Banging a Gong to Celebrate Four Centuries of Dutch-U.S. Friendship

By: Ray Pellecchia

File Under: NYSE Euronext

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At today's NYSE Closing Gong -- yes, that's gong, not bell -- our sister exchange in Amsterdam will help us celebrate "NY 400 Week," marking four centuries of friendship between The Netherlands and the United States. Frans Timmermans, Minister of European Affairs for the Netherlands, will do the honors, according to this press release. (The gong is the traditional sound of the start and end of the trading day in Amsterdam.)

Also to mark the occasion, a colleague in Amsterdam sends this excellent reminder of the historical contribution of Dutch investment to the development of the U.S.:

The Netherlands is a small country on the North Sea coast that has always been outward looking. That was true in the 17th century, when the new Dutch Republic rapidly evolved into the center of world commerce, and it is still true today. Investment activities have traditionally been an important aspect of the country’s international orientation. Starting in the 18th century the Netherlands began to invest the wealth it had accumulated during its golden age in the 17th century, earning it the title the “world’s financier.”

This reputation spread to the United States and in 1780 John Adams, who later became president, was sent to the Netherlands to garner political support and raise money to finance the development of the new country. His mission was highly successful, and in 1782 the Netherlands became the first country to recognize diplomatic relations with US as well as the first country to issue a loan to the new American government. John Adams secured a 5 million- guilder loan to the U.S. at an interest rate of 5 percent.

Although the Netherlands was hesitant at first, it eventually extended 10 other loans to the U.S. and by 1794 the U.S. had borrowed 30 million guilders from the Dutch (the equivalent of approximately US$22 billion today).

In the 19th century the Netherlands continued to play a prominent role in the development of the United States. The Amsterdam-based bank Hope & Co. helped to finance the Louisiana Purchase in 1803. The U.S. acquired this vast area of land in the Midwest from Napoleon for a sum of $15 million, doubling the size of the country virtually overnight. Starting in the middle of the 19th century Dutch investors began to play a part in American railroad construction. At the height of their popularity 200 of these shares, known as “amerikaantjes,” were listed on the Amsterdam Stock Exchange.

Although the U.S. itself had become a lender by the 20th century, Dutch investors were unabatedly enthusiastic about American investments. They followed the latest news from Wall Street with great interest and the Amsterdam Stock Exchange listed more American shares than any other exchange outside of the U.S. To surmount the practical problems created by the distance between the two countries, special depositary receipts for U.S. shares were issued for the Dutch market. At its height, approximately 400 U.S. securities were listed in Amsterdam. Today – over two centuries after the first loan in 1782 – the Netherlands remains one of the biggest foreign investors in the U.S.

This is also a good time to remind you of our most recent post on the subject, including spot-on comments by Bart Ward here.