Commercial Revolution - Key Features - Managing Risk - Joint Stock Companies and Stock Exchanges

Joint Stock Companies and Stock Exchanges

Stock exchanges were developed as the volume of stock transactions increased. The London Royal Exchange established in 1565 first developed as a securities market, though by 1801 it had become a stock exchange.

Historian Fernand Braudel suggests that in Cairo in the 11th century Muslim and Jewish merchants had already set up every form of trade association and had knowledge of every method of credit and payment, disproving the belief that these were invented later by Italians. In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers. In late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurse, and in 1309 they became the "Bruges Beurse", institutionalizing what had been, until then, an informal meeting. The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam.

"In the middle of the 13th century Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds." Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. This practice was only possible, because these independent city states were not ruled by a duke but a council of influential citizens. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds.

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them."

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Famous quotes containing the words joint stock, exchanges, companies, joint and/or stock:

    There is no such thing as “the Queen’s English.” The property has gone into the hands of a joint stock company and we own the bulk of the shares!
    Mark Twain [Samuel Langhorne Clemens] (1835–1910)

    When a girl marries, she exchanges the attentions of all the other men of her acquaintance for the inattention of just one.
    Helen Rowland (1875–1950)

    Socialite women meet socialite men and mate and breed socialite children so that we can fund small opera companies and ballet troupes because there is no government subsidy.
    Sugar Rautbord, U.S. socialite fund-raiser and self-described “trash” novelist. As quoted in The Great Divide, book 2, section 7, by Studs Terkel (1988)

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    [Samson:] Not for thy life, lest fierce remembrance wake
    My sudden rage to tear thee joint by joint.
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    Among illustrious women, faithful wives:
    Cherish thy hast’n’d widowhood with the gold
    Of Matrimonial treason: so farewel.
    John Milton (1608–1674)

    I have, thanks to my travels, added to my stock all the superstitions of other countries. I know them all now, and in any critical moment of my life, they all rise up in armed legions for or against me.
    Sarah Bernhardt (1844–1923)