Sunday, September 20, 2015

Yale's Dutch water bond

Courtesy Yale University

The story of the 1648 bond held by the Yale rare books library, on which the university will be paid interest, has been making the rounds. The always erudite Rechtsgeschiedenis Blog (Legal history with a Dutch view) explains:
This week news came out about the upcoming payment of interest to Yale University on a perpetual bond issued in 1648 by a Dutch water authority, the Hoogheemraadschap van de Lekdijk Bovendams. Next week its legal successor, the Hoogheemraadschap Stichtse Rijnlanden, will pay the sum of €136,20 ($154), the interest over twelve years. Yale’s Beinecke Library bought the bond in 2003 as a cultural artefact. 
The website of the Regionaal Historisch Centrum Rjnstreek en Lopikerwaard, the regional archive at Woerden, offers a concise history of this institution. In 1285 a dam had been placed in the Hollandse IJssel to prevent the water of this river to stream into the Lek near the village of Vreeswijk, now a part of Nieuwegein. After floodings in this region of the diocese Utrecht due to neglect of this dam bishop Jan van Diest published in 1323 an ordinance for its maintenance. The schouwbrief of 1323 was followed by more instructions, in particular by ordinances published on behalf of Charles V in 1537. “Bovendams” means “ahead of the dam”, in this case up to Amerongen, to the east, 33 kilometers. From the dam westwards another water authority came into existence dealing with the Lekdijk Benedendams up to the town of Schoonhoven. 
The bilingual website Beursgeschiedenis/Exchange History has a short article showing the 1648 bond is not the oldest surviving one from this hoogheemraadschap, but one from 1624, since 1938 in the possession of the New York Stock Exchange, thus one of the oldest surviving shares worldwide. The 2,5 percent interest yields even today 15 euros. The bonds of 1648 were issued specifically to build a krib, a pier in the Lek near the hamlet of Honswijk, now situated within the municipality Houten. Maintaining such piers and fighting against piers and other structures at the other side of the river kept the hoogheemraadschap busy for centuries.... Like other Dutch water authorities the hoogheemraadschap was an independent authority which could proceed in court against for instance the counts of Culemborg or the States of Guelders. The website for the history of stock exchange does call to attention the fact that even the counts of Holland and the bishops of Utrecht, in medieval times often deadly enemies, both invested money in the maintenance plans of water authorities. 
Some elements in this week’s story need elaboration. You can shake your head in disbelief about a rich university welcoming a payment of just over one hundred dollars, but you might also marvel at the fact of the longevity of institutions vital for the protection of areas threatened by the powers of mighty rivers or seas. Issuing perpetual bonds or rents was not an invention of the Dutch Republic. Medieval rents issued by cities are documented for regions such as Tuscany and Flanders since the thirteenth century. Water authorities could levy taxes to get money, but these taxes were meant to cover the costs of normal maintenance. 

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