Boom in D

At a bustling construction site in the West German city of Duesseldorf last week, the final steel girders were being lowered into place for an important new building: Germany's biggest and most modern stock exchange. When it is formally opened next summer, the city's brokers and traders will have a 13-story, $1,500,000 granite-and-glass headquarters with a trading floor almost half the size of a football field, a modern ticker-tape system, offices and exhibition rooms and a 100-car parking garage. Duesseldorf's new Stock Exchange will symbolize the resurgence of West Germany's securities market, long one of the weakest links in the nation's booming economy.

Taxes & Dividends. Before World War II, Germany had a central stock exchange in Berlin. Now there are eight independent regional exchanges--in Duesseldorf, Frankfurt, Munich, Hamburg, Berlin, Stuttgart, Hanover and Bremen--which traded $1.5 billion worth of stocks and bonds last year v. only $200 million in 1951. Twice since 1948 Diuesseldorf's stock and bond traders have been forced to move into bigger quarters because trading has grown so big.

What makes Duesseldorf the nation's No. 1 securities market is partly its position as capital of West Germany's biggest and most prosperous state, ringed by expanding coal and steel industries in the Rhine-Ruhr area. But mainly Duesseldorf--and its sister exchanges--owe the new boom to the insistent demands of West Germany's industry for new expansion capital.

As late as 1954, trading was largely limited to bonds; now stocks are starting to take over the market. Last year the German government passed a new tax law cutting corporate taxes by 25%, thus making dividend-paying stocks a more attractive method of corporate financing. In short order, 100 big German firms issued some $300 million worth of new stock issues, more than during the entire six-year period from 1949 to 1955, pushed dividend rates as high as 7.2% compared with only 2.9% in 1953. In the scramble to buy, West Germany's stock average of 17 industrial groups shot from 87 in mid-1953 to a high of 215 in 1955, with some individual stocks selling for as much as $400 a share.

Interest at 8%. To keep its new market--and overall economy--from ballooning too far too fast, West Germany has tightened credit. As a result, industrial stock averages have slipped to 181. However, the demand for new capital is so great that eleven big firms, led by the Robert Bosch electrical company, recently went into the market with $109.5 million worth of bonds and pegged them at an 8% interest rate to tempt investors, v. about 4% for stocks. By last week not only had the bonds been snapped up, but exchange officials predicted that other securities such as municipal bonds, government bonds and stocks, which slipped lower in the first rush to buy the 8% bonds, would also be on their way up again as increasing numbers of investors hurried into the market.

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