Introduction

After the founding of the Dutch East India Company (VOC, 1602), a thriving secondary market for company shares developed. The VOC was certainly not the first company in history that issued shares, but now for the first time all necessary preconditions for the development of a secondary market were present: the company stock was sufficiently large, a high number of shareholders subscribed to the stock, there was a clear rule for the transfer of ownership of a share, and, perhaps most importantly, the company would stay in business for almost two centuries. This was a major difference with earlier equity-financed companies. These companies, which were also for the most part shipping companies, usually existed for the duration of a single voyage only; when the ships returned from their destination, the company was liquidated and the proceeds were distributed among the share holders.

It is not hard to see how the longevity of the VOC created an incentive for its shareholders to occasionally transfer a share. The majority of shareholders did not want their money to be locked up in the company for an indefinite period of time and they therefore traded their shares if, for example, need for cash forced them to do so. This is exactly what shareholders did in the first decade of the seventeenth century.