Historical tidbit: this year is the 350th anniversary of the Treaty of Breda.

So?

OK, here we go. In 1667, at the end of the second of four Anglo-Dutch Wars, the Dutch traded away their interests in the New World to the English. The English took over New Amsterdam, which became New York, which eventually became the world’s economic center. And all the Dutch got in return was a tiny speck of an island in Southeast Asia called Run.

Pretty stupid, right?

Perhaps not. At the time, Run was the world’s only source of a tree with the magical name, “Myristic fragans.” From which one can harvest a heavenly spice called nutmeg. Which in 1667 was one of the most coveted commodities in the world. And, by removing the English from that part of the world, the Dutch gained a monopoly on nutmeg, and over much of the Asian spice trade.

Meanwhile, the Dutch had already realized that, with so many of their trade ships sailing halfway around the world, it made no sense for single investors to place their entire bet on just one ship, and lose it all if that ship went down. Instead, why not lump the whole fleet together, and offer it up to investors in little pieces? That way lots of people would own small bits of the whole thing, which would give it financial stability through good times and bad.

Thus was born the world’s first publicly traded company, known by its Dutch name, Vereenigde Oost-Indische Compagnie, or VOC. The VOC was granted a charter by the Dutch government to offer investors these new things called “shares.” They were little pieces of the VOC in the form of offerings called stocks and bonds. Which could be purchased by anyone at a new financial market called an exchange. The company had a VOC logo and colors, a global structure and culture, a board of trustees, a governance policy, annual reports, and all the other things we now see in any modern global corporation.

But here was the bloody kicker: the VOC was also granted the power to arm its vessels, hire soldiers, mint coins, develop colonies, build forts, wage war, and conclude treaties with foreign powers. In short, it was the paramilitary arm of the Dutch Republic everywhere around the world. It went wherever it wanted, killed whomever it wanted, took whatever it wanted, and brought it all back for sale in Europe.

And it was murderously effective. For over two hundred years, the VOC paid its investors an annual dividend of 18%.

Read that again. For over two hundred years, the company paid its investors an annual dividend of 18%.

Which means that if you had invested just one guilder in the VOC at the dawn of the company, and reinvested your dividend every year, by the time the company folded in 1800, your investment would have been worth…238 trillion guilders.

So, back to the Treaty of Breda. Yeah, the Dutch traded away Manhattan, which would one day become the center of global commerce. But in return they got the global spice trade, upon which they invented the entire concept of global commerce – for good or bad – in the form of the VOC.

Today we remember the VOC by its English name, the Dutch East India Company.