Thursday, July 28, 2005

Some Financial history/trivia from the 1600s

Some Finance trivia for you. All from the 1600s.

  1. How profitable was the spice trade? VERY! If (and this is a big if) the ships made it back safely. In 1618 it was estimated that 3000 tons of spices were bought in what is now India and the surrounding area. The spices cost about £91,000. By the time they reached the eastern Mediterranean they were worth almost £800,000! So it is easy to see why trading companies were so important.

  2. In 1633 speculation in tulip bulbs was rampant in the Netherlands. It is reported that one "“collector"” (dare I say investor?) pays 1000 pounds of cheese, 12 sheep, a bed, and a suit for a single tulip bulb. (Online sources suggest that a single bulb cost upwards of $40,000.)
    In 1636 the tulip "“bubble"” burst.

  3. Talk about your weird financial contracts! In 1641 the Japanese threw out most European trading firms because on religious grounds. However, the Dutch East India Company have no missionaries and are allowed to stay on the conditions that "“company officers visit Edo once a year, turn somersaults in the street, spit on the Cross, and pay rent in peppercorns."”

  4. In 1642 the Massachusetts Colony initiated a usury law at 10%, in 1693 this rate was lowered to 6%.

  5. In 1656 shares of the Dutch East India Company "“plummet on the Amsterdam Exchange and many investors are ruined. Among them is Rembrandt van Rijn [yes that Rembrandt!] who is declared bankrupt." Mmm, diversification needed maybe?

  6. Lloyds of London was started as a means of sharing the risk of shipping. The company was started at Edward Lloyd's Coffee House.

  7. In 1690 commodity rice futures were selling in Japan

  8. In 1693 King William III of England raised money for the operation of the government by selling £1,000,000 of 10% annuities.

  9. The Bank of England was chartered in 1694. It was based loosely on the Bank of Amsterdam which got its start in 1609.

  10. The London Stock Exchange was started in 1698

Dates and events from The People's Chronology by James Trager. It is one of my all time favorites. Covers history from 3 million BC to the present in largely bullet form. It may have some mistakes, but it sure is interesting!

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