The Frankfurt Story: Financial Markets, Power, and the Struggle for North America

In the final third of the nineteenth century, German-speaking central Europe emerged as one of the leading creditors of United States governments and corporations. London, Amsterdam, and New York played a key part in channeling German capital there, but so did—rather unexpectedly—the small mercantile city of Frankfurt/Main. This presentation revisits the so-called “Frankfurt story.” It explores why and how a city of such modest size, and with little prior experience in Atlantic World finance, became one of the central players in the international market for American debt after 1860. To do so, this presentation opens the black box that is the Frankfurt securities market. Two insights follow. First, a spatial history analysis suggests that starting in the 1820s Frankfurt developed a unique, bifurcated market that happened to offer convenient solutions to the logistical challenges of selling American debt in Europe. Second, in their capacity as “market-makers,” Frankfurters imagined themselves, and their debtors, as sovereign actors who competed for hegemony and financial power on the North American continent. This presentation argues that the sovereignty metaphor helps explain why Frankfurters—and, more generally, their European clients—proved so willing to downgrade their risk assessments of American debt and to rate expected returns more highly. In so doing, it contributes to a recent literature concerned with recovering the contingency of financial markets as well as the centrality of power, and assumptions about sovereignty, in the making of modern European finance capitalism.