Bridgeman Art Gallery
Oil painting by Andries can Eertvelt depicting the arrival of the Compagnie Van Verne ships in Amsterdam harbor on July 19, 1599.
wrote one English merchant,“ has clean overthrown our dealings to Aleppo.” Spice route historian John Keay summarized this nautical feat in writing that“ direct maritime access, together with naval superiority … ensured the lowest possible purchase price and the highest possible resale value.” In sailing around Africa and across the Indian Ocean, the Dutch merchants had“ eliminated the middlemen.”
It was clear to the English that the Dutch had found a better way, and they hurried to compete with them. It was also clear that financing such a long and risky voyage— outfitting ships with men, food and bullion( mostly silver rials) for trading— was beyond the means of any small group of them.
Their solution was to form a joint stock company. One of their leaders explained that,“ A trade so far remote cannot be managed but by a joint and united stock.” In late September 1599, 101 individuals met in London to petition the Privy Council and subscribe to a venture involving“ voyage to ye East Indies … there to make trade.” They were led by a couple of influential local men, namely London’ s lord mayor, the city auditor and a few
“ aldermen of the city.” There was strength in numbers in such a risky endeavor, and assorted other subscribers were set down by the notaries:“ grocer,”“ haberdasher,”“ vintner,”“ skinner” and a host of“ privateers.” Those initial subscribers ponied up a little over 30,000 British pounds, and additional subscribers brought the total to about 65,000 pounds. They used 11.5 of these pounds to engage one Richard Hakluyt, who would compile for them all that was known about“ the Spice Routes.”
The Dutch merchants, some of them flush with cash from that successful 1599 voyage, were right behind them in cobbling together their own Dutch East India joint stock company in 1602.
Both these East India stock companies were granted monopolies by their sovereigns. However, the idea that these monopolies were economically enforceable was, according to financial historian Niall Ferguson,“ absurd, given the proximity of the Dutch and English markets to one another.”
A stock company addresses a problem that private property and banking cannot easily solve. Bankers can finance working capital and lend against receivables easily enough, but 16th and 17th century banks, even the well-capitalized, preferred to lend short-term, and with as little risk as possible in that risky age. Such a banker could easily feel he took enough risk in lending to people and businesses who often earned the money to repay the loan in a hodgepodge of different currencies and bank notes— they had little appetite for risky long-term ventures.
The subscribers to these East India joint stock companies understood they were lending long-term and taking a good deal of risk, but the prospect of big profits connected with a risky business proposition was tempting enough to get them to invest. By spreading the risk across a large group of individuals who were all willing to bear some of it, the joint stock company could finance a venture that was too risky and capital-intensive for any bank or small group of investors.
The initial journeys were indeed long and treacherous. The first British East India ships left London in February 1602, rounded the African Cape in September, and returned in June 1603 with 900 tons of pepper, along with cinnamon, cloves and assorted other spices. The captain summarized the voyage on their return by
www. MoAF. org | Spring / Summer 2026 | FINANCIAL HISTORY 49