Java Sea Day to Vietnam - Day 74

The Dutch East India
Company's Financial
Revolution
By the 1600s, the fleet of the Dutch East India Company, or the Vereenigde Oost-Indische Compagnie (VOC), had grown into the largest corporate entity in the world. Exactly how it became so massive highlights the most pivotal moment in the history of finance.
In its earliest days, as the first ships of the VOC set off for Indonesia, each voyage was financed individually with the hope that investors would turn a profit from the sale of spices and other goods when the ships returned. But with piracy, shipwrecks and disease common, this economic model proved unsustainable. In its place, the VOC introduced a revolutionary financing strategy: public trading and the issuance of stocks and bonds.
For the first time, speculators placed their money on an entity rather than on a single venture, allowing the scale of VOC expeditions to expand exponentially. Trading posts were established in
Batavia (modern-day Jakarta), on Java, and in as far away as Japan. This was the birth of corporate globalization, and it gave rise to the financial markets that still exists today. Investment banking, investment funds, corporate shareholders, stock futures, and many other systems integral to today's finances were all created by the VOC. And all the trading action took place on the floor of the Amsterdam Stock Exchange, also the first of its kind, established in 1602. By the mid-1700s-as the political and economic atmosphere shifted in Asia, as corporate corruption became viral, and as dividends exceeded profits- the. iC ‘s prosperity faltered. The company was nationalized in 1796.Read more