The World’s First Stock Exchange
We are up to our necks in the financial markets these days, whether we like it or not. But how did we get here? Lodewijk Petram’s fascinating new book tells us. Back in the early seventeenth century, Amsterdam was in the process of growing from a regional market town into Europe’s dominant financial centre. It all started with the launch of the Dutch East India Company in 1602, which introduced easily transferable shares. Within days people were trading them, and soon they were engaged in a wide range of complex transactions, including forwards, futures, options and bear raids. By 1680 the techniques deployed in the Amsterdam market were as sophisticated as any today.
We tend to think of financial markets as highly abstract entities handling incomprehensible products, as indeed they always have been. But Petram shows that markets really boil down to what people do, who they are and how the world around them works. His account of the fledgling Amsterdam securities trade is organized around a few key themes that he brings to life by relating them to the people involved: Who were they? Where and how did they live? What kind of business were they in?
We walk the streets of Amsterdam, visiting the harbour and the places where merchants met to do deals, then on to the notary’s office to swear an affidavit, and to court to contest a case. We get to know the main players, whether rich merchants or small fry: serious investors, shady dealers, speculators and ordinary people, such as domestic servants. Apparently complex transactions and legal intricacies suddenly become easy to understand when seen from the perspective of the people involved; they are explained in simple terms, and enlivened with quotations from personal correspondence and other historical documents. We explore why and how people speculated, what aggrieved shareholders could or could not achieve, whether fraudsters escaped with the proceeds or were caught and how crises hit.
Petram’s skilfully woven narrative continually invites us to ponder concepts still relevant today, such as the value of information, trust and honour, diverging expectations and how to balance risk. The book brings out the modernity of the past and enables us to appreciate how people of the seventeenth century wrestled with financial markets in ways very similar to our own.
Meticulously researched and refreshingly well written.
Tells the stories of the people behind the first stock-market transactions.
“Petram’s historical study is no dry summary of the facts. These are almost universal tales of greed, risk, riches, prosperity and disaster. What makes the book so relevant today is that Petram shows convincingly why excesses almost inevitably accompany the trade in stocks and shares.”
“The bewigged figures familiar to us from Rembrandt’s paintings are transformed into dealers of flesh and blood, sometimes cocky, sometimes magnanimous, often greedy and in some cases downright corrupt.”
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