ers and pamphleteers regularly linked the state of the company to the well being of the
`
`Dutch Republic further stresses my argument that support for the Dutch Republic
`
`was an important motivation for many to invest in the \-’()C; the authors of these texts
`
`realized that many people were susceptible on this point and therefore used it as an
`
`argument for their own cause.”
`
`This might also explain why l’Empereur chose to invest in the v0(; at a mo-
`
`ment when the future of the company was insecure. He bought a share in January
`
`1609, when the outcome of the negotiations for a truce with Spain was still uncer-
`
`taini", because by purchasing a share, he could show that he wanted the company to
`
`continue its activities in the East. Being an immigrant from the Southern Netherlands
`
`- like so many of the early investors in the \-"OC33 — l’Empereur was probably particu-
`
`Early sympathetic towards the Dutch cause in the conflict with Spain.“ So, although
`
`the information available to l’Ernpereur was nowhere near enough to really know
`
`what was going on within the company, he probably did not care: l’Empereur learned
`
`that the \-"QC had a growing chance of success in the East and by investing he sup-
`
`ported the Dutch cause.
`
`A/Iarket reactions to infiimmtian
`
`During the period 1602-9, shareholders never received an official statement from the
`
`company, so the announcement of the first dividend in March 1610 was an important
`
`3” The company directors, for example, used it in H509 to argue that sliort-selling should be prohibited:
`the short seilers not only disrespeetccl the company, but also the United Prox-‘inces as a whole. Petition
`\-"'00 directors to States General, I609: \-"an Dillen, ‘Isaac le l\-'Iaire', 31-2 [_doc. nr. 2). See also: De Mar-
`chi and Harrison, ‘Trading “in the wind”, 51-2. The shareholders who made a case for leaving the
`share trade liree, 1‘epiied in a Counter petition to the States til‘ Holland that they were devoted to their
`Fatherland: \-"an Dillen, ‘Isaac le Maire’. 34 (doc. nr. 3). The activist shareholder who took open action
`against tl1e company management also linked the \='f.‘J(: to the ctnldition oiithe cottntry. Eng. Vs.='£oao’t (mi
`rt’? Ea’. Hr). 4"/Io. Herman .5't‘rt-‘en (frnerael. Finally, according to De la Vega, even in the late seventeenth cen-
`tury, there were still in\-'t.'stors, so-called ‘liefhebbers’, who always held long positions; as ‘devotees’ of
`the company, and tire» l')tttrit Repubiit‘, they were constantly trying to push up the share price: De la Vega,
`(i'orgfit.i‘irin dz? renfu.r2'oite.i', 102.
`31 See Footnote 15.
`
`33 301 [or 26%) ofthe l [43 subscribers to the Amsterdam chamber capital stock in 1602 came from the
`Southern I_\letherlands. Their average subscription to the stock was relatively high; they subscribed
`slightly over 38% ofAmste:'daIn‘s stock: V an Dillen, Amideelitnua’rr.irq:;i'.ttrr, 55.
`33" Cornelius Plancius \-‘(titted similar feelings about the predecessors of the voc: in his late-sixteenth-
`ttentury description of Amsterdam: they were deployed to maintain the freedom olithe Dutch Republic,
`rather than to suppress other countries. Their revenues went to the churches and to other laudable
`institutions: Cornelius l’1am:ius, ‘Beschrivinge der lollijcke ende wijtverrnaerde coupstede Aemstelre-
`damme’ (1597), in: P. Seheltema (ed._}, Aem.t:‘rE'.s' nttdficirz’ rgf(IedrnA?eaard{g!‘iede*n arm Amsterdam ll [l85ti'), l-l 2,
`there I]. Very little is known about Cornelius Plancius. but it could \-‘eiy well be that he belonged to the
`saine family as Petrtts Plancius,
`the fanious Cartograplier and clergyman who immigrated from the
`Southern Netlterlands to Amsterdam.
`
`156
`
`167 IBG LLC ET AL. - EXHIBIT 1015 PART 3
`
`167
`
`IBG LLC ET AL. - EXHIBIT 1015 PART 3
`
`

`
`event. The market participants had to assess the value of this dividend; was it more or
`
`less than they had expected? The fact that the directors announced a dividend in kind
`
`[shareholders were given the opportunity to receive 75% of the nominal value of their
`
`shares in rnace-“J did not make the assessment any easier. Did this, for instance, indi-
`
`cate that the company had cash-flow problems? And what was the market value of the
`
`batch of spices shareholders could collect at the East India house?
`
`The company set a price for the mace (11 and 9 stuiaers per pound, for high
`
`and lower quality mace, respectively) to be able to calculate the amount of mace each
`
`individual shareholder was entitled to. To make the offer more inviting, the company
`
`promised that it would not sell mace at a lower price in the next two years.“ De Ve-
`
`laer advised his uncle to accept this dividend, because he did not expect a cash divi-
`
`dend to be imminent. He also wrote that 1’Empereur should ship it to another place,
`
`as the dividend deluged the Amsterdam market for rnaee.35 l’Empcreur hesitated and
`
`did not take any action. This pattern recurred in September 1610, when De Velaer
`
`advised his uncle to accept the second dividend (50% of the nominal share value in
`
`pepper plus, only for those shareholders who had accepted the dividends in kind,
`
`7.5% in cash) and either grant a spice trader authority to sell it on the Amsterdam
`
`market or ship it to Venice, Naples or Danzig: there were ‘good ships’ leaving for
`
`these places shortly.”
`
`The De Velaer-l’Empereur correspondence clearly shows that the company’s
`
`decision to distribute spices burdened the investors with a hard choice. The directors
`
`of the lirst hour were all experienced spice traders themselves (they were the pioneers
`
`of the East India trade for a reason] and there were quite a few investors who were
`
`keen on receiving the dividend”, but traders with little or no experience as commodity
`
`merchants - there were quite a few of them amongst the shareholders - must proba-
`
`bly have had no idea what to do with the spices.” Even those who had an interest in
`
`3" See footnote 39 on page 28.
`37‘ De \-"claer to |’limpereur, 19 March 1610, BT, inv. nr. 215, nr. BI /5. The prices ol‘ 1
`equaled the prices at which the company had recently sold mace on the market.
`3“ De \-"elaer to l‘l~lmpereur, 24- March 1611), HI‘, il]\'. nr. 215. nr. Bl/6. l’F.mpereuI‘ to De Velaer, ‘.21
`March 1610, I31‘, im-'. nr. 255.
`5” De Velaer to l'lf.1npereur, 30 September 1510, I3-'1', inv. nr. 215, nr. Bl/1 l.
`3*” There were even people who bought shares after the dividend announcement in order to be able to
`receive the mace: De Velaer to 1’F.mpereur, 24 Marcli 1610, 3'1‘. inv. nr. 215, nr. B1 /6.
`3” De Velaer wrote to his uncle that many shareliolders were hesitant about what to do with the mace:
`De Velaer to l’E.mpereur_. 24 March 1610, III‘, inv. nr. 215, nr. 131/6.
`
`1 and 9 .s'tuiz.'er3
`
`168
`
`15?
`
`168
`
`

`
`East-Indian wares did not know what to do with spices, as the example ofl’Empereur,
`
`a silk trader“, shows.
`
`The market nevertheless reacted positively to the earliest dividend announce-
`
`ments. The cum-dix-idend price - the price paid for shares that were entitled to receiv-
`
`ing the dividend distribution - increased from around 130% in October 1608 to 156-
`
`8% right after the announcement.“ The r:um—dividend price rose further to 170% after
`
`the second dividendfilg The dividends were of course not isolated events, so these in-
`
`creases in the share price cannot be solely attributed to the announc.ements, but the
`
`market undoubtedly reacted positively to the dividend distributions. Shareholders
`
`probably regarded them as ofiicial confirmations of the. news shareholders had already
`
`received via information channels external to the company: business was going well in
`
`the East Indies.
`
`From 1623 onwards, the \-'O(: started distributing dividends on a regular ba-
`
`sis.” It is not surprising that the company changed its policy in 1623; this was the
`
`principal reaction to activist shareholders’ requests for financial reports. The share-
`
`holders did not get permission to inspect the company’s financial records, but from
`
`this moment on the dividend distributions functioned as reports on the financial situa-
`
`tion of the \-’OC:. The information concealed in the dividends was of course inadequate
`
`to assess, for example, the value of the company’s assets and liabilities, but it did give
`
`the shareholders an impression of the performance of the company. A dividend in-
`
`crease could very well be a sign that the company’s financial situation had improved.
`
`A decrease, on the other hand, meant bad news. A conversion from dividends in cash
`
`to either kind or obligations would also be negatively interpreted. In sum, the absolute
`
`value of the dividend was of no particular importance to the shareholders; what really
`
`interested them was the size of the dividend compared to earlier years and hence the
`
`informational value of the dividend.“
`
`4” l’En1pereur regularly asked De Velaer if the \-’()tI return cargo contained silk and he had a special
`interest in the silk price on the Amsterdam market.
`” This price quote, 9 April I610: S.-\i\, Notaries, inv. nr. 1520, fo. 2. See chapter 52. section Share price
`and dividends on page 65 ll". for a discussion on mm— and r.\'-dividend prices in the period before 1618.
`*9 This price quote, 30 October I610: S.-\..\, Notaries, inv. nr. 196, lb. 597x-‘—5981'.
`*3‘ Two-yearly dividends in the l6§20s and Iirst half of the. 1630s; from [635 tniwarrls every year. In the
`remainder of the century. only the wars with England and France made the company deviate tempo-
`rarily from the distribution pattern. See also chapter 2, section Share price and dividends on page 65 fl“.
`and Appendix B Dividend distributions YOU.
`l50‘2-l70D.
`'” In corporate finance models, which assume the existence of perfect capital markets, a Iirnfs value is
`unaffected by its dividend policy. See e.g. the famous article by Modigliani and Miller: Merton H.
`Miller and Franco Modigliani, ‘Dividend policy, growth, and the valuation of shares’, Fir jrmrnm’ (Jr
`!l'u.ri:t£.t'.t' 34- (1961) 4-1 1-33. In these models, a share’s value equals the present value oll all future divi-
`
`158
`
`169
`
`169
`
`

`
`In the first half of the seventeenth century, the company directors determined
`
`the size of the dividend soon after the arrival of the return fleet, generally in autumn.
`
`The management tlnts really let the owners of the company have a share in the suc-
`
`cess of the trade. This policy changed in the second halfof the century. From now on,
`
`the dividends were announced at the end of the yearly meeting of the Heeren X141 in
`
`spring. At this meeting the directors also drafted the annual report, allowing them to
`
`adjust the size of the dividend to the performance of the company as a whole.“
`
`Clearly, the outcome of this meeting was very important for the shareholders. The
`
`transaction data from the \-'OC capital books show a heightened level of activity in the
`
`share trade around the spring meetings in March (see Figure 2.1 on page 78 and
`
`Figure 2.5 on page 80) and a letter of share trader Rodrigo Dias Henriques confirms
`
`this. He wrote that as soon as the first rumors about the dividend went round on the
`
`exchange, a great game for Jieflzebbers (those who loved the trade) started.” In other
`
`words, the traders immediately started speculating on the correctness of the rumors
`
`and the impact the dividend would have on the share price.
`
`The tension amongst the share traders on the night of the dividend meeting of
`
`the directors becomes clear from a letter of_]eronimus Veltcrs, dated 13 March 1688.
`
`The meeting was closed and the outcome confidential, so shareholders had to rely on
`
`rumors until the directors made an oflieial announcement - some weeks after the
`
`meeting. Already months before the meeting, however, traders started assessing the
`
`size of the upcoming distribution. In 1688, many traders had expected the dividend to
`
`be 25% in cash.” But then Velters heard a rumor, which he held to be correct, that
`
`the distribution would amount to only 22.5% of the nominal value of the company
`
`stock. He instantly liquidated his position and sold two forward contracts (nominal
`
`values:f6,0U0 and_f30,0U0 at 557.75 and 559% - please note that these were short
`
`sales) with a settlement date of 1 May. Not everybody believed the rumor, though, so
`
`the price increased a bit in the next few days.
`
`dcnds -- which instantly explains why the share price decreases by the value ofthe dividend just distrih—
`uted. However, this does not hold iii a world with capital ma1‘kets that are imperfect, due to t:.g. asym-
`metric iiilorniatiori, where dividends also have information content. See c.g. Merton H. Miller and
`Kevin Rock, ‘Dix-idenrl policy under asymmetric inForinatioti’.jow'na[ Qffifldfrrf 40 {I985} 1031-51.
`*7’ de Korte, De,}nar£ijkxr_finanrtE'Ie r.=€ran{wrJ0Jr2’ir.=g
`in dc VUC, Verem;grIr’
`()rJi'£im1'i.t'ra‘re Corrtfirigttie (Leyden
`1984) 65, 68.
`4'5 Dias Henriques to I.e\y Duarte, 17 February 1698, .'-;.«L-\, Pit}, inv. nr. 681]), p. 109.
`*7 Ibidem. In previotls years, the \'‘U(: had distributed 20% in cash {l5 April I687} and lQ.5°x'u in cash {I
`l\-Iay I68G):\-"a:1 Dam, Be5r'Itryz,1}{ge l.»\,-'1-33~-1-36.
`
`170
`
`159
`
`170
`
`

`
`On the night of the meeting, broker Gerrit Loot offered many shares for sale;
`
`there were rumors amongst the traders who were present on Dam Square that these
`
`shares belonged to Adolf Visscher, others said _]acob Q_uina, Isaac les Paul, Gerard
`
`Putmans, Cornelis de Groot or Velters himself
`
`these were prominent share traders
`
`and they were generally considered to be well-informed. Consequently, nobody dared
`
`to buy the shares; the price sunk 2%, but Loot refused to sell for less.“ This situation
`
`lasted until 8.30 p.m. and then reversed: the price rose to 566% and there were sud-
`
`denly only buyers on the market. Minutes earlier, the meeting of the Harm: X VII, which
`
`took place in the East India house,
`
`less than 500 meters from Dam Square, had
`
`ended. The company directors did not want to release any information about the size
`
`of the dividend, but after having talked to some of the directors, the shareholders got
`
`the feeling that they had had a pleasant meeting. Hence they concluded that the divi-
`
`dend would be higher than expected. The next day, many shareholders held the opin-
`
`ion that the company would distribute 22.5"/u in cash and another 15% if the return
`
`ileet arrived safely. Velters had tackled all his contacts about extra information and he
`
`was pretty sure that the dividend would be 33 1/ 3% in cash, to be distributed on I
`
`May.” His information proved correct. Apparently Velters had personal access to
`
`(one of) the company directors, chief participants or their close relatives - not surpris-
`
`ing, for Velters himself belonged to the regent clique.
`
`This example clearly shows how important the outcome of the meeting was for
`
`the shareholders: a large number of them were present on Dam Square during the
`
`meeting to be able to instantly react to any rumors regarding the dividend. Share-
`
`price movements around the yearly meeting are thus particularly telling about how
`
`the shareholders interpreted the signal that was concealed in the proposed dividend
`
`distribution. Unfortunately, my dataset does not allow for a more thorough analysis of
`
`these (probably) volatile periods; I have too few price observations for the periods
`
`around the dividend announcement dates?“
`
`Naturally,
`
`the. market not only reacted to company-specific information. On
`
`the contrary, political and military events were of major influence to the share price.
`
`The share price movements of 1672 and 1688 give insight into the kinds of informa-
`
`'*” \-"eltcrs to Holla, 14 March 1688, S.-\_-\, Velters, in\--_ in‘. 4, lo. 78.
`“' Idem.
`
`5“ Nor do I know when exactly during the meetings, which took several days, the subject of the next
`dividend distribution came Up. The oflieial dividend announcement dates are known, but as the \-"cl-
`ters-Holla correspondence shows,
`the information concealed in the announcement already filtered
`lltrough long before the ollicial announcement.
`
`160
`
`171
`
`171
`
`

`
`tion the market reacted to and how it reacted. Both years witnessed large price falls,
`
`which led to a high number of im‘inua.!ies'
`
`share traders wanted to make sure that their
`
`counterparties would not walk away from their losses. Hence there is a relatively high
`
`number of price observations available for these years (55 and 35 for 1672 and 1688,
`
`respectively).
`
`Figure 5.1 shows the price ofAmsterdam chamber \-'()(j: shares for the period 7
`
`July 1671 — 28 December 1672. The 7 July 1671 (566%) observation is the highest
`
`price I have found for the entire seventeenth century - accidentally, the share price
`
`reached the exact same level on 13 March 1588. The shareholders received several
`
`indications that things were going very well with the company: in May 1671, the \-‘QC
`
`announced a record-high dividend (60% of the nominal value of the company’s stock
`
`in cash; 45% was distributed onjune 1, the remaining 15% on_]u1y 20)“ and also in
`
`this year, a total of 22 ships arrived from the East Indies.-52 But the bu11ish* atmos-
`
`phere made way for fear that war would break otlt.-33 On 30 October,]eroniInus Vel-
`
`ters wrote that the share traders’ fear of war had brought the share price down to
`
`480"/o.5" Over the next months, it became clear that war would be unavoidable and
`
`the share price decreased steadily to 406-13% in late February.“ The price remained
`
`stable - it even rose slightly - until the day England declared war on the Netherlands
`
`(l\1arch 12). It then tumbled to around 370% in late March and fell even further when
`
`France followed England and also declared war on April 8"‘. The share price de-
`
`creased by more than 100 percentage points in a single month and stood at 311% in
`
`early April.-35 The lowest point was reached only in July (290% on_]u1y 20)“, however,
`
`after the enemy forces had occupied much of the east and north of the Dutch Repub-
`
`lic. A month earlier, on 13 and 16_]une, the French armies had even taken the towns
`
`Utrecht and Naarden - both very close to Amsterdam.
`
`The share price again started an upward trend in early August, after a convoy
`
`of fourteen V00 ships had managed to sail around the English navy and the momen-
`
`5” Van Dam, Brsr:’7fr2.'ingr I.-\, -135.
`Eleven ships arrived in mid-June, another nine ships in mi(|—_]uly. and the remaining two arrived on
`August 24111 and September ‘2nd: D.-\.‘.i.
`-73‘ See, for a general account of the political and military events of 1672, Israel, '77rrD1r{o’t Reptrblir, chap-
`ter 31. See, for the economic impact of 1b72:Jonathan 1. lsrael, )')m’n’: primr::._'1> in world trade, 7585-7740
`{Oxford 19893992-9.
`5'" Velters to Fletclter, 30 October 1671, SAA. Velters, inv. nr. 1. lo. 237.
`55 Velters to Fletcher, 26 February 1672, .‘i.-\.-\, \-"eltcrs, inv. nr. 1, fo. ‘Z52.
`515 V"elters to Fletcher, ‘.29 l\-"larch and 5 April 1672, SA.-\, Veltcrs, inv. nr. 1, fo. 258-9.
`5” SA.-\, Deutz, inv. nr. 293, fo. 86. Please note. that this is an ex-dividencl price; the \''0(; clistriboted l:')":’u
`ofthe nominal value ofthe company’s stock on_]unt'-. 2.
`
`172
`
`161
`
`172
`
`

`
`tum of the war in the east and tl1e north changed. The fact that the murder of the De
`
`Witt brothers is not visible in the share price indicates that the share traders were ei-
`
`ther not surprised by the political upheaval, or that domestic politics were deemed of
`
`lesser importance for the profitability of the VOC than foreign relations. The upward
`
`trend stalled in May l6?3, when the share price fell back no 314%. This price, how-
`
`ever, incorporates the dividend distribution of 33 l/3% of the nominal value of the
`
`company’s stock in obligations of the States of Holland and Zeeland (lune 1), which
`
`had been announced on May 16. Interestingly, the share price fell by about the size of
`
`the dividend distribution. This indicates that the shareholders did not react strongly
`
`on the signal that the company was unable to distribute cash to its shareholders. Put
`
`another way, they did not update their beliefs on the state of the company after this
`
`dividend announcement. In the following years, the share price started to rise quickly.
`
`The war with England had come to an end and the Dutch Republic had found several
`
`allies in its war with France. The clip in 1678 (see Figure 2.6} must probably be attrib-
`
`uted to the disappointing outcome of the Peace of Nijmegen. The share price move-
`
`ments of 16?? and the years thereafter thus show that the share price reacted particu-
`
`larly strongly to events in the international political and military situation.-""3 Hence
`
`shareholders would have derived benefit from an international information network.
`
`Figure 5.2 shows the share price for 1688. A 33 l/3°/o dividend distribution
`
`caused the price decrease that is visible in April”, but the large price fall in late August
`
`and the smaller one in October of course deserve all the attention. Israel has dealt
`
`with this episode extensively in his article ‘Jews and the stock exchange: the Amster-
`
`dam financial crash of 1688’. Using mainly the reports to London of Daniel Petit,
`
`English consul at Amsterdam, Israel has shown that until the end of August only a
`
`very small number of people knew about Stadholder William Il[’s plans for an inva-
`
`sion of England, even though William had started preparations for the invasion al-
`
`ready in May. In early August, some marine preparations were underway, but on such
`
`a small scale that people believed that they were aimed at Algerian corsairs. Around
`
`this time, moreover, share traders were mainly concerned with the. news about the
`
`return fleet.
`
`3'” Israel has noticed the same: Israel, Dutrlt {Jamar}, 86.
`5” This is thus not a stl‘uctm‘al price change, but merely the (lllT(‘l‘('?I'Il’2(f between the cum— and rx—di\-'idend
`price.
`
`162
`
`173
`
`173
`
`

`
`According to Israel, the first rumors about the invasion reached the stock ex-
`
`change on August 24, on which day foreign diplomats at The Hague also mentioned
`
`the possibility of war with England for the first time.“ Israel got his information on
`
`this episode from De la Vega’s Coryariéa de conftesiones, who wrote that the news reached
`
`the share market via Jewish trading clubs. Hence, Israel argues that the Sephardie
`
`community, and in particular a number of influentialjews who stood in ciose contact
`
`with Wlilliam 1115' and who may therefore have had private information about the in-
`
`vasion, played a very important part in this stock market crash. They probably delib-
`
`erately manipulated the news in order to bri11g the share price down.‘33
`
`Surprisingly,‘]eronimus Velters gave a different explanation for the price fall of
`
`late August 1688. On August 24-, he wrote tojacob Boreel that the first price decrease
`
`had occurred in the afternoon of Saturday, August 22. The night before, the Amster-
`
`dam delegates to the States of Holland had returned to the city. On Saturday, Jacob
`
`ten Grotenhuijs, one of‘ the delegates, ordered several brokers to sell shares at any
`
`price. This instantly brought the price down to 480%. Velters named four reasons for
`
`the setback of the price: the naval preparations that were underway, the recruitment
`
`of 18,000 soldiers, the decree to lcw a tax on French produce and lastly, and accord-
`
`ing to Velters most importantly, a plan of the provincial authorities to curb the share
`
`trade. Velters took this point very seriously, because the Grand Pensionary, the high-
`
`est official in the Dutch Republic, had started the discussion on this topic.
`
`Velters further wrote that in the following days, the price fluctuated. It even
`
`temporarily climbed back to 505% on August 24, the day on which, according to Is-
`
`rael, the price started to collapse, but later that afternoon news about French troops
`
`advancing to Liege brought the price down to 488°/u.‘33 Velters had been to the ex-
`
`change that day, but had not linked the naval preparations to an invasion of‘ England.
`
`He sent Boreel an update of the share price (491%) on August 27, without specifying
`
`“” Israel, ‘The Amsterdam financial crasli of‘ I588’, 472-4».
`“l Israel names the following members‘ ol‘ the Sephardie eommunity:_]acob Pcreira, Antonio Ifh-Ioseli}
`Ah-‘ares Machado, jeronimo Ntmes da Costa and Francisco Lopes Suasso: Israel, ‘The Amsterdam
`financial crash of‘ I688’, -1-82-3.
`'59 Israel quotes the pamphlet R:.’!'a:?5 er: roitrrrtdiclir to prove this claim: Israel, ‘The Amsterdam financial
`crash of 1688', 484. However, the anonymous author of Relate an con£rr.=dir£i.° only stated in general that it
`had occurred that people deliberately tried to bring the share price down. He did not specifically men-
`tion tl1e_]ews or the price crash of 1688, which, incitlenlally, would not even Itave been possible, for the
`pamphlet was published in 1687. Relate" er:
`rom‘rr:c1'Et‘£ie op ale more-’er.=, am lie: koafim ea E:e‘:Iil:u0f;er.= z.-rm Owe an
`l-lr’est—!nriise? arifarz, die ml?! ge£:'ans[mr!re:'n’ tterden, endr nfirie pargi-‘M tr I')e.czx:<.=n=n mm‘ rest Impost by (it? H381‘.-'\'5€t}ffl€.T
`.-1/i':y.r Mn Holy, Adi.-arms! int‘ x‘lm.rlem’rma,
`r'iJ'!I.t.'¢":'t.’.’i(f€ 2.-'nnrge.m’t'£, en deer" are brJ:.w1 getoonl Lt,-’(Ié?1”i1i|' wrterbnt Hnflanls iamzst
`231 weltlarrm l5.r.tira°.=.=a'e it [s.l. 1687} 1. See also: Smith, 'il'ijd—r,tflr‘?ira.t, 76.
`"'5"\"e1ters to Boreel, 24 August 1688, SA-\,\-’elte1‘s,i[1\'. nr. -1-, lb. 87.
`
`174
`
`163
`
`174
`
`

`
`more details.“ On August 31, he reported that \»'0(: shares now sold for 463%. The
`
`share traders feared that the authorities would decide to levy a tax on every share
`
`transaction - following the proposal of Nicolaas Muys van Holy.“ Three days later,
`
`the share price had recovered to 474°/03*“
`
`The most plausible explanation for Velters not mentioning the fear that war
`
`would break out is that he tried to link what he saw happening on the stock exchange
`
`with the information he was sure to be correct. Velters, himself city secretary of Am-
`
`sterdam, had good connections with the authorities, so he knew what was ping on
`
`within the governmental bodies ofthe Dutch Republic. And indeed, the States of Hol-
`
`land had held deliberations about a renewal of the ban on short-selling on August
`
`21.57 He probably also heard rumors about the invasion, but deemed these to be pre-
`
`mature and decided not to write about them.
`
`But Israe1’s account, heavily influenced by De la Vega’s dramatized account of
`
`this episode, is not fully correct either. The Jewish traders were not solely responsible
`
`for the price fall and, more importantly, the crash was not as large as Israe1’s sources
`
`suggest. Velters may not have reported all the causes for the price fall to Boreel, but
`
`his price observations were no doubt correct - he had been among the share traders in
`
`the days of the crash and he had even traded shares himself. The share price did not
`
`tumble from 580 to 370% between August 24- and 28 and even to 366% in early Sep-
`
`tember, as De la Vega and Israel write53, but from 563% in March to 463% on
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`August 31. The strong ‘patriotic’ rally, that should have followed in the first half of
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`September, where the share traders suddenly endorsed \-Villiam's plans, never oc-
`
`curred‘‘", the share price rather continued falling until it reached its lowest point on
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`September 14 (4l4%)7'3', the day on which the Amsterdam city council made inquiries
`
`about the purpose of the naval preparations.“ It then climbed up again to 433°/072 on
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`September 16, and fell back for the last time to 416“/n73 on October 17, just after the
`
`“" V-"elters to Boreel, 27 August 1688, .'-i.-L-\, V-’e1te1's, my. :1 I‘. 4-, F0. 88.
`‘*7’ Velters to Boneel, 31 August 1688, S.-'L=\, Velters, inv. nr. 4, F0. 89. For the Muys van Holy proposal,
`seep. 3“2.
`“*5 \"'elters to Boreel, 3 September 1688, S.-\.-\_. \-"elteas, inv. n r. 4, lo. 91.
`"7 Resolutions States of Holland, 21 August 1688, N.-\, States ofHo11a11cl, inv. nr. 121, fo. 491.
`'53 lsrael’s price observations can be found in the appendix to his article: Israel, ‘The Amsterdam finan-
`cial crash oF1(i88’_. 487.
`'“' Israel, ‘The Arnsterdam financial crasli of 1588', 484-5.
`7“ Israel, ‘The Amsterdam financial crash of 1688’, 478.
`71 Dreiskéimper, Ann dc umrrwmm’, 81.
`73 Israel, ‘The Amsterclani financial crash of 1688’, 478.
`75‘Ve-.1ters to Holla, 17 October 1688, SAA, Velters, inv. nr. '1», to 92.
`
`164
`
`175
`
`175
`
`

`
`authorities in the Dutch Republic had decided on economic sanctions against
`
`France.“ Hence, by the time William IlI’s invasion actually took place (the first at-
`
`tempt to sail away on October 30 failed, the second attempt on November 12 was
`
`successful“), the share price had already started an upward trend. In the following
`
`dec.ade, it fluctuated between 485 and 51?”/u.
`
`So far, this chapter has discussed the factors that influenced the share price.
`
`Share traders were interested in news about the state of affairs in the East Indies,
`
`about the return cargo that was underway, about the size of dividend distributions and
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`the political and military situation in Europe. The trading behavior of other share
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`traders of course also influenced the price, so it was also profitable to have some
`
`knowledge of the investment sentiment of other traders. Speculators needed constant
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`updates on all these different categories of information. Furthermore, for their trades
`
`to be profitable, they needed to be the first to get news that could influence the share
`
`price. The next section will explore how share traders managed these information
`
`needs.
`
`771:? ttyimnatien networks QfC?'trist‘ia3t andjewinlz share traders‘
`
`De la Vega already noticed that speculators needed to have private correspondents in
`
`the Indies, who could send them the latest news via the overland route or on an Eng-
`
`lish ship, thus trying to get information on return cargoes and the overseas branches of
`
`the company quicker to the Dutch Republic than on the \-‘DC. return fleet. He also
`
`wrote that it was vital for a share trader to keep abreast of news about the political
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`situation in Europe.” It is doubtful whether all share traders had private correspon-
`
`dents, but the correspondence of two active share traders, Jeronimus Velters a11d
`
`Manuel Levy Duarte”, shows that these investors were constantly trying to get infor-
`
`mation concerning the East India trade. Their correspondence reveals how early
`
`modern share traders managed their information needs.
`
`Comparing the correspondence of the two traders is interesting for yet another
`
`reason: these traders belonged to two distinct groups of share traders - Christians and
`
`7" Dreiskii1nper,_»'lrm dc’ uaarm:ona', 62.
`7-7‘].R. Bruijn,
`I"?1rer:.=rf wrtzden. De..-‘t"E?a’rri’nnrf.9r nn.='é'og.w{on£ in de gm.-‘arrayed? an :m’zt£imr1‘.»* avuw [Amsterdam 1998}
`I22.
`
`7'7 De la Vega, Chnji:.tién air cor5fie.\‘£nne.c, 92.
`77 The Levy Duartc correspondence is kept in the archive of Amstcrdarn"s Portugucse—Jewish syna-
`gogue: S.-\.-\, Flt}, in\'. nrs. 675-9]. The Velters papers can be found in the Vellcrs liunily arcliive, which,
`incicleiilally, contains the correspmideiiee oFonly_]eronitnus Velters: S.-\.-\, 2.
`
`176
`
`165
`
`176
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`

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`Portuguese Jews. Their letters therefore give insight into the information networks of
`
`both communities. Velters was a very wealthy Christian merchant: his estate was val-
`
`ued at_fl07,76U at his death in 1707. He (and his family) had gained this wealth in
`
`commodity trade with France and Spain. Butjeronimus shifted the focus from inter-
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`national trade to civil administration. He became city secretary of Amsterdam in
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`1673, accepted other administrative duties in regions around the city and became a
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`\-’()C director for the Amsterdam chamber in l693.?3 Levy Duarte, on the other hand,
`
`was a Portuguese-Jewish merchant jeweler, who formed part of an international net-
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`work of merchant _jewelcrs.7"9 Moreover, as a member of the Portuguese-Jewish com-
`
`munity, he could probably benefit from the information network of the Diaspora. The
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`Sephardic Jews had business and family connections in the Iberian Peninsula, the
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`Caribbean, France, Italy, India, North Africa and London.
`
`Israel has pointed out that the cohesion of the Diaspora’s information network
`
`was unsurpassed and this seems to have also held true for the Portuguese Jews who
`
`traded shares.“ VVhen, for example, Rodrigo Dias Henriques, the exchange agent of
`
`Manuel Levy Duarte who was also in charge of gathering information for his master“,
`
`met some other Portuguese Jews during the Sabbath in the first week of October
`
`1693, they sat together and shared their news about the \-’O(:.‘‘‘3 Dias Henriques had
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`the advantage, moreover, that he was the exchange agent of several Portugtese Jews,
`
`inclu