ers and pamphleteers regularly linked the state of the company to the well being ofthe
`
`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 therelbre used it as an
`
`argument for their own cause.”
`
`This might also explain why l'Emperet1r chose to invest in the \-’O(.: 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-
`
`tain5‘“_. because by purchasing a share, he could show that he wanted the company to
`
`continue its activities in the East. Being a11 immigrant from the Southern Netherlands
`
`- like so many of the early investors in the VOC39 - l’Empereur was probably particu-
`
`larly sympathetic towards the. Dutch cause in the conllict with Spainfiii‘ 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.
`
`Market imctioiis to infiamtrition.
`
`During the period 1502-9, shareholders never received an official statement from the
`
`company, so the announcement of the lirst dividend in Marcli 1610 was an important
`
`-'5" The company clirectors, for example, used it in H509 to argue that short-sel.ling should be prohibited:
`the short sellers not only tlisrespected the company. but also the United Proviltces as a whole. Petition
`\'rJt: directors to States General, 1509: Van Dillen, ‘Isaac le l\-"fairs", 31-2 [_doc. nr. 2}. See also: De Mar
`chi and Harrison, ‘Trading “in the wind”. .31-2. The share.holclers who made a case for leaving the
`share trade free, replied in a counter petition to the States Di‘ Hollancl that they were (levelled to their
`Fatherland: Van Dillen, ‘Isaac lc Maire’, 34 (doc. nr. ."l_‘_I. The activist shareholder who took open action
`against the company n1a11a_t;etne.nt also linked the \'()C: to the (‘.(}I‘lCll|_llJI'l ofthe country.
`l’2i‘laar!'t (mi
`dc Ed. Ho. rlzln. Hmm .S'lrt-‘er: Gaiierael. Finally, according to De la Vega, even in the late seventeenth cen-
`tury, there were still investors, so-called ‘liclhebbcrs’, who always held long positions; as ‘det-'otecs‘ of
`the company, and tie 1)m‘rft Rtgriuiilit.-, they were constantly trying to push up the share price: De la Vega,
`Cir3igfit.ririit dz’ .rri;y'it.ritirm', 102.
`3' See footnote 15.
`
`5‘? 301 {or 26“.='n] of the I [43 subscribers to the Amsterdam chamber capital stock in 1602 came from the
`Southern Netherlands. Their average st1bsci'iption to the stock was relatively high; they subscribed
`sliglitly over 38% offitttstcrdatifs stock: \-"an Dillen, .-‘la-rtrfeefirnii(fo'.s'i'qg7'.sto‘. 55.
`35‘ Cornelius Plancius voiced similar feelings about the predecessors of the \"('JC in his late-sixte.enth-
`century description of Anisterdani: they were deployed to maintain the ircedora o|‘thc Dutch Republic.
`rather than to sttpprcss other countries. Their rcvcnucs went to the churches and to other laudable
`institutiotts: Cornelius Plancius,
`'Bescl1rivirtge der lollijcke ende wijtvcrmaerde eoopstede AerI1stelre-
`dammc’ Ii l5'?l7l, in: P. Schcltema nfed.}, :lem.s"te=i"a' riitdlieirf t_J,!“(:'e’r:'.‘e'.’i‘tl‘I:r:'¢?(Iral!:.gt‘l't‘(tlt‘.’.' vrm .»I.-m‘£et‘darr.= It i;'l85fii, 1- I 2,
`there I I. Very little is known about Cornelius Plancius, but it could veiy well be that he belonged to the
`same lalnily as Pelrus Plancius.
`the famous Cattographer and clergyman who immigrated from the
`Soutltern .\letl1er|ands to .—\mstt-rtlann.
`
`156
`
`167
`
`167
`
`

`
`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 :nacei”‘*,l 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 die East India house?
`
`The company set a price For the mace (ll and 9 stttierrs 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.“-3 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 ]’Empereur should ship it to another place,
`
`as the dividend deluged the Amsterdam market for rnace..3'-* l‘Empereur 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 sh orLly.'~‘7
`
`The De Velaer-l’Empereur correspondence clearly shows that the eompanv’s
`
`decision to distribute spices burdened the investors with a hard choice. The directors
`
`of the first hour were all experienced spice traders the.mselves {they were the pioneers
`
`of the East India trade For a reason) a11d there were quite a few investors who were
`
`keen on receiving the di\«'ide11di"’3, but traders with little or no experience as commodity
`
`merchants - there were quite a few of them amongst the shareholders - must proba-
`
`hly 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 V-"e|ae1' to |”EInpereur, 19 March I610, I-‘II’, inv. nr. 215, nr. RI /5. The prices ol‘ 1
`equaled the prices at which the company had recently sold mace on the markel.
`55'“ De Velacr to |"l'Jmpe.reur. 24 March 1610, I31‘, inv. nr. 215. nr. H]/ti. 1'l:in1])ereur to De \-"elder, El
`I\'I:1rc|1 1610, I31‘, inv. nr. 255.
`5‘? De Velaei‘ to |'lf.11ipcrettr. 30 September l5lO. B'l', inv. nr. 21:3. nr. Bl /l l.
`-“3 There were even people who bought shares after the dividend anuottncemem in order to be able to
`receive the mace: De Veiaer to |‘F.mpereur, 24 Marcli 1610, HT, inv. nr. 215, nr. HI /(5.
`3" De Veltter wrote to his uncle that mzirtv shareholders were hesitant about what to do with the mace:
`De Velacr to l‘Emperettr_. 2-"r I\-"larch I610, B1‘. in\'. nr. 2 I 5, nr. Bl /6.
`
`1 and 9 st.-.*i:,'m
`
`168
`
`157
`
`168
`
`

`
`East-Indian wares did not know what to do with spices, as the example ofl’Empereur,
`
`a silk tracleri”, shows.
`
`The market nevertheless reacted positively to the earliest dividend announce-
`
`ments. The cum-dividend price - the price paid for shares that were entitled to reeeiv»
`
`ing the dividend distribution - increased from around 130% in October 1608 to 156-
`
`8% right after the announcement.“ The. rum-di\.-'idend price rose further to 170% alter
`
`the second di\."idend."2' The dividends were of course not isolated events, so these in-
`
`creases in the share price c.annot be solely attributed to the announc.ernents, but the
`
`market undoubtedly reacted positively to the dividend distributions. Shareholders
`
`probably regarded them as ollicial 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 \-'0(: 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 llJ11('.[l0l1C‘Cl as reports on the financial situa-
`
`tion ofthe VOCI. 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 he a sign that the company's financial situation had improved.
`
`A decrease, on the other hand, meant bad news. A conversion lrom 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.“
`
`l“ l‘I7Lmpere1|r regularly asked De Velaer if the \='tJ(.' return cargo (‘on1ainecl silk and he had a special
`irtte.I‘est in the silk price on the Amsterdain I‘I1ZlI‘l(("£.
`[20, lo. 2. See chapter 9. section Share price
`” This price quote, 9 April ltilt): S.-L\, Notaries, inv. nr.
`and (ll\‘l(.l(‘.l1fl.‘S on page 65 ll. For a discussion on cttm— and £’.\'-{ll\'i{lL‘!l’1(l prices in the period befot‘c I618,
`‘*9 This price quote, 30 October lfil 0: H.-\.-\, ;\lot2iries, im‘. in‘. 1916. lo. 597\-‘-5981'.
`'5‘ Twti-vearlj.' di\-idencls in the l[i‘.?Os and lirst hall ol'1he lt53t'ls; from [635 ouwarrls every year. In the
`remainder ol‘ the centuri,-', only the wars with England and France made the company deviate tcn1po-
`t‘€lI‘il}-‘ front the distribution pattern. See also t:liapI.er 2, section Share price and dividends on page 65 fl".
`and Appendix B Dividend clistributions \'U(':. I602-l 700.
`"H In corporate finance models, which assume the existence ol‘ perfect capital Iuarkets. a lirrn"s value is
`tinaflcttted hy its dividend polic}-'. See e.g.
`the famous article by Modigliani and Miller: Merton H.
`Miller and Franco l\Iodigliani, ‘Dividend policy, grotvlli, and the valuation of sliares'._ 7?t.r_,:'ottmr.'l of
`tlri.rirm'.s' 34 t'_|$l6l_‘J -“ll I-33. In these models, a share‘s value equals the present value of all future tlivi~
`
`158
`
`169
`
`169
`
`

`
`In the first haif of the se\-renteenth century‘ the company directors determined
`
`the size of the dividend soon after the arrival of the return fleet, generally in autumn.
`
`The management thus really let the owners of the company have a share in the suc-
`
`cess of the trade. This policy changed in the second half of the Century. From now on,
`
`the dividends were announced at the end of the yearly meeting of the He£I'8H .‘(V.~'1 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 \-"OE: 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 Jiefltebbers (those who loved the trade} started.” In other
`
`words, the traders immediately started speculating on the correctness of the rttmors
`
`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 ot'_]cronimus Vcltcrs, dated I3 March 1688.
`
`The meeting was closed and the outcome confidential, so shareholders had to rely 011
`
`rumors until the directors made an ofiicial 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
`
`he 25% in cash.“ But then Veltcrs 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 foiward contracts {nominal
`
`\-'alues:f6,[}U0 and_f30,0UU at 557.75 and 559°/o - please note that these were short
`
`sales) with a settlement date of I May. Not everybody believed the rumor, though, so
`
`the price inc.reased a bit in the next few days.
`
`(lends - which instantly explains why the share price decreases by the value o|‘the diviclend just distrib-
`uted. However, this does not hold in a world with capital ntarkets that are impctfcct, dtte to e. g. asym-
`metric information, where dit-idends also have information content. Sec tag.
`.\'lcr1.on H.
`t\-Iillcr and
`Kevin Rock. 'I)i\'ident| policy under asyxnmctric inforrnation’,jhmwrtf qfflrtanrr +0 {I985} 1031-51.
`*7‘ de Kurtc, D6‘_?_t’t(.’J"£?}l:iZ5't*"fiftflfttiéft
`t=crr:rttzt‘r;r;:'rIir.=_g in (air
`I-’l’)C_.
`I"}’rertr;tgrIt’
`()t:.t'tit:a't.s'r.ftr Ccrrtfirrgrtir [Leydcn
`15184} 65. ($8.
`l(}'.~l.
`I’I(".'. in\‘. nr. 681b, p.
`4“ Dias Hcnriques to Lexy Duartc, I7 February 1698. :-i.-L-\,
`‘7 lbiclerrt. In pre\‘io1ls years, the \-’t')(J had disttibtttcd 20°/u in cash {'15 April 1587} and l‘.2.:'}°x'u in cash {:1
`May I[i8(i): Van Dam, lie.s't't't.g-:.'ir:gr IA, -I33--1-36.
`
`170
`
`I59
`
`170
`
`

`
`On the night of the meeting, broker Geriit 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 Jacob Quina, Isaac les Paul, Gerard
`
`Putrnans, Comelis 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 565% and there. were sud-
`
`denly only buyers on the market. Minutes earlier, the meeting of the Hearen X 1'71, 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 a11y 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% in cash and another 15% if the return
`
`fleet 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 1
`
`;\*'lay.“5’ His information proved correct. Apparently Velters had personal ac.ccss 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 ofthe meeting was for
`
`the sliareholdersz 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.5"
`
`Naturally, the market not only reacted to company-specific information. On
`
`the contraiy, political and military events were of major influence to the share price.
`
`The share pric.e movements of 16?? and 1688 give insight into the kinds of informa-
`
`'”‘ \-"'clters to Holla, 14 l\"Ia1'ch llifltl, S.-\.\. \-"c|I.ers. inv. nr. 4, lo. 78.
`“’ Idem.
`
`5" Nor do I know when exactly during the meetings. which took several days, the subject ofthe next
`dividend distribution came up. The oflicial (ll\‘l(l¢T‘I1d announcenient dates are known. but as the \-"el-
`ters-l-lolla correspondence sliows.
`the information ClZlI1l3("dll.’(l
`in the announcement already liltcrctl
`through long bef'ore the ollicial announcement.
`
`160
`
`171
`
`171
`
`

`
`don the market reacted to and how it reacted. Both years witnessed large price falls,
`
`which led to a high number ofinsinieaties
`
`share traders wanted to make sure that their
`
`countetparties would not walk away from their losses. Hence there is a relatively high
`
`number ofpriee observations available For these years (55 and 35 For 1672 and 1688,
`
`respectively).
`
`Figure 5.1 shows the price ofAmsterdam chamber \’0(': shares for the period 7
`
`July i671 - 28 December 1672. The 7 July 167i (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 1688. The sliareholders received several
`
`indic.ations that things were going very well with the company: in May 1671, the \-’()(3
`
`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 July 20)“ and also in
`
`this year, a total of 22 ships arrived from the. East Indies.-59 But the bullish* atmos-
`
`phere made way for fear that war would break out.“ On 30 Octobenjerortinius Vel-
`
`ters wrote that the share traders’ fear of war had brought the share price down to
`
`480°/0.5" Over the next months, it became clear that war would be unavoidable and
`
`the share price decreased steadily to 406-13% in late Felaruary.-3" The price remained
`
`stable - it even rose slightly - until the day England declared war on the Netherlands
`
`[March 12]. It then tumbled to around 370% in late l\-‘larch 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 '31 1% in
`
`early April.5‘-‘ The lowest point was reached only in July (290%) onjuly 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 l6_]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-
`
`7" Van Dam. [ie.trfrp':Iin,r;e 1.-\, 435.
`7‘? Eleven ships arrived in mid-_]unc, another nine ships in mi(|—_]ul_v, and the remaining two arrived on
`August 24111 and Seplemlaer 2nd: l).-\.*5.
`53‘ See, for a general account" of the political and military events of l[‘i7§2, Israel, Tire Dirfrii Republic, chap-
`ter 31. See, for the economic impact of l(i72:jo11atl1a11 1. Israel, 1):u'n’1 prinmg1ri:.= renifa’ trade,
`I 585-1’ 740
`{Oxford I989} 292-9.
`7"‘ V"elters to Fletelielx 30 October l67 l, .‘s'.-\.-\. \-ielters, inv. nr. 1. lb. 237.
`35‘ \-"eltc1‘s to Fletcher, 2(fi February I672, H.-L-\. Vcltcrs, inv. nr. l, to 252.
`-"“"' \"e.lters to Fletclicr, 29 March and 5 April 1672, SA.-\. Veltcrs, inv. nr. I, fo. ‘.258-9.
`-37 E-5.-\.-\, Dcuta, inv. nr. ‘.293. in. 86. Please note that this is an ex-dividencl price; the \"t'}(: distributed 13%
`o|‘t]Ie nominal value oftl1eeoInpany’s stock on_]unc 2.
`
`172
`
`161
`
`172
`
`

`
`turn of the war in the east and the 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 \-'()C than foreign relations. The upward
`
`trend stalled in May 1673, when the share price fell back to 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 (June 1), which
`
`had been announced on May 16. Interestingly, the share pric.e 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 sliareholders. Put
`
`another way, they did not update their beliefs on the state of the company alter 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 lbund several
`
`allies in its war with France. The dip in [678 (see Figure 2.6) must probably be attrib-
`
`uted to the disappointing outcome of the Peace of Nijmegen. The share price move-
`
`ments of 1672 and the years thereafter thus show that the share price reacted particu-
`
`larly strongly to events in the international political and militzuy situation.-""‘ 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 linancial 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 \-Villiam 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.
`
`-"‘” Israel Iias noticed the same: Israel. Dt:!di,(J:i'mr.':_r1', 86.
`7"-' This is thus not a strtlctural price change, but merely the dill}'renec between the rum— and (‘X-l.'ll\'ilIlI."I]Cl
`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 \=’ega’s Coryirsitin ale can
`
`stones, who wrote that the news reached
`
`the share market via Jewish trading clubs. Hence, Israel argues that the Sephardic
`
`community, and in particular a number of inflttential_]ews who stood in close contact
`
`with \'Villiam III“ 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 bring the share price down“?
`
`Su1‘pI‘ISl.ngly,_I€I‘OI‘IlI1’lt1S Velters gave a different explanation for the price fall of
`
`late August 1688. On Auyst 24-, he wrote to_]acob Boreel that the first price decrease
`
`had oc.curred in the afternoon of Saturday, August 22. The night before, the Amster-
`
`dam delegatcs 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 l{;‘\-"}-' a tax on French product-. 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 ollicial 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"r'u.‘33 Velters had been to the ex-
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`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 crash of I588‘, 472-'l-.
`"1 Israel nztmes the following members of the Scphardic commttnity:Jacob Pereira, Antonio t[l\-'Iosel1]
`Alvares .\'l£l(‘l1ElClO,__]{’.f'0l‘tln'IO Ntmes da Costa and l~'rancisco Lopes Suasso: Israel, "lite Amsterdam
`linaltcial craslt of I688’, 482-3.
`"3 Israel qttotcs the pamphlet R£’llr1'f.’S rt: r:mt't'rrrt'io‘ie to prove this claim: Israel. ‘The Atnsterdam financial
`crash of 1688‘, -I8-1-. Hut-seven‘, the anonymous author of Rrt‘r.w wt :'ort:‘rrtdt}¢tir only stated in general that it
`had occurred that people deli|)erattxly tried to bring the sltare price down. He did not specifically men-
`tion tl1t.~_]ews or the price crash of 1688, which, ittcitlentally, would not even have laeen possible, for the
`pamphlet was publi.-.-hed in 168?. Ifrtcter er:
`rrJt:tmc.I'.='u*t'e up (is m0t£z'er.=_. am EM keeper: at z:ev'kuu;;er.- cm: Ou.tt- an
`l'l’i?.tt-Indira rtrftffl, din sir! ,gett'mts{mrteet'd t<.'m'rt’e?n,
`e’!t'(t'r* ttptir ,(:r.'r{_t-.«w re t'2r:.rtz'<r.='e°t: met rest Lwftnst Qt (it? Hm’ ."-irotrtrrs
`i'l'ft‘{_‘.t'.\'
`:.Im.= Holy. .»lrt't'rtc(mI' tot‘ .-'l.In5t‘t=r(t’mn. nnttelertde :.'nrtrga<t'et"£. an riser‘ en bstwt getmmt uwrr tit ttIee.='§}=!t' Hm’lrzmtt .='t;tm‘t
`ea tt.‘elt'rt.rrm .rl't".\'l(ht’I.'fllt" it [s.l.
`l(i8?'_‘.' 1. See also: Smith, 7ijd—(tyfl7rit'rr.t', 76.
`‘*5 \"e1ters to Boreel, 24- Augttst 1688. S.-t-\_. Veltets, inv. n r. -1, F0. 87.
`
`174
`
`163
`
`174
`
`

`
`more details.“ On August 31, he reported that \--'()t: shares now sold for 463"/o. The
`
`share traders feared that the authorities would decide to levy a tax on every share
`
`transaction - following the proposal of Nicolaas l\/Iuys van Holy.“ Three days later,
`
`the share price had recovered to 47~‘l"x’o.5“
`
`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 going on
`
`within the governmental bodies ofthe Dutch Republic. And indeed, the States of Ho]-
`
`land had held deliberations about a renewal of the ban on short-selling on August
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`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 Israel’s account, heavily influenced by De la Vega’s dramatized account of
`
`this episode, is not Fully correct either. Thcjewish traders were not solely responsible
`
`for the. price fall and, more importantly, the crash was not as large as lsrael’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 37’O"x’o between August 24 and 28 and even to 366% in early Sep-
`
`tember, as De la Vega and Israel wr“ite'53, but front 563% in March to 463"/o on
`
`August 31. The strong ‘patriotic’ rally, that should have followed in the first half of
`
`September, where the share traders suddenly endorsed \-'\"illiam’s plans, never oc-
`
`curred“, the share price rather continued falling until it reached its lowest point on
`
`September 14 (ell-4%)”, the day on which the Amsterdam city council made inquiries
`
`about the purpose of the naval preparations.“ It then climbed up again to 433”/972 on
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`September 16, and fell back for the last time to 4l6°fo?‘-5 on October 17, just after the
`
`"" \-"eltcrs to ‘Borecl. '27 :‘-\ug'L|%t H388, S.-\.\_. Velters, im-'. nr. 4-. lo. 83.
`"7' Velters to Boreel, 3| August 1683. S.-U, Velters, inv. nr. -l, ft). 89. For the Mtlys \'an Holy proposal,
`see p. 72.
`"'3 \'elters to Boreel, 3 September I688, ti.-\.\, \-"ellers, inx-‘. Ill‘. 4, lo. 91.
`l'.?l _. lb. 49].
`'” Resolutions Slates ofHollancl, 21 August 1683, X.-\, States ul‘Holla11cl,in\'. nr.
`‘*3 Israel’.-3 price observations can be found in the appendix to his article: lsrael, ‘The .~‘\rnstcrd:tm limin-
`cial crash of 1688’, 487‘.
`"“-' Israel, "The ;'\n1ste.rcia1n financial crash of I688’, 484-5.
`7" lsrael. ‘The Amsterdam financial crash ol” I 688’, 478.
`3‘ Dreiskiimper, zl(-'l'i|' de :.'ar;rrnrtmd, {.3 l .
`73 Israel, ‘The Atnsterclaln financial crash of l 688”, 478.
`73* Vellers to Holla, I? October 1688, .‘5.»\.v\, \»’elters, im‘. nr. -1-, lo. 92.
`
`164
`
`175
`
`175
`
`

`
`authorities in tlie Dutch Republic had decided on economic sanctions against
`
`I~‘rancc.7"' Hence, by the time William 1lI’s invasion actually took place (the first at-
`
`tempt to sail away on October 30 failed, the second attempt on November 12 was
`
`suct;-.essl"uI?~"}, the share price had already started an upward trend. In the following
`
`decade, it fluctuated between 485 and 51 7%.
`
`So far, this chapter has discussed the factors that influenced the share price.
`
`Share traders were interested in news about the state of allltirs in the East Indies,
`
`about the return cargo that was underway, about the size of dividend distributions and
`
`the political and military situation in Europe. The trading behavior of other share
`
`traders of course also influenced the price, so it was aiso profitable to have some
`
`knowledge of the investment sentiment of other traders. Speculators needed constant
`
`updates on all these difierent categories ofinformation. Furthermore, for their trades
`
`to be profitable, they needed to be the first to get news that could inlluencc the share
`
`price. The next section will explore how share traders managed these information
`
`needs.
`
`The irgffinanrztiriri netuirirks‘ rg/’(L}"trr'.s£t'an aridjeztridz sl'trtretrr1(1.'e1s'
`
`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 \-'0('; return fleet. He also
`
`wrote that it was vital For a share trader to keep abreast of news about the political
`
`situation in Europe.7'5 It is doubtful whether all share traders had private correspon-
`
`dents, but the correspondence of two active share traders, Jeronimus Velters and
`
`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 ofshare traders - Christians and
`
`?" I)reisk5t|11pe1‘. Arm ale i.!narrrt::;-r:(t', 6'2.
`7-"JR. Bruijn.
`l-“erred :.'r.='a'rden. Dr..-\i3drr!n::rI‘_rr nn:'£o_g5:JZnm' in div zrr.rert£imrie* an (:c':’t.'t£rr:a'r= £’P!:‘€£'
`1'22.
`
`I}-‘nnstet‘d;11i1 1998)
`
`7'5 De la Vega, (.‘tuy‘r}.riri:: de cs-nfu.tim2.s=_v. 92.
`V7‘ The Levy Duartc correspondenct‘ is kept in the £1t‘Cl1i\-‘(‘ of‘Amster(|am"s I’ortu,-;v,tIese—_]cwis|i syna-
`gogue: S.-\;\, Flt}, in\'. nrs. G75-9|. The Velters papers can be lbund in the Velters l'amily archit-‘e. \\'hit‘h,
`ilieiclentally. contains the correspotideliee oFonly_]t-ronimus Vt-lters: S.-\.-\, 2.
`
`176
`
`165
`
`176
`
`

`
`Portuguese Jews. Their letters therefore give insight into the information networks of
`
`both communities. \-"e]ters was a very wealthy Christian merchant: his estate was val-
`
`ued atfl0?,?60 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-
`
`national trade to civil administration. He became city secretary of Amsterdam in
`
`1673, accepted other administrative duties in regions around the city and became a
`
`\--'()C director for the Amsterdam chamber in I693.” Levy Duarte, on the other hand,
`
`was a I’ortuguese—Jewish merchant jeweler, who formed part of an international net-
`
`work of merc.l1antjcw'elers.?9 Moreover, as a member of the Portugttese-Jewish com-
`
`munity, he could probably benefit from the information network of the Diaspora. The
`
`Sephardic Jews had business and family connections in the Iberian Peninsula,
`
`the
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`Caribbean, France, Italy, India, North Africa and London.
`
`Isr