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Stock market history / Historical milestones / Amsterdam, 1602

Amsterdam, 1602

The late 16th century saw fierce competition among Europeans for supremacy in sea trade with Asia. In 1602, Dutch companies united to establish the Dutch East India Company (Vereenigde Oost-Indische Compagnie or VOC), a company with unrivalled equity capital (6.5 million guilders, the equivalent of 64 tons of gold at the time!) and with a structure resembling our modern-day joint-stock companies. It issued shares listed and traded on the Amsterdam Stock Exchange, a revolution in those days. Prosperous and influential, in the two centuries of its existence it paid out 1,600% in dividends.

Le prêteur et sa femmeLe prêteur et sa femme
Le prêteur et sa femme (1514), Quentin Metsys (Louvain 1465/66 – Anvers 1530)
Musées Royaux des Beaux-Arts de Belgique, Brussels/photo: J. Geleyns/Ro scan – Koninklijke Musea voor Schone Kunsten van België

The weight of gold

Also entitled « Le changeur et sa femme » or « Le banquier et sa femme », Metsys’ painting depicts a key business transaction in 16th-century Flanders, a country very much open to international trade. Fiduciary currency was not yet widespread and money was exchanged using coinage whose value depended on its weight in precious metal, especially gold. Weight determination was essential to establish the equivalency of different coins.
This seems to be the transaction that the person portrayed is doing, under the watchful eye of his wife.

It would seem that Metsys moved to Antwerp around 1491. The city enjoyed unprecedented trade and had become Europe’s leading financial centre.

View of the Antwerp Stock Exchange
In Lodovico Guicciardini, Belgium dat is Nederlandt, ofte beschrijvinge derselviger provincien, Amsterdam: Joannes Janssonius, 1648 (KBR, VH 25.776 C) (Bibliothèque Royale de Belgique)

A Florentine merchant living in Antwerp, Lodovico Guicciardini (1521-1589) was the author of the first major description of the Netherlands. Of all of the cities described, Antwerp merited the longest chapter, enhanced with four illustrations: the stock exchange, the Hansa House, the cathedral and the city hall. These represented the four pillars of Antwerp’s power: finance, trade, civil society and the church.

A stock exchange in the heart of the city

The 16th century was Antwerpís heyday. A “New Stock Exchange” was built on the Meir in about 1531. Considered as the first purpose-built stock exchange building, it was to serve as inspiration for the architects of the London and Amsterdam Stock Exchanges. As may be seen on the map, it is in the heart of the city, a stone and brick building in the middle of wooden houses. This constituted a break with the tradition that places where merchants did business were to be located close to the port and its warehouses.

De oude beurs te AmsterdamDe oude beurs te Amsterdam
De Oude Beurs te Amsterdam, circa 1670, by Job Adriaensz
Museum Boijmans van Beuningen, Rotterdam. Photograph: Studio Tromp, Rotterdam

This painting clearly reflects the wealth of the Netherlands in the 17th century, nicknamed the “Gouden Eeuw”. The stock exchange buildings are imposing; transactions take place in an organised manner, and the clothing and postures of the merchants are indicative of wealth.

The Amsterdam Stock Exchange during the 17th century

Construction of Bourse d’Amsterdam began in 1607 under plans drawn up by the architect Hendrick de Keyser. Previously, merchants did not really have anywhere to do their business. Like all stock exchanges of that time, the Amsterdam Stock Exchange, the worldís No. 1 exchange, was primarily an exchange for commodities rather than securities. Between 400 and 600 different products were traded there (with the notable exception of wheat, which had its own exchange). We can well understand how the introduction of shares in the Dutch East India Company was a complete novelty, a revolution! The 46 pillars of the inner courtyard were numbered so that people knew where the merchants were located. The session opened at noon with the tolling of a bell, and ended at 2:00 p.m. The buildings could accommodate nearly 5,000 people!

Map of the City and Castle of Batavia on the Island of Java
In La Galerie agréable du monde, volume 57-59. Volume one on the East Indies, Leiden : Pierre Vander Aa, [1729] (KBR, III 94.155 C) (Bibliothèque Royale de Belgique)

La Galerie agréable du monde was published in 66 parts and included 3,000 plates depicting places all over the world. The map of Batavia was compiled in 1669. Now Jakarta, the capital of Indonesia, the city was the headquarters of the Company until 1799.

La plus ancienne action connue aujourd’hui!

A share certificate of the Dutch East India Company dating
back to 1606. The oldest known share certificate!
Westfries archief, Hoorn

The most powerful company

Voyages to the “Indies”, as they were then known, were full of risk and required considerable investment. This led various fleets to co-operate with one another and establish the Dutch East India Company (Vereenigde Oost-Indische Compagnie or VOC) whose capital stock was divided into shares. Each associate was entitled to a share of profits in proportion to his contribution, while at the same time the risks were pooled. The Company was managed by the “Board of 17”, made up of representatives of regional chambers, in proportion to each oneís financial holding (Amsterdam thus accounted for 8 of the 17 representatives!). This set-up was the precursor of our current boards of directors. A winning formula: over the decades, with Batavia (Jakarta) as its base, the Company would build an empire, not merely a trading one, but also a territorial one, the basis of the future Dutch colonial empire.

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