I Asked My Dad to Write an Article, and This is What I Got.

My father is quite the man, he is a self-proclaimed historian, a bald nerdy polyglot, and quite the storyteller. One day I noticed that he was going through a bit of a writer’s block for his new book, so I decided to give him a writing exercise for slim radio – just to lift up some work load from my shoulder. Initially he was hesitant because he didn’t really know what he should write about. So I told him, since he is known as The Flying Dutchman that lives and breathes capitalism, why doesn’t he just do something related to that. After an hour and a half this is what I got from him.

Travellers arriving in Amsterdam make their way through a bustling, high-roofed, 19th century railway station before they find themselves in a large square at the front of the building. Here, swarms of waiting relatives, lovers, business associates and other assorted meeters and greeters swirl back and forth between trams, taxis and a thousand bicycles. 

The square opens on to a broad street with a wide canal on its left, both called the Damrak. It’s often packed with wandering tourists, rowdy British bachelor parties, overseas students in search of weed, or busy locals pedalling their way disdainfully through the crowd on bicycles, bells jingling. The wide sidewalks are lined with a string of kebab vendors, pizza restaurants and souvenirs shops that suck new arrivals into the city centre.  

A little further is The Rokin, a road which opens into a wide boulevard, with a large metro station of the same name. After a few hundred metres, a left turn on to a narrow street, more of an alley really, provides access to an even narrower alleyway that runs parallel to The Rokin. Enclosed by the tall buildings, it’s very quiet. Few tourists venture here unless they have booked a seat at a small theatre, “Frascati”, or a table at one of the unpretentious restaurants.

We have arrived at where Capitalism started. Nes. In this nondescript lane, global capitalism was born on the evening of April 1, 1602. It was here that the world’s first shares were traded in a house in the centre of Amsterdam belonging to a tall, handsome man with a twisty little moustache, Dirck van Os. 

Where it all started: Nes. This painting is from Nes in 1774.

The story began a few years earlier on April 2, 1595 when four ships set sail for Bantam, the most important of the trading centres on the island of Java. They arrived more than a year later, on June 6, 1596. The fleet was under the command of Cornelis de Houtman, who had instructions from the expedition’s financial backers to explore the viability of sailing all the way to Asia and to identify opportunities to buy pepper, nutmeg and other spices in those faraway lands. 

The expedition might have been a commercial failure – few goods were carried back home – but it was now clear that sailing to Asia was possible. It initiated an era of Dutch maritime exploration in the late 16th century, which led to the foundation of the Dutch East India Company -the “VOC”- in 1602 and the beginning of the Dutch Golden Age. 

The VOC needed money, though. And so, just before 10pm on Saturday, April 1, 1602, a crowd gathered at the house of Dirck van Os on Nes to establish the VOC. It must have been an extraordinary evening, buzzing with excitement and expectation as the first shares were issued to a total of 1,143 people.

And what a motley crew they were. Lawyers, carpenters, bakers, shopkeepers, weavers and even seven housemaids lined up to put money into this new venture. The total capital raised in this first “initial public offering” (IPO) – the process by which a private company goes public by the sale of its stocks to the general public – was more than 3.6 million guilders, a fortune at the time. To put this into perspective, in those days a few hundred guilders would buy a small house in the centre of Amsterdam. 

Soon thereafter shareholders were starting to do what shareholders have done ever since. Buy and sell.

Profile of Amsterdam, seen from the IJ (1618), Pieter van der Keere , stadsarchief Amsterdam. The “New bridge” where stock traders met is seen prominently in the middle of the picture.  These days, the train station blocks this view of the city.

 Opposite the Amsterdam railway station is a small bridge, where trams squeal as they turn right from the Damrak to loop towards the Central station. Just beyond the “Nieuwe Brug” – New Bridge – is an alley that leads to the Warmoesstraat, one of the oldest streets in Amsterdam. Beyond that lies what was then and is still today the city’s famed red-light district. In the early 1600s, people who wanted to buy or sell VOC shares met on this unassuming bridge. On rainy days, these traders sought shelter under the porches of the shops on Warmoesstraat.

Detailed Profile of Amsterdam, seen from the IJ (1618), Pieter van der Keere , stadsarchief Amsterdam. The “New bridge” (De Nieuwe Brugh”) where stock traders met is seen prominently in the front of the picture, further back is the tower on top of the stock exchange, called “De Beurs”, visible.  The letter “s” is somehow hidden in a fold in the drawing.

 But as trading in VOC shares and a range of other commodities gained in popularity, it was decided that a permanent trading venue was required. The city council appointed architect Hendrick de Keyser to build the world’s first purpose-built stock exchange. The impressive building opened on August 1, 1611. Trading in stocks took place by one of the pillars at the back of the exchange.

Picture Hendrik Exchange. Different commodities were traded at different corners or the exchange. Stock were traded in the back, visible on this drawing.

 The flame of capitalism had been lit and soon spread like wildfire across the whole city. Everybody wanted a piece of the action. In 1688, the first best-seller about stock markets was written by an Amsterdam-born Portuguese Jew named Joseph de la Vega. He described how trading in VOC shares held Amsterdam in its grip:  

 “If one were to lead a stranger through the streets of Amsterdam and ask him where he was, he would answer “among speculators” for there is not corner where one does not talk shares”. 

 The idea of stock exchanges spread like molten Dutch cheese – slowly and irreversibly. In 1657 The English opened a stock exchange in London. The Americans were the next to catch stock market fever and opened what eventually became the biggest stock market in the world - the New York Stock Exchange (NYSE) was opened.  Stock exchanges then started to pop up across Asia too. The first was in Mumbai in 1875, Tokyo opened one in 1878 and Shanghai and Hong Kong in 1886.

Most of these new Asian stock exchanges were raucous, bustling “open outcry” markets, with brokers shouting orders around. These days its all electronics and computer that run stock exchanges.

But the very principles of how stock markets work and operate are still very much like that evening of April 1, 1602 in that small alley in Amsterdam, Nes, at the house of Dirck van os. Stock markets, such an important part of the functioning of most economies these days, were a particular Amsterdam invention.

After reading this, I was quite surprised that the man that planted his seed to form me wrote this out of his ass within one short writing session. Made me wonder how long it took him to make me. But I was impressed with how much knowledge I was able to extrapolate from it. If you are curious about stocks and want to get financially literate in times of high inflation. Check out Herald van der Linde’s newest book right here.