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					                          MIRRORING DIFFERENT FOLLIES


                 The Character of the 1720 Bubble in the Dutch Republic




                             By Oscar Gelderblom and Joost Jonker


                                      Utrecht University




                                  This version, 17 April 2008


                          First draft, please do not quote or circulate


                                    Comments welcome at
                  oscar.gelderblom@let.uu.nl or roode.jonker@inter.nl.net


Abstract
The 1720 bubbles are generally taken as the first modern, international speculative boom and
bust cycle testifying to the close financial integration between Paris, London and Amsterdam.
Yet the character and timing of events in the Dutch Republic differed markedly from those in
France and Britain. Share prices followed a similar trajectory to London but, because the
Republic’s public finance offered no scope for debt-equity swaps, a bubble on the French or
British scale never developed. The boom in company promotion was generated by local
authorities using the speculative sentiment for launching joint-stock companies, hoping an
infusion of capital would lead to economic revival. Only a small number of these companies
were actually constituted and no more than a few generated any share trading at all. Thus
peculiar political and social circumstances prevented the spread of the Paris and London
contagion to the Republic.


                                               1
Introduction
The 1720 bubble stands as the defining event of modern financial market integration, in Larry
Neal’s words, ‘the first international stock market boom and bust in capitalist Europe’.1 But
how deep did that integration go? Exchange rates, bullion movements and securities prices
tied Paris, London and Amsterdam closely together, yet the pattern of events in the Dutch
Republic appears to be rather different from what happened in France and Britain, suggesting
that somehow the speculative contagion failed to catch. If indeed it did not, then perhaps the
financial integration went less deep than we tend to suppose. Or perhaps Laspeyres was right
in suggesting that the Republic already trailed international developments.2
        Our understanding of events in the Republic is not made easier by the existing
confusion about what really happened. For all the attention lavished on the Groote Tafereel
and the events in the Republic which helped to produce it, we know very little about key
aspects of the Dutch 1720 bubble. The scarcity of securities prices, for example, means that
we cannot gauge the trajectory of events. The Dutch bubble lagged the French and British
ones, but we do not know by how much, nor how big it was and the precise date of bursting.
        Moreover, the literature is unclear about the events of 1720. Drawing heavily on the
Groote Tafereel, older authors such as Laspeyres and Vissering emphasized the fraudulent
schemes boosting irrationality, the losses sustained by investors and the collateral damage
done to the Dutch economy.3 Ever since Groeneveld’s pioneering 1940 thesis, authors have
accepted his conclusion that the losses and damage were inconsequential, while still
describing the bubble in lurid terms.4 As a result we face a curious discrepancy. By number of
companies launched and the amount of capital mobilized, the Dutch bubble was impressive
enough; yet the overly familiar scenes of fraud, folly and frantic speculation associated with
them and the resulting collapse failed to leave a dent. The explanations offered for this lack of
impact also seem to fall just short. Authors have exchanged the notion of experienced Dutch
financiers effecting a timely withdrawal from Paris and London for the macro-economic
explanation of a more mature financial system combined with prudent authorities refusing


1
  L. Neal, The Rise of Financial Capitalism, International Capital Markets in the Age of Reason (Cambridge UP:
Cambridge 1990) 62; cf. also Michie, ‘Invisible Stabilizer’ ***.
2
  E. Laspeyres, Geschichte der volkswirthschaftliche Anschauungen der Niederländer und ihrer Litteratur zur
Zeit der Republik (Leipzig 1863), 273.
3
  E. Laspeyres, Geschichte der volkswirthschaftliche Anschauungen der Niederländer und ihrer Litteratur zur
Zeit der Republik (Leipzig 1863), 273-277; S. Vissering, ‘Het groote tafereel der dwaasheid’, in: De Gids **
(1856), ***.
4
  F.P. Groeneveld, De economische crisis van het jaar 1720 (Groningen 1940); Slechte, de Bruyn, Forrer, DeV &
VdW. Curiously enough, even Groenveld describes the speculation as disastrous, while showing that little actual
damage was done: [***6]. ***Add De Bruyn 2x, Forrer.


                                                        2
company projects involving the public debt for equity swaps which started the French and
British bubbles.5
        Though financial maturity and official prudence may provide the key to understanding
the time lag between the three bubbles and the lack of fallout from Paris and London, these
aspects bring us no closer to understanding the discrepancy between the magnitude of the
Dutch bubble and the Groote Tafereel scenes on one hand, and the limited impact of the crash
on the other. In this paper we want to show how the complex events of 1720 need a varied
approach if we are to bridge the gap in our understanding. We will first discuss the structure
of the Republic’s public finance and the impossibility of engineering debt for equity swaps,
which explains why the Dutch bubble lagged those in France and in Britain. Section 2
outlines the events during the summer of 1720 and shows how the Dutch bubble closely
followed the British one in time. Speculation in English securities caused a few spectacular
bankruptcies, but the overall damage does indeed appear to have been slight despite the
enormous scale of company promotion and the evidence of heavy securities trading. This can
be explained by looking in more detail at the companies launched (Section 3). Local elites
kept a close rein on them, preventing speculation from getting out of hand. Since a bubble
never really developed, the Tafereel aimed, like the Tulipmania pamphlets of the 1630s, at
presenting a strong satire rather than a realistic account of events (Section 4).


1. Public Finance and the Scope for Debt-Equity Swaps
The War of the Spanish Succession crippled the Republic financially to a quite similar degree
as France and Britain. By 1715 the biggest and richest province of Holland had a consolidated
debt of 310 million, nearly the equivalent of modern, rough estimates of the GDP produced by
the Seven United Provinces together.6 The other provinces were also heavily indebted; the
rudimentary central government of the Estates General faced a debt of 61 million guilders.
And then the sums given do not include a floating debt in the form of ordonnanties, treasury
bills issued in lieu of payment to army suppliers and navy captains for men, goods and
services provided. We do not have figures for the amount of bills circulating in the Republic,
but it was substantial. By 1712 the province of Holland’s estimated debt in the form of



5
  De Vries and Van der Woude, First Modern Economy ***189. The reference to Dutch bankers being more
experienced and cashing out early in Paris stems from an 18th century French complaint and may thus be suspect:
***ref.
6
  E.H.M. Dormans, Het tekort, staatsschuld in de tijd der Republiek (NEHA: Amsterdam 1991) 111, 147; J.L. van
Zanden and A. van Riel, ***36.


                                                      3
ordonnanties amounted to 12 million guilders.7 In 1715 the five regional admiralties together
had debts of 10 million guilders. Amsterdam owed 6.5 million, of which 1.4 million in bonds
issued and the rest in unpaid bills. 8 In 1717 the province of Overijssel still had an ordonnantie
debt of 2 million guilders from the war.9
         The financial situation became so bad that the Republic developed distinct signs of a
state in bankruptcy. The provinces ran up arrears in their contribution to the central
government funds, forcing the treasury of the Union to suspend payments in 1715. When the
office reopened after nine months, the interest payments on bonds outstanding were
unilaterally reduced from four to three per cent.10 The province of Friesland suspended
payments on annuities issued in Holland, though carefully maintaining interest payments to its
own inhabitants.11 The ordonnanties could not be repaid when due, holders having to wait
two, five, or sometimes more than eight years to get their money. As a result these illiquid
instruments traded at only 60-70 per cent of their value.12 The northern part of Holland could
only sustain its financial burdens by drawing on subsidies from the southern part.13
         The authorities reacted to this situation by applying orthodox remedies: pruning the
biggest spenders, the army and the navy, deferring the weakest creditors, i.e. the holders of
ordonnanties, and raising taxation. Some provinces, Overijssel, Gelderland and probably
Utrecht, managed to reduce their debts in this way, but three other provinces did not. This
included Holland, which saw its interest payments peak in 1719, seven years after the war, at
a crushing 90 per cent of revenue. 14 The Union’s finances also remained in a sorry state.15



7
  J.M.F. Fritschy, R. Liesker, 'Overheidsfinanciën, kapitaalmarkt en "institutionele context" in Holland en Overijssel
tijdens en na de Spaanse Successie-oorlog', in: C.A. Davids, W. Fritschy, L.A. van der Valk, ed., Kapitaal,
ondernemerschap en beleid, studies over economie en politiek in Nederland, Europa en Azië, afscheidsbundel voor
prof.dr. P.W. Klein (NEHA: Amsterdam 1996) 165-196, pp. 179-183.
8
  J.R. Bruijn, De Admiraliteit Amsterdam in rustige jaren, 1713-1751 (Scheltema & Holkema: Amsterdam 1970)
80.
9
  Fritschy and Liesker, ‘Overheidsfinanciën’, 186, 187.
10
   J. Aalbers, De Republiek en de vrede van Europa (Wolters-Noordhoff: Groningen 1980) 3.
11
   Aalbers, Republiek 331 footnote 23. Friesland resumed payments to Holland holders after protests from
Holland in the Estates General, but paid them 0.5 per cent less than it did to Friesians.
12
   Fritschy and Liesker, ‘Overheidsfinanciën’ 186-188, Bruijn, Admiraliteit 84-86. The broker and company
promoter Gabriel de Souza Britto offered to accept treasury bills at 60-70 per cent, depending on the issuer, as
payment for subscriptions in one of his many companies, the Generale Compagnie modelled after the Bank of
England and the South Sea Company (no. *** in Table ***: see the conditions in Verzameling tot
waarschouwinge voor de nakomelinge van alle de projecten en conditien van de Compagnien van assurantie,
commercie en navigatie (The Hague, 2 vols 1720-1721) I, 7-45.
13
   Fritschy and Liesker, ‘Overheidsfinanciën’ 186-187.
14
   R. Liesker, J.M.F. Fritschy, Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden, IV,
Holland 1572-1795 (Instituut Nederlandse Geschiedenis: The Hague 2004) 431. The position of the seventh,
Zeeland, remains unclear pending the outcome of V. Enthoven’s forthcoming book on the provincial finances.
15
   Dormans, Tekort 149-155.


                                                          4
From a purely financial viewpoint unorthodox remedies such as the debt-equity swaps
effected in France and Britain could therefore have been welcome.
        However, for two reasons the Republic did not apply them. Firstly, because the
country offered insufficient scope. The Amsterdam Wisselbank’s pre-eminent position left no
room for a credit institution modelled on the Bank of England, because the giro system
rendered a monopoly on the note issue useless. The intercontinental trade already was in the
hands of chartered companies, the Verenigde Oostindische Compagnie (VOC) for Asia and
the West-Indische Compagnie or WIC for West Africa and the Caribbean. From time to time
the VOC did help out when treasuries were empty. In 1674 the company paid out dividends
worth 2.1 million guilders in the form of bonds taken over from Holland and Zeeland, and in
1717 it accepted to pay the interests on a 1.5 million guilder loan.16 Such handouts remained
incidental and on a small scale, however, and usually formed part of the conditions for a
renewal of the VOC charter. Insurance was really the only economic sector where a large
concern could have found profitable employment, but obtaining and operating an exclusive
charter was out of the question. Though the Estates General had no qualms about monopolies,
any attempt to eliminate free enterprise from this thriving business would have foundered on
the opposition from the large crowd of underwriters active in the main cities. The WIC
already experienced great difficulty in upholding its monopoly, which was constantly
undercut notably by skippers from Zeeland, where the authorities turned a blind eye.
        Secondly, the debt-equity swaps practised in Paris and London aimed to raise public
credit by widening the secondary market for government securities. No such need existed in
the Republic, because public credit remained surprisingly robust. Data from bond transfers in
the city of Gouda show that, between 1700 and 1720, Holland bonds rarely fell as low as 70
and generally traded in the 80-85 range which, with interest payments on bonds taxed at 1.5
per cent, 80-85 per cent of par still yielded only a 3-3.5 per cent return.17 By July 1720 the
bonds sold comfortably above par at Amsterdam securities auctions.18 The prices of bonds
issued by other, less creditworthy debtors also edged back to presentable levels. At the
auctions, bonds issued by the Estates General rose from 64.5 per cent in 1716 to 82 three
years later.19 Consequently neither Holland nor the Union, the country’s two main debtors,
needed to find new ways to raise their credit, because the secondary market, no doubt buoyed


16
   J.P. de Korte, De jaarlijkse financiële verantwoording in VOC (Nijhoff: Leiden 1984) Annex 1B; Fritschy and
Liesker, ‘Overheidsfinanciën’ 185.
17
   ***verw Gouda data.
18
   Stadsarchief Amsterdam (SAA) archive no. 5068 invno. 74, auction 3 July 1720.
19
   SAA archive no. 5068 invno. 72 and 74, auctions 14 december 1716, 11 October 1719.


                                                      5
up by the Republic’s abundance of capital, already did that for them. Provinces such as
Friesland could not contemplate swap schemes without support from Holland which, given
their financial beggar-thy-neighbour policy, they were unlikely to get.


2. Contours of the Dutch bubble
We do not know the extent to which Dutch bankers and speculators took part in Law’s
schemes and the Mississippi bubble, but these events had few repercussions in the Republic.
French securities were offered for sale in Amsterdam and elsewhere, but they rapidly
disappeared because few investors wanted to buy.20 By contrast, punters in the Republic
heavily engaged themselves in British securities trading: the notarial archives in Rotterdam,
The Hague and, to a markedly lesser degree, in Amsterdam, are awash with powers of
attorney for transactions in London. 21 Trading is said to have started in March-April and
really taken off in June, hard on the heels of events in London.22 Because of this connection,
Slechte considered the Dutch bubble as a clear case of contagion from Britain, British capital,
speculators, and company promoters crossing the North Sea once the London peak had
passed.23
        For all the contemporary comments on the many bankruptcies caused by the
speculation in British securities, the available evidence suggests that the damage remained
limited. Neither Amsterdam nor Rotterdam saw a marked rise in bankruptcies during 1720-
1721.24 Four very large bankruptcies in Amsterdam were clearly linked to speculation in
British and Dutch securities and the bill traffic generated by it, but these cases occurred
during 1721 and 1722, so the events of 1720 cannot be taken as the only cause.25 It does not
appear likely either that the bankruptcy numbers remained low because speculators fled their
creditors to sanctuaries like Vianen and Culemborg: the coachloads of fugitives depicted in
the Groote Tafereel are a figment of the imagination. The two cities did not accept all comers,


20
   Europische Mercurius January 1721, 12-13; cf. Vissering, ‘Groote Tafereel’ 14, for the image, by all
appearances drawn from French authors critical of the Dutch, of the Dutch bankers’ timely withdrawal with
coachloads of money.
21
   Groeneveld, Economische crisis, 122-168, surveys the evidence from notarial records and merchants’
correspondence. Presumably Amsterdam merchants had less reason to go to a notary because they would have
had a regular correspondent in London.
22
   S. Vissering, ‘Het groote tafereel der dwaasheid’, in: De gids 1856 Vol. 1, and also issued separately; page
numbers refer to this last edition. Reference here to p. 22.
23
   ***Slechte ref; after peak or already during?
24
   W.F.H. Oldewelt, ‘Twee eeuwen Amsterdamse faillissementen en het verloop van de conjunctuur’, in: Tijdschrift
voor Geschiedenis (1962) 421-435; Gemeentearchief Rotterdam (GAR) archive no. 4395, ledgers of bankrupt
estates administered by the town secretary *** chk number and amount.
25
   Groeneveld, Economische crisis 88-107 and 212-245.


                                                        6
asylum seekers had to offer convincing proof of their innocence. As a result numbers
generally remained low and the early 1720s show no difference from the general pattern.26
        The Dutch bubble is generally dated to have begun with the publication of the
Amsterdam insurance company project on 10 June 1720 (Table 2 No. 1), and to have ended
on 5/6 October following public disturbances in Amsterdam outside the Fransche Koffiehuis,
a café in the Kalverstraat where some of the most vigorous trading outside exchange hours
took place. For now, these two dates will have to serve as broad demarcations of events in the
absence of better gauges such as securities prices. The official Amsterdam current published
prices for any imaginable commodity, but not for securities, and the newspaper
Amsterdamsche Courant started printing a clutch of share prices only in 1723.27 However, we
do have a short series from the Rotterdamsche Courant of share prices for July-August plus a
single observation for late September from a private price list which enable us to get closer to
what happened during that long hot summer of speculation (Table 1). We must assume that
Amsterdam prices for English securities moved in tandem with events in London, but by
March the speculative fever had apparently not yet transferred to Dutch shares. VOC is said to
have traded at 700, rather lower than its normal range of 850-860, and WIC at 80, .e. around
its normal price.28 Buoyed up by the speculative climate, VOC prices peaked initially at 1,190
on 20-22 July and are said to have sold at 1,260 in August, but we have been unable to verify
this. 29 WIC shares followed a similar trajectory, though rather higher in relation to that
company’s normal trading level. The market pushed prices initially to 200 by mid-July and
330 in early August.30 This rise enabled the cash-strapped company to float 1,600 new shares
priced at *250 per cent.31 The Estates General’s consent to the proposal on 6 August must
have created a spectacular traffic jam, all coaches available in The Hague having been hired
to carry the news to Amsterdam. In Rotterdam, wild rumours circulated that the


Table 1, Securities prices (per cent of par) in Amsterdam and Rotterdam, 1720


26
   M. Gijswijt-Hofstra, Wijkplaatsen voor vervolgden, asielverlening in Culemborg, Vianen, Buren. Leerdam en
IJsselstein van de 16de tot eind 18de eeuw (Bataafsche Leeuw: Dieren 1984) 129-137.
27
   J.G. van Dillen, ‘Effectenkoersen aan de Amsterdamsche beurs 1723-1794’, in: Economisch-historisch jaarboek
17 (1931) 1-46.
28
   Smith, Tijdaffaires 119, probably taking his cue from Vissering, ‘Groote Tafereel’ 29-30. We have been
unable to verify the source or find the exact date for these March prices. Both authors exaggerate the speculative
wave by giving 40 as the price for WIC shares at an unspecified date in 1719, but the Rotterdamsche Courant for
22 December 1717, 4 April 1718 and 23 October 1719 suggests the trading range to have been 80-90.
29
   Cf. Vissering, ‘Groote Tafereel’ 30, Van Dillen, ‘Effectenkoersen’ 15.
30
   NA 1.05.01.02 WIC no. ***, ***. Van Dillen, ‘Effectenprijzen’ 11, even mentions a peak of 600 at an
unspecified date in 1720 for which we have not found confirmation.
31
   NA 1.05.01.02 WIC ***ref board mins. NB 200 or 250: Eur Mer says 250, board 200.


                                                        7
                    Amsterdam                                                                    Rotterdam
                                                    Bank of                                       Maatschappij
                        VOC           WIC           England        South Sea Co.       EIC       Stad Rotterdam
 23 October 1719         892           81
      2 July 1720       1,160         188         225                   825           362.5
            3 July                                                                                    157.5
            9 July    1,160         160           260                  1000            430
           10 July                                                                                    142.5
           15 July    1,120         200           240                   950            405
           18 July                                                                                     140
           17 July    1,175         202           239                   900            397
           20 July    1,190         205           241                   890            403
           21 July                                                                                     151
           22 July    1,190         198           240                   890            380
           23 July                                                                                     147
           24 July    1,166        225.5          240                   929            392
           27 July    1,135         254          235.5                  900            400
           28 July                                                                                     152
           29 July    1,155         236           251                   880            380
           30 July                                                                                     153
           31 July    1,120         235           250                   930            377
         1 August                                                                                      154
         3 August     1,140         246           245                   990            360             190
         5 August     1,125         258           241                   970            385            180.5
         6 August
         7 August     1,140         330           242                   970            390
       10 August      1,150        342.5          246                   950            388
       11 August                                                                                      182.5
    25 September      1,012         400          242.5                                332.5
Source: Rotterdamse Courant32 and De Vries, Eeuw Effecten, 18


shares had risen to 1,000 in Amsterdam.33 When the shares touched 450 at the end of August,
the board decided on a second issue at that same price but, launched after the 12th of
September, it came just too late and failed miserably.34 On the 18th trade in the Delft company
shares (Table 2 No. 4) was still sufficiently buoyant for the board to launch a second share
issue. However, the IPO of the Sociëteit Berbice, about which more below, failed at an
unknown date; despite heavy advertising the subscription for project in Zwolle on the 23rd fell
short of its target.35 The Dutch bubble thus burst between the 18th and the 23rd or the 25th of


32
   The Gemeentearchief Rotterdam run of Rotterdamsche Courant copies begins with the issue for 4 April 1718
followed by 25 October 1719 and then 17 July 1720, but the Economisch Historische Bibliotheek Amsterdam
(EHBA) possesses (Call No. BC 255-1) a unique copy of the Groote Tafereel bound with various pamphlets not
included in other copies, amongst them the Rotterdamsche Courant for 3 and 10 July 1720. The Rotterdam
newspaper published the local prices of the day before, and the Amsterdam ones of two days previously.
33
   Rotterdamsche Courant 8 August 1720.
34
   NA 1.05.06, no. 904, a bundle of various papers including a handwritten statement of revenues and costs ***1675-
1728; H. den Heijer, De geschiedenis van de WIC Walburg Pers: Zutphen 1994) 179; Van Dillen, ‘Effectenprijzen’
11; Groote Tafereel section Letters AZ to NN 7 (price peaked at 600).
35
   Van Dillen, ‘Effectenkoersen’ 11; ***chk NA WIC en VWIS, Van Brakel WIC (verw Schneeloch); Formsma,
‘Windhandel’ 116.


                                                        8
September at the latest, the latter day the customary settlement day on which investors would
have had to adjust their positions to the price falls which started in London on 13 September,
or 3 September in the Old Style which Britain still used.36 Consequently, the Amsterdam
brawl on 5 October did not mark the turn of events, but came in the aftermath. This comes as
no surprise; the busiest crowd scenes pictured in Wall Street are also not before but invariably
after a crash, when everyone scrambles for liquidity.
         The pattern of share transfers at the Maatschappij van Assurantie, Disconteering en
Beleening also suggests that the collapse occurred somewhere in September and not in
October. In Rotterdam trading was hottest during July. Launched in June 1720 (Table 2 No.
2) and later known as the Maatschappij Stad Rotterdam, this company was the last and lone
survivor from that tumultuous year until its recent take-over by Fortis. Trading in its shares
probably began immediately following the assignment of shares to subscribers on June 25, the
price apparently reaching 186 per cent the following day, though the board opened the
transfer ledgers only on July 16.37 Figure 1 shows that, in a little over two weeks, shares with
a nominal value of 7.5 million guilders on a total of 12 million guilders changed hands for an
average of nearly 600,000 guilders per trading day. The books were then closed until 16
August, no doubt so the clerks could catch up with other work. Though the remainder of
August did see some very busy days with large transfers, the total and the average per day
remained considerably lower than in July. The company’s share price remained high, enabling
the board to launch a second issue at an unknown price on 21 August.38 However, the
September transfers were still lower than August. During the first week the shares of the
Maatschappij Stad Rotterdam probably peaked, for on 2 September the board sold shares
from its portfolio to three directors at 192 and 193 per cent, which may have been below
market value.39 But payments on the September instalments on share subscriptions slowed
down and on the 25th the board had to warn some seasoned punters that they risked forfeiting
their shares unless they paid up that same afternoon.40 At around the same time a




36
   Smith, Tijdaffaires 92 and *** on the rescontre or settlement days.
37
   G. van Rijn, ‘De Oude Hoofdpoort’, geschiedenis der Maatschappij van Assurantie, Disconteering en
Beleening dezer stad (Rotterdam 1899) 17; Slechte, ‘Noodlottig jaar’ 98; GAR archive no. 199, inv.no. 19,
transport ledger 16-24 July 1720.
38
   ***chk GAR price.
39
   G. van Rijn, ‘De aktiehandel in 1720 te Rotterdam en de Maatschappij van Assurantie, Disconteering en Beleening
dezer stad’, in: Rotterdamsch jaarboekje (1899) 1-75, ibidem 22; cf. Slechte, ‘Noodlottig jaar’ 110, putting the peak
at 200 per cent.
40
   Van Rijn, ‘Aktiehandel’ 26. ***chk subscription payments GAR for totals/month and resolutieboek 1 others
warned and how many.


                                                         9
petition circulated requesting the Maatschappij Stad Rotterdam to open a special loan facility
so shareholders could lombard their shares, a sure sign of price falls causing margin calls and
squeezing liquidity.41 During October the settlement of futures and options deals pushed share
transfers up again, but by then the bubble was well and truly over.




Figure 1, The nominal amount of shares transported in the Maatschappij Stad Rotterdam
(left scale) and average transports per trading day (right scale), June-October 1720
     14000 00                                                                                        70000 0

                        av g tran spo rts per tradin g day

     12000 00                                                                                        60000 0




     10000 00                                                                                        50000 0




      8000 00                                                                                        40000 0




      6000 00                                                                                        30000 0




      4000 00                                                                                        20000 0




      2000 00                                                                                        10000 0




           0                                                                                         0
          29 ct
                    t
         20 e p
         23 e p
         26 e p
         29 e p
                   p
          6- g


         12 u g




         30 u g

          2- g
          5- p
          8- p
         11 e p




          14 ct
          17 t
          20 ct
          23 t
          26 ct
         14 ep
         17 ep




          11 t
          9- g


         15 ug
         18 ug
         21 ug
         24 ug
         27 ug
          19 l
          22 l
          25 l
          28 l
          31 l
          3 - ul




           5 t
           8 t



               oc


               oc




               oc
              - ju

                  u
              - ju
              - ju
              - ju




              oc
              oc
              oc
              au




                e
                u
             au




              se
              se




               o


               o


               o
               o
              -j




               -j




            -s
            -s
            -s
            -s
            -s
             -s
             -s
              s
            -a
            -a
            -a
            -a
            -a
            -a
            -a
             a
          16




           2




Source GAR 199 No.’s 19-27, share transport ledgers July-November 1720




                Thus, contrary to established opinion, the pattern of securities prices in the Republic
appears to have matched London prices quite closely: an early summer rise culminating
during August and collapsing during the first weeks of September. However, the pattern of
company promotion developing on the back of this bubble differed markedly, both in timing
and in the nature of the companies promoted.


3. Companies in close-up
The Republic witnessed company promotion on an immense scale during the summer of
1720, all the more remarkable for joint-stock companies being rare until then. The VOC and

41
  Van Rijn, ‘Aktiehandel’ 27; the board created the facility on 3 October, GAR archive no. 199, inv.no. 1 board
minutes book A fol. 83-84.


                                                             10
WIC, founded in 1602 and 1621 respectively, were the only large and publicly traded
concerns operating in this form. Joint-stock ownership was common in shipping, fishing, and
in industrial milling. Large land reclamation projects also appear to have had a form of joint
ownership with transferable shares, though in all these cases trade in the securities appears to
have remained restricted. For all other economic activities, private partnerships provided
sufficient resources.42
        Between June and October over 40 companies were projected with a total nominal
capital of more than 800 million guilders, almost three times the estimated GDP of the
Republic. The average nominal capital came to more than 20 million guilders, equal to the
financial resources of VOC and WIC combined.43 Table 2 lists a selection of companies, with
the more obscure or fanciful ones left out.44 With the exception of only three (No.’s 1, 3 and
7) all schemes shared the hallmarks of speculative enterprises in combining a very large
nominal capital with a low first instalment of 1-6 per cent and an equally low paid-up capital.
Nine schemes, of which the table lists only four (No.’s 16, 19, 20, 23), envisaged using their
invariably enornormous capitals partly in support of public finance in one form or another. A
Portuguese Jewish broker in The Hague, Gabriel de Souza Britto, produced no fewer than five
such projects. Britto, who probably also published a heavily plagiarized manual for double-
entry bookkeeping in Spanish, was as active as he was unsuccessful, for the authorities turned
down all projects linked to public finance. 45 Only eight schemes remained stillborn. Four of
them (No.’s 16, 19, 20, 23) were either dismissed by the authorities or not even submitted for
approval after failing to raise support. The four others (No.’s 1, 8, 24, 29) were definitely
submitted to the authorities, but turned down.
        That this fate should have befallen the Amsterdam scheme is puzzling, for it was a
perfectly viable and sensible project supported by no fewer than 264 merchants, including
leading firms such as George Clifford & Co. and Andries Pels. A small group from this
crowd, with Clifford but without Pels, also supported the insurance company proposed in The



42
   E.J.J. van der Heijden, De ontwikkeling van de naamlooze vennootschap in Nederland vóór de codificatie (Van der
Vecht: Amsterdam 1908) 84-131.
43
   De Korte, Financiële verantwoording 2, Annex 1, valuing the VOC’s debt plus equity at 15 million guilders.
***GNP figs from JLvZ, chk; plus WIC.
44
   The private price current dated 25 September 1720 and printed in Joh. de Vries, Een eeuw vol effecten,
historische schets van de Vereniging voor de Effectenhandel en de Amsterdamse Effectenbeurs 1876-1976 (s.l. 1976)
18, lists projects in Schoonhoven and Staveren of which no further details are known.
45
   Van der Heijden, Naamlooze vennootschap 149-151, Groeneveld, Economische crisis 27-35. On Britto and
bookkeeping E. Hernandez Esteve, ‘A Spanish Treatise of 1706 on Double-Entry Bookkeeping: “Norte
Mercantil y Crisol de Cuentas” by Gabriel de Souza Brito’, in: Accounting and Business Research (1985) 291-
296.


                                                       11
Table 2, Selected companies projected in the Republic during 1720
                                       Date projecta        Nominal      First instalment        Total
                                                              capital            %          subscription %
    1 Amsterdam                                10 June           12 mln                10                100
    2 Rotterdam                                 22 June          12 mln               0.2                  5
    3 Middelburg Assurantie                        June          1.2 mln               50                 50
    4 Delft                                     11 July            6 mln                 1                 1
    5 Schiedam                                  15 July            6 mln                 1                 1
    6 Gouda                                     23 July          10 mln                  1                 1
    7 Middelburg Commercie                      25 July          10 mln                25                100
    8 Leiden                                       July                              12.5
    9 Dordrecht                             14 August              8 mln                 1                 5
   10 Hoorn                                 14 August            20 mln                  3                 6
   11 Purmerend                             16 August              5 mln                 1                 1
   12 Edam                                  21 August            16 mln                  1                10
   13 Monnikendam                           22 August            20 mln                  2                 6
   14 Medemblik                             28 August            16 mln                  1                 6
   15 Alkmaar                               29 August            24 mln                  2                 5
   16 Den Haag                                  August           75 mln
   17 Vlaardingen                         3 September              5 mln                 2                 2
   18 Den Haag                            3 September            10 mln                  2                 4
   19 Den Haag                           4 September            100 mln
   20 Den Haag                            4 September           100 mln
   21 Enkhuizen                           4 September            20 mln                  2              12.5
   22 Muiden                            11 September               5 mln                 1                 5
   23 Den Haag                         12 September             110 mln
   24 Arnhem                           13 Septemberb             1.9 mln                 3                14
   25 Utrecht                           16 September             10 mln                  1                 6
   26 Naarden                           17 September               5 mln                 1                 6
   27 Weesp                             19 September             15 mln                  1                 8
   28 Zwolle                            23 September             10 mln                  1                 6
   29 Harlingen                         24 September             16 mln                  1                10
   30 Maassluis                         29 September               3 mln                 2                 2
   31 Sociëteit Berbice                 ** September             3.2 mln
   32 Veere                                  1 October           25 mln                  1                 6
   33 Hasselt                                1 October             8 mln                 1                 4
   34 Kampen                                 7 October           15 mln                  1                 4
   35 Brielle                              12 October              4 mln                 1                 5
   36 Vlissingen                           15 October            30 mln                  2                10
   37 Steenwijk                            16 October            12 mln                  1                 6
   38 Embden                               21 October            20 mln                  3                10
   39 Woerden                              25 October              6 mln                 1                 2
Source: Verzameling, Groenveld, Economische crisis, Groote Tafereel, Van der Heijden, Naamlooze
Vennootschap. a Dates given are those of the first subscription, where available. Those in bold are dates of
prospectuses. b Prospectus date unknown; the Estates of Gelderland rejected the proposal on 13 September.




                                                       12
Hague (No. 16).46 The time was clearly ripe for a consolidation of the Amsterdam insurance
sector and the further standardization of conditions. The underwriters knew this and had
attempted to establish standard conditions by concluding mutual agreements in February 1719
and again in March 1720.47 Meanwhile London had taken the lead in launching insurance
companies and Amsterdam risked losing market share unless it followed, and quickly too, for
by 10 July, the time of the petition in support of the scheme, the Maatschappij Stad Rotterdam
had been successfully floated. The Amsterdam city council’s motives for refusing assent to
the insurance company project are not fully known.48 The literature takes the project’s
perceived speculative intent as the main reason and its leading proponent does appear to have
been an active company promoter.49 However, when the board of the WIC chamber
Amsterdam sounded the mayor about its plans to start a general insurance department, the
mayor simply stated that the city did not need an insurance company. 50 The council had never
shown any concern for countering speculative operations, allowing futures and options
trading to soar, for instance, ignoring bans issued by the Estates of Holland. 51 The city fathers
were probably more concerned with the social balance at stake here. The big merchants
wanted an insurance company so they could impose terms. For that reason, insurance
company schemes had foundered twice before after loud protests from the underwriters.52
Those precedents will have weighed more heavily with the council than any fears for
speculation.
        Thus a remarkably high number of projects, 31 out of the 39 listed, obtained official
approval, constituted themselves, collected subscriptions and issued calls for payment of the
first instalment. However, only eight companies (No.’s 2, 3, 6, 7, 18, 25, 28, 31) survived this
first stage and developed any business activities at all, of which six (Maatschappij Stad
Rotterdam, the two Middelburg companies, Gouda, Utrecht, and Sociëteit Berbice,

46
   The EHBA Call No. BC 255-1 copy of the Groote Tafereel prints (fol. 39-43) the petition to the city council
supporting the insurance company scheme dated 10 July 1720 together with the signatories to the petition,
missing both from the normal copies of the Groote Tafereel and from the Verzameling tot waarschouwing. The
EHB also has (fol. 37) the petition in support of the The Hague insurance project, dated 10 July as well. On 20
August the main proponent of the Amsterdam scheme, Josias van Asperen, issued a last petition in support of his
scheme: Groote Tafereel projects section, p. 18-19.
47
   Copies in EHB BC 255/1, fol 44-45.
48
   ***Chk council minutes.
49
   At the end of the 1720s Josias van Asperen, attracted general indignation by getting actively involved with
efforts to set up a company for the Asian trade in Altona: K. Glamann, ‘Hollandske indberetninger om
Altonaprojektet, 1728-1729’, in: Danske magazin 7 Rækk : 5, 263-302.
50
   NA 1.05.01.02 no. ***, board minutes ****.
51
   O. Gelderblom, J.P.B. Jonker, ‘Amsterdam as the Cradle of Futures Trading’, in: W.N. Goetzmann, K.G.
Rouwenhorst, ed. The Origins of Value, the Financial Innovations that Created Modern Capital Markets
(Oxford UP: Oxford 2005) 189-206.
52
   *** Blok Voorstel BVGO 4 (1900) and BMHG 21 (1900); 1660s proposal.


                                                      13
respectively No.’s 2, 3, 6, 7, 25, 31) became fully operational, be it on a far more modest scale
than originally envisaged. Holland had a comfortable lead over the other provinces with 26
projects; Zeeland and Overijssel came second with four each; Utrecht launched two; the
authorities in Friesland and in Gelderland considered one project each and turned it down.
Finally the city of Embden, located in Germany on the borders with the Republic with which
it maintained close economic and political ties, also launched a company.
        The most telling difference between the various projects is the timing of their launch.
The majority, 23 out of 39, opened subscriptions after the 1st September, i.e. with share prices
at their peak or, in the case of the 15 projects opening after mid-month, probably falling. In
addition the September group included some of the more fanciful projects: three of Britto’s
five megalomaniacal schemes (No.’s 19, 20, 23), three conglomerates with towering
ambitions to operate in all economic sectors (No.’s 24, 25, 28) and ten proposals from third-
rank provincial towns without sufficient trade on which to spend the millions to be raised
(No.’s 22, 26, 27, 29, 32, 33, 34, 35, 37, 38). The September group suffered seriously from a
lack of realistic economic objectives, more so than the earlier proposals and as a result this
group attracted most scorn from the contemporary press.53 Given the hostile climate and the
poorly considered objectives, it comes as no surprise to discover that only three from the 23
survived the subscription stage. Of those three, the Zwolle company (No. 25) did not develop
commercial operations but turned into a peculiar form of investment consortium.54 The
Utrecht company (No. 28) exchanged its huge ambitions for a very modest existence
exploiting the city tolls and provincial lotteries.55 Given these circumstances it does not
surprise that very few companies generated any trade in their shares at all. The Rotterdam and
Delft companies (No. 2, 4) attracted the keenest and widest interest, even though the Delft one
was considered a somewhat dubious proposition.56 As a result both companies managed to
float a second issue. Both companies were also traded in Amsterdam, where Maatschappij
Stad Rotterdam peaked at 187 per cent of par, Delft at 170.57 Of the other companies, only
Dordrecht , Hoorn, Edam, Monnikendam, Alkmaar, The Hague, Enkhuizen, and Zwolle
(No.’s 9, 10, 12, 13, 15, 18, 21, 28) appear to have been regularly traded in sufficient volume
to attract the attention of the pamphleteer AZ, a close observer of the Amsterdam market.

53
   Europische Mercurius ***, Brieven Knuttel No. ***, printed in Groote Tafereel *** and, in excised form, in
Verzameling ***.
54
   W.J. Formsma, ‘De windhandel van 1720 in Overijssel’, in: Verslagen en mededeelingen van de Vereeniging
Overijsselsch Regt en Geschiedenis 60 (1945) 110-123.
55
   Noorle Jansen, ‘Provinciale Utrechtsche’ 20-26.
56
   Rotterdamsche Courant 29 July 1720.
57
   Groote Tafereel section Letters AZ to NN, 10 *** Knuttel.


                                                     14
Dordrecht and The Hague did best, achieving peaks of 125-130 per cent; the others never rose
beyond 105-110 per cent of par.58 Thus a real bubble never developed.
        Otherwise the projects resembled each other very closely in a number of respects. First
of all, they carried very similar names, with usually the term General Company and the name
of the city of residence sandwiching similar business purposes: insurance (No. 1, 3, 4, 5, 16),
insurance, discounting and lombarding (No. 2, 18), insurance, lombarding and lotteries (No.
19), trade (No. 7), trade and insurance (No. 6, 9), shipping and trade (No. 10, 29, 36),
shipping, trade and insurance (No. 12, 14, 15, 27, 33), shipping, trade, insurance and fishing
(No. 21, 22, 32), haulage, insurance and trade (No. 28), trade, shipping, insurance, lombarding
and haulage (No. 33). One project (No. 13) envisaged combining trade, shipping and
insurance with shipbuilding and allied manufacturing activities such as ropemaking and
sawmilling. Only one project, No. 26, concentrated exclusively on manufacturing. The
Arnhem scheme (No. 24) covered the entire economy: manufacturing, trade, lotteries,
lombarding, insurance, river tolls, and other operations to be announced but kept secret in the
prospectus so as not to alert the competition.
        As a rule the prospectuses were vague on the business operations, but quite detailed on
the corporate governance aspects such as board appointments and shareholders’ rights. The
governance clauses were a curious blend of old and new. Traditional and really obsolete was
the frequent appearance of oligarchic clauses creating in effect two classes of shareholders,
hoofdparticipanten or large ones with full voting rights and small ones with restricted rights
or none at all. As we will see below, this split served a particular purpose. However, overall
the corporate governance marked clear progress of company law in the Republic over earlier
arrangements such as the VOC and WIC, notably in laying down procedures for the
presentation of annual accounts and for the election of company directors, and in introducing
new features such a two-tier board (No.’s 4, 5, 11, 27, 28, 32, 33) and printed share
certificates (No.’s 12, 16), the latter a great advance over the cumbersome transport
procedures common in the Dutch securities trade.59 The Hoorn project (No. 10) came with a
printed standard form for share transfers.60 Britto launched one of his schemes (No. 20) with
both a share transfer form and an options contract, the latter with a useful clause binding
signatories to honour their agreement regardless of formal bans on options trading.61 Three
schemes sought to bolster their chances of success by promising advantages to Jewish

58
   Groote Tafereel, section Brieven AZ to NN, 9-10 *** Knuttel.
59
   Cf. Van der Heijden, Naamlooze vennootschap ***; also Frentrop ***.
60
   To be found in EHB BC 255/1 fol. 57.
61
   Verzameling I, 82-88.


                                                    15
subscribers such as the freedom of the city (No.’s 33, 34) or by appointing a prominent Jewish
merchant to the board (No. 25).62 Other, less realistic features to attract investors included
rash promises by some companies of a minimum annual return on capital paid up of 3, 4 or
even 6 per cent (No.’s 6, 12, 25 respectively). And of course rumours were spread to raise
interest: shares in the Middelburg insurance company (No. 3) were said to trade at 140 per
cent shortly after its launch, the Maatschappij Stad Rotterdam (No. 2) was said to be doing
good business, also for Amsterdam merchants, Utrecht would build an exchange to house the
trade generated by its company (No. 25).63 Finally, several prospectuses showed the activities
of company promoters successfully hawking their schemes around the country by a noted
resemblance in the nature and wording of various clauses.
        However, the most telling resemblance between the projects lies in their close
connections to local authorities: nearly all schemes issued from a form of public-private
partnership. Significantly, the ones that did not, No.’s 1, 8, 16, 19, 20, 23, and 24, failed to
obtain the customary official approval, with two exceptions. The Harlingen company (No. 29)
was approved by the city council but rejected by the Friesland estates. Sociëteit Berbice (No.
31) stood out from the crowd of bubble companies in that it was not a new company but the
transformation of an existing and languishing private colonial syndicate into a joint-stock
concern. Though not subject to formal approval, the IPO of 3.2 million guilders launched by
Sociëteit early in September failed on the market; only 941 out of the 1,600 shares offered
were sold.64 For the other projects, official involvement went beyond formal sanction to
commitments at all levels: conception, launch, and organization of the proposed companies.
In several cases the initiative to launch a company came from the authorities, as the preamble
to prospectuses shows (No.’s 21, 22, 25, 26, 27, 28, 29, 32, 33, 34). Moreover, the interest of
some city councils predated the bubble summer by a considerable margin. As early as 10
February 1720 the Middelburg mayor informed his council about the ongoing consultations
with merchants which led to two companies being constituted there in June and July (No.’s 3
and 7).65 The Middelburg council supervised the payment of the instalments and the



62
   J.J. van Noorle Jansen, ‘De Provinciale Utrechtsche Geoctroyeerde Compagnie’, in: Stedelijk Gmnasium
Utrecht, Programma voor den cursus 1903-1904 (Bosch & Zoon: Utrecht 1904) 7-30, ibidem 15.
63
   Groote Tafereel, projects section 23 (Middelburg), Rotterdamsche Courant 17 July, 7 August 1720
(Maatschappij Stad Rotterdam), Groote Tafereel section Brieven AZ to NN 23 (Utrecht) ***add Knuttel No.
64
   J.J. Hartsinck, Beschrijving van Guiana (Amsterdam 1770) 329-330; P.M. Netscher, Geschiedenis van de
koloniën Essequebo, Demerary en Berbice van de vestiging der Nederlanders aldaar tot op dezen tijd (Nijhoff:
The Hague 1888) 161.
65
   C. Reinders Folmer-Van Prooijen, Van goederenhandel naar slavenhandel, de Middelburgse Commercie
Compagnie (KZGW: Middelburg 2000) 17.


                                                     16
appointment of directors, supplying three of the Commercie Compagnie’s nine directors.66
These two features, monitoring subscriptions and payments and participating in the
management through board appointments, were more or less standard throughout the
Republic, as was a clause in the articles of association making companies financially
accountable to the mayor. Some councils went a step further and provided practical support
like office premises free of charge (No.’s 2, 25) or yards and sheds from which to start
operations (No. 13). Zwolle, Hasselt and Steenwijk (No.’s 28, 33, 37) paid the start-up costs,
which in Zwolle’s case included advertisements in Holland newspapers and the bill from an
Amsterdam broker for marketing the shares there.67
        The corporate governance structure of nearly all projects demonstrated that local elites
meant to retain a firm grip. As a rule the articles of association gave hoofdparticipanten or
principal shareholders, those with a particular number of shares, a say in the company and the
normal shareholders no more than a right to annual accounts. Together with a set maximum to
the number of shares any individual could own, such clauses enabled local elites to keep
control over their companies and to steer them safely through the speculative storm. In
addition city councils directed the subscription process so as to ensure that inhabitants came
first and outsiders second. In several cases outsiders did not get shares at all. Hardly any
shares in the Middelburg, Veere and Vlissingen companies (No.’s 3, 7, 32, 36) appear to have
left the Zeeland province. 68 In Delft (No. 4) outsiders are said to have received no shares at
the first issue, but given the apparently buoyant trade in the company some Delftenaren must
have sold.69 The subscription in Hoorn (No. 10) drew such a large crowd that the night before
all inns were fully occupied. The next day locals quickly divided the shares between
themselves before outsiders had had a chance even to enter the building where subscriptions
were taken.70 After the Dordrecht city councillors had similarly carved up No. 9 between
themselves, they had to placate the angry crowd facing them by giving away some shares to
people on whom they could rely, including the local vicars.71 The city council in The Hague
followed a similar tactic with No. 18, reserving a large number of shares for themselves, their
secretaries, other local dignitaries such as the vicars of various denominations and officers of

66
   Groote Tafereel, projects section 22-23.
67
   Formsma, ‘Windhandel’ 117, 118; RA Zwolle TG 700 Vol. 2 inv.no. 11634, letter from Jacob Raket to the
council, 9 November 1720. We are indebted to Heleen Kole for ferreting out the Zwolle information for us.
68
   Groote Tafereel, section Brieven AZ to NN, 10 *** Knuttel.
69
   Rotterdamsche Courant 8 August 1720; cf. idem 29 July 1720 for a rumour that five Rotterdammers would be
elected as principal shareholders, which election according to the paper they were unlikely to accept as contrary
to their interests.
70
   Europische Mercurius August 1720, 149-154.
71
   Groote Tafereel section Brieven AZ to NN 4 *** add Knuttel no.


                                                       17
the civic militia, and for selected other beneficiaries. Once done there were sufficient shares
left for granting to the numerous investors from Amsterdam, Rotterdam, Leiden, Delft, Gouda
and Dordrecht who had applied. 72 The Utrecht company showered nearly half of its shares
over the provincial governing elite and squandered a further large block on two crooked
company promoters.73
        The Maatschappij Stad Rotterdam also reserved large blocks of shares for the local
elite, and the evidence suggests that, it remained faithful.74 Despite the skewed subscription
process the company attracted numerous shareholders from elsewhere. Together with the
Delft company of which we know next to nothing, the Stad Rotterdam appears to have
generated the widest and most active trade. This trade was mostly between Rotterdammers;
sales to or by outsiders are very rare in the transport ledgers during July-October 1720.
Slechte’s detailed analysis shows the elite to have been active traders as well, but most of
them took care to retain a substantial position in the company. Of the 79 officials bought
shares, only 19 had sold out by August 1721, with another 19 keeping 10 shares or less. The
others still owned blocks of shares, often substantial ones of 30 or more.75
        The many schemes issuing from small cities and the involvement of the city councils
there were lampooned in often devastating terms by contemporary observers, not entirely
unjust given the often ludicrously large capitals married to completely unrealistic economic
aims. Subsequently historians have castigated officials for their veniality in getting involved
with speculative enterprises. 76 Such criticism appears a little unfair. Of course officials hoped
to profit from booming shareprices. However, the prospectuses suggest that the city councils
were driven by various motives, not just a hope for personal gain. For all their blind ambition
and impracticality, the projects really aimed at harnessing the speculative climate for
productive purposes by mobilising capital for the local economy. In February 1720, the
Middelburg mayor told his council that trade stagnated because so much business had moved
to Holland during the War of the Spanish Succession; setting up a large company with 30
ships would regenerate it.77 Middelburg clearly experienced the start of what Johan de Vries
has termed the process of internal contraction of the Republic, i.e. the concentration of
business on Amsterdam to the detriment of other cities. Dordrecht, Nijmegen, Zwolle,
72
   H. Enno van Gelder, ‘De wijze Hagenaars en de windhandel’, in: Jaarboek Die Haghe (1942) 104-110, ibidem
106; cf. Groeneveld, Economische crisis 68-70, with on 198-209 an extract from the subscribers’ register.
73
   Noorle Jansen, ‘Provinciale Utrechtse’ 16-18.
74
   Slechte, ‘Aandeel’ 220, 232.
75
   Slechte, ‘Aandeel’ 251-252.
76
   Europische Mercurius August 1720 149-154, September 1720 188-207; Groote Tafereel section Letters AZ to
NN 1-5, 9-10, ***ref Knuttel; Vissering, ‘Groote Tafereel’ 21-22.
77
   Quoted in Reinders Folmer-Van Prooijen, Van goederenhandel 17.


                                                    18
Alkmaar, Hoorn, Enkhuizen and Medemblik also showed marked signs of decline during the
early decades of the 18th century.78
        These wider economic motives help us to understand two distinct aspects of the Dutch
bubble, its strong regional pattern and its late development. There were four successive waves
of project launches evidently triggered by cities reacting to moves in neighbouring cities: first
during 22 June-23 July in southern Holland, with Rotterdam, Delft, Schiedam, and Gouda
(No.’s 2, 4, 5, 6), then from 14 August to 4 September in the northern part of the province
with Hoorn, Purmerend, Edam, Monnikendam, Medemblik, Alkmaar and Enkhuizen (No.’s
10, 11, 12, 13, 14, 15, 21), followed from 11 to 19 September by the eastern part of the
province with Muiden, Naarden and Weesp (No.’s 22, 26, 27). The last wave occurred from
23 September to 16 October in Overijssel with Zwolle, Hasselt and Steenwijk (No.’s 28, 33,
34, 37). As the preamble to the Purmerend project (No. 11) put it disarmingly: if so many
merchants exerted themselves in oversubscribing projected companies and in bidding up the
shares, then launching another one had to make sense.79 The shared experience of economic
decline meshed with the keen competition between cities in a densely urbanized country to
render councils receptive to the schemes of company promoters which otherwise they might
have rejected out of hand. This is underlined by the bubble’s late development mentioned
above. No sensible company promoter would have risked his own time, reputation and money
to launch a company during September and particularly after say the 15th. And yet many were
launched, because local particularism provided a stronger fuel for the Dutch bubble than
speculative fever, and company promoters were happy to earn fees from city councils for
services they would not have risked for their own account.


4. Conclusion: The mirror of rationality
The Dutch bubble was a damp squib. Following events in London, share prices rose, creating
a climate of speculation conducive to company promotion on an immense scale. However,
this never developed into an asset price bubble on the French or British scale because the
Republic offered no room for debt-equity swaps and because local authorities remained in
control of the situation, using the speculative climate for their own ends. The the Republic’s
the different socio-political structure prevented the contagion from spreading, despite the
close financial integration with France and Britain. Consequently, overemphasizing the

78
   Joh. de Vries, De economische achteruitgang van de Republiek in de achttiende eeuw (Stenfert Kroese: Leiden
19682) 40-44.
79
   Groote Tafereel projects section 3.


                                                       19
modernity of the 1720 bubble and the financial integration between France, Britain and the
Republic risks overlooking the crucial fact that the French and British bubbles originated in
efforts to achieve a transition from Early Modern public finance to Modern public finance,
which the Republic already had achieved.
        Consequently, the Tafereel’s vivid scenes, like the Tulip Craze pamphlets analyzed so
well by Anne Goldgar in her recent book, are heavy satires at a substantial distance from
events in the Republic. 80 The Tafereel embodies a carnival, the counterpart to the supreme
commercial reason depicted in the handbooks published by Jacques Le Moine de l’Espine and
later by Isaac le Long, joined at the end of the 1720s by Jacques Savary. Where those books
erred on the side of rationality in their praise for the Republic’s virtuous capitalism, the
Tafereel exaggerated its foibles, the follies of unfettered speculation. Therefore we need to
balance the book’s scathing condemnations with the fact that, during 1720, the Republic’s
follies were fundamentally different from those in France and Britain.




80
  A. Goldgar, Tulipmania, Money, Honor, and Knowledge in the Dutch Golden Age (University of Chicago
Press: Chicago 2007).


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