Establishment of the First Stock Exchange in the World

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The Amsterdam Stock Exchange is considered the oldest in the world. It was established in 1602 by the Dutch East India Company, which issued the first shares on the Amsterdam Stock Exchange.

It was the first company to issue stocks and bonds and the first to formally begin trading in securities.

In the 1600’s, the Dutch, French and British governments all gave charters to companies with East India in their names. At the peak of imperialism, it seemed like everyone had a share in the profits from the East Indian and Asian campaigns except the people living there. Sea trips that brought back commodities from the East were very risky — besides pirates, there were risks of weather and losing navigation.

To minimize the risk of a lost ship ruining their profits, ship owners had long been using the help of investors who would finance the trip — outfitting the ship and crew in return for a percentage of the proceeds if the voyage turned out a success. These early limited liability companies often lasted for only a single voyage. They were then dissolved, and a new one was created for the next trip. Investors lessened their risk by investing in several different ventures at the same time, thereby playing the odds against all of them ending in disaster.

When the East India companies formed, they changed the way business was done. These companies issued stock that would pay dividends on all the proceeds from all the voyages the companies undertook, rather than going voyage by voyage. These were the first modern joint stock companies. This allowed the companies to demand more for their shares and build larger fleets. The size of the companies, combined with royal charters forbidding competition, meant huge profits for investors.



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