[FINANCIAL HISTORY, STOCKS AND BONDS]. LEKDIJK BOVENDAMS. Document signed by an official ("A. Boote") of the Polder Committee of the Lekdijk Bovendams, CONSTITUTING A BOND FOR 1200 GUILDERS, issued to Catharina Jans' daughter, certifying payment of annual interest, tax-free, to the purchaser and subsequent bond-holders. [Utrecht, Netherlands], 1 May 1634.
Oblong folio, 224 x 371 mm., written in a clear Dutch clerical hand on strong parchment, original papered seal at top left corner, with intact red wax seal (small losses) attached to a small flap of parchment at bottom, verso with a number of early notations registering the Bond (one signed "A. Boote" another "D. Blanckendael, 1634"). Blank margins on front and verso covered with brief notations recording the payment of interest each year from 1698 to 1890. With a separate sheet or "allonge" recording annual payments from 1891 to 1999, and several supporting documents, 1652-1890. Full translation available on request.
THE BIRTH OF THE MODERN FINANCIAL SYSTEM: THE SECOND OLDEST BOND IN EXISTENCE, STILL PAYING INTEREST AFTER 366 YEARS
A very remarkable parchment which vividly documents the earliest origins of the western banking and capital markets, many of whose concepts, practices and instruments--including securities and bonds--were first introduced in prosperous, highly mercantilized Holland in the late sixteenth and early seventeenth centuries. Shortly after the founding of the United East Indies Company in 1602, shares in that highly profitable venture began to be traded; the Amsterdam Stock Exchange still ranks as the oldest such institution in the world. In a parallel development, the issuance of bonds began as a new approach to capitalization for civic projects. The Lekdijk Bovendams, chartered in 1323 by the Bishop of Utrecht and recognized by the government, was a company of landowners and leading citizens in charge of the erection and maintenance of the critical system of polders, dikes and canals which created large areas of tillable land from the low-lying marshes of the lower Rhine floodplain. It was empowered to control, repair and expand the dike and polder network along the Lek (a section the lower Rhine in Utrecht province), and levied taxes for this purpose on those who farmed the lands. The company, dedicated to public works, chartered by clerical authority and composed of important individuals from the community, enjoyed a reputation for stability, longevity and reliability. That implicit trust, of course, is what underlies the entire modern financial system. When, therefore, substantial new capital was required for the repair of dikes and retaining walls on the Lek (possibly due to storm damage), the Polder Committee of the Lekdijk Bovendams began, in the early decades of the seventeenth century, to issue a new type of financial instrument, termed, in Dutch, a rentebrief, corresponding in nearly all respects to the modern municipal bond.
In the text, Didrich Nedde, "monk of Saint Mary" in Utrecht, Secretary of the Lekendijk Bovendams polder Union, acknowledges, in accordance with a certain act of "their excellencies the Lords of the Province of Utrecht," that the bond has been sold to Catharina Jans' daughter "and her heirs, and all others who have a legitimate right to the bond," for 1200 Guilders. The funds are "to construct two new groines, near the village of Twaell," and the bond entitles the bearer "to receive free and clear, Seventy Five k[arolus] Guilders...Interest payments will be made in future...as long as the principle of the bond is not repaid to the bearer. The interest from the bond is free and clear of all taxes and levies, of whatever nature, with no exceptions. Under these conditions, I and all the secretaries of the polder union who succeed me, will be obligated to make interest payments or to redeem the bond...I place my signature and seal on this...obligating myself and all the secretaries who may succeed me to respect the contents..."
At maturity, a clerk's brief notation, beneath the seal at the left corner records the first payment of interest, on 31 December 1698. In each subsequent year, similar payments were briefly recorded in the top and bottom blank margins. By 1825, the front had been entirely filled with these one-line notes and the clerks turned to the back, which contains annual notations up to 1890. In 1891, a supplemental record sheet, or allonge, was attached, which continued the record of annual interest payments up to the most recent, in January 1999. At some point in the early 18th century, it appears, interest on the bond was officially lowered to 30 Guilders (2½.
The Lekdijk Bovendams was incorporated in 1971 into a larger municipal organization, the Waterschap Kromme Rijn, which took over the payment of annual interest on the handful of extant original bonds. According to a 1978 report of the Waterschap's Secretary, the corporation had issued a total of 48 bonds in the 17th and 18th century; their denominations ranged from 400 to 8,000 Guilders. Only 4 bonds were issued in the amount of 1200 Guilders. In 1978, only 22 of the 48 issued were still traceable (most in the hands of banks and other institutions, a few in private hands). According to a recent communication from C. Vanema, Archivist of the Streekarchief "Rijnstreek," where the papers of the Waterschaap are deposited, there are today only five of these early bonds still active. Only one, issued in 1624 and owned since 1938 by the New York Stock Exchange, pre-dates the present bond, and only two of bonds issued in the 17th century are still active. The three oldest are as follows:
1) Issued in 1624 to Ellsjen Jorisdochter for 1,000 Guilders. Presented to the New York Stock Exchange in 1938 by a Dutch bussinessman.
2) (The present). Issued in 1634 to Catharine Jans' daughter for 1200 Guilders.
3) Issued in April 1638 to Anthonia van Wintershoven for 1600 Guilders.
The present is, quite probably, the only lot ever offered by Christie's which entitles the buyer to an annual interest payment, however modest. While it was originally a requirement that the bond-holder send the original parchment to the Lekdijk Bovendams on 12 January to receive the annual interest, the successful bidder on this lot need only send the allonge, on which the payment will be neatly recorded by a responsible clerk of the Waterschap Kromme Rijn (successor to the monk and Secretary who sealed the document in 1634), as it has been for 302 years since 1698.