From spices to beaver pelts to oil, Corvil’s Shane Minogue maps out the similarities between conflicting trading resources, and how the largest Equities exchange in the world came to be.
Nutmeg is a quite distinctive spice that has become something of a minority taste in today’s cuisine. This early Dutch map below from about 1660 shows the Moluccan Islands which were once the only known sources of nutmeg. Back in the 17th century, popular spices such as cloves and pepper were found elsewhere in Asia, but nutmeg could only be found in the Moluccans, better known as the ‘Spice Islands’.
Such was the value of nutmeg that Magellan, after two exhausting years sailing across both the Atlantic and Pacific oceans, set course directly for the Spice Islands. One explanation for such intense interest is that medical knowledge of that era claimed nutmeg could cure or prevent the onset of plague. (The lack of evidence for this assertion was immaterial as the fear of anybody who had witnessed the gruesome effects of a plague outbreak would be enough to try every remedy possible.)
Over a 100 years later, the English and the Dutch fought several wars for control of these islands with the Dutch gaining the upper hand. By 1650, only Pulau Run (shown here on the far left) remained under English control.
When the English and Dutch fought for control of these islands, it was in stark contrast with the earlier Spanish and Portuguese explorers who were supported by a monarch. These voyages were sponsored by the very first joint stock private equity companies. Both the Dutch East Indies Company (VOC) and the Honourable East India Company (HEIC) were the earliest and most powerful in this realm. The risk of an individual ship not returning safely was enormous, but the rewards for a successful voyage could generate over 1000% returns. No surprise then that these companies fought so hard for control, and in today’s language we would say the intellectual property of each company resided in their maps.
If you enter ‘Pulau Run’ on Google Maps, zoom out slowly, and you will understand how remote and difficult the navigation could be for 16th and 17th century explorers. In fact, the maps and navigational data for these regions were closely guarded secrets. There are accounts of sailors who were publicly executed, having been caught passing on maps or depth soundings to an agent ashore...Data protection and enforcement were a little different in those days.
This map below is also of Dutch origin from 1660 and shows lower Manhattan island or ‘New Amsterdam’ as it was known then. Famously, the Dutch traded Manhattan to gain the island of Pulau Run in the Treaty of Westminster to settle the end of the Anglo-Dutch war in 1674.
Today, precise maps are now freely available to all and trade in nutmeg has become a lot less profitable. And on Manhattan Island where the Dutch once traded beaver pelts we now have NYSE, the largest Equities exchange in the world. Hindsight may tell us that the Dutch came out of the wrong side of this trade, but the ROI on beaver pelts was only a tiny fraction of the profits to be gained from a complete monopoly of the nutmeg trade.
Now imagine if you will, a few hundred years from now historians explaining wars fought in the 21st century for black sticky stuff called oil. The key difference with oil is that it can be found globally, but the regions which have the richest concentrations have been scarred by armed conflict for over a hundred years. In that regard, it seems that not much has changed after all.
It is a great irony that the largest stock equity exchange in the world sits beside where Fort Amsterdam was built. While the speed at which information travels has changed dramatically the power of a precious commodity to drive the value of equities half the world away is undiminished.