Windhandel 1720

DUTCH MIRROR OF FOLLY

Warning: Many popular storytellers of bubbles and manias refer back to historical books like Mackay's Extraordinary Popoular Delusions and the Madness of Crowds. These historical sources can hardly be referred to as in any way scientific. They are primarily (religious) moral tales and warnings against perceived errors of human nature. It has been established that many of the claims made and stories told are false, simply not supported by evidence or at least exaggerated.

Thus the scene is set. The above text is on the cover page of one of the main sources of information about what has become known as the Dutch 'windhandel' (wind trade) of 1720. Hardly a strong recommendation for objective and serious analysis of this episode in Dutch share trading. The Great Picture of Folly consists of a collection of cartoons, comedies and satires, poems and a few texts depicting the short-lived boom in Dutch joint-stock companies. Approximately 40+ joint-stock companies were proposed and founded in the period June-October 1720. Most of these companies were designed to follow the recent English example for joint-stock assurance companies (aiming to replace the existing private, individual insurance underwriting) although their plans also included various combinations of commercial activities (e.g. shipping and trade) and financial activities (loans and lotteries). Besides the fact that the proposed joint-stock companies required an official charter, their planning and organization included a close cooperation with the Dutch city governments. Today that would be called public-private partnership.

The following table presents a survey of most of the Dutch companies and the available information on key features with respect to date, nominal capital and nominal share value. Eight of the proposed companies were stopped at an early stage, mostly because official consent was not obtained. All the projects followed each other within a very short time frame from June to October 1720. The most important feature was perhaps that the proposals with respect to share capital included a large maximum share capital that in most cases was not at all intended to be called on short notice. Most initial calls of share capital were between 1 and 15 percent. The maximum share capital seems to have functioned as an upper limit on shareholder liability (particularly in the case of the insurance companies) and as a shareholder commitment to supply future funds (something we today would compare to loan commitments or credit lines offered by banks). The effective nominal value of shares should be adjusted accordingly; only the percentage called or paid-in capital amount is relevant. As is clear from the final rows in the table, from the enormous amount of 363 mln guilder capital (almost 900 mln guilder when incl. the rejected/stopped projects) only 41 mln gld of capital was actually called to start company operations. Still a large amount of money, but of course of a different order than the exaggerated 363 or 900 or more million that others like to emphasize when commenting on this episode.

[Note: The table is constructed using information from various sources, not always reliable and frequently confusing because the situation was constantly changing with many companies adjusting their IPO and subscription conditions during 1720 and later. Percentage capital called refers to the total, not merely the first installment that is reported in some sources. The Societeit Berbice is treated separately because although founded in the same period, its origin was not related to the other assurance and commerce projects. A few other proposals may have circulated at the time, informally with little information or simply unknown to us today. A unique printed price list for the daily prices on the Amsterdam exchange, dated 25Sep1720, lists 26 domestic compagnies, and includes companies in Schoonhoven and Staveren but these two companies' shares had no prices. The city of Embden is located in Germany but right on the border with the Netherlands.]

Share and subscription prices

Twenty-four of the 38 companies listed above attracted sufficient attention from investors to have their share or subscription prices listed on the Amsterdam and/or Rotterdam exchange, for shorter or longer periods. Share price data for 1720 have only recently been collected from the archives of the Leydse Courant by Frehen, Goetzmann and Rouwenhorst (2009). Gelderblom and Jonker (2008) have uncovered a short series of share prices from copies of the Rotterdamsche Courant. Earlier, only Groeneveld (1940 p.166) listed a few short time series of share prices but not many and of unknown origin.

Besides the fact that many historical outside observers were apparently unable to distinguish between fully-paid and partially-paid shares, another major confusion existed and still exists due to the misperception that price quotes for subscription shares followed the same convention as price quotes for normal shares. In fact, the subscriptions (both in England, France and in the Netherlands) were quoted as percentage gain, profit, or premium ("avans", or similarly "opgeld", "voordeel") or percentage loss (verlies) relative to the sum of the already paid or immediately due installments (par) paid by the existing owner. Thus, a reported subscription price of zero does not mean that a 5000 gld share/subscription has suddenly lost all its value, but merely that the seller will get a refund of the paid installments on called capital without gain or loss.

The confusion about subscription price conventions is not helped by some authors who clearly were aware of the issue, but who report without further comment for example valuations made for several estate administrators of subscription shares ('avans') as if they were normal shares (percent of full capital). See for example Groeneveld (1940), p.95,166 vs. p.100,104. Some examples also exist of company administrators buying/selling shares or subscriptions for percentages of full capital, at substantially inflated money prices. For another example of this confusion among many observers and even market participants see Slechte (1972, bijlage 9) who reports an attempt in January 1721 to enforce legal action on a put option contract, dated 21 July 1720 with expiry date 1 January 1721 for one 5000 gld share Stad Rotterdam [on which only 250 gld capital was called/paid-in] at price 30 Pct for which the buyer had paid an option premium of 150 gld (probably a common 3% option premium, but on 5000 gld). The premium is disproportionate to the effective share value.

The price for Stad Rotterdam shares reported for 4 September 1720 is 90 1/2 percent avans. For this first offering of a 5000 gld share nominal value, with 5% capital called, and 1% paid in the first instalment due on 15 August, the transaction value would amount to 50 + 0.905*250 = 276 1/4 gld. With four further installments (15th Sep, Oct, Nov, Dec) totaling 200 gld the comparable normal share price would become (approx., ignoring the time value of future money, and the put option value) 476 1/4 divided by 250 = 190 1/2 percent. At the same time, the price for the Stad Rotterdam additional share subscription was 32 percent avans. For this subscription on a 1000 gld share nominal value, with 80% called, and 15% to be paid on 25 September in the first instalment and 13x 5% further instalments every 3 months, the transaction value would amount to 150 + 0.32*800 = 406 gld. With further installments totaling 650 gld the comparable normal share price would become (approx., again ignoring the time value of future money) 1056 divided by 800 = 132 percent.

Note on share / subscription price quote conventions

There is some debate ongoing about the appropriate denominator in the percentage pricing calculations. I believe the use of called/paid-in capital is the correct calculation, but further archival research on actual transactions must resolve this issue. Most notary documents on transaction disputes do not quote actual money values but repeat Pct avans language and some other recorded transactions are simply clearly wrong. Researchers on the English South Sea shares/subscriptions (compare Shea, 2004) and the French Mississippi shares/subscriptions (compare Velde, 2004) struggled with more or less the same questions. On the extreme end, Frehen, Goetzmann and Rouwenhorst (2009 Appendix III) suggest the following price calculation: Stad Rotterdam share fl 5000 nominal capital value, first instalment 1% paid-in, price quoted at 49% avans, with total monetary value of the transaction equal to (1%+49% = 50%) x fl 5000 = fl 2500. Comment 1: Although consistent with a straigthforward bubble view of the market, a price of 2500 for a newly issued stock with merely 50 paid-in makes absolutely no sense. Comment 2: Their reasoning based on a lack of information among buyers and sellers is not correct. Details of capital called and the installments schemes were widely reported. Furthermore, transfer of the shares would have to occur in the company ledgers, at which time all parties would convene to confirm transactions and would be able to easily verify the amounts of capital paid-in as recorded in the ledger. Comment 3: Dividend payments were definitely also linked to paid-in capital, not the nominal value of the fl 1000 or fl 5000 shares.

Note on shares / subscriptions and other names

Perhaps it would be logical to assume that the term subscription ('subscriptie') refers to shares ('actie') on which some future installments still need to be made (and before their price quote changes from 'avans' to simple and more common 'percentage of capital'). However, in practice 'actie' is generally used for the first issue (perhaps because these were issued at par) and 'subscriptie' or even 'inscriptie' is used for second and in theory subsequent share issues, as in the case of Rotterdam and Delft (perhaps because these were issued at market prices above par).

The options feature of the Dutch and English subscriptions

All Dutch subscription contracts contained a provision that effectively turned the share subscriptions into (a set of) option contracts, or better still warrants. The conditions specified that failure to pay installments on time would immediately result in forfeiture of the already paid amounts to the benefit of the company. This option feature made the subscriptions very sensitive to price speculation and introduces an embedded option value in their price (see Shea 2004 on the South Sea Company equivalent).

Joint-stock (marine) insurance companies

As mentioned before, half or more of the proposed Dutch joint-stock companies mentioned assurance as one of their important activities. At the time, the joint-stock insurance activities could perhaps be viewed as an attractive major new business opportunity. The share prices of some of the important assurance compagnies (Stad Rotterdam, Middelburg Assurantie, and also Delft, Gouda) do suggest they contain a premium over the other compagnies (see the graph of share prices). The proposed other, frequently somewhat unfocused, commercial activities must probably be viewed as essentially serious attempts of public-private partnerships to accumulate funds of capital that were needed or desired to stimulate the various local economies; the Dutch economy was (probably) experiencing a somewhat difficult conjuncture period that had started approx. a year earlier (1719).

The importance and subsequent experience of the joint-stock insurance companies is perhaps aptly described by the following text [adapted from Kingston (2007, JEH): Marine insurance in Britain and America, 1720-1844: A comparative institutional analysis]

At the start of the 18th century, marine insurance in Britain was carried out entirely by private individuals. Many underwriters were merchants who wrote insurance on the side, but any wealthy individual could underwrite a policy. A merchant (or a broker acting on his behalf) wishing to purchase insurance drew up a policy and presented it to private underwriters for their signature. Risks were usually shared among several underwriters. The parties negotiated a premium, and the underwriter wrote on the policy the amount he was willing to insure. In 1717 several groups of merchants and speculators began petitioning to obtain charters for joint-stock marine insurance corporations. The promoters argued that the proposed corporations would provide cheaper and more secure insurance than the existing system of private underwriters. Their underwriting would be backed by a large capital fund, and in the event of a claim, it would be easier for a merchant to recover losses from a corporation than from many individual underwriters separately. Corporations also expanded the pool of available capital by enabling those without specialist knowledge of marine risks, or with relatively modest amounts of capital, to act as insurers by entrusting their underwriting decisions to experts. The proposed charters were opposed by merchants and private underwriters in London and Bristol, who claimed that the existing system was adequate, and that a monopoly would harm trade. Both sides in the debate, however, shared the expectation that if charters were granted, the proposed corporations would drive private underwriters out of the market. The argument was settled when the two main groups of promoters offered the King £600,000 (to pay off the debt on the Civil List) in exchange for charters. Two joint stock corporations (the Royal Exchange Assurance and the London Assurance) were subsequently incorporated as part of what later became known as the “Bubble Act” of 1720. The Bubble Act made it illegal for joint-stock companies to operate without a corporate charter. In all industries except marine insurance, however, other kinds of unincorporated companies, including partnerships and trusts, were still allowed, and businessmen were later able to use these devices to create (highly imperfect) substitutes for the joint-stock business corporation (Harris, 2000). However, marine insurance received special treatment: all firms and partnerships, apart from the two corporations chartered by the Bubble Act, were barred from writing marine insurance (crucially, however, private underwriting by individuals was still allowed). Contrary to expectations, private underwriting not only survived, but flourished. Except perhaps during their first few years of operation, the two chartered corporations probably never wrote more than 10% of all marine insurance business, and in 1810, it was estimated that together they accounted for less than 4% of total sums insured. Why, despite their advantages, did the two chartered corporations fail to dominate the British marine insurance market? We will argue that the way in which the market developed - in particular, the way in which the private underwriters managed to overcome the information asymmetries and agency problems described above - meant that the two chartered corporations faced an adverse selection problem which hindered their expansion.

[End of Kingston (2007)]

As this text makes clear, there were good reasons to assume that joint-stock assurance companies presented a profitable business opportunity. The fact that its operation was more difficult than expected, in the face of economic problems that have only started to become a feature of mainstream economic analysis in modern times, should not reflect too badly on the originators of the projects in 1720.

The Dutch Stad Rotterdam insurance company of 1720 seems to have been more successful than others because, despite a lack of expertise in formulating the policy conditions and correct pricing, from an early start it offered fire insurance policies to individual home owners rather than commercial marine insurance. In the Netherlands, it took another 50 years before in 1770 a next attempt was made to establish new insurance companies (Societeit van Assurantie in Rotterdam, followed in the next years by other companies).

[Note: Besides the Dutch and English projects, a similar attempt to start one or more joint-stock insurance companies (Assecuranz-Compagnien) was made in Hamburg Germany in 1720. The attempt failed - at least with respect to the tradable shares - following opposition from the authorities. (Samuel, 1924; Amsinck, 1894)]

[Note: On the English 1720 assurance boom in share prices see my other webpage that deals with the South Sea Company shares.]

Fundamentals

On the fundamentals of the Stad Rotterdam shares, we could calculate that to support a share price of 190 1/2, using a required return rate of 5%, the company would need to pay constant dividends of 190.5*0.05 = 9.5 percent on paid-in share capital. If you favor a different set of numbers, or have different expectations, do your own calculation. This is what investors of the time had to do also. As a matter of fact, after relatively high pay-outs of 20% and 10% on paid-in capital in the first 3 years, the Stad Rotterdam dividend rate settled on an average of 4-5% until the late 1790s.

Much has been made in the literature of the fact that subscribers to the share issue were able to quickly cash a substantial profit on their initial investment. Yes, the initial returns to approved subscribers was large. Mathematically, even a 10% gain on investment in one month equals 120% return on annual basis. However, this should not be surprising at all. One needs to remember that the companies simply issued their first shares at par value (later subscription issues were usually at higher market level prices). It is not particularly special that a presumably profitable new enterprise carries a market price for its invested capital that is higher than par value. To some extent, what we see with the share issues in 1720 is also very much like the so-called new issue (IPO, SEO) underpricing puzzle that we still see debated in the academic finance literature today.

Fizzling out

Of the 38 projects only a few seem to have actually survived the initial stages, but information on most of them is simply not available. Most seem to have stopped their capital instalment payments and returned the paid-in money to the shareholders before taking up any serious commercial activities. At least this is what appears to have happened in the Hague (v Gelder, 1942). In Zwolle, after failing to initiate any meaningful commercial operations, the city government offered shareholders a choice to convert their 10 gld paid-in shares into three 5 gld lottery tickets. This plan was later changed to a conversion of shares into city government loans: losrenten, lijfrenten with a haircut loss of 25 Pct of capital (see also Formsma, 1945). The compagnie of Veere contacted the Middelburg Commercie company to discuss a merger; which was rejected (Groeneveld, 1940). The company of Hoorn never succeeded in more than sending out a whaling ship, but at least shareholders had their capital refunded in the end (Kooijmans, 1985). The Compagnie of Monnickendam developed some activities and bought real estate, warehouses and ships, but was liquidated in 1725 (Vereniging Oud-Monnickendam, Archief 1988: Scheepstimmerwerven en zoutketen te Monnickendam). The Compagnie of Dordrecht operated several ships but decided to sell them in 1727-28 (advertisements couranten). The companies of Rotterdam (1997), Utrecht (1750-52) and the Middelburgsche Commercie Compagnie (1889) existed for many years and have left archives and featured in a few books. In addition, the Middelburgsche Assurantie Compagnie operated until 1814 and the Gouda Commercie en Assurantie Compagnie remained in business until approx. 1729 (Schuddebeurs, 1928).

Also interesting is that Van Sante (1770) Alphabetische naam-lyst van alle de Groenlandsche en Straat-Davissche commandeurs, ... lists various Commercie Compagnies as sponsors ('directeurs') of ship captains ('commandeurs') that commanded whaling ships to Greenland and the Davis Strait. A scan of the long list for the number of ship captains and years of operations yields: ships to Greenland: Hoorn (1 ship, years 1721), Enkhuysen (?), Purmerend (1, 1724), Monnikendam (6, 1721-24), Vlaardingen (1, 1721-22); ships to Davis Strait: Vlaardingen (3, 1721-22), Maassluys (3, 1721), Monnikendam (2, 1721-24), Enkhuysen (1, 1721). Results in terms of number of whales, barrels of blubber and oil were diverse. One ship of Monnickendam was lost. Ships of Hoorn, Enkhuysen, Maassluys returned with no catch at all.

So far, I have found reports that the compagnies of Kampen en Steenwijk never proceeded beyond the share application, but there may be others.

The historical literature has commonly suggested that the financial speculation must have ended around Saturday 5 October 1720. Allegedly, that day in Amsterdam during the afternoon and evening a crowd of several persons (and a lot of young boys) rioted and attacked one of the cities off-exchange trading centers (Fransche Koffyhuis Kalverstraat). The next day the city government prohibited the gathering of crowds, reiterated its prohibition of broker activities by anyone other ('beunaazen, byloopers en dergelyke') than the official brokers ('makelaars'), and warned the official brokers to not get involved in what was referred to as wind trade (Wagenaar & Stijl, 1788 p.111-18).

Whatever the precise reason for the Amsterdam riot may have been (perhaps simply an aggression against the Jewish traders, perhaps the extended and noisy presence of the large numbers of (unofficial) traders, perhaps disappointed buyers or sellers), the continuing reports of share prices suggest that the event did not significantly affect trading on the official Amsterdam exchange (and also not in Rotterdam). There is no visible price collapse or discontinuance of prices.

Ridiculous claims

Various outrageous claims have been made about the 1720 Dutch windhandel, almost all of them misleading and false. Again, as with the other 'famous bubbles', the purpose of the pamphlet literature on which almost all of the subsequent literature relies was not to provide a serious and objective analysis, but to denounce a part of economic life (i.e. financial markets and trading) that was poorly understood by outsiders and that conflicted with certain religious and moral beliefs (then and now).

Some of the most important or noteworthy claims:

* A speculative frenzy that involved the collection of total share capital in excess of all the available financial resources in the Netherlands

[Total nonsense as indicated above. Numbers on the maximum allowed share capital/issue are irrelevant, because almost all compagnies clearly indicated that they had no intention of raising this capital in the short run. First calls were modest, and further calls of capital in the future were subject to approval from the major shareholders. The local wealthy and rich merchants and notables had no problem whatsoever in raising the money for the first call of share capital.]

* A speculative frenzy that involved children, low income common folk, pensioners and others who lost all their savings and ended up in bankruptcy

[Although it is certainly true that many applied for subscription shares (although only few of the registrations for the compagnies have survived and can be examined), the compagnies were generally very selective in their allocation of shares. Only notables, local dignitaries, well-known rich local businessmen and persons 'potentially useful for the company' from other regions actually received shares in the allocation run by the company directors. It is possible that some low-income common people traded share subscriptions on the Rotterdam or Amsterdam exchange, or, perhaps more likely, in the parallel unregulated street trade, but there is no evidence for this claim and certainly no indication that this was widespread. It is in general very unlikely that stock brokers on the market would agree to work for - intermediate - low-income people with little credit. Lastly, transfer of shares on the company books was always subject to approval (at least signature) by one or two of the company directors, although I am not sure whether they may have actually vetoed certain prospective shareholders.

Empirical evidence on bankruptcies in Amsterdam and Rotterdam show no significant change in the number of bankruptcies in 1720 or the next years.]

* A speculative frenzy that ruined the Dutch economy

[There is no evidence that developments on the share market affected the real economy. The economy was perhaps - data are very sparce - in a difficult period, but this seems to have started the year before in 1719 (Groeneveld, 1940).

The pamphlet literature argues on the belief that purely financial trade, in contrast with productive industry resulting in tangible goods, could not at all contribute to economic prosperity and that people involved in financial trade should be forced to take up productive labor activities instead. This archaic view reminisces of mercantilism; the view that an economy's fortune depends on the amount of gold and silver it can collect and keep.]

* Gullible investors who fell victim to devious schemers and fraudsters without proper due diligence investigation

[Again, total nonsense. The companies of 1720 were the result of intimate public-private partnership with a very important role for city government officials in the foundation of the companies. It is very unlikely that city governments would knowingly and willingly get their local business men and notables involved in a fraudulent or hopeless enterprise. As mentioned before, most of the admitted shareholders were local dignitaries and especially local and regional businessmen. These are the people who take investment and business decisions on a regular basis. Nobody always takes perfect decisions, but the shareholders knew perfectly well what they were doing, and they knew the possible risks they were taking with their business investments.]

* Money and share trading involving enormous sums and speculators earning thousands of guilders with little or no investment

[Nonsense. Shares traded were only for partially paid-in capital and the nominal amounts referring to full capital shares are irrelevant for the actual money amounts involved in transactions. Attempting to compare the limited amounts of the first installment payments to the full-capital share values is complete nonsense.]

All these claims are misleading and/or false, based on a poor understanding of what actually happened and how the financial markets operated.

Work in progress and miscellaneous

The West-Indische Compagnie share subscription(s) of 1720

During a period when interest in WIC shares boomed and its share price rose, the WIC obtained permission in August 1720 to expand its share capital by an issue of 1500 to 1600 shares with nominal or capital value 3000 gld (i.e. 1600*3000 = 4.8 mln gld capital maximum). Although the literature frequently mentions that the share issue at price 250 was almost instantly oversubscribed by the enthousiastic stock market speculators, Den Heijer (2005, p.102) reports that the archives show that actually only 3.765 mln gld, some 500 shares, was subscribed and share capital expanded by a book value of 1.7 mln gld. Slightly more than the 1.5 mln expected, but according to Gelderblom/Jonker (2008, note 31) the WIC also appears to have issued shares at price 200 in what was a separate deal, not the subscriptions of 250 traded on the Amsterdam exchange. Contrary to earlier studies, WIC archive documents of the Heeren 10 show that on 3Apr1721 the accountant reports that of 1600 shares available a total of 1506 had been issued. Furthermore, on 16Apr1721, besides confirming the revision of the timing and amount of instalments decided 15Nov1720, the Heeren 10 also decide to allow subscribers of the 1st subscription to convert their already paid first instalment of 2500 gld into a share of 1000 gld capital priced at 250 Pct. It appears that many subscribers opted to convert, cutting both the overall capital and received amounts to about 1/3 of their original.

A second subscription of 1,000 shares (12Sep1720), almost immediately after the first, at a price of 450 failed miserably. Although Den Heijer (2005, p.102) reports merely 7500 gld subscribed, this is a mistake. A WIC document summarizing the results of the 1st and 2nd subscriptions shows that actually 247,500 gld was subscribed, with nominal capital value of 55,000 gld, or 18 shares. The 2nd subscription was soon effectively cancelled by suspending collection of instalments (WIC Heeren 10 decision 15Nov1720) and subscribers at the price of 450 were reimbursed their first instalment (WIC Heeren 10 decision 5Nov1720), with a residual sum of 7500 gld remaining with the company.

Again, although the investors were surely disappointed by the subsequent performance of the WIC and its share price, the historical literature seems to report misleading and exaggerated accounts of what actually happened.

The available time series clearly show the boom and bust in WIC share prices in July-October 1720. The timing of events, however, is not entirely congruous with the developments in share prices of the domestic assurance and commerce companies, which suggests a different fundamentals component.

This contract and another contract on the Company of Stadt Rotterdam shares [see the scan here] have been labeled option contracts [incorrect, option contracts are different] or term/forward contracts [misleading, because the first possible moment of transfer in the company books was sometimes unavoidably delayed by days or weeks]. (Buyer on the Stadt Rotterdam contract, dated 27 July 1720, is Henry Hope Sr., father of the famous Amsterdam merchant banker, who apparently left Rotterdam for the U.S. after experiencing financial difficulties.)

Smith (1919, p.122) provides the following text of 3 types of standard contracts:

To buy: "Ik ondergeschreven bekenne gekocht te hebben van d'Heer ........... twintig duysent guldens capitaal actie van de Commercie, Navigatie, en Assurantie Compagnie tot Gouda, ten pryse van .... per cento, welke twintig duysent guldens ik my obligere te ontfangen binnen de stadt Rotterdam, tot de gemelte prys, soo dra de transporten sullen konnen gedaan werden. En by geval in 't midden desen tijd eenige uytdeeling gegeven word, soo sal 't selve tot profyt van de koper syn en tot afkorting van de bovengemelte prys. En in tegendeel alle bylage en inroepinge tot zyne laste, na de gemeene styl."

To sell: "Ik ondergeschreve bekenne verkocht te hebben aan d'Heer .... twintig duysent guldens capitaal actie van de Commercie, Navigatie en Assurantie Compagnie tot Gouda, ten pryse van ...... per cento, welke twintig duysent guldes ik my obligere te leveren binnen de stadt Rotterdam, tot de gemelte prys, soo dra de transporten sullen konnen gedaan werden. En by geval dat in 't midden desen tyd eenige uytdeeling gegeven word soo sal 't selve tot profyt van den koper syn, en tot afkorting van de bovengemelte prys. En in tegendeel alle bylage en inroepinge tot zijne laste, na de gemeene styl. Alles ter goeder trouwe, gedaan in 's Gravenhage den vyfde September seventien honderd en twintig. N.B. Dit contract, soo het niet verwisselt of voldaan word binnen ....... na het openen der boeken, sonder dat by den eenen contractant of den anderen daaruyt eenige wettige pretentie word gemaakt, sal aangesien en gehouden worden als vervallen, van nul en geender waarde te zyn."

Option contract: "Ik ondergeschreven bekenne ontfangen te hebben van d'Heer ...... de somma van ..... guldens casgelt, voor welke praemie ik my by deze verbinde te leveren (a) een partij ..... actie, bedragende de somma van ......... guldens capitaal in de Compagnie van Commercie, Navigatie en Assurantie binnen de Stadt ........., van dato deses af tot den ...... des jaars seventien hondert en ....... twintig, en dien dag incluys, alle uure als my door toonder deses sal aangesegt werden te moeten ........ (b), en dat ten pryse van ...... per cento avans, boven de alsdan betaalde fournissementen, te betalen contant volgens costumen; dog byaldien toonder deses my de voorgeschreve partij van ..... actien niet komt aan te seggen dat ik die moet ........ (c) tusschen heden en den voorsz. dagen ...... des jaars seventien hondert en ..... twintig, soo sal ik van dit contract vry en ontslagen wesen, en de praemie voor my behouden, sonder dat die oyt sal behoeven te restitueren, of eenige namaninge subject zijn. Aldus gedaan ter goeder trouwe, onder renunciatie van alle placaten, resolutien, en wille-keuren, zoo bij haar Ed. Groot Mog. als bij particuliere steden gemaakt en gearresteert, in soo verre deselve met dese zyn strydende. Actum in ............

a. of te ontfangen. b. ontfangen of leveren. c. ontfangen of leveren."

Recent literature

• • Frehen, R.G.P., W.N. Goetzmann and K.G. Rouwenhorst, 'New evidence on the first financial bubble,' Yale working paper no.09-04, under revision.

  • Gelderblom, O. and J. Jonker, 'Mirroring different follies: The character of the 1720 bubble in the Dutch Republic, first draft working paper 2008, revised March 2009.

  • Slechte, C.H., 'De Maatschappij van Assurantie, Discontering en Beleening der Stad Rotterdam van 1720,' Rotterdams Jaarboekje 1970: 252-310

  • Slechte, C.H., 'Het aandeel van de Rotterdamse regenten in de actie-handel van 1720,' Rotterdams Jaarboekje 1972: 206-62.

  • Slechte, C.H., Een noodlottig jaar voor veel zotte en wijze: De Rotterdamse windhandel van 1720. Nijhoff, 1982.

  • Van de Laar, P.Th. & H.H. Vleesenbeek, Van Oude naar Nieuwe Hoofdpoort, de geschiedenis van het Assurantieconcern Stad Rotterdam Anno 1720 N.V., 1720-1990.

  • Kingston, C., 'Marine insurance in Britain and America, 1720-1844: A comparative institutional analysis,' Journal of Economic History, vol.67 no.2 June 2007: 379-409

Internet

• • Het Groote Tafereel der Dwaasheid, electronic scan (missing pages) of the copy held by Stadsarchief Dordrecht, http://www.geheugenvannederland.nl/?/en/items/SAD01:489-70015

  • most importantly the 'copye van een brief': four letters from an anonymous disgruntled observer/investor.

  • Prints/cartoons from Groote Tafereel, Harvard Business School, The South Sea Bubble collection,

  • http://www.library.hbs.edu/hc/ssb/recreationandarts/tafereel.html

  • Personal webpage on the Dutch windhandel 1720, with special emphasis on Rotterdam

  • http://www.engelfriet.net/Alie/Hans/windhandel.htm

  • Vissering, S., Het Groote Tafereel der Dwaasheid,' De Gids, jrg. 1856: 643-84. http://www.dbnl.org/tekst/_gid001185601_01/index.htm

  • Yale International Center for Finance. Includes links to the Origins of Value Virtual Museum and Historical Financial Data, incl. the 1720 Dutch share prices in the Great Mirror of Folly Project. http://icf.som.yale.edu/special.shtml

  • Salmon, Wagenaar en van Goch, Hedendaegsche Historie, of tegenwoordige staat van alle volkeren, Deel 15, 1744. History and description of Dutch cities (Holland). It includes many of the cities that proposed the various companies. Google books PDF: http://books.google.com/books?id=H8gWAAAAQAAJ

  • Gemeente Rotterdam, Gemeentearchief, Rotterdams Jaarboekje 1888-heden, Online http://rjb.x-cago.com/