Home > Uncategorized > A vigorous capital market without banks – Hennaarderadeel, Friesland, 1537-1556

A vigorous capital market without banks – Hennaarderadeel, Friesland, 1537-1556

At this moment I’m working on an article on the capital market in Hennaarderadeel, a rural part of Friesland, between 1537 and 1556. Look here for the unbearable flatness of this area, the landscape as shown has not changed too much since 1537. The data are obtained from the excellent transcriptions of hundreds upon hundreds of sixteenth century deeds available on the website of Paul Borghaerts (and there is much more where that came from… ). Interesting questions are: who were the lenders, who were the borrowers, how much did they lend and borrow, why did they lend and borrow and how did lenders and borrowers meet – without banks. And a genuine capital market of course has an interest rate (graph, every dot is a transaction), note the increase after 1550 (interestingly, after 1543 a 20 year pause in the sixteenth century price revolution came to an end).

Hennaarderadeel

One interesting part of the answers to the questions above is that, in 1537, no banks existed in Friesland and we have to wait until the nineteenth century before any serious banks came into existence in this area. Somehow, lenders and borrowers were able to find each other without banks…  Between 1537 and 1556 almost all lending and borrowing was a kind of ‘peer to peer’ lending, often but surely not always between family members but importantly also more often than not also between people living in different villages and hamlets. Each village and hamlet was a kind of node in a rural capital market network which as early as the first half of the sixteenth century covered the entirety of at least Friesland and probably the entire commercialized and monetized coastal zone of Friesland, Groningen northern Germany and Denmark (this is not too hypothetical!). While no banks existed…  Considering the amount of deeds lots of people took part in this market, when it comes to borrowers according to Paul mainly to be able to buy land and houses. Also according to Paul, after about 1600 (The Dutch ‘Golden Age…) rich traders and institutions entered this capital market but even this did not change the ‘peer to peer’ character of this capital market and did not lead to the rise of a banking system. Which leads to the question: what did?

 


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  1. Steve
    August 18, 2015 at 6:38 pm

    Industrialization/technological advance which led to a more drawn out productive process and hence both time lags between production and consumption and the additional costs of doing business…which results in insufficient individual incomes being distributed and the additional costs….enforcing the need to have a bank create the additional costs of money created as debt.

  2. August 18, 2015 at 9:34 pm

    What kind of money did they borrow?

    • merijnknibbe
      August 19, 2015 at 7:57 am

      Textbooks state that ‘money’ is a combination of a unit of account, a store of value and means of exchange (therewith downplaying the political social relations embedded in money – hey, why do all these ceasars and kings and presidents put their head on it). In this period the unit of account was basically the ‘stuiver’ and in the deeds often multiples of this stuiver like the Philips guilder (25 stuivers, Not Philips the II but another Philips), the Carolus guilder (Charles the Fifth, 20 stuivers) or Gold Guilders or Florijn (28 stuivers) were used. Actual payment was made in a bewildering array of coins (though some contracts stipulated that specific coins had to be used). For reasons not entirely clear to me, the price of horses was (in accounts) always stipulated in Philips guilders, while loan contracts increasingly used Golden Guilders as their unit of account. Carolus and Gold guilders were the units used to calculate taxes.

  3. August 19, 2015 at 1:44 pm

    Many answers to many questions about money are in “Money, how to flip the table off” Edited by Amazon

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