The History Of The Stock
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Stocks have been around for 400 years already having their origin in the Netherlands.
In the 16th. Century Spain and Portugal controlled the trade with Asian spices that were sold at very high prices which they were able to do due to no competition.
But the Dutch weren’t going to put up with that so they decided to import spices themselves.
A few clever merchants got together and formed smaller companies which bought 65 ships to send them to Asia.
About 50 ships came back fully loaded with commodities.
But the sudden excessive supply of spices, that now existed, made prices drop drastically which the smaller companies couldn’t cope with and which caused them to united into one large company.
That’s how VOC “Vereinigte Ostindische Compagnie” (United East-Indian Company) was formed on March 20, 1602 and became the first corporation in the world that offered their company shares to the public.
Anyone that had enough capital could now buy a share of VOC which became the first marketplace in the world where stocks were exchanged. And from 1606 until today these people are called shareholders.
Back in those days – basically just like today – the shareholders didn’t receive any stocks personally. Their names were merely taken down in a book for as long as they kept their stocks. If someone sold, their name would just be deleted and replaced by the new owner.
Because of the lack of news on the stock market unlike today, the traders and brokers used all kinds of tricks in those days already. Especially rumours about ships that sunk pushed stock prices down which gave these investors the chance of buying stocks at a cheaper price.
The dividends of 20% on average that VOC paid out is a dream for investors nowadays. In 1606 it was even 75%. These kind of profits caused an extreme demand for VOC stocks also because VOC didn’t issue any new stocks and prices skyrocketed.
But VOC ended like many other speculative companies. Due to mismanagement VOC ran into more and more debt and was shut down 198 years after it’s foundation.
The very first stock
Ricky Schmidt
June 23, 2005
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