ANNEX IV

The Dutch securities market in the 18th century

During the seventeenth century commerce and finance were the twin pillars of the Dutch Republic, nowadays known as the Kingdom of the Netherlands, on which its political power and economic primacy in the world were based. The vast colonial empire in Asia, Africa and the Americas, the knowhow of its merchants and the navigational skills of the merchant marine made the port city of Amsterdam the world centre of commerce and finance. The creation in 1602 of the Vereenigde Oost Indische Compagnie (the Dutch East India Company), widely known as the VOC, which was the world s first limited company with tradeable shares, followed by the establishment of the Amsterdamsche Wisselbank or Bank of Amsterdam in 1609 and the Vereenigde West Indische Company (WIC) in 1621 underlined this dynamism. It also gave the wealthier classes the chance to build up surplus capital, which then sought investment opportunities. On the Amsterdam Bourse, which was founded in 1611, one could buy and sell shares in the VOC and WIC, plus the less speculative bonds issued by cities, provinces or the government, and all sorts of commodities besides. Around 1650 some merchants began to get involved in financial activities in order to facilitate trade in their products and the settlement of the consequent international financial transactions. Over the years this led to a new activity whereby these merchant bankers acted as underwriters for loans to foreign states, which were then also traded on the Amsterdam Exchange.

After the disastrous wars and economic crises of the eighteenth century, the Dutch Republic had lost its predominant position but remained a wealthy capitalist nation. In the course of this century a typical portfolio of securities was invested internationally. Certificates issued by British and other foreign sovereign debtors, plus in 1782 the first bonds from the new United States of America, were avidly purchased. Shares in the Bank of England, the East India Company and the South Sea Company were also widely traded. This was also the period in which the first investment trusts were created. Around 1750 the Plantagenegociaties were introduced. These were represented by the tradeable certificates of packages of bundled mortgage loans, which had been granted to planters

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