Last year the economic crisis hit us all. Stock markets, too, had a tough time. Both the American and the European markets felt the pain, and the Bel 20 index plummeted. The Fortis share, initially thought to be stable, went into free-fall. Nowadays, the stock market is a familiar concept, but where, when and how did share trading actually begin? You will find the answer to that question in room 9 of the museum.
The foundations of the stock exchange that we know today were laid in the late Middle Ages in the cities of northern Italy. That is where the main basic concepts of modern banking and stock markets (e.g. bills of exchange, businesses in the form of a company, and banking with book-entry money) were first developed. The Italians introduced them into north-western Europe via Bruges. Right from the start, Bruges played a crucial role in the development of share trading. Owing to the demise of the Champagne annual fairs and rising transport costs, the Italians sought a different route to northern Europe via Bruges. In the 14th century, Bruges lay at the junction of two major trading empires, namely the Mediterranean area with the Italians and the Baltic Sea area with the German Hanseatic merchants. Although trade was flourishing in Bruges, the people of Bruges were not directly involved. They tended to act as agents or intermediaries between the various foreign merchants. The brokerage function was often taken on by innkeepers. Not only did they provide accommodation for foreign merchants, they also represented them. In view of that central role in trade, inn keeping was one of the most highly respected occupations in the town.
One of the most important families of innkeepers was the Van der Buerse family. For five generations they ran the ‘Ter Buerse’ inn. The oldest records relating to the family date from the 13th century, and it is an established fact that the Ter Buerse inn itself was already operating in 1285. It was run by Robert Van der Buerse, who was also the owner. During the 14th century the square in front of the Ter Buerse inn developed into the leading commercial and financial centre of the city. By 1340, Pegolotti’s guide to commerce was already comparing the Bruges brokerage rates and exchange rates with trade in England and Italy. Brokers also met in the square at set times, and because there were not yet any official stock market journals, they gathered a whole range of information from their guests, who travelled and corresponded with them about the local economic situation and the state of the foreign markets. In 1370, exchange rates for various cities were announced at regular times in Bruges. By around 1400 a continuous, organised money market had developed, with set times for announcing the exchange rates of the leading commercial and banking centres of Europe, such as Barcelona, Venice, London and Paris.
The principal money changers operated from their ‘nation houses’ on Ter Buerse square. A nation was an association of foreign merchants. These nations usually built, bought or rented their own buildings, known as the ‘nation houses’, which were also used as consulates, meeting rooms or storage facilities. By 1322 the Venetian nation had already been established; the Genoans arrived in 1397, and in the 15th century the Florentines also set up their nation. The merchants met daily in the square to conduct their business. If it rained, they took shelter under the eaves of the buildings around the square, or in the ‘Ter Buerse’ inn itself. And although the Beursplein [stock exchange square] was a public place, beggars and vagrants were not allowed access during trading hours because they might annoy the merchants. There was also a steward on guard. It is not known exactly what the trading hours were, whether there were any regulations, or what sort of official supervision existed. The operation of the first stock exchange was based on customary practice and there was never any written record. It was not until the 16th century that the Antwerp stock exchange became the first to keep written records.
Be that as it may, the old Bruges family of innkeepers lives on in the word ‘beurs’ [stock exchange]. There is no doubt that the name and coat of arms of the Van der Buerse family were central to the development of the association between the Bruges stock exchange square and the concept of a stock market. Yet the original meaning of the word ‘beurs’ seems to refer more to the square than to the building. The very first author to mention the Bruges stock exchange was Hieronymus Muenze, a German physician from Nurenberg who embarked on a long journey around Europe in 1495. His travel diaries reveal that in 1495 he stayed in Bruges at a guesthouse on the square, near the Ter Buerse inn. He said: “In Bruges there is a square where merchants meet. It is called De Beurs. Spaniards, Italians, English, Germans, Orientals, in short all nations, meet there.” In the next century, following the decline of Bruges, the financial centre moved to Antwerp. Very soon people were talking about ‘the new stock market’, the square where merchants met. From Antwerp the term ‘beurs’ spread to France, Italy, Spain and Germany where it was corrupted into bourse, borsa, bolsa and Börse. In England, too, the term ‘Burse’ was used between 1550 and 1775, eventually giving way to the term ‘Royal Exchange’.
The city of Bruges undoubtedly played a crucial role in the development of the stock market. The role of Bruges as a financial centre was over by the end of the 15th century. There followed a long history of trading in stocks and shares, culminating in the hectic, speculative stock market that we know today.
- De Clercq G. (e.a.), Ter Beurze. Geschiedenis van de aandelenhandel in België, 1300-1990, 1993, p. 15-32.