The early 17th century marked the genesis of modern finance, establishing foundational principles that remain central to contemporary markets.

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​Founded in 1602, the Dutch East India Company (VOC) received a monopoly from the Dutch Republic to conduct trade with Asia. An initial subscription offered shareholders the option to transfer their shares to a third party at their discretion. Quickly a secondary market arose as shareholders met in makeshift open-air markets that coalesced into the Amsterdam Stock Exchange - the world's first modern financial exchange.

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​​​Over the subsequent period, the VOC became the first company to establish shareholder rights, a dividend policy and a Board of directors that are pillars of modern corporate governance today. It also became the first company to experience shareholder activism and was separately shorted in a bear raid by an industrious syndicate of speculators.

 

The VOC’s valuation rose precipitously. This led to prosperity for its shareholders and ushered in the Dutch Golden Age. Surplus wealth flowed back into the markets as investors looked for the next big thing.

Over time tulips became a popular investment and a symbol of wealth. Forward contracts that were almost exclusively used by farmers were quickly hijacked by speculators. The price of a tulip rose tenfold in the last few months of 1636. In February of 1637 the music stopped and prices crashed over ninety percent.

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1637 perfectly epitomises how markets can create wealth over decades and take it away in days.

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A few years before the tulip crash, Dutch explorers established a colony called New Amsterdam in what is today the southern-most tip of Manhattan Island. For protection, a wooden palisade was erected on the colony’s northernmost border. While the palisade did not survive the English invasion many years later, the street where it once stood was named after it - Wall Street. The Dutch’s financial ethos and fascination of markets has shaped the world we all live in today.