Page 45 - THE MARKET WHISPERER

THE MARKET WHISPERER 43

The Stock Exchange’s
Early Days

Stock trading is documented in ancient writings as early as 400 BC, but the
most significant, initial sale of stocks to the public occurred in Amsterdam
in 1602 with the establishment of the Dutch East India Company as an
international spice company.

The Netherlands

The essential difference in this case was the fact that from the outset, the
company’s stocks were meant to be sold to the public. In actuality the public
had little impact on the company’s management, which remained in the
managers’ control. The Dutch East India Company was highly successful
and for decades, from its inception through 1650, paid its stockholders
an average annual dividend of 16%. Over the years, additional public
companies were established in Amsterdam, and stock trading took on
an organizational nature. In 1688, the first book in history dealing with
stock trading was published. Its author, Joseph de la Vega, was a successful
Spanish-Jewish trader. He wrote the book using a dialogue format between
a stock holder, a trader, and a philosopher. The book described in fine
detail the relatively ingenious conduct of the Amsterdam Bourse, and even
offered valuable tips to its readers.

London

Some few years later in London, 1693, the first bonds began to be traded.
Immediately afterwards, several British public companies began trading.
London’s first stock traders operated in coffee shops on Change Street,
adjacent to the Royal Exchange, the trading center they were not allowed
to enter because of their known “bad habits.” In 1698, one John Casting,
whose preferred spot was in “Jonathan’s Coffee House,” began hanging a list