Buyers, Sellers, and the 17th-century Amsterdam Stock Exchange

START HERE Long Distance Trade Buyers, Sellers, and the 17th-century Amsterdam Stock Exchange Background: Though Europeans launched voyages of exploration from the late 15th century, two hundred years later, interest in the East Indies and the Americas intensified. Early profits on the spice trade were extraordinary, and Spanish conquest across the Atlantic resulted in a flow of precious metals to Iberia. The Amsterdam Stock Exchange was created in 1602, a few short months after the establishment of the Dutch East India Company (VOC). Like the Spanish and the Portuguese, the Dutch were interested in acquiring profits, but they were also keen on throwing off the rule of the Catholic and Spanish Habsburg Empire. In 1621, after the lapse of the Twelve Years’ Truce between Spain and the Dutch Republic, the Dutch West India Company was formed as well. One purpose of this company was to challenge Spanish rule in the Americas and thus draw Spanish attention away from the Dutch Republic. Dutch investors had funded expeditions abroad prior to the 17th century. New, however, was the purchase and sale of shares in companies. The goal was to provide a company with a ready supply of funds for investment. Where could one purchase and sell shares in a company? In Amsterdam, this activity took place at the Bourse, an open-air building which initially served as a place for commodity exchange. Directions You will to analyze two 17th-century paintings on the Amsterdam Stock Exchange, which was created in 1602: Document 1, General Scene at the Amsterdam Stock Exchange (undated, Berckheyde) and Document 2, The Courtyard of the Old Exchange in Amsterdam (1652, Emmanuel de Witte). As you analyze the sources, respond to the following questions: 1. What seems to be happening in the documents? In the documents ____________________________________________________________________________ 2. What is the most interesting feature (or what stands out) in each of the paintings? ____________________________________________________________________________ 3. What is similar in both? ____________________________________________________________________________ ____________________________________________________________________________ 2 4. What is different? ____________________________________________________________________________ ____________________________________________________________________________ 5. Consider what might account for the similarities and differences of the paintings. ____________________________________________________________________________ ____________________________________________________________________________ 6. What conclusions can we draw from this scene? ____________________________________________________________________________ ____________________________________________________________________________ 3 Document 1: General Scene at the Amsterdam Stock Exchange (undated) by Jhiob Berckheyde (1630-1693) Source: https://upload.wikimedia.org/wikipedia/commons/0/07/Job_Adriaensz._Berckheyde_001.jpg Document 2: The Courtyard of the Old Exchange in Amsterdam (1652) by Emanuel de Witte (1617 – 1692) 4 Source: https://upload.wikimedia.org/wikipedia/commons/b/bf/Emanuel_de_Witte__De_binnenplaats_van_de_beurs_te_Amsterdam.jpg 5 Before you create your scripts, please be sure that you read the following excerpt: Economic Strategies of European States (1450–1750) During this period, European powers employed various strategies to increase wealth and influence, each with distinct methods, goals, and impacts. These strategies included establishing trading post empires, implementing mercantilism, colonizing overseas territories, founding joint-stock companies, expanding plantation economies, and innovating financially. Together, these approaches allowed European states to dominate global trade networks, which reshaped economies and societies worldwide. 1. Trading Post Empires Trading post empires emerged primarily as a strategy for European states that lacked the resources to fully colonize foreign territories. Instead of taking control of vast land areas, they established a network of strategic coastal forts and trade outposts. Portuguese Strategy: Portugal was the first European state to create a trading post empire, establishing fortified posts in Africa, India, and Southeast Asia. The goal was to dominate the spice trade by controlling the most important sea routes without fully colonizing these regions. In Africa, they built trading posts such as Elmina on the Gold Coast (present-day Ghana) to trade in gold and, eventually, enslaved Africans. In Asia, they established posts at Goa in India and Malacca in Southeast Asia, using their navy to enforce control over the spice trade. Naval Superiority and Fortifications: Key to the trading post empire model was a powerful navy capable of protecting trade routes. Portugal’s heavily armed caravels could defeat many local naval forces, allowing them to seize control of strategic ports and demand fees from passing merchants. This allowed the Portuguese to profit from Asian trade without direct territorial control. 6 Dutch Expansion: The Dutch East India Company (VOC) later adopted and expanded on the Portuguese model by establishing trading posts across the Indian Ocean. They controlled trade routes, focused on monopolizing the lucrative spice trade, and negotiated treaties with local leaders in Southeast Asia. Batavia (modern-day Jakarta) became their central hub, allowing them to dominate trade between Southeast Asia and Europe. 2. Mercantilism Mercantilism was a comprehensive economic philosophy that saw wealth as finite and trade as a competition. European governments believed that their strength depended on accumulating wealth, especially in the form of gold and silver. Colonial Economies: Mercantilist policy directed European colonies to provide raw materials, such as sugar, tobacco, and cotton, which could then be processed in Europe and re-exported. Colonies were restricted from manufacturing goods or trading with other nations, enforcing a one-way flow of resources to benefit the mother country. Trade Surplus and Wealth Accumulation: A central goal of mercantilism was achieving a positive trade balance (exporting more than importing) to increase the state’s gold and silver reserves. By promoting domestic industries, taxing imports heavily, and subsidizing exports, European states sought to limit dependency on foreign goods, thereby keeping wealth within their own borders. Protectionist Policies: European governments supported mercantilist goals with policies like tariffs on imported goods, high taxes on foreign luxury goods, and subsidies for domestic industries. France, under Jean-Baptiste Colbert’s guidance, implemented mercantilist reforms that helped France compete with other European nations by supporting local industries and limiting imports. Example: Spain’s vast influx of silver from the Americas fueled its economy but 7 eventually led to severe inflation as large amounts of silver devalued the currency. This inflation affected Spain’s global competitiveness, highlighting one of the risks of relying heavily on a single resource under mercantilist policy. 3. Colonization and Exploitation of Resources Colonization allowed European states to directly control large overseas territories, obtaining resources and establishing new markets. The strategy varied by location but generally involved exploiting the land, labor, and natural resources of these territories. Spanish Colonization in the Americas: Spain focused on mineral extraction, particularly silver, with notable mines at Potosí in Bolivia and Zacatecas in Mexico. Native populations were often forced into labor through systems like encomienda, where Spanish settlers were granted the right to extract tribute and labor from indigenous communities. This strategy brought immense wealth to Spain but led to the collapse of many indigenous societies. Portuguese Colonization in Brazil: Portugal’s focus in Brazil was primarily on sugar, which became a major export due to European demand. The sugar plantations required extensive labor, leading to the importation of enslaved Africans, especially as indigenous labor sources dwindled due to harsh conditions and disease. French and English Colonies in North America: While the Spanish and Portuguese focused on mineral wealth and plantations, the French and English initially targeted fur and fish in North America. These colonies often had less centralized economic exploitation but eventually grew cash crops, particularly tobacco in Virginia and sugar in the Caribbean, where they also used enslaved labor. 4. Trading Companies and Joint-Stock Ventures Joint-stock companies were one of the most innovative financial tools of the time, 8 allowing investors to share risks and profits. European states issued charters to companies that held monopolies over trade in specific regions, often backed by government support. British East India Company: Founded in 1600, the British East India Company was granted a monopoly on trade between England and Asia. It could raise funds by selling shares to private investors, reducing individual risk and enabling extensive overseas operations. Over time, the company acquired political and military control in India, becoming a quasi-governmental authority. Dutch East India Company (VOC): The Dutch East India Company, founded in 1602, became one of the wealthiest corporations of its time. The Dutch government granted it the power to negotiate treaties, wage war, and administer justice in its territories, making it a colonial power in its own right. The VOC controlled trade between Europe and Southeast Asia, focusing on monopolizing spices like nutmeg and clove. Financial Flexibility: These companies were essential to European economic strategies because they provided the capital needed for large, risky ventures. Stockholders could sell their shares, creating a liquid market and making it easier to raise funds for future expeditions and colonial projects. 5. Development of Plantation Economies and the Trans-Atlantic Slave Trade Plantation economies in the Americas fueled European wealth, especially in sugar, tobacco, and, later, cotton. These economies were labor-intensive, relying heavily on enslaved labor from Africa. Expansion of the Slave Trade: European states and trading companies, especially the British, Portuguese, and Dutch, organized the trans-Atlantic slave trade, transporting millions of Africans to the Americas. European traders exchanged manufactured goods, 9 such as guns and textiles, for enslaved people in Africa. The brutal journey across the Atlantic, known as the Middle Passage, was a horrific aspect of this trade. Triangle Trade System: The triangular trade linked Europe, Africa, and the Americas in a cycle of profit. European manufactured goods were shipped to Africa, enslaved Africans were sent to the Americas, and cash crops from plantations were shipped back to Europe. This system generated enormous wealth for European nations while devastating African and indigenous societies. Economic Impact on Europe: The plantation economy created new consumer markets in Europe, with demand for sugar, coffee, and tobacco growing among all social classes. These goods became status symbols, and European governments profited from import taxes and the expanding market for manufactured goods to supply plantations. 6. Banking and Financial Innovations Large-scale economic expansion required innovative financial systems to fund long and costly voyages, secure profits, and mitigate risks. Banking and Loans: Banking institutions in Italy and the Netherlands pioneered the issuing of loans with interest, supporting trade and exploration. The growth of banking allowed merchants and companies to borrow large sums to fund overseas expeditions, as well as invest in infrastructure and military equipment for colonies. Marine Insurance: Insurance companies arose to manage the high risks associated with maritime trade. Marine insurance protected merchants from potential losses due to shipwrecks, piracy, and weather, encouraging greater investment in overseas trade and exploration. 10 Stock Exchanges: Stock exchanges, such as the Amsterdam Stock Exchange, allowed companies to sell shares to raise capital. This created a more fluid and accessible investment market, providing European economies with the resources needed to support large-scale ventures. Stock markets in Amsterdam, London, and other cities facilitated investment and encouraged the growth of joint-stock companies. Example: The Bank of England, founded in 1694, was instrumental in helping Britain finance its colonial and military campaigns, providing loans that allowed the state to pursue its expansionist goals. From trading post empires to plantation economies, European states pursued a range of economic strategies to expand their wealth and influence. Trading posts helped Portugal and the Dutch dominate trade routes with limited territorial control, while mercantilist policies, joint-stock companies, and financial innovations allowed states to sustain large-scale economic ventures. These approaches collectively established Europe as the dominant force in global trade and laid the foundation for modern capitalism while having far-reaching consequences on global populations and economies. 11 Commerce and Coffee: A Coffeehouse Drama The year is 1698. Fifty years have passed since the Dutch have formalized independence from Spain, and are completely free to pursue commercial activity without fear of Spanish punishment (seizure of ships, taxes). The French are a rising maritime power. The English have expanded their imperial reach, aided by the mid-Navigation Acts and the outcomes of three Anglo-Dutch wars. Commerce continues— and is thriving. One reason is that access to financial capital has increased through the exchange of funds for shares in companies such as the East India Companies. For instance, the English East India Company first issued General Stock in 1657, and even allowed the sale of shares to foreign agents. The financial world of 17th-century England is fast-paced—and rowdy. English governments and courts scramble to keep up with financial innovations, such as the purchase and sale of shares in companies. In addition, English stockbrokers are viewed as an ill-mannered, boisterous rabble, and were recently expelled from the Royal Exchange! Business, however, goes on “as usual.” Voyages have to be funded, and there are profits to be made. So upon expulsion, stockbrokers and interested buyers have been conducting business in the streets and coffee houses, the most popular of which is “Jonathon’s.” It is here that John Castaing regularly posts a list of stock and commodity prices. This list is known as “The Course of the Exchange and other things.” Directions Your task is to simulate a 17th-century discussion in a London coffeehouse. What was important, and to whom, in such commercial discussion? Why? In a group of 3-4, you will create a dialogue. Consider carefully what you might discuss, and why. You may insert a few lines of “small talk.” Each group will hand in a “script” that consists of about 15 lines, with 3-5 lines per person. Coffeehouse in London, 17th century Source: Bodleian Library, University of Oxford Wikipedia commons, http://en.wikipedia.org/wiki/Coffeehouse#/media/File:17th_century_coffeehouse_england 12 _1- 580x400.jpg YOUR GROUP CHOOSES 1 OF THESE: Scene 1: The Tobacco Business Topic: How might tobacco be best shipped and distributed in England and on the European continent? What other commodities would offer a good return? Reveal specific concerns of each “actor” in your dialogue. What concerns might they share? Actors: An English lord, two tobacco planters, and two English East India Company officials An English Lord (government official) who is deeply interested in the profitability of tobacco, as this might lead to greater tax revenue. He is a staunch advocate of mercantilism. Two tobacco planters with land in Virginia. They are in England to persuade government officials of the benefits of freer trade. At present, they are restricted by the Navigation Acts. Their product “Virginia Gold” could help them pay off their colony’s debts, if only they were able to sell beyond the British market. Two English East India Company officials who have returned from the East Indies and have given up on the spice trade there, as the Dutch remain firmly entrenched. They are looking for new economic activities, and hope to raise funds for their next venture. Scene 2: Peril at Sea: Lost Ship from Barbados Topic: The loss of a ship and goods (in this case, the precious commodity of sugar “white gold” ) en route from Barbados to England. The captain escaped with his life, as did twenty of his crew. Actors: A ship’s captain, his first mate, an insurance agent, and two investors in the enterprise. The ship’s captain and his mate, who were promised a cut of the sugar profits—but there are no profits. The insurance agent, hired by the captain, who is new to the business. The insurance agent is not willing to cover other losses. The investors, who have fronted funds for a ship, specially fitted for slaving, for the purpose of shipping human cargo to Barbados. The ship was to return loaded with sugar. They have lost it all. Scene 3: The Allure of China Topic: Consideration of how to gain access to Chinese goods. The Spanish have declined in power, though they still control the bulk of the world’s silver trade, due to the mines in Potosi. How might the English government help merchants gain access to Asian trade? Actors: An English merchant, a British official, a member of the British East India Company, and a cartographer An English merchant hoping for access to Chinese silk and tea. A British government official (House of Lords) who dreams of a glorious British empire, a merchant who has had success in India. A member of the British East India Company who is eager to expand activities in the Far East. A cartographer who would like a permanent position in the British East India Company. 13 LAST THING YOU DO TODAY Historical Context Contextualization involves understanding how the context of time and place as well as national, regional, and global processes affected a person or event in history. After reviewing the organizer below, fill in the full page organizer with the context that shaped the perspective of your assigned person for the Coffeehouse Drama. Note: You might also consider how past events or economic processes might have provided important context that shaped a person or event. Historical Context Organizer Complete this organizer that shows the historical context that shaped and impacted the person you have been assigned for the Coffeehouse Drama. Start by naming the person, then detailing in the circles their country’s position in regards to trade, their country’s status in their region (competing powers, goods markets), and lastly their position globally (wealth in relation to other regions, desirable goods, etc.) 14 Your final task is to write a thesis for the following prompt: In the period 1450-1750, Mercantilist policies and practices were used by European rulers to expand and control their economies and claim overseas territories. Develop an argument that evaluates the extent to which European rulers employed economic strategies to consolidate and maintain power throughout the period from 1450 to 1750.