A high tower could make a difference

WestertorenAmsterdamI am just back from a family vacation in The Netherlands, during which we got to admire (among others) the architectural treasures of Amsterdam – a very active merchant city through the 17th and 18th centuries, at a time where long distance travel and trading was a risky endeavor, and instantaneous means of communication inexistent. So when merchants would expect ships bringing home coffee, spices or silks, all they could do was wait – and pray (for they were devoutly Christian).

It is hard to imagine in today’s times of instantaneous communication, GPS and online real-time tracking, not to know when one’s shipment would arrive, even if it would arrive at all, for enemy fleets, pirates, and just bad weather, were always to be feared on the open seas. But beside the nerve-wracking wait for the families of the sailors, lots of money was in play too. The merchant cities of Northern Europe were then operating as marketplaces, pretty much like today’s commodities exchanges: a fresh supply of coffee or sugar would generate fresh income for the importer, but could also cause wholesale prices to drop, whereas a shortage due to delayed shipments could cause price inflation.

There was thus a key competitive edge to gain from advanced knowledge of the arrival of a specific merchant fleet, known to return from the West Indies laden with sugar or bringing precious spices back from Java. With no GPS, no satphone, only one technique existed: lookouts. Traders had to post lookouts in outposts where they would gain advance knowledge of a shipment, and be able to communicate this information promptly to the trader (without raising attention from other traders, else the information become worthless). Said trader would then be able, armed with this privileged information, to buy or sell (maybe short-sell) the commodities which price was going to drop or rise the next day, when the ships make port.

Is this the main reason for all these high towers in Amsterdam? It seems that spires of churches, and towers in the headquarters of merchant companies, are more conspicuous than in similar cities. Of course, a lot has changed architecturally in the following two centuries. A lot has changed also in commodities trading, in which weather forecasts and piracy reports play a tremendous role, and which has become significantly more instantaneous. And in a digitalized world, no trader would dream of a one-day advantage – more like sub-second…

Digitally yours,
Yves
@ydemontcheuil

(photo credit: Massimo Catarinella, Wikipedia, CC BY 3.0)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s