The first shareholders of the Dutch East India Company
Introduction
In the beginning of the seventeenth century something special happened in the Low Countries. Already in the fifteenth and sixteenth century the world opened up as new trade routes were established when trade over sea became more important. The Dutch Republic took part in this development as well. Thanks to better cartography, navigational skills and especially the smart ways to obtain capital the Dutch lay the basis for their Golden Age. It was this keen way of collecting private funds under a large group of inhabitants that ultimately led to a solid enterprise that traded for almost 200 years with Asia. Collecting private capital among different layers of the population for a joint venture was not completely new that time, but it were the scale and the long-term nature of the company that were never seen before.
In the beginning of the seventeenth century something special happened in the Low Countries. Already in the fifteenth and sixteenth century the world opened up as new trade routes were established when trade over sea became more important. The Dutch Republic took part in this development as well. Thanks to better cartography, navigational skills and especially the smart ways to obtain capital the Dutch lay the basis for their Golden Age. It was this keen way of collecting private funds under a large group of inhabitants that ultimately led to a solid enterprise that traded for almost 200 years with Asia. Collecting private capital among different layers of the population for a joint venture was not completely new that time, but it were the scale and the long-term nature of the company that were never seen before.
Short history
In the fifteenth and sixteenth century distant trade over sea already existed in the Low Countries. The companies responsible for this were financed before every journey. To spread the risks of bankruptcy and shipwreck investors took a so called part in the shipping company. Each investor took only the risk for his share and not the whole company. After the journey the company was abolished and profit or losses were calculated among the different investors For every new journey a new company was founded. These early shipping companies had a short-term outlook of a couple of years maximum, depending on the length of the trip. At the end of the sixteenth century these companies had developed a more long-term outlook and gathered more and more success. .Between 1595 en 1602 65 ships sailed to Asia. The separation of management and investors was growing, as was the competition between these trading companies. That resulted in the Octrooi of 1602. The States General, the highest administrative institution of the Republic, stated that the different companies should join forces instead of compete each other. Besides that the Dutch political ambitions needed a strong war-fleet which depended heavily on the trading-fleet. In the document of 1602 the States General granted a trading monopoly for 21 years for the trade with Asia. The Dutch East India Company (VOC in Dutch) was born,
Big spenders and modest investors
To collect the funds that were necessary for the expensive long distance trade with Asia the States General allowed every inhabitant of the Republic to invest a certain amount of money. Since there was no minimum amount set in the foundation document of 1602, different investors with all sorts of social background provided the VOC with their money. The following quote, in Dutch, is from the 1602 foundation-document, regards the height of the investment, and means in English '...with as much as one wishes'.
‘met soe weynige ende veel penningen als het hen sal believen’
The States General had thus created a company out of different former trading companies. The starting capital was brought together, as we shall see, by a large and heterogeneous group of people. One of the six branch offices, the so called Chambers, the Chamber of Amsterdam managed to gather f 3.67 million. More than 1000 people inscribed the first couple of years after 1602, alone at the chamber of Amsterdam. Together, the six chambers of the VOC raised for almost 6,5 million guilders. That would be the modern equivalent of about €100 million. To attract investors the direction promised a so called dividend, which is a distribution of profit of the company. Besides that the shareholders would receive interest on their capital as long as the ships had not sailed out yet. A final compensation was the possibility to pay for the deposit in different terms. In practice this meant that from 1602 until 1606 it was possible to subscribe and fulfill the deposit. In the foundation document was stated that after ten years, in 1612, a first account was held. Until that moment the shareholders received interest on the amount of the invested money. When all the payments were done the participant would get a receipt as a proof of payment as well as a record where all the dividend and interest-payments where accounted on.
In the fifteenth and sixteenth century distant trade over sea already existed in the Low Countries. The companies responsible for this were financed before every journey. To spread the risks of bankruptcy and shipwreck investors took a so called part in the shipping company. Each investor took only the risk for his share and not the whole company. After the journey the company was abolished and profit or losses were calculated among the different investors For every new journey a new company was founded. These early shipping companies had a short-term outlook of a couple of years maximum, depending on the length of the trip. At the end of the sixteenth century these companies had developed a more long-term outlook and gathered more and more success. .Between 1595 en 1602 65 ships sailed to Asia. The separation of management and investors was growing, as was the competition between these trading companies. That resulted in the Octrooi of 1602. The States General, the highest administrative institution of the Republic, stated that the different companies should join forces instead of compete each other. Besides that the Dutch political ambitions needed a strong war-fleet which depended heavily on the trading-fleet. In the document of 1602 the States General granted a trading monopoly for 21 years for the trade with Asia. The Dutch East India Company (VOC in Dutch) was born,
Big spenders and modest investors
To collect the funds that were necessary for the expensive long distance trade with Asia the States General allowed every inhabitant of the Republic to invest a certain amount of money. Since there was no minimum amount set in the foundation document of 1602, different investors with all sorts of social background provided the VOC with their money. The following quote, in Dutch, is from the 1602 foundation-document, regards the height of the investment, and means in English '...with as much as one wishes'.
‘met soe weynige ende veel penningen als het hen sal believen’
The States General had thus created a company out of different former trading companies. The starting capital was brought together, as we shall see, by a large and heterogeneous group of people. One of the six branch offices, the so called Chambers, the Chamber of Amsterdam managed to gather f 3.67 million. More than 1000 people inscribed the first couple of years after 1602, alone at the chamber of Amsterdam. Together, the six chambers of the VOC raised for almost 6,5 million guilders. That would be the modern equivalent of about €100 million. To attract investors the direction promised a so called dividend, which is a distribution of profit of the company. Besides that the shareholders would receive interest on their capital as long as the ships had not sailed out yet. A final compensation was the possibility to pay for the deposit in different terms. In practice this meant that from 1602 until 1606 it was possible to subscribe and fulfill the deposit. In the foundation document was stated that after ten years, in 1612, a first account was held. Until that moment the shareholders received interest on the amount of the invested money. When all the payments were done the participant would get a receipt as a proof of payment as well as a record where all the dividend and interest-payments where accounted on.
As the table on the right shows the Chambers Amsterdam and Zeeland were the most important as they gathered the biggest sums of capital. Among the investors, as we know from a preserved registration source from 1602 from the Amsterdam office, were rich merchants, local officials, and nobility. As one would expect perhaps. But there was also a small group of craftsmen, bakers, butchers, blacksmiths, weavers, carpenters, brewers, small businessmen, doctors, lawyers who subscribed for participation in the VOC. Almost every layer of the population gets represented. This shows that the call of the States General had shown an effect. 466 of the 1143 subscribers in Amsterdam had a share smaller than f 1000,-. The share of the small-investors should therefore not be underestimated.
The table on the right shows the distribution of the size of the deposits. The group of small investors takes a large part of the total in the example of Amsterdam. For Zeeland this group is much smaller. The biggest investor in Amsterdam, a merchant, had a share of f 85.000 and the smallest share was f 50 on the name of a servant girl of one of the directors.
If we would dig deeper in this registration document of 1602, and some scholars did, and we would combine provided social-geographical background-information with the size of the deposits we can create a new table for the chamber of Amsterdam.
What stands out immediately is the relatively low number of Southerners in comparison with the large number of Northerners. But the relative amount of registered capital is much higher with the Southerners. The Southerners were capable to bring in a relatively higher amount with much less subscribers. This draws to the conclusion that the Southerners, for example fled merchants from Antwerp after the siege of 1585, are financially stronger than the Northerners in the beginning of the seventeenth century.
Conclusion
The different chambers of the VOC fulfilled a decentralized role in the accumulation of capital and the expanding of trade networks and functioned therefore each as a hub, The different participants are the nodes in this trade-financingnetwork, all with their own motives. Some where merchant and had interest in expanding their network, others where modest investors and hoped that this new company could top up some of their savings. We have seen that local participants were a group that should not be underestimated. Local gathered money was ultimately employed on a global scale. Also we have seen that the shareholders from southern origin were wealthier than the rest of the investors. The flow of capital is interesting and seems to run to a place where it will yield some profit. For almost 200 years the VOC had the availability of a permanent amount of external capital, to finance the expeditions with. This was brought together by a large, and divers file of shareholders. This variety and the long term outlook made the VOC the first business with modern characteristics.
T.G.R.
Conclusion
The different chambers of the VOC fulfilled a decentralized role in the accumulation of capital and the expanding of trade networks and functioned therefore each as a hub, The different participants are the nodes in this trade-financingnetwork, all with their own motives. Some where merchant and had interest in expanding their network, others where modest investors and hoped that this new company could top up some of their savings. We have seen that local participants were a group that should not be underestimated. Local gathered money was ultimately employed on a global scale. Also we have seen that the shareholders from southern origin were wealthier than the rest of the investors. The flow of capital is interesting and seems to run to a place where it will yield some profit. For almost 200 years the VOC had the availability of a permanent amount of external capital, to finance the expeditions with. This was brought together by a large, and divers file of shareholders. This variety and the long term outlook made the VOC the first business with modern characteristics.
T.G.R.
Suggestions:
For a close look on a 1606 proof of deposit with dividend-payments visit www.worldsoldestshare.com
For the States General foundation document of 1602 visit www.gahetna.nl inventory number 1.04.02
Further reading:
Gaastra, Femme Simon. Geschiedenis van de VOC: opkomst, bloei en ondergang, Zutphen: Walburg pers, 2009.
Heijer, Henk den, et al. De VOC En De Beurs : De Verenigde Oost-Indische Compagnie Als Grondlegger Van De Eerste Aandelenbeurs. Euronext Amsterdam NV : Stichting Vereniging voor de Effectenhandel (Stichting VvdE), 2002.
Petram, Lodewijk. De bakermat van de beurs: hoe in zeventiende-eeuws Amsterdam de moderne aandelenhandel ontstond. Amsterdam : Atlas, 2011.
Image 1 https://commons.wikimedia.org/wiki/File:Nicolaes_Visscher_Indiae_Orientalis.jpg
Image 2 https://commons.wikimedia.org/wiki/File:Voc-stock.jpg
Tables J.G. van Dillen,Het Oudste Aandeelhouders-Register Van De Kamer Amsterdam Der Oost-Indische Compagnie, 's-Gravenhage: Nijhoff, 1958.
Image 2 https://commons.wikimedia.org/wiki/File:Voc-stock.jpg
Tables J.G. van Dillen,Het Oudste Aandeelhouders-Register Van De Kamer Amsterdam Der Oost-Indische Compagnie, 's-Gravenhage: Nijhoff, 1958.