The Netherlands as seen by Parisian chroniclers

In its 4 April 1863 issue, the Gazette, a newspaper published in Paris which specialised in commercial and financial information, broke the news of the founding of the Nederlandsche Credit- en Deposito Bank, sketching an enthusiastic portrait.

If there is one country in the world which has practical knowhow when it comes to commercial and financial business, it is certainly the Netherlands. To all appearances such a small country, the Netherlands is nevertheless one of the most extensive stores of capital in Europe. Is this not the country where state funds have attained the highest levels of capitalisation? Has not the Netherlands been for fifty years the only European market place where, so to speak, immense Russia has been quenching her thirst for loans? Has not Holland been the great industrial and financial driver behind Belgium, and is not it a king of the Netherlands (a strange fact which is worth pointing out) to whom is attributed the writing of the statutes of the Société Générale de Belgique? Founded many years before the political separation of the Low Counties into two separate kingdoms, this financial institution has seen its dividends and fields of activity

The Dutch securities market up to 1860

The beginning of the securities markets dates from the establishment of the Verenigde Oost-Indische Compagnie (Dutch East India Company) in 1602. The issue of shares in the amount of 6.4 million guilders excited a great deal of interest and a highly active market in these shares soon developed in Amsterdam. At this time, the system of settlement and delivery was complicated by the fact that updates to the names on the share register were carried out only a few times a year. This gave rise to a secondary clearing market for purchase and sales orders, and opened the way to speculative trading in what we would today call options and derivatives. The market grew and expanded to cover an extensive variety of instruments issued by companies and local authorities. Then the first shares of British companies came on to the market, helping to develop a market which the merchant population found increasingly appealing, especially as interest rates were rather low.

During the second half of the 18th century the boom in the market continued with the placement of debt securities issued in guilders2 by foreign sovereign borrowers and governments. Amsterdam thus became the centre of the international capital markets.

But while Dutch merchant bankers had been pioneers and innovators in financial techniques, it was in London that the real development of the profession was taking place, relegating Amsterdam financiers to a secondary role. Several merchant banking houses disappeared following the financial crises of 1763 and 1772-1773 or as a result of the French occupation of 1795 -1813.

Up until 1860, there were still very few foreign bond issues in the Netherlands, but this did not mean that Dutch investors had lost interest in this type of investment. At that time

2. Guilder is the English translation of the Dutch gulden (a word which comes from Old Dutch golden); the guilder was originally a gold coin, hence the name. The name gulden is actually interchangeable with guilder .

This chapter is a summary of an article written by Piet Geljon and Ton de Graaf, entitled Investment Banking in the 19th and 20th centuries, the Dutch way .

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