What did the Dutch banking system look like in the 18th century?

English and Dutch ships taking on stores at port by Jacob Knyff

To understand the Dutch banking in the 18th century, one needs to understand what the Dutch were predominantly engaged in during the period: Trade.

The Dutch banking in the 18th century was predominantly what we would call today trade banking and commercial banking,

Because of the emergence of Vereenigde Oostindische Compagnie, VOC, better known as the Dutch East India Company, merchant banking was the most active segment in banking at the time.

The Dutch built their ships (called: Fluyts) faster than anyone else (England being their closest rival). This meant more cargo and people, at a prices less than the competition.

Figure 1: A Dutch Fluyt


All this needed banking.

• Ships needed to be built and hence financed.
• Voyages needed to be financed.
• Cross-country trade relationships needed to be established (bater, gold/silver and promissory notes).
• Insurance (which was also handled by the banks).
• Letter of credits for the trade houses all over Europe, and those working with the Dutch colonies all over the world.
• Manufacturing within Netherlands (shipping especially) also needed financing.
• Correspondent Banking for the Dutch East India Company.
• Etc.

Figure 2: The shipyard of the Dutch East India Company in Amsterdam. 1726 engraving by Joseph Mulder.

Because of the trade that was happening in Europe (started by Marco Polo, with currency notes), banking & finance was slowly taking shape. As new markets opened up and presented new opportunities, the Dutch, British and Italian bankers found niche and innovative means to finance trade. Many a times this resulted in a totally new banking element (for example correspondent banking was established when the colonies expanded and banks established branches within these colonies).

Figure 3: Colonial Trade Routes

17th century saw the start of the trade, but 18th and 19th century saw the Dutch coming of age in trade and banking. Anyone and everyone in Netherlands at the time wanted to make money in trade, for Dutch manufacturing was very limited at the time, and the one thing they were good at was shipping and ship building.

All ancillary industries and branches because of traveling the high-seas, especially trading, put banking on a new plateau every few months. A lot of genuine innovation for the very first time in banking, happened during this period.