Oscar Gelderblom

Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595–1612

The article analyzes the evolution of the Amsterdam capital market as a consequence of Dutch overseas expansion and the introduction of transferable VOC shares. Offering investors prospects of speculative gains without serious loss of liquidity, these instruments created a booming secondary market offering a wide range of allied credit techniques. By 1609 this market had become sufficiently strong to dictate terms for new public debt issues. These findings show that, contrary to commonly held notions about the emergence of secondary markets, private finance took precedence over public finance in the Dutch Republic.

The Rise and Fall of the Merchant Guilds: Re-thinking the Comparative Study of Commercial Institutions in Premodern Europe

Although the importance of merchant guilds for the commercial development of Europe is beyond doubt, scholars do not agree about why they emerged, persisted, and ultimately declined between the eleventh and eighteenth centuries. Historical studies usually focus on individual cases and idiosyncratic circumstances that restrict comparisons, whereas economic approaches based on game or contract theory often impose narrow assumptions on their models that tend to neglect two key features of these institutions: In imperfect markets, merchants used more than one institution to solve a given problem, and individual institutions often addressed more than one problem. However, a new methodological approach (maximum likelihood estimation) permits rigorous comparative analysis of the probability that merchants, under a given set of market and political circumstances, will delegate control of their dealings. This model requires only one assumptionthat merchants relinquished such control only when they expected a positive return.

Cities of Commerce: The Institutional Foundations of International Trade in the Low Countries, 1250-1650

Cities of Commerce develops a model of institutional change in European commerce based on urban rivalry. Cities continuously competed with each other by adapting commercial, legal, and financial institutions to the evolving needs of merchants. Oscar Gelderblom traces the successive rise of Bruges, Antwerp, and Amsterdam to commercial primacy between 1250 and 1650, showing how dominant cities feared being displaced by challengers while lesser cities sought to keep up by cultivating policies favorable to trade. He argues that it was this competitive urban network that promoted open-access institutions in the Low Countries, and emphasizes the central role played by the urban power holders--the magistrates--in fostering these inclusive institutional arrangements. Gelderblom describes how the city fathers resisted the predatory or reckless actions of their territorial rulers, and how their nonrestrictive approach to commercial life succeeded in attracting merchants from all over Europe. Cities of Commerce intervenes in an important debate on the growth of trade in Europe before the Industrial Revolution. Challenging influential theories that attribute this commercial expansion to the political strength of merchants, this book demonstrates how urban rivalry fostered the creation of open-access institutions in international trade.

Direct finance in the Dutch Golden Age

This article analyses private credit operations in Amsterdam in the seventeenth century to explain the absence of deposit banks. The financial system was highly segmented and a combination of declining business margins and narrow interest rate spreads cut the scope for deposit taking. Moreover, merchants had easy access to credit in the form of short-term loans which could be easily rolled over, or replaced at will. This technique worked well because a market developed providing key functions to control risk and price loans accordingly.

An Admiralty for Asia: Business Organization and the Evolution of Corporate Governance in the Dutch Republic, 1590–1640

The Dutch East India Company (VOC) in 1602 showed many characteristics of modern corporations, including limited liability, freely transferable shares, and well-defined managerial functions. However, we challenge the notion of the VOC as the precursor of modern corporations to argue that the company was a hybrid, combining elements from traditional partnerships with a governance structure modeled on existing public-private partnerships. The company’s charter reflected this hybrid structure in the preeminent position given to the Estates General as the VOC’s main principal, to the detriment of shareholders’ interests. Protests by Isaac le Maire and Willem Usselinx about the board’s disregard for shareholders were rooted in a conviction that it ought to conform to traditional partnerships with their judicious balance between stakeholders’ interests. However, the perceived public interest of a strong military presence in Asia prevented shareholders’ protests from changing the corporate governance.

Low Countries finance, 1348-1700

Public finance in the Low Countries, which played a central role in global financial innovation, evolved from the constant interactions between the cities and successive rulers that accompanied war and trade. Once the Dutch Revolt had split the Habsburg Low Countries into two, the Dutch Republic in the north adopted a high degree of fiscal centralization, which, boosted by economic growth, enabled the country to create high levels of tax revenue and public debt. In the southern Netherlands, however, the cities retained fiscal controls, and combined with sluggish growth, this kept tax revenue and debt low.

Money, Currency and Crisis : In Search of Trust, 2000 BC to AD 2000

Money is a core feature in all discussions of economic crisis, as is clear from the debates about the responses of the European Central Bank and the Federal Reserve Bank of the United States to the 2008 economic crisis. This volume explores the role of money in economic performance, and focuses on how monetary systems have affected economic crises for the last 4,000 years. Recent events have confirmed that money is only a useful tool in economic exchange if it is trusted, and this is a concept that this text explores in depth. The international panel of experts assembled here offers a long-range perspective, from ancient Assyria to modern societies in Europe, China and the US. This book will be of interest to students and researchers of economic history, and to anyone who seeks to understand the economic crises of recent decades, and place them in a wider historical context.

Public Functions, Private Markets: Credit Registration by Aldermen and Notaries in the Low Countries, 1500–1800

Gelderblom, Hup, and Jonker explore financial market development in preindustrial Europe by examining the financial functions performed by aldermen and notaries. Using a new dataset of 12,000 credit transactions registered by these public officials in six different cities in the Low Countries between 1500 and 1780, we analyze who used their services, for which purposes, and at what price. We find that notaries and aldermen were very active in registering debt contracts, but failed to obtain a commanding or even strong position as financial intermediaries in the way Parisian notaries did. As they registered only a small fraction of local credit transactions, notaries and aldermen in the Low Countries never possessed the information advantage of their French counterparts. Our findings highlight the degree to which subtle regulatory differences profoundly affected the dynamics of financial market evolution.

The business history of the preindustrial world: Towards a comparative historical analysis

Abstract The organisation of business transactions in the preindustrial period, once a central concern in scholarly debates about the rise of capitalism, currently plays only a marginal role in the literature on long-run economic development. Our survey of the contents of five top-tier business and economic history journals published in the United Kingdom and the United States from 2000 to 2016 finds that only 20 per cent of the articles concern the entire period before 1800 and that, among those articles, most are national or regional in scope, with a disproportionate focus on Europe, and on England in particular. At the same time, our survey suggests that a strong theoretical foundation and rich empirical data exist on the basis of which we can develop a comparative business history of the preindustrial world. We identify four areas of enquiry that are especially conducive to further comparisons within and beyond Europe: the corporation, the family firms, the economic role of women, and the funding of private businesses.

Merchants from the Southern Netherlands (1578–1630)

In 1585 the Duke of Parma conquered Antwerp, which was followed by a blockade of the river Scheldt. A large number of merchants moved to Amsterdam. Since the beginning of the twentieth century a historical debate has been going on about the economic effects of these events. The submitted data, gathered from different historical sources, aim to provide a precise answer to this question. Information from nine different sources (e.g. poortersboeken of the city of Amsterdam, two tax registers, Notarieel Archief and VOC/WIC-archives) has been combined in an attempt to reconstruct the entire merchant community of Amsterdam between 1578 and 1630. This resulted in a data collection on more than 5,000 wholesale traders. Analysis of the data shows that migration to Amsterdam started long before the siege of Antwerp because of old commercial ties between the two cities. Moreover, the role of the newcomers was of moderate importance. In 1609 the immigrants amounted to one third of Amsterdams merchant community. The majority of them were young men of modest means, seeking an international career in Amsterdam. Since collaboration between merchants from the north and the south dated back to the 1540s, the influx from Antwerp may be considered part of one single merchant community which developed in the Low Countries in the course of the sixteenth century.