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The long trading history that turned Frankfurt into a financial powerhouse

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The long trading history that turned Frankfurt into a financial powerhouse
Frankfurt: a dominant city. Photo:DPA
16:09 CEST+02:00
As the home of the European Central Bank and the Deutsche Bank, Frankfurt is well-known as one of Europe's most important financial hubs. But how did the Hesse city develop into one of Europe's – and arguably the world’s – most influential cities?

From Frankfurt in the middle ages to the post-war era we dug into the history of the biggest city in Germany's central state of Hesse.

A medieval trade centre

Frankfurt’s central European location has long been a crucial factor in its economic and political significance. And the city has also long been a hub of European economic relations.

Together with Leipzig, it had one of the most important trade fairs on one of Europe's most important trade routes; from Paris to Nizhny-Novgorod in Russia. 

At trade fairs in the Middle Ages, merchants and traders would set up stalls to buy and sell products such as cloth, silk, glassware, wine and spices. After Johannes Gutenberg developed the printing press in 1445, Frankfurt also became powerful in the book trade.

This fair became known as the Messe Frankfurt, and today is the world’s largest, with an annual revenue of around €650 million.

But the selling of goods in the city, and on the river Main has always been popular. Even in the 14th century, it is estimated that around 40,000 merchants would visit Frankfurt.

The Messe Frankfurt has been powerful for centuries. The first written documentation of the trade fair comes from 1150, although it was officially inaugurated in 1240 by Emperor Frederick II.

About a century later, the city began to host its fairs twice a year in spring and autumn. Merchants and traders would congregate at the Römer, which has been Frankfurt’s city hall since the 15th century.

The Römer was the heart of Frankfurt's trade history. Photo: DPA.

The Messe Frankfurt is not the city’s only economic institution which has its roots in the city's medieval past.

In 1585, the city’s traders developed a system of stock exchange rates of the different currencies used at the fair; this helped to hinder cheating and fraud, and also lay the foundation for the Frankfurt Stock Exchange.

An Imperial City in the Holy Roman Empire

Frankfurt’s political influence was enhanced under the Holy Roman Empire. In 1372, it became a Freie Reichsstadt  - a 'free imperial city' - which meant it had autonomous powers and was subordinate to the Holy Roman Emperor, rather than local nobility.

But the city was significant in other ways. In 1356, Emperor Charles IV issued one of the most notable Golden Bulls in the history of the Empire.

The term 'Golden Bull', or Goldene Bulle refers to the decrees enforced by Holy Roman Emperors, and were named so due to the golden seal on the decree itself.

The Golden Bull of 1356 essentially aimed to define the Holy Roman Empire's constitutional structure.The role of Holy Roman Emperor was elective, and the decree stipulated that seven Kurfürsten ('Prince-electors') should decide on new Emperors at elections in Frankfurt. 

From 1562, coronations of Holy Roman Emperors also took place in the city, until the coronation of Francis II in 1792, the last coronation of a Holy Roman Emperor.

1848 Parliament

Frankfurt’s status as a powerful political location was reinforced in the 19th century, and especially with the Frankfurt Parliament of 1848. The Frankfurter Nationalversammlung was the first freely elected national assembly in Germany, which was brought into being in the wake of the 1848 revolutions.

The Frankfurt Parliament meeting in St. Paul's Church. Photo:DPA.

Germany at the time was still a loose confederation of states governed by monarchies, but, like much of Europe, it experienced a wave of revolutions in 1848 which essentially demanded greater liberties and national unification.

The 600 or so elected representatives met in the Paulskirche, a Protestant church in central Frankfurt, to discuss the establishment of a liberal constitution and a national unification. But eventually the endeavour failed, and the parliament dissolved itself in May 1849 after Frederick Wilhelm VI of Prussia rejected its offer of kingship, dismissing it as “a crown from the gutter”.

The city lost its independence in 1866 following the Austro-Prussian War, as the northern German state of Prussia annexed Frankfurt into its own ever-growing empire. In 1871, Otto von Bismarck finally achieved German national unification after his defeat of Napoleon III's French forces.

Although the Frankfurt Parliament ultimately failed to establish a more democratic, unified German nation, events in the city highlighted the shifting nature of German politics and the growing awareness and demand for national unification.

Destruction in the Second World War

Like many other German cities, Frankfurt suffered heavily during the Second World War. The city was bombed heavily by Allied forces; around 5,500 civilians were killed as about 12,000 tons of explosives were dropped.

It suffered especially badly in March 1944, as British forces obliterated the medieval city centre. Much of the medieval city had been constructed from timber, and so it was unable to withstand the British incendiary bombs.

On March 18th, 7,000 buildings were destroyed and 55,000 civilians were made homeless. Frankfurt's historic centre was wiped out, needing to be rebuilt from scratch. 

Post-War Frankfurt

After the Second World War, Frankfurt was the original choice to be West Germany’s provisional capital. 

Yet the city’s historic economic and political power proved to be a hindrance. West German Chancellor Konrad Adenauer worried that West Germans would come to accept Frankfurt as their permanent capital; this would reduce the chance of reunification as it would mean surrendering Berlin's political significance to East Germany.

Adenauer thus selected the smaller city of Bonn as his temporary capital (which also happened to be conveniently close to his home city, Cologne).

Frankfurt nevertheless flourished in the post-war era. Berlin was isolated and divided, and Frankfurt was able to quickly assert itself as the country’s financial centre.

Frankfurt's iconic skyline. Photo: DPA.

It was in Frankfurt in 1948 that the allies established the Bank deutscher Länder, which became the Deutsche Bundesbank - Germany’s central bank - in 1957. Moreover, the Frankfurt Stock Exchange, which had laid it roots centuries ago in the city’s trade systems, was able to establish itself as Germany’s leading stock exchange in the 1950s.

Frankfurt was crowned as Europe's financial epicentre in 1998, when the European Central Bank was established there.

In the latter half of the twentieth century, the city profited from a building boom, when high-rise constructions such as the Silbertum, the Westend Gate and the Commerzbank tower were erected. Not only did such buildings define Frankfurt’s skyline, dubbed 'Mainhattan' after the similarities to the New York skyline, but it also helped to cement the city's status as Europe's economic powerhouse. 

It is from Frankfurt that the euro’s monetary policy is decided, and European economic affairs are dominated. Frankfurt is not only one of Germany’s, but one of the world’s most influential cities.

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