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Honor and Trust Honor and Trust
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The Collegie van de Actionisten Trading Club The Collegie van de Actionisten Trading Club
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Settlement Settlement
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Shares as Collateral Shares as Collateral
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Cite
Abstract
This chapter examines the risks involved in forward trading in the Dutch East India Company’s shares in seventeenth-century Amsterdam. The lawsuit between Sebastiaen da Cunha and the nine dealers with whom he had signed forward contracts showed that the foundations supporting forward trading in Company shares were shaky. Huge sums were involved in the forward market. Many traders turned over amounts of money that were vastly bigger than the balance in their Company capital account. Forward contracts were entered into on the basis of trust. A dealer only sold them if he was confident that the vendor would fulfill his obligations, since no help could be expected from the legal system in the event that he reneged. This represented a big risk because the forward trade involved substantial sums. This chapter also looks at the share traders’ club called Collegie van de Actionisten and how it does business as far as trading in shares was concerned.
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