Cygne Noir

I've always been interested in the performance and basic functioning of financial markets during times of extreme systemic stress: man-made or natural disasters, hyperinflation, revolution, and war. Lately I've been reading about what happened to France's stock market during the Nazi occupation. Here's a good paper on this. It explores the conflict between Nazi hatred of financial speculation and the pragmatic need to finance the war. It also shows how the Paris bourse and its employees were subject to aryanization. And it explains why stock prices didn't react to the occupation in the way one might expect. Excerpts:

[F]or Nazis, trading securities was basically not acceptable. Indeed, the international connections created by the trade and the notion of speculation attached to stock exchanges were despised by the Nazi officials. As such the stock exchanges had been an important target of Nazi propaganda before 1933. However, and despite this animosity, when the Nazis came to power they did not suppress all the stock exchanges even though they did reduce their number from 21 to 9.

In occupied countries, the contradictory feelings towards stock exchange were also observed. The reopening of the stock exchanges quickly led to vivid debates and, depending on the country, would occur with quite large time differences. In fact, and even though a large fraction of the Nazis loathed them, stock exchanges provided a useful and powerful tool to plunder the occupied nations.

Eventually, the Paris bourse was allowed to resume its activity on October 14, 1940 albeit under very strict rules. Opening hours were limited and access to the bourse became heavily restricted. Out of the 6000 persons who were working there before the war, only 900 regained access. Jews were explicitly forbidden to enter the stock exchange whereas a report issued by the French Ministry of Finance described the measures set into place to aryanize the bourse.

For those interested in this area, the full paper is here.