Ferries and Finance: The Financial Infrastructure of the Dutch Republic
02 / 2012 - 02 / 2015
This research fundamentally challenges present conceptions of the origins of modern banking systems. It aims to do so by showing how in the Dutch Republic - Europe's leading economy of the seventeenth and eighteenth centuries - local factors shaped the pattern of financial services. The Republic's geography -a variable not included in the debate about financial markets - determined a unique pattern of financial services. Until now, the analysis of financial markets in the Dutch Republic has concentrated on either specific local intermediaries or on international high finance. It has not addressed the financial transactions that took place between towns. Given the Republic's high urbanization level this has distorted our interpretation of its financial markets. This research shows how the natural infrastructure complemented with a dense intercity transportation system enabled an unexpected intermediary - ferry skippers - to provide interurban financial services. Because an intricate network of high-frequency connections was already in place, skippers were in an exceptional position to offer financial services once opportunities presented themselves. Like other early modern institutions the ferry network could do multiple things without additional costs. Skippers collected interest and dividends, carried cash and performed many additional financial transactions. This research explains that ferry skippers could be trusted with valuables and that they operated at low intermediation costs. The Republic's unique transport system thus had two major consequences for the evolution of financial markets. It reduced the potential for intermediaries in provincial cities because a low-cost alternative to take care of interurban transactions was already in place. Direct bilateral connections between cities also reduced the potential for intermediaries in Amsterdam because people could access other markets without the assistance of a central market. Ferry skippers thus made that financial markets in the Dutch Republic assumed a strongly different - though not less efficient - structure than markets elsewhere in Europe.