How Stocks Helped the Netherlands Rule Over the World

The story of the rise of merchants and the most influential company in history!

In the first phase of exploration, Spain had accumulated such massive wealth that they had everything in their arsenal to rule the world for long. But Spain, which looked destined for absolute world domination for centuries to come, lost its supremacy in less than half a century.

Even the Union with their Iberian neighbor Portugal could not stop its downfall caused by profligacy of their wealth and a series of miscalculated wars and defeats. But the main reason why Spain could not make the most of its massive wealth can be explained by a simple law of Economics 101, related to the world of money.

Spain in South America had literally struck Silver, and that too in an infinite amount. When the Spanish conquistadors discovered one hill in modern-day Bolivia known as Cerro Rich (which in Spanish means Rich Hill), that hill enriched Spain in no time. 80 percent of the total Silver on earth came out of that one hill alone, so one can imagine how cash-rich Spain had become because of that one single discovery.

The colossal amount of Silver made Spain the richest empire in the world. But as we can understand from the simple law of Economics — as the supply of Silver vastly supplanted the demand of Silver, Silver lost in value. And that meant the vast wealth of the Spanish Empire, and its power — as it is often money that leads to power — waned in no time.

Just as it was the failure to understand the nuances of money that led to the fall of one massive empire, it was an ingenious innovation in money that propelled the rise of another. And ironically, it was a country that was under the Spanish empire before that engineered this innovation in money.

Netherlands (or the Dutch Republic, as it was referred to at the time), a country that had just ceded from the Spanish empire, heralded a new era of exploration. And it was not the usual kings and the monarchs that led their era of supremacy, but rather merchants, and a company — perhaps the most influential company ever established in history — that stamped the authority of a small northern country in the world map.

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