A Strange Voyage

In August 1602, a Dutch merchant opened his house in Amsterdam to receive visitors. There was no investment bank involved—investment banks didn't exist yet. Instead, a bookkeeper sat at a large table, probably in the kitchen or living room, while one or two directors oversaw the process. Visitors would state their name and the amount they wished to invest. The very last entry in the book came from the bookkeeper's assistant, who subscribed 50 guilders. Wealthy merchants put in tens of thousands. This was the first initial public offering in human history, held in a private home because the Dutch East India Company didn't yet have an office. Nobody involved understood they were inventing the stock market.

The Accidental Invention

The Dutch East India Company was created in 1602 as a response to a practical problem. The Netherlands was competing in the spice race—not space, but spices like nutmeg, which could be bought for pennies in the Banda Islands and sold in Europe at markups of 60,000 percent. Shipping was expensive and incredibly risky: ships wrecked, crews died. Before this, businesses were funded by single individuals or families, with shipping companies formed for just one voyage and dissolved when the ship returned. Investors got paid back immediately but had to start over for the next expedition.