Bank of Amsterdam
For decades the assay master of the Bank sent out stocks of gold and silver to the various Mints in the United Netherlands to receive new coins in return.
[4] Unlike the Bank of England, established almost a century later, it neither managed the national currency nor acted as a lending institution (except to the government in emergencies); it was intended to defend coinage standard.
[7] The bank's full-reserve policy relaxed over time as it lent money to finance overseas trade and to support the Dutch economy, but it remained liquid by requiring good collateral on its loans.
This changed with the Fourth Anglo-Dutch War, when the Dutch East India Company defaulted on large unsecured advances from the bank.
500 different coins – legal or illegal – from a wide variety of countries and regions circulated, but a good system to determine exchange rates did not exist.
[b] Each of the accountants had his own specific task: the first took the written orders for payment receipt, the second held in the journal, the third balanced the book, and the fourth took care of the ledger.
[33] It provided the Admiralty of Amsterdam and the mint masters in Enkhuizen, Harderwijk, Kampen, Medemblik, Zwolle and Utrecht with funds booked as private loans.
In October the States General decided to authorize the admiralties to issue passports for the export of silver imported from Spain, Andries Bicker was involved in the request.
[f] Silver coins such as the rijksdaalder and the coveted Spanish dollar were in high demand in Old Batavia, prized on the Spice Islands, and sought after in Southeast Asia, ultimately proving to be lucrative exports.
[g] In 1683, Christoffel van Swoll was appointed as governor-general of the East Indies; he had good connections as his father was an attendant (usher?)
[47] Until then few people in China were engaged in coastal and foreign trade, but soon Batavia (and Manila) would become a popular destination for Chinese merchants.
Bills of exchange drawn on Amsterdam were a liquid form of short-term credit readily available in most European commercial cities.
[61] The bank's metal stock was increased by large purchases at favorable times or by offering higher prices than the competition.
Consequently, John Law introduced paper money, which remained in circulation until his adversaries attempted a widespread conversion of their notes into precious metals.
Unlike at the beginning of the 1720s, when French gold dominated the bank's total metal supply, by the middle of the century it consisted mainly of Spanish specie.
In January 1711, Anthoni and Johannes Grill (III) were appointed as assayers, specializing in coin testing, but also dealing in copper plates and iron.
[68] They supplied the Dutch East India Company, between 1722 and 1731, with silver ingots,[69] which were made from melted coins, mainly Spanish American reales de a ocho or "pieces of eight" and marked with a VOC stamp.
In 1746, the mint masters asked for strict measures to be taken with regard to all the bad small coins (or change); they were supported by the bankers and cashiers.
[83][84] The commissioners sanctioned, by the decree of 27 June 1749, the private trade in specie, and even ordered that the regulation of the values of the coins had to be fixed by commercial agreement.
"[86] Part of it was used to mint 40 million new coins, which were put into circulation in Saxony and Silesia, but also in Hungary, Poland, Lithuania and Courland.
[90] The financial crisis at the end of July 1763 was triggered when Leendert Pieter de Neufville had to pay his obligations to Johann Ernst Gotzkowsky.
The deferrals resulted in an international banking crisis in Amsterdam (38 bankruptcies), Hamburg (90–97), Berlin (33),[95] Danzig, Leipzig, Breslau, Stockholm, and London.
[99] On August 4, six prominent Amsterdam bankers proposed the idea of depositing their silver and gold bars at the Wisselbank, opting for this approach over using coins.
Based on The Father of Economics Adam Smith's The Wealth of Nations: While this was not its original aim, the Bank of Amsterdam proved profitable to the city which provided for it.
It initially operated on a deposit-only basis, but later it allowed depositors to overdraw their accounts, and it lent large sums to the Municipality of Amsterdam (the Society of Surinam and the East India Company).
[114] In June 1794, king Victor Amadeus III of Sardinia, who was in war with France, borrowed more than one million guilders; a box with jewels was kept in the Wisselbank as a deposit.
On 23 January 1795, during the Batavian Revolution, the doors of the Wisselbank were locked and the treasure sealed; within two weeks the First French Republic claimed the jewels belonging to the King of Sardinia.
The Wisselbank refused to hand them over, referring to the charter of 16 December 1670, which allowed it to give credit to foreign nations, and the money could not be arrested, etc.
A loan was issued to raise capital to save the Wisselbank, which was still considered vital to the Amsterdam economy, but far too few lenders signed up.
In 1802, the bank's liabilities were once again entirely backed by 'metallique specie', and from that point forward, the commissioners were explicitly prohibited from extending credit to 'any private person, corporation or constituted authority, by whatever name'.
