchanges as ``a necessary organ of the contemporary acquisitive society rooted in private capital'' versus deciding to abolish the ownership of private capital entirely.32 Weber, in his ¢rst article, o¡ered only the briefest mention of the socialist view (mentioning the suspicion of all non-collectivized institutions almost in passing) and instead focused on laying a broader social-historical and functional justi¢cation of exchanges. His view of the exchanges standing at the end of a long development, at the beginning of which he positioned the basic social process of ``producing for others,'' was therefore not, ultimately, that di¡erent from Cohn's. The very institution of a ``market'' was only the correlate of the growing dependency of the members of any society that had passed beyond the most basic stage of a subsistence economy. In Weber's description of the functional (and increasingly ``rational'') role played by those who specialized in the work of exchanging what had produced, there was an implicit challenge to workers to recognize the status of a specialized ``work'' that need not denigrate or clash with their own. Weber's thumbnail history of commercial trade focused on the indispensability of a commodity ``exchange'' for facilitating the trade in the vast supplies of natural resources or mass-consumption articles that had become the essential components of modern industry or daily life.

300 What is also striking is what Weber omitted from his analysis. He placed less emphasis on a Smithean argument for the rationality in using the rate of return on invested capital as a mechanism to reward the most e¤cient use of the capital resources of a society. Instead, he focused on the hierarchical social and political metaphor of interest as a ``tribute'' exacted by the owner of capital from any debtor. While admitting that the question of who the owners of capital in any given society were was itself simply a matter of the historical development of wealth and its divisions within any given society, Weber spent more time dwelling on the increasing ``anonymity'' of capital investors and thus the impersonal distance that had now developed between capital investors on the one hand and the producing or consuming public indirectly linked to them on the other. But such impersonality also had its positive, ``social'' side: to the degree that more and more people became small shareholders (whether in stocks or government bonds), then a consciousness could emerge that everyone was ``taxing'' everyone else ^ a ``collectivism'' of a sort. In other cases, however, some of Weber's examples seemed at times to be as much directed at large agrarian landholders, small shopkeepers, or craftsmen, deeply suspicious of the power of exchanges to set prices for basic commodities, as they were at workers alone: e.g., that estate mortgages and the ongoing, historical shift in landowners' strategies of production showed a major reliance of even landowners on a broader socially-supported ``market.'' In the second half of his ¢rst pamphlet, Weber raised, but then quickly dismissed, the issue that had so dominated public debate at the time: whether it was possible or socially useful to regulate the kinds of ``speculation'' that were carried on at the exchanges. For his part, he proposed that it was more e¡ective to regulate the kind of person who traded on the exchange. This was not a matter in his mind of establishing a higher criterion of wealth for admittance to trading, for in any case (with or without small traders) large capital would continue to dominate the exchanges, as it already did. Rather, it was far more a question for him of enhancing the power and e¡ectiveness of the exchange's own internal ``tribunal'' (the so-called Ehrengericht). And, even as he wrote (in 1894), he knew that this was precisely one of the things that the new exchange law was envisioning. By the time that Weber came to write his second pamphlet (in 1895/96), it was clear that most of the major directions for reform of the exchanges had been decided upon. What was still left open, however, was the extent to which the Reichstag and the various provincial Landtage

301 would continue to exercise the power given by the new legislation to impose a ban upon futures trading in grain at the exchanges. (That ban, as was noted above, was ¢nally passed in June 1896, but without the support of the Social Democrats. Despite their deep suspicion of the role of the exchanges, and their view that regulation of the exchanges was fully justi¢ed, they accepted the argument that a ban on futures trading would only end up raising grain prices.33) It was in that context of uncertainty that Weber devoted so large a portion of his second pamphlet to explaining in detail the rationality and functionality of futures trading, as a mechanism for reducing merchants' and producers' risks in the market, and (indirectly) distributing supplies of commodities across a broader span of time. But, if rationality did not o¡er enough incentive, he also added in a battery of arguments about political power ^ that is, about the role of exchange trading in expanding the size of a national market and enhancing the leverage of the merchants located at the national site. In the end, the one area where he thought that the exchange law had overlooked useful state intervention was in the matter of pressing for better regulated, more openlyaccountable relationships between ``commissioned agents'' and their customers. The temptation of ``insider trading,'' deception, and the ``skimming'' of customers were simply too great under the conditions then existing. Other abuses would be taken care of, he thought, by simply enforcing the new provisions on an o¤cial reporting of exchange prices and their publication in a regular exchange bulletin. Weber's own stance on the stock and commodity exchange law that had been passed in 1896 was thus partly favorable, partly critical. But, in his view the errors in banning futures trading in grain were only part and parcel of the way in which the various political parties and interest groups had arrived at their standpoints on the legislation ^ in the absence of any real appreciation of the ¢ndings of modern scholarship on the structure and functions of exchange trading itself. It was no way, in his view, to begin to educate the socialist-oriented working class and its £edgling leaders. Although the issues of protectionism, free trade, and the role of institutions such as the exchanges were clearly of the ¢rst rank for Weber, he did not really articulate a stand on the two subsequent securities and commodity exchange laws that were brought up before the Reichstag in 1904 and 1906, laws that ultimately failed to pass due to conservative opposition to them. Weber did, however, view the passage of the 1908 exchange law favorably, which liberals had made a

302 condition of their participation in Chancellor von Bu«low's ``bloc politics,'' for it largely removed the restrictions that had been set up by the 1896 law.34 Notes 1. See Rudolf Hermann Meyer, Politische Gru« nder und die Corruption in Deutschland (Leipzig: E. Bidder, 1877), and Frederick Engels, ``The Socialism of Mr. Bismarck,'' Karl Marx and Friedrich Engels, Collected Works 24 (London: Lawrence & Wishart, 1989), 272^280 [originally published in L'Egalite¨ no. 7 & 8 (March 3 and 24, 1880)]. 2. Hans Rosenberg, ``Political and Social Consequences of the Great Depression of 1873^1896 in Central Europe,'' Economic History Review 13 (1943): 58^73, and his Grosse Depression und Bismarckzeit: Wirtschaftsablauf, Gesellschaft und Politik in Mitteleuropa (Berlin, 1967). 3. For Bismarck's strategy in the mid-1880s and after, see Lothar Gall, Bismarck: Der weisse Revolutiona«r (Frankfurt am Main and Berlin: Verlag Ullstein; Propyla«en Verlag, 1980), 597^607. The stages of the development of the legislation on the securities and commodity exchanges in the Reichstag are outlined in Nationalliberale Partei, ed. Die Reichstags-Session 1895/96. 9. Legislaturperiode. Erster Abschnitt: 3 Dezember 1895 bis 2 Juli 1896 (Berlin: Centralbureau der nationalliberalen Partei, 1896), 239^240. 4. Nationalliberale Partei, ed. Reichstags-Session, 3^5 and J. C. G. Ro«hl, Germany without Bismarck: The Crisis of Government in the Second Reich, 1890^1900 (London: B.T. Batsford, Ltd., 1967). 5. Nationalliberale Partei, ed. Reichstags-Session, 240. The academics on the commission included Professors Gustav Schmoller (Berlin) and Gustav Cohn (Go«ttingen). 6. Wolfgang Mommsen, ``Einleitung,'' in Max Weber, Landarbeiterfrage, Nationalstaat und Volkswirtschaftspolitik: Schriften und Reden 1892^1899, ed. Wolfgang Mommsen with Rita Aldenho¡. Max Weber Gesamtausgabe, I, 4/1 (Tu«bingen: J. C. B. Mohr [Paul Siebeck], 1993), 2^7. 7. Ibid., 5^7, and Ro«hl, Germany after Bismarck, 75 ¡. 8. Nationalliberale Partei, ed. Reichstags-Session, 242^245, 284. 9. Ibid., 249, 254^265. 10. Mommsen, ``Einleitung,'' Weber Gesamtausgabe, I, 4/1 (1993): 36, 41^42. 11. Wolfgang Mommsen, Max Weber und die deutsche Politik, 1890^1920, 2nd rev. edition (Tu«bingen: J. C. B. Mohr [Paul Siebeck], 1974), 81. For portions of a letter to his wife describing his interactions with the agrarian representatives, see Marianne Weber, Max Weber: A Biography, transl. and ed. Harry Zohn, with a new introduction by Guenther Roth (New Brunswick, N.J.: Transaction Books, 1988), 198. 12. Wilhelm Hennis, ``Eine `Wissenschaft vom Menschen': Max Weber und die deutsche Nationalo«konomie der Historischen Schule,'' in Hennis, Max Webers Fragestellung: Studien zur Biographie des Werks (Tu«bingen: J. C. B. Mohr [Paul Siebeck], 1987), 117^166, and Richard Swedberg, Max Weber and the Idea of Economic Sociology (Princeton: Princeton University Press, 1998), chapter 6. 13. This was soon to become the third chapter of a larger work, ``On the History of Trading Companies in the Middle Ages, According to South-European Sources,'' (1889).

303 14. These included leaders of the National Liberal Party like Benningsen and Miquel and high o¤cials in Bismarck's government like the one-time Bu«rgermeister of Berlin and Finance Minister under Bismarck, until 1879, Arthur Hobrecht, See Dirk Ka«sler, Max Weber: An Introduction to his Life and Work, transl. Philippa Hurd (Oxford: Basil Blackwood; Polity Press, 1988), 3. 15. Ibid., 2^6. 16. Mommsen, ``Einleitung,'' Weber Gesamtausgabe, I, 4/1 (1993): 1. 17. Ibid., 1, 16^20. 18. In accepting the o¡er to move to Freiburg, Weber ¢rst factored in the chances (through inquiries with the powerful head of Prussian academic administration, Altho¡) that an appointment such as he truly hoped for, a professorship in commercial law at the University of Berlin, was not going to materialize in the near term. Ibid., 39^40. 19. Marianne Weber, Max Weber, 200. 20. Mommsen, ``Einleitung,'' Weber Gesamtausgabe, I, 4/1 (1993): 39^41. 21. Max Weber, ``Die Ergebnisse der deutschen Bo«rsenenquete,'' Zeitschrift fu«r das gesammte Handelsrecht 43 (N.S. 28): 1/2 (1894): 83^98. 22. Knut Borchardt, ``Editorischer Bericht,'' in Max Weber, Bo«rsenwesen: Schriften und Reden 1893^1898, ed. Knut Borchardt, with Cornelia Meyer-Stoll. Max Weber Gesamtausgabe, Sect. I, 5/1 (Tu«bingen: J. C. B. Mohr [Paul Siebeck], forthcoming), 11^18, 496^500. I wish to thank the editor for sharing proof-pages of these editorial prefaces prior to the appearance of the volume. 23. Cited in Mommsen, ``Einleitung,'' Weber Gesamtausgabe, I, 4/1 (1993): 27. The Verein, for instance, took the conservative view of the East Elbian agrarian question, favoring state measures to uphold the large estates and to stem German laborers' £ight from the land, ibid., 17. 24. Ibid., 27^33, 38. 25. Weber's 1894 review of Naumann's ``Was heisst Christlich-Sozial?'' published that same year, is cited in Borchardt, ``Editorischer Bericht,'' Weber Gesamtausgabe I, 5/1 (forthcoming): 13^14. Weber was also critical of the way in which Naumann wagered on getting important support for his movement from what Weber viewed as a ``declining'' social group ^ small rural landholders, the object of state resettlement policies in the east ^ and not focusing on ``rising'' and self-conscious social groups (i.e., presumably the bourgeoisie and industrial workers). See Mommsen, ``Einleitung,'' Weber Gesamtausgabe I, 4/1 (1993): 37. 26. Mommsen, M. Weber u. dt. Politik, 74^75. Naumann's extensive review of Weber's Inaugural Address (originally entitled ``Nationality in Economic Life'') in the journal Die Hilfe ended with the conclusion that ``a socialism capable of governing must pursue a politics of German national self-interest (muss deutschnational sein).'' 27. Borchardt, ``Editorischer Bericht,'' Weber Gesamtausgabe I, 5/1 (forthcoming): 12, 14^15, 496^497. Borchardt cites no ¢gures on the size of the printing of Weber's pamphlets, nor whether they went through more than one edition. 28. Ibid., 14^15, 497. 29. Cohn was one of the founders, in 1872, of the Verein fu«r Sozialpolitik; he taught at Go«ttingen from 1884 until his death in 1919. See the Neue Deutsche Biographie, ed. Historische Kommission bei der Bayerische Akademie der Wissenschaften, 3 (Munich, 1966): 315. The Volkswirthschaftlichen Gesellschaft in Berlin, for example, published a series of pamphlets (Volkswirthschaftliche Zeitfragen [Contemporary National Economic Policy Questions] that included ones on the draft of the exchange law and on the ¢nal bill that was passed.

304 30. See Weber's comments in his initial article for the Zeitschrift fu«r das gesammte Handelsrecht, 43 (N.S. 28), 1/2 (1894): 90. 31. See Gustav Cohn, ``Zur Bo«rsenreform,'' Deutsche Rundschau 69 (1891): 216 where he terms the £uctuation of di¡erent prices, searching for the right balance of pro¢t and security, a ``continuing tossing of wavelets'' [ein fortwa«hrendes Wellengekra«usel] ^ exactly the same metaphor Weber will later employ in his own pamphlet (p. 366). 32. Cohn, ``Zur Bo«rsenreform,'' 206^208. 33. Nationalliberale Partei, ed. Reichstags-Session, 244. 34. Mommsen, M. Weber u. dt. Politik, 81.