GaWC Research Bulletin 92

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Centres of Finance, Centres of Imagination: On Collective Memory and Cultural Identity in European Financial Market Places

B. Reszat*


The rapid development of electronic exchanges and growing digitalization of financial activities in recent years appear to contradict the observation that centrality remains a key feature of today's financial markets. This study draws the attention to the determinants of financial agglomeration in Europe and to the effects of cultural identity and collective memory on financial firms' choice of location. Beside their real function as providers of intermediation and financial services cities such as London, Paris and Frankfurt always have a symbolic dimension which influences their international competitiveness. There is a subjective experience of financial places rooted in collective phenomena whose importance is analysed in detail.


Monetary integration and the introduction of a common currency in Europe raised a renewed interest in the competitiveness of European financial centres and its determinants.1 This paper wants to draw the attention to one particular kind of influences, the effects of cultural identity and collective memory on financial firms' location decisions. Beside their real function as providers of intermediation and financial services cities such as London, Paris and Frankfurt always have a symbolic dimension, a power to focus market actors' imagination. They are imaginary places - "Gedächtnisorte" (Nora, 1998) - with their symbolic content shaped according to people's memories and beliefs of a (socially constructed) past and present which is determined in a permanent active process of cultural creation and destruction. There is a subjective experience of financial places shared by actors in the markets determining what broadly may be called "market culture". From sociology we know that individual memory creating cultural identity depends on the social environment (Berger, 1963) and is deeply rooted in collective phenomena. Collective memory of a financial centre in this sense takes many forms. The following will focus on rites, myths, symbols and media and on patterns determined by spatial context.

The aim of the paper is to explore the range of these influences. The first chapter gives a short overview of the history of financial centres in Europe. The second presents the main line of reasoning in the literature on cultural identity and collective memory. The third chapter applies these arguments to the process of spatial concentration in European financial markets. The fourth chapter summarises the main results and asks for the scope of policy to enhance a financial centre's competitiveness.


The concentration of trading activities in particular centres is a very old phenomenon. First gatherings of merchants which already resembled a rudimentary version of an exchange even can be traced back to the big trading places of antiquity in Babylonia, Egypt and Phoenicia (Merkt, 1997). In Europe, first exchange-traded bills could be found on fairs in Italy - in Lucca, Genoa, Venice and Florence - in the 12th century. The first government bonds were issued in Venice. Initially, trading took place in streets or public places like, for example, at Jonathan's Coffee House in London. In the beginnings, it was wholly informal by nature; a body responsible or institution, which is one crucial prerequisite of a true exchange, was lacking. As a result, trading had to be done step by step because, as a rule, the partners did not know each other. Only much later did it move to closed rooms where entry was restricted to a limited number of traders with proven solvency. Bill and lending business soon became separated in space and time from goods trading shifting to times when no fairs were taking place and to the money lenders' and bill traders' residences. Italian merchants brought the bill and lending business to west and north Europe where until the 15th century Bruges became the main trading and financial centre.

The beginnings of Bruges' rise date back to the year 957 when the first trading fair there was established. But, the real breakthrough came with what economists call "historic accident": In 1134, a big storm raged over the North Sea and changed the coast line for the first time allowing commercial ships to navigate this part of Europe. In what follows, Bruges became the main trading port at this coast. In 1252 it established relations with the Hanseatic League. In 1277 the first trading ships from Genoa arrived and in the 14th century, there was even a daily courier service to Venice overland. Between the 13th and 15th centuries, the city became one of the richest in the world famous not only for its trade but also for its fine cloth manufactories as well as its banking services. The end of Bruges' predominance was marked by another natural event: In the late 14th century, the Zwin, the river on which the city is built, began to silt up, discouraging the passage of commercial shipping. Economic crises and political unrest worsened the situation and in 1488 Emperor Maximilian ordered foreign merchants to shift their offices to Antwerp (Benevolo, 1993).

Between 1480 and the 1560s, Antwerp rose to the main centre of north European trade and to the leading financial place in Europe. The town was the first to grant almost total liberties to both domestic and foreign merchants. One reason for the existence of fairs in the Middle Ages had been the temporary exemption from trade restrictions. Now, under almost total permanent liberalisation uninterrupted market trade became possible and Antwerp changed from a place for fairs and markets to one in which exchange trading became the rule (Merkt, 1997; Fischer, 1998). In 1518, the Antwerp Exchange was founded which was open to merchants from all nations. Only English merchants kept their own commodity exchange.

In the 1570s, the Spanish-Dutch conflict, the closure of the river Scheldt and the isolation of the town by Spanish troops put an end to Antwerp's supremacy. Its successor became Amsterdam whose advantages were among others its port, its outstanding superiority in shipbuilding, its geographic position and its liberal government in contrast to that of Antwerp in the rather conservative Spanish Netherlands. The Amsterdam Bourse became Europe's leading securities market. At that time, European merchants often concentrated their transactions in one or more specified towns known as staples and Amsterdam was the biggest staple in the Western world (Fischer, 1998). There, merchants coming from East India or America met those from eastern Europe, and since cargoes from both directions could not be transported any further before the winter set in they were stored in Amsterdam. As late as 1728, Daniel Defoe described the Dutch as "the Carryers of the World, the middle Persons in Trade, the Factors and Brokers of Europe: ... they buy to sell again, take in to send out: and the Greatest Part of their vast Commerce consists in being supply'd from all Parts of the World, that they may supply all the World again."2

One hundred years later, the same could be said about London. The exact time when London took over from Amsterdam is not known. It emerged as a centre of international merchant banking in the 17th and 18th centuries. The decisive years appear to be between 1660 and 1700 when the Navigation Act took effect and England brought a large part of the transatlantic trade under its flag. Among the 28 colonies established in the western hemisphere in the 17th century, 12 were English, three Dutch and eight French. Around 1700, there were 350,000 to 400,000 British subjects on the other side of the Atlantic, but only 70,000 French. The final stroke to Amsterdam came during the French Wars of 1793-1815. When in 1795 the French occupied the town much of its financial business migrated to London which was one of the few major towns in Europe which had not fallen under Napoleon's control (Einzig, 1970). When peace returned many of the Dutch commercial and banking families remained and London benefitted from their money and their experience and worldwide contacts. For a long time, Dutch became the leading business language in London (Fischer, 1998). Many financial regulations, norms and behaviour patterns such as the rules and techniques of stockbroking followed those prevailing in Amsterdam.

The Dutch were not the only aliens dominating trade and finance in London, and they were not the first ones: The first foreign financiers there had been Jews who had settled in London after 1066 where they became the main source of loans until the middle of the 13th century. Next came Italian and Hanseatic merchants as well as many others. The most important group up to the late 15th century was the Italians who not only handled about a quarter of England's overseas trade but also dominated its banking system in using financial techniques and capital not available to native merchants (Inwood, 1998). And war was not the only reason for Amsterdam's decline either. During the 1760s and the 1770s there had been a series of financial crises. In 1763 it was speculation in unsecured war loans which ruined several Amsterdam financiers. In 1772-3 a succession of bankruptcies among Dutch financiers from speculations in East India Company stock brought business in Amsterdam to a standstill. In both cases, the Bank of England acted to restore confidence which left the overall impression that the financial system in London was safer than the decentralised and uncontrolled system in Amsterdam (Inwood, 1998).

In the 19th century London's international role strengthened. It became common for European merchant banks to open offices there. American banks followed. Those were the years when the Barings and the Rothschilds became the most powerful financiers in the City. In 1914, twelve of the twenty-one leading London merchants banks were Anglo-German, three American and one French. London became the focal point of overseas lending - mostly government and railway issues, but also mining, industry and public works, in America, India, Australia, Canada and New Zealand - with a large proportion of the money originating overseas and much of the businesses handled by the London offices of American and German finance houses. The City's reputation was high: Foreign merchants used its accepting and discounting services even when their trade was not with England (Inwood, 1998). Internationalisation was fostered by new technology. The electric telegraph enabled trades between London and other financial centres to be done in minutes rather than days or weeks. The first submarine cable linking London to Paris was established in 1851, to New York in 1866 and to Melbourne in 1872.

During these years other towns in Europe emerged as financial centres as well. London's nearest rival was Paris. Between 1850 and 1870 Paris was said to be the first place in Europe for foreign exchange (Kindleberger, 1993, 1996). However, various data show a different picture. For example, published deposits in London banks in 1873 amounted to £120 million, compared to £40 million in New York, but only £13 million in Paris (Inwood, 1998: 483). The French system was by far much less developed than the British and those of other comparable countries. Between the 1880s and the 1930s French commercial banks proved largely incapable to provide the channels for financial savings. For example, end of 1937, there were 12,000 francs' worth of deposits per inhabitants in the United States, 10,000 francs in England, but only 1,200 francs in France. Hoarding reflected the still essential rural nature of the country (Gueslin, 1992). The influence of the French state was overwhelming. This does not only refer to the vast public channels for deposit collection provided by public savings banks and postal savings banks, but also to the numerous restrictions French banks were subject to before World War II.

In Germany, up to the second half of the 19th century, Frankfurt was the most important financial centre (Wandel, 1998). Its success owed a great deal to names such as Bethman and Rothschild. It was Meyer Amschel Rothschild (1744-1812) who established the famous dynasty there. The earliest source mentioning the Frankfurt stock exchange dates from 1605. But, the place lost its vigour in the Thirty Years' War from which it recovered only in the 18th century when bond issuing operations, together with commodity trade, formed the basis for exchange trading on a larger scale. One feature of the bond issuing process in Frankfurt was the strong cooperation between banks and the exchange - a characteristic marking the relation between the two up to these days:

German exchanges had two different roots. One was the big trade fairs in towns like Nuremberg and Augsburg, the other the guilds and merchant cooperatives which were found in Frankfurt, but also in Cologne, Hamburg and Berlin. Those differences had important implications for the competitiveness of German financial centres in the 19th and 20th centuries: At the beginning of the 19th century, modern exchanges in Europe like those in London, Paris, the Netherlands and - to a certain extent - Vienna were tightly organised and regulated, either by the state or by private initiative in reaction to earlier speculative excesses and breakdowns. Access was restricted to professional traders with a specialisation and separation according to functions. Those exchanges showed a high sophistication and a strongly growing funds business and in particular forward business. In contrast, the major trading places in Germany in the 19th century were successors of the autonomous merchant gatherings and guilds and cooperatives of the late Middle Ages and early modern history. Their most important characteristic was free access. Funds and forward dealings were comparably underdeveloped. There was no excessive speculation and therefore no need for respective regulation. The exchanges served above all as information exchanges which offered an opportunity to deal in commodities, foreign currencies and assets besides (Merkt, 1997).

The first speculative boom in Germany was in railway stocks in the middle of the 19th century. This was accompanied by a change in hierarchy among the German exchanges. While in the 1840s, Frankfurt's supremacy in a bond-dominated market was still unchallenged, with the boom in railway stocks and the crisis of 1848 the Berlin exchange took the lead. In the following years, Frankfurt, confirmed by the events, maintained its hesitant attitude towards industrial shares concentrating on the bond business which, after a while, brought it into the reputation of backwardness. When the Prussian government decided to make Berlin the new capital, the town soon became the centre of economic and financial activity in Germany, a situation which prevailed until the end of World War II.

After 1945, Germany was split up into occupied zones and the financial system was rebuilt in a largely uncoordinated way along the lines of its former decentralised regional nature. Berlin lost its dominance, above all, because of its geographic position in the Soviet zone. Frankfurt once again took the lead - this time, at first, together with Düsseldorf (Merkt, 1997). However, Frankfurt's future role was decided when the American and British occupation authorities chose the head office of the Bank deutscher Länder, the predecessor of the German Bundesbank, to be located there.

Internationally, London's role as a financial centre was in steady decline since 1914. The main reason was the shrinking influence of the United Kingdom in the global economy and the economic and political rise of the United States which already began at the end of the 19th century. However, despite the shift in economic leadership, London's dominant position as a financial centre remained undisputed for about at least another twenty years. New York banks continued to depend on the City of London for their international business, the rules and regulations prevailing there stayed the same as overseas and by the end of the 19th century the British gold standard was adopted almost worldwide. One explanation given for London's ongoing predominance was the role played by the British Empire. Another was the willingness of the biggest economy at that time, the United States, to go on considering London as its central financial place. More than one hundred years after becoming independent, the US obviously felt no need to change old habits that appeared well-established, comfortable, inexpensive and reliable. A third argument is that Britain managed to maintain its competitiveness in at least two areas which were of special importance for its functioning as a world banker: It showed an increase in a whole range of services from shipping over insurance to finance even at a time when its industrial performance was in decline and its surpluses from overseas investments were still growing with remarkable regularity (Merkt, 1997).

The First World War brought two significant changes. One concerned Britain's international financial position which was considerably weakened by the need of war financing and by foreign assets lost or confiscated. The other, even more dramatic, was a widening trade deficit which not only reflected the effects of the war but also long-term structural changes. As a result, New York took the lead, and it maintained this position up to the stock market crash of 1929 and the following worldwide economic crisis when London - although temporarily - regained its supremacy. World War II brought another setback for London, and New York became again the most important international financial centre, a position it held until the US introduced the Interest Equalization Tax in 1963. The resulting emergence of the euromarket meant the last turning point so far in the history of international financial centres (Hamilton, 1986). Since then, London was, and is, the Number One, not only in Europe but worldwide.

Despite, or perhaps because of, its competitive advantages, during the 1960s and 1970s, the City of London remained a remarkably conservative financial place slowly reacting to new challenges. This changed with the arrival of highly competitive American and Japanese banks in the 1980s, and with the deregulation of the London Stock Exchange, the so-called Big Bang. As often complained, this was altering the nature of the City itself, its main actors, habits and rules. Before 1914, there had been thirty foreign banks in London. In the 1970s, there were already 183. Between 1914 and the first half of the 1980s their number grew fourteen-fold up to 434 in 1985 (Hall, 1998). The development was accompanied by a spatial extension of the City economy with the transformation of the Docklands in order to create new office space one of the most disputed outcomes. The City, which over centuries had been the "square mile", a region with more or less unchanged boundaries, was losing shape. Between 1985 and 1989 alone, 2.6 million square feet of office space were completed in the Docklands, another 16.5 million square feet in the City itself (Hall, 1998), an expansion which is still going on.

In part, these developments reflect a reaction to the new challenges the City faces since the late 1980s. With the introduction of a common currency in Europe competition among financial centres has stiffened and for the first time since the late 1960s London's position is threatened again. This time, the rivals do not come from overseas but from within Europe, from Paris and Frankfurt with the latter having the undeniable advantage of hosting the European Central Bank.

These days, the discussion of the advantages and disadvantages of the various places is not restricted to economic arguments. Cities compete by building infrastructure and enhancing the amenities of their Central Business District (CBD) as well as by promoting lavish cultural programs. But, whether the huge sums invested into these efforts really make a difference, a useful contribution in the struggle for investments and employment in an industry which becomes more and more crucial for the cities' long-term economic survival, is an open question. Part of the answer lies in the way in which financial institutions and the people heading them, and working for them, conceive the place.


International financial centres are located mostly in so-called world cities. Those are places which, according to a common definition, meet at least four criteria (Friedman 1995). Firstly, they are centres through which economically relevant variables such as money, workers, commodities and information flow, with their influence stretching far beyond their boundaries to places and regions worldwide. Secondly, in forming an international network those cities organise a space of global accumulation, defined by a set of interdependent regional and national economies which encompasses only a small fraction of the earth's surface and population but a large share of the world's total production and consumption. Thirdly, world cities are large, urbanised regions defined by dense patterns of interaction rather than by political-administrative boundaries. Fourthly, they serve as the commanding nodes of the global system which can be arranged into a spatial hierarchy according to their economic power - at least as far as the top is concerned where New York, London and Tokyo represent the undisputed command and control centres of the global economy.

For various reasons, once established, financial institutions located in world cities cannot easily change places. They depend on a vast net of suppliers of so-called producer services which, among others, include advertising, accounting, management consulting and legal services (Sassen 1991). Beside, there is a dependence on the built environment which is a rather new phenomenon. In London, for instance, in former times developers used to put up offices for financial institutions, which, in principle, were able to move easily in and out, on a speculative basis. Now banks' requirements have become too specialized for this to work and for the major houses worldwide the trend is to design their own buildings (Eade, 1998). For example, financial institutions need large trading floors - open spaces of up to 60,000 sq ft (Cohen 2001) - and, depending on a certain technology to handle the huge volume of transactions traded every day, require adequate space for cables and outlets as well as a pool of technical personnel to operate and repair equipment and upgrade information and telecommunications systems (Fainstein, 1994). In addition, the industry has an ongoing need for personal, face-to-face contacts. The core of financial activities can be described as "information, expertise, contacts" (Thrift, 1994: 334) creating coordination and trust. In general, all of these require spatial proximity although the advantages vary in their intensity from product to product. For small securities trades, interbank payments or standardised foreign exchange dealing they are minuscule. For mergers and acquisitions, the management of investors' portfolios or the lead management of syndicates they are high.

Besides, there is still another argument for spatial concentration which is identification with a place in its broadest sense. In general, people living and working in world cities like New York, London and Tokyo are aware of their special status. They may complain about the disadvantages such as air pollution and traffic jams, but they also enjoy the advantages. Some of these are in part imaginary by nature, consisting of an experience of a certain way of life, the feeling to be part of a special culture, which differs from those elsewhere. This holds in particular for the financial community located in those cities, which has become a wholly distinct class breeding its own rules, norms, rituals and behaviour patterns. Their view is largely determined by the way they see themselves and their industry and by the way they interact. Financial places in this sense are places where individuals are bound together by a common "market culture" which is differing from centre to centre and not easily given up in exchange for another environment.

How does market culture affect a financial place's success and what kind of influences are important in this context? To answer this question, the attention will be drawn to a strand of sociological literature around the work of Maurice Halbwachs emphasising the role of collective memory as an explanation for cultural identity.

Nowadays, outside sociology Maurice Halbwachs' work in the sociology of knowledge is widely unknown. One reason is that his most important contribution, Les cadres sociaux de la mémoire (The social frameworks of memory) had not been available in English for many years. Halbwachs' work stands in the tradition of Emile Durkheim in emphasising the social construction of time and the fact that, in addition to historiography and biography, the past is mainly known through symbol and ritualism. His central thesis is that collective memory in establishing cultural identity is laying the foundations for community. Collective memory does not mean that there exists a kind of mystical group mind; it is individuals as group members who remember. It is only that individual memory, as most areas in human experience, is rooted in a social context and structure. "Memory depends on the social environment" (Halbwachs, 1992: 37). Without a social frame of reference - les cadres sociaux - individual memory is not possible.

The past is a social construction which is shaped by the concerns of the present, that is, the beliefs, interests and attitudes prevailing in society or within a group, and there are as many distinctive collective memories as there are groups and institutions in society. Critics have hinted at the fact that, according to this view, in its ultimate consequences there would be no continuity in history altogether. However, one must see that the past is always a compound of persistence and change, of continuity and newness (Coser, 1992: 26). In this framework, individual and group memory are two sides of the same coin. From the point of view of an individual memory is an aggregate resulting from being part of a manifold of group memories. Seen from the view of the group, memory is a matter of distributing a given knowledge that is available inside this group among its members. All remembrances together build an "independent system" whose elements support and determine one another (Assmann, 1999: 37).

In order to become anchored in collective memory, truths have to relate to events, places or persons. On the other hand, to become part of the collective memory, events have to be enriched by a sense of meaning. At the very moment of its entry into memory each personality or historical fact is transposed into a lesson, an idea or a symbol getting meaning and becoming an element of the society's system of ideas. The interplay of ideas and experiences forms what Halbwachs called "memory images". Their manifestation is determined by three characteristics, a specific reference to time and place, reference to a group and the process of reconstructing the past itself (Assmann, 1999):

Memory images refer to a particular time and place, although this need not be a historic time or a geographic place. Collective memory depends on common points of orientation or landmarks. For example, calendar holidays reflect a collectively experienced time marking either the ecclesiastical year, the farmers' year, the civil or the military year, depending on the group. Respective anchors for the collective memory can be found in space as well: the house for the family, the village for the rural population, towns for urban crowds, the City for the financial community. Space also includes the material things by which the individual is surrounded, his "entourage matériel" (Assmann, 1999). These things are socially determined as well. Their price, value and relevance as a status symbol are social facts (Appadurai 1988).

The second characteristic is group reference. Collective memory is bound to the group. Those sharing it and participating in its construction are definitely part of the group. For example, "social classes are made of people who are distinguished from each other by the kind of consideration that they display toward one another and that others display toward them" (Halbwachs, 1992: 179). The group which constitutes a collective memory preserves its past above all under two aspects: distinctiveness and persistence. The image it is constructing of itself stresses the distinct characteristics of insiders and outsiders but plays down differences inside the group. In addition, it is building a consciousness of its identity in time by selecting the remembered facts with regard to continuity and resemblance. The third characteristic of the manifestations of memory images is reconstructivity, the very fact that the own past can be, and constantly is, reconstructed by the group. There are no pure "facts" of remembrance in the world. The past is only preserved in memory in the form, and to the extent, that a group in its particular epoch, and within its particular frame of reference, is able to recover it.

The literature on collective memory and cultural identity distinguishes between historical or cultural and autobiographical memory. The latter refers to events that were experienced personally. Autobiographical memory is always rooted in other people. It tends to fade with time unless it is periodically reinforced and reconstructed through contact with persons who shared the same experiences. In contrast, in historical memory events are not directly remembered. It has to be kept alive by cultural mnemonics. From the literature several elements of construction of collective memory and cultural identity can be derived. Those of special interest here are myths, rites, symbols and media. Their role for the success or failure of a financial place will be analysed in detail. In addition, a fifth element will be introduced, called patterns, which needs further explanation:

Patterns refers to a spatial concept and to a special "logic of space", of the social functions of buildings, places and cities in general, and of the built environment in financial places in particular. The idea is that, for example, in addition to serving as bodily protection buildings "operate socially in two ways: they constitute the social organisation of every day life as the spatial configurations of space in which we live and move, and represent social organisation as physical configurations of forms and elements that we see." (Hillier, 1996) It is this concept of "configuration", stressing the importance of relations taking into account other relations and of "how things are put together", that influences collective memory and thereby contributes to constructing cultural identity.

At first sight, there is a spatial hierarchy of buildings, places and cities which becomes increasingly fuzzy at a closer look at their functional role. As Hillier puts it: Cities are the largest and most complex artefacts of humankind. In general, their physical and spatial structure is the outcome of long-term small incremental changes whose accumulation over time can be regarded as a quasi-organic process producing complex patterns. The incremental changes are the result of social and economic alterations involving feedback and multiplier effects, and interaction between different scales, which in their interplay lead to a phenomenon known as "emergence", the effect that the way parts are put together to form the whole is more important for the cultural identity connected with a place than any of the parts taken in isolation. One result is that in their social function the hierarchy between buildings, places and cities no longer holds. Places can no longer be considered as local things. "Places do not make cities. It is cities that make places" (Hillier, 1996: 151).

How do spaces and places affect collective memory? One key factor here is the relation between movement within and through the city and its various parts on all scales, on the one hand, and the structure of the urban grid, on the other. As research in this field shows, this relation is a reciprocal one and there are multiplier effects on both arising from patterns of land use and building densities which, in turn, are themselves influenced by the space-movement relation responsible for the characteristic structures of cities. Socio-economic forces shape the city in producing collectively defined spaces and patterns which, in turn, determine how the city is conceived. While some of the movements in a city can be explained by certain activities or the presence of some attractors or magnets, others are determined by the structure of the urban grid itself. There is a kind of "natural geometry" (Hillier) to what people do in space.

How does spatial experience link to a place's acceptance or "success"? Part of the answer is intelligibility. An intelligible space structure is one which can be intuitively understood in that it is giving obvious clues to people to where they can go. Another element is accessability on a larger scale. Relations between different scales, between the local and the global in a city's structure have to be intelligible and conceivable as well which, in turn, once again depends on the lines and patterns of the urban grid formed by movement. (Hillier, 1996: 160)

It would lead too far to give a detailed description of the very rich concept of configuration here.3 The question remains why in this analysis space should be attributed such a prominent role treating it as an extra category. In the works on collective memory and cultural identity spaces and places are, above all, seen as symbols. Those can be real or imaginary ones. As Assmann (1999) puts it: "Each group aiming at consolidation tends to create and secure places which represent not only arenas of their various interactions but also symbols of their identity and anchors for their remembrances. Memory needs places .".4 However, this is not the way - at least not the only way - space matters in the context of this paper. Space consciousness has two different meanings here. The following will analyse how places as symbols serve to construct collective memory, but also how spatial patterns, and the traces of the interaction of space and movement in a city, contribute to the formation of cultural identity.


Economists have explored the role of "shared beliefs" as one possible determinant of agglomeration (Ottaviano and Puga, 1998: 719). People choose a certain location just because everyone is expecting this to happen with the result that the outcome will confirm their expectations. However, respective works are restricted to a very limited number of influences such as cost considerations and expectations about future gains. Taking into account cultural phenomena such as myths, symbols, rites, media and patterns in analysing financial centres' competitiveness considerably widens the range of possible explanations for a place's success or failure and deepens the understanding of the underlying processes.

A purely fictitious narrative usually involving supernatural persons, actions, or events, and embodying some popular idea concerning natural or historical phenomena.

At all times, financial markets have lived on myths and created their own myths. Although they have their share of "commemorations and festivities" as well - one only has to think of the G7 summits, the annual meetings of IMF and World Bank or the World Economic Forum in Davos - myths are a constituent element of cultural identity in these markets. Some of them relate to a particular financial centre, others to the profession as such. There are myths of people, places and institutions as well as of qualities and of what is so special about the financial services industry compared to others. Some myths concern daily life, the extraordinary efficiency and flexiblity, mobility and speed with which financial decisions are made, the high degree of information and transparency in the markets, but also traders' greed and willingness to take risks. Others refer to the grand narratives of the profession constantly being retold and re-interpreted by traders and investors as well as the financial press and numerous other observers.

Financial market's myths are populated by all kinds of people. There are fabulously rich clients such as monarchs and rulers, big industrial tycoons and wealthy persons of independent means, who sometimes have become big gamblers and speculators. There are the highly influential financiers which - at least in former times - were said to determine the fate of whole nations. And, there are those hordes of nameless, mostly young people in the trading rooms of financial institutions and corporations all over the world who, as a group, nowadays have become a myth with their greed and energy, their high salaries and spending habits, and among whom, at times, when the odds are against them, some become famous as "rogue traders". There are other named and unnamed heroes and villains, individuals and groups, as well: The "Jews", the "oil sheiks", the "Japanese", the "gnomes of Zurich", the hedge funds in general, and George Soros in particular.

Among the financial places in Europe, in those myths about people London always played a dominant role at the same time reflecting and supporting its position as the leading centre. It was in London where Nathan Rothschild built up the family imperium in the early 19th century winning fame as its "commanding general" although the Rothschilds had bases in Paris, Frankfurt, Vienna and Naples, too (Ferguson, 1999). When Nick Leeson, a "rogue trader", ruined one of the oldest European merchant banks within a couple of months he was from Britain and it was a British bank (Reszat, 1997). When George Soros and his Quantum Fund run their attack on the European Monetary System in September 1992, it was the British pound which was forced out of the system, estabilishing the special aura which is surrounding him since that time - to name only a few examples.

Myths are also etablished around the places themselves. While Paris long had been famous for being the world's cultural metropole which roots mainly in its artists' colonies of the 19th and early 20th centuries London was considered the world capital of finance which, despite its fluctuating factual importance, it managed to hold in many people's views to this day. All financial centres are known to be "world cities" and constantly trying to live up to this claim. Besides, myths also exist about special locations in cities such as Wall Street or Lombard Street. In a sense, "The City" or "The Square Mile" itself is a myth. In fact, it is neither square nor a mile.

Further, there are myths about institutions. For example, the Bundesbank is not simply one central bank among others. It always managed to keep up appearances of being a rule-based kind of monetarist purist, and its seemingly uncompromising attitude gained it an unrivalled credibility in- and outside Europe which added to Frankfurt's reputation as well. Even now that its reign has ended formally, its directorate's members at times have a remarkable influence on market sentiments and moods. But, most important among all myths in and around international financial markets and activities are the grand narratives of the profession, the tales about the South Sea Bubble, Black Friday in 1929, Black Monday (October 19, 1987), the Asian Crisis and many other "Manias, Panics and Crashes"6. They resemble the tales of wars and battles people had fought, and other major events in their lifes, retold again and again establishing and supporting the view that the financial industry, and its main centres of activity, are something special in the world economy.

Something that stands for, represents, or denotes something else (not by exact resemblance, but by vague suggestion, or by some accidental or conventional relation); esp. a material object representing or taken to represent something immaterial or abstract, as a being, idea, quality or condition; a representative or typical figure, sign or token.

Symbols are another key element in the construction of cultural identity in financial markets. Thinking of a material object as a representation of financial power and authority, perhaps the first image that comes to mind is the skyscraper (Zukin, 1992: 197). In general, a skyscraper is a special-purpose office building and, although the office building as such was probably invented in London,7 the skyscraper's role in shaping North American towns in general, and the New York skyline in particular, has largely contributed to the significance it has for the built representation of cities' financial districts in our times. The skyscraper represents the Central Business District (CBD), the heart of the city, and in the big financial centres this is the place where financial activity is concentrated.

The first skyscrapers date back to the mid 1800s when new building technologies such as the steel-frame construction and the elevator, and transportation innovations like the commuter railroad, were developed. They became particularly successful in the New World where places were not restricted by medieval urban form and building types (Ford, 1994). With the growing economic importance of the United States, and the emergence of New York as a world financial centre, the Manhattan skyline became a symbol of capitalism to the world. When competition between the Big Three, New York, London, and Tokyo, in financial services stiffened in the 1980s, in the latter two - as well as in many smaller centres worldwide - skyscrapers became the symbols of the cities' prosperity as well as of the new way they earn their livings. During those years, their urban landscape underwent radical changes. Manufacturing left the cities on a large scale and finance became the dominant sector and often the main focus of city planners in their struggle to attract jobs or not to lose them to other places.8 As a result, financial institutions, planners and developers often joined ranks in shaping the new image of their cities. One of their main instruments was the skyscraper.

Part of the cities' efforts to get a Manhattan-like skyline are image-building campaigns, in parts they reflect the need to offer an attractive infrastructure for the financial community. Among other things, the new skyscrapers have the function "to lift urban identity from the modern to the spectacular" (Zukin, 1992: 196). A comparison of the urban landscape of European financial centres now and ten years ago demonstrates that the skyline as a determinant of financial market competition in Europe is quite a new phenomenon. In the early 1980s none of the big European centres had an accumulation of buildings worth calling a "skyline". Paris, Zurich, Milan and Amsterdam still have none. In course of the developments, architecture has become one element in the increasing competition not only between European financial centres but worldwide. This has two aspects. On the one hand, buildings are regarded as means to establish identity for both corporations and cities. On the other, the tendency to culturally distance themselves from their national context in reaction to the twofold challenges of postmodernism and globalisation made financial centres become more and more uniform in sight:

"... the landscapes of power that are emerging in New York and London are strikingly similar. This is hardly surprising, for redevelopment of the centre in both cities is commissioned and designed by the same worldly superstars, including developers, architects and private-sector financial institutions. Just as skyscrapers have become the sine qua non of place in the global hierarchy of cities, so do US, Japanese and Canadian builders and bankers represent the basis of a global market rank. A city that aims to be a world financial centre makes deals with Olympia & York and Kumagai Gumi (Canadian and Japanese developers), welcomes Citibank and Dai-Ichi Kangyo (a US and a Japanese bank), and transplants Cesar Pelli as well as Skidmore, Owings and Merrill and Kohn Pederson Fox (architects)." (Zukin, 1992: 203 f.)

The focus here is less on symbolising a town's vernacular identity to the world but on constructing the in financial and other circles accepted identity of a "Global City". However, cities do not only compete by planning and re-designing their financial districts. Nowadays, official authorities throw themselves into the construction of museums, city halls, airports and other buildings (Sudjic, 1992). In interaction with the private sector, they search to provide a supply of asthetic variety and cultural amenities aimed at attracting, above all, this class of single-person, dual-income households which make up for a high and growing share of workers in financial and related services. In showing a strong preference for visual consumption those are targeted by a whole range of cultural producers these days "including artists, actors, museum curators, gourmet food entrepreneurs and a standing army of waiters, designers and boutique clerks" (Zukin, 1992: 200). Their functions in the postmodern global society are not only real ones, but, for some groups such as the financial community the products and services they sell, and the environment they create, also serve as symbols permeating collective memory thereby contributing to the construction of a market culture.

The authorities' motives are often met with critical remarks:

"For policy-makers, encouragement of real estate development seems to offer a way of dealing with otherwise intractable economic and social problems. Governments have promoted physical change with the expectations that better-looking cities are also better cities ... and that property development equals economic development. The quandary for local political officials is that they must depend on the private sector to finance most economic expansion, and that they have only very limited tools for attracting expansion to their jurisdictions. Their heavy reliance on the property sector partly results from their greater ability to influence it than other industries." (Fainstein, 1994: 2)

At times, planners' aspirations reach far beyond that. One example is France during the 1980s when the French government was said not only to aim at creating Paris's image as a global city but as a capital of Europe. For example, President Mitterand allegedly considered it the duty of the French state to build museums, not only for the enlightment of its citizens, but also and above all as part of its undeclared mission to make Paris the unchallenged centre of European culture (Sudjic, 1992: 136). The plans meant city planning at large as is demonstrated by the axis built under Mitterand's presidency which defines the heart of Paris, running from the courtyard of the Louvre with its glass pyramid through the Tuileries, across the Place d'Etoile, along the Champs Elysées and through l'Arc de Triomphe culminating at La Défense with its monumental arch.

In France, city planning has a long tradition. Even under changing political administration the French government never lost its enthusiasm for directly orchestrating the town's urban re-design as in the days of Haussmann's transformation of Paris in the 19th century. The reason why this aspect is emphasised here is that, by some observers, it is put in a wider context explaining it as part of a Rhine-Alpine-Scandinavian tradition of "managed capitalism" - traced back even to the system of urban administration in Rome two millenia ago - which stands in strong contrast to the Anglo-American laissez-faire model (Hall, 1998: Chapter 22). Frankfurt which has been no less ambitious than Paris at least in its program of cultural building9 is regarded as to stand in the same tradition.

1) A formal procedure or act in a religious or other solemn observance. 2) The general or usual custom, habit or practice of a country, people, class of persons etc.; now spec. in religion or worship.

The financial services sector in European cities differs from other parts of society not only by its myths and symbols but also by the variety of rites it has established over the years. Financial markets, although considered as a global phenomenon, more than others depend on highly localised cultures of work. More than other sectors in the economy they rely on mutual trust. Personal appearance, presentation and image matter both in face-to-face contacts with clients and investors and in competition with other traders. In this business, success depends on performances (Crang, 1998: 156).

Rites are a vital part of these performances. Just like Antwerp and Amsterdam determined the customs and practices in European finance in the Middle Ages, in recent history, London became dominant. But, "the rules of the game" did not hold unchanged. Since World War II, there have been at least two distinct eras. The first is the one of "the old gentlemanly discourse" (Thrift, 1994: 350) as it was, for example, represented by a dress code based on dark suits, life in quiet, wood-paneled dining rooms and the ritualised operation of the London Stock Exchange. Until the Big Bang of 1986 the City of London was a highly stratified culture with licensed traders relying on mutual trust - "a dealer's word is his bond" (Crang, 1998: 155) - and the stock exchange resembling more a club than a global market. It was characterised by dense social networks and recruitments of 'old boys' from private schools and Oxbridge. Further, it was a male society. The first female stockbrokers were admitted in 1973. With the arrival of foreign financial institutions in the 1980s market culture became a mixture of old English and new, largely, American rites. The more "cut-throat" habits prevailing in New York dealing rooms now began to show up in London as well. Part of this culture is dealers' aggressive masculinity which, for example, is demonstrated by the fact that in many market segments they are explicitly encouraged to demonstrate their willingness to take risks and "move for the kill" (Crang, 1998).

The entrance of new competitors from other countries in Europe and Asia, a growing female workforce and an increasing role of virtual business are changing this culture once again. One result is the - albeit slowly - vanishing of old, and the emergence of new, rites as, for example, a rising public awareness of sexual harrassment in financial institutions demonstrates. Another is the fact that with increasing importance of electronic trades, and a shrinking share of face-to-face contacts in the market, the role of rites for the construction of cultural identity is in overall decline. As a result, myths and symbols become ever more important for the financial community's collective memory. The same holds for the role of media.

Media 1) Newspapers, radio, television, etc., collectively, as vehicles of mass communication.

Since Nathan Mayer Rothschild established his first private courier service in the early 19th century10 media have played an overwhelming role not only for the dissemination of financial news but also for the construction of cultural identity in the market. In Europe, at first sight, London is in a privileged position. The City is the centre of the global financial press - Euromoney, The Banker, The Economist and the Financial Times are all located there. The Financial Times, today the by far most authoritative financial newspaper which probably has influenced European views of business and culture in international finance in general, and in the City in particular, more than any of its competitors, has a long tradition. Founded in the 19th century, it started a European edition in 1979, with a New York edition following in 1985. By 1993, 40 per cent of the paper's circulation was abroad (Thrift, 1994: 350). Since March 2000, there is a German-language edition. However, there are other, more important aspects that count.

Market culture is influenced by all kind of media and their presentation of spaces and places. In general, place as symbol, the city both in its real and imaginary form and modern urban experience - of which financial activities and markets are an important part - is a frequently exploited theme in literature and the arts, film and television. They do not simply portray or describe a city or a market place but, in a sense construct it in different ways allowing to gather a feeling for life in a "modern" or "postmodern" society. Often cited examples of those "literary landscapes" are T.S. Eliot's The Waste Land, John Dos Passos's Manhattan Transfer, but also for the imaginary city11 Italo Calvino's Le Città Invisible (the invisible city), Georges Perec's Espèces d'Espaces (species of spaces) or Jonathan Raban's Soft City. A recent example from the arts is the exhibition of the Museum of Modern Art, New York (MOMA) in 2000 on ModernStarts: People, Places, and Things (Elderfield et al., 2000) which included an exploration of particular parts of space, represented and real, at the beginnings of modernism In the film industry no other single work has probably influenced ideas of the modern city as much as Fritz Lang's Metropolis produced in 1926.

Nowadays, spatial phenomena are mostly understood and interpreted by the impression gained from mass media. They strongly influence the subjective human experience of a place and the affective and emotional relationship people develop to it. "Most people's knowledge of most places comes through media of various sorts, so that for most people the representation comes before the 'reality'" (Crang, 1998: 44) This holds for actors in financial markets as well. Knowing to live in a "World City" with all its amenities does not necessarily mean that its citizens constantly use the cultural supply offered, that they visit its touristic sites or enjoy shopping in its malls and eat out in fancy restaurants. For them the way the place is described and "constructed" in the media, and thus possibly seen by others, may shape their view of it and contribute to make it worth living there. People's image of Paris and London is probably as much influenced by the works of Victor Hugo and Charles Dickens as by modern fiction and mysteries, press and television reports. In this world, a city which is not constantly present in the media has the serious disadvantage not to matter in people's mind. This may, at least in parts, explain the efforts invested in projects such as the Mission 2000 en France and London's Green Millenium Projects which competed for attracting the attention of observers beyond national boundaries.

With respect to the competitiveness of financial places in Europe, two aspects are worth mentioning in this context. First, how many books, articles, songs, films and other things have been written and produced about, or playing in, London and Paris over the centuries - and which of both cities is the dominant here - is probably an open question. But, there are few doubts that, in contrast, for example, to Frankfurt or Zurich, these two were and are among those attracting the most attention in Europe. Second, in the same way in which culture and the arts matter for Paris, media focus on London often explicitly or implicitly refers to the City's financial expertise thereby emphasising the importance of this facet of life in Britain and its relevance for the world. All this, once again, adds to the cultural identity of London as the leading financial place constantly reminding people of its eminence.

1) An arrangement or order of things or activity in abstract senses; order or form discernible in things, actions, ideas, situations, etc.

While media have an indirect effect on cultural identity and the relation between people and financial and other places, the built environment, and the spatial order given by the interplay of movement and urban structure, exert a direct - although not always consciously felt - influence on this relation. In Europe, despite all their variety, towns in their development in history, have several elements in common. Firstly, there is a functional arrangement of public and private buildings. Together they form a complex organism whose different roles are highly intelligible. Streets and places build an interconnected public space which is individually shaped and with which the community identifies. Streets vary in their fullfilment of collective tasks offering room for pedestrians and transport facilities to move and places to linger. As a rule, buildings are multistoried and open into this complex space system. In a sense, their facades represent the outer walls of the public space. In such a system, the individual feels obliged to contribute to the design of this space. The facade of the house becomes "a gift to the street" (Benevolo, 1993: 61).

A second common element of European towns which emerged in the Middle Ages is spatial concentration. The town covers as few space as possible with the centre having the strongest attraction. Here are the highest buildings. While in earlier times, the centre's contours were dominated by churches and public buildings, these days, they are often characterised by the skyscrapers of the Central Business District. This stands in strong contrast to the historical experiences in other continents. It differs markedly from the chequerboard pattern of early American cities as well as, for example, from the city landscape of "hard shells and soft yolks" in Japan (Shelton, 1999: 11) where traditionally lower buildings and relatively quiet streets lie between high buildings on busy thoroughfares over a wide area. The observation that the old centralised city in Europe has changed into a more diffused one is a very recent phenomenon.

One way to look at the effects the built environment has on people's collective memory in creating patterns of movement is to analyse a town's or a (financial) district's street network and the way in which streets and places are interconnected.12 The basic idea is that under normal circumstances - which refers, above all, to the homogeneity of built forms - the spatial configuration of the urban grid is in itself a consistent factor in determining movement flows. Drawing an axial map of a big city like London, even taking into account only the least set, the "fewest and longest", of straight lines (Hillier, 2000), normally will give no clues to an underlying order whatsoever. But, analysing the interrelationship between streets and places in greater detail with more sophisticated means may unveil how people make use of the existing space and how they move within and through cities making it possible to explain why one area, such as a town's financial district, becomes a successful city-within-a-city while another will not.13 In principle, there are two explanations. One is that the area under consideration itself has an acceptable social infrastructure - schools, churches, playgrounds and the like - which is rendering its residential housing most suitable for people. Another is that, although it may not contain any residential elements, as is characteristic for so many towns' financial districts these days, it may be well connected with the surrounding space and the community around it.

The key word is integration. In general, there are different groups of space users in a city - travellers, residents, office workers, tourists and many others - which use space in different ways and on different scales moving in and through a city on largely separate routes. Highly integrated areas bring them together and, thus, for each of those, in a sense, generate "more by-product" (Hillier, 1996: 169). These areas tend to have higher intensities of development accompanied by multiplier effects which, in turn, attract other activities and uses. What matters in this context is accessibility and intelligibility. For example, the City of London has often been criticised as "haphazard" and "labyrinthian". A closer look at the square mile reveals that it would not appear so to a person moving at ground level (Hillier (1996: 156 ff.). There are always lines linking spaces usually showing where you have come from as well as where you might go to reach your destination, which is quite the opposite of a labyrinth. Another effect becomes obvious in studying an old map of the City. Entering one of the old City gates and proceeding, for example, by following a simple rule which says: always take the longest line available (without going back on yourself), one will very soon quasi-automatically end up at a line from which the Bank interchange, the old City centre, can be seen. In this system, a stranger is led right to the heart of the city.14 Among the European cities London was probably unique in its centre not being the seat of some worldly political or religious power but of money and finance.

With respect to integration and accessibility, these days, the three leading financial places in Europe, London, Paris and Frankfurt, all have a similar problem, although on different scales. All have newly established financial sites which are not located in the traditional centre but outside. In the beginning, this appeared to be one of the main impediments for the development of the Docklands. Now, Canary Wharf stresses the point that it is only "12 minutes from Bank tube station and 10 minutes from London City airport". Planners and developers have become well aware of the fact that transport is all that matters once a financial centre gets decentralised and diffuse. In Paris, apparently, a similar solution has been found for La Défense which is linked to three high-speed rail lines. Frankfurt differs in that its "surrounding space" which needs to be taken into account for an analysis of its accessibility is much larger. Although banks are located near the traditional city centre, many workers in the financial district are commuting between Frankfurt and London or other foreign places for the weekends. Identification with the city is low. Many traders are not even located there at all but use new technologies and Frankfurt's trading infrastructure for doing business in Frankfurt from afar. This is a serious obstacle to the place's competitiveness which, so far, could not be overcome.


Does the Frankfurt example mean that official efforts to enhance a financial place's attractiveness are doomed to failure? The analysis of the key elements of cultural identity in financial markets gives no clear answer. There are two kinds of lessons to be learned from history. One emphasises the importance of "historic accident". In the past, a big storm, or a war could easily change the course of events and condemn a financial centre to future meaninglessness and oblivion. But another, which is in obvious contradiction to the first, is path dependence and persistence. Obviously, a financial place which is once established as a centre to the region or worldwide tends to keep this status for a long time even if circumstances turn less favourable.

Maurice Halbwachs and his work on collective memory may offer an explanation for this observation which concerns the role of time in the construction of social facts. Many influences on the attractiveness of a financial centre are long-term, perpetuating themselves through rites, myths and other elements of the construction of cultural identity. This holds for policies aimed at a place's international position, too. When, nowadays, in their reliance on the re-design of the built environment authorities in London, Paris and Frankfurt appeal to the "World City" myth and the symbolic content of modern skyscrapers and other official buildings they have to be aware that most likely the effects of these policies are not immediate. To a large extent they depend not only on whether the new symbols are understood and accepted as such but on whether the sites' integration and accessibility induces patterns of movements which over time shape people's collective memory and identification with a place.


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* Beate Reszat, Hamburg Institute of International Economics, Neuer Jungfernstieg 21, D-20347 Hamburg, e-mail:

1. In the literature, this topic is discussed in various disciplines such as economics (Dermine 1996), sociology (Sassen 1991, 1999) and geography (Leyshon and Thrift 1997; Martin 1999).

2. Cited from Fischer (1998: 29).

3. The reader is refered to the explanations and empirical explorations in Hillier (1996, 2000).

4. Assmann (1999: 39), translation by the author.

5. All following definitions are taken from The Oxford English Dictionary (1989).

6. This is the title of a book by Kindleberger (1996) which since its first edition in 1978 in a sense has become a record of the great narratives of the industry.

7. Some have argued that London developed a kind of CBD - with houses built specifically for businesses and merchants living elsewhere and commuting to the business district - as early as around 1600. See Ford (1994: 16).

8. For example, between 1981 and 1984, London lost 97,000 jobs in manufacturing and gained 45,000 in financial services (Sudjic, 1992: 114).

9. Noller (1999: 129 ff.) gives a detailed description of Frankfurt's administratively prescribed "world-city culture" and its consequences.

10. It was a myth that he made a fortune from private information of the battle of Waterloo. Compare Kynaston (1994).

11. "The country of the mind" as Kerrigan (1998) calls it.

12. The following relies heavily on Hillier (2000) and Stonor (1998).

13. This is what Space Syntax is about, an analytical method developed to identify areas which lend themselves naturally to becoming centres of commercial and residential activity and thereby points of attraction for the financial community and any other businesses. See for the following in greater detail Hillier (1996).

14. Actually, in former times, this was a highly symbolic place, usually regarded as synonymous to the "Heart of the Empire", as a painting of the site by Niels M. Lund with the same title shows. And, in a sense, it still is a symbolic place. In Britain the painting became widely known in course of a series of architectural controversies surrounding the redevelopment of the site in the 1980s. See Black (2000) and the references given there.

Edited and posted on the web on 20th August 2002