![]() #Living artifact meaning how to“The question was how to consider the status of the bond,” says Young. The acquisition of the 1648 bond raised a challenge for the Beinecke, which does not typically catalog and house “living” documents. The lives of perpetual loans typically were “cut short by imprudent financing, government recall, or the misfortunes of wars and revolutions,” Rouwenhorst and Goetzmann write. They write that the Dutch water boards had relative financial autonomy, which protected them from falling fortunes of the central government and allowed the securities that they issued to survive. Rouwenhorst and William N. Goetzmann, Edwin J. Beinecke Professor of Finance and Management Studies and director of the International Center for Finance, wrote a chapter about the bond “The Origins of Value,” their 2005 history of financial innovation. One ought to be astounded that such a thing exists.” Timothy Young “Yale’s bond is an extremely early example of a security that was issued without maturity and still pays interest. But it is very rare that there is an uninterrupted history when governments or other entities have not defaulted on those debts,” says Rouwenhorst. In the 17 th century, people sometimes issued perpetual debt. “There have been many instances in history when institutions issued debt with very long tenure. That was the last time interest was collected. That year, Geert Rouwenhorst, professor of corporate finance and deputy director of the International Center for Finance, took the bond to the Netherlands to collect 26 years of back interest. #Living artifact meaning seriesThe water board used the money raised to pay workers at a recently constructed cribbinge, a series of piers near a bend in the river that regulated its flow and prevented erosion. The interest payments were recorded directly on the bond. (The interest rate was reduced to 3.5% and then 2.5% during the 17 th century.) Niclaes de Meijer for the “sum of 1,000 Carolus Guilders of 20 Stuivers a piece.” According to its original terms, the bond would pay 5% interest in perpetuity. Yale’s bond, written on goatskin, was issued on to Mr. (Stichtse Rijnlanden is a successor organization to Lekdijk Bovendams.) The bonds were issued by the Hoogheemraadschap Lekdijk Bovendams, a water board composed of landowners and leading citizens that managed dikes, canals, and a 20-mile stretch of the lower Rhine in Holland called the Lek. “This is a teaching moment because the financial industry changes so rapidly but here we have something very old and constant,” says Young, who curates the Beinecke’s Collection of Financial History in partnership with the International Center for Finance at the Yale School of Management.Īccording the water authority, Yale’s bond is one of five known to exist. The water authority paid Young 136.20 euros in interest, the equivalent of $153. Collecting the back interest maintains the bond’s status as a functioning artifact from the Golden Age of Dutch finance. Timothy Young, the library’s curator of Modern Books and Manuscripts, has travelled to Amsterdam this week to visit Stichtse Rijnlanden, a Dutch water authority, and collect 12 years of interest on the bond. It still pays annual interest more than 367 years after it was issued. While most of the Beinecke’s archival holdings are by their nature dead - their original purpose being fulfilled - the water bond lives on. A perpetual bond, it continues to pay interest.Ī 1648 Dutch water bond housed at Yale’s Beinecke Rare Book & Manuscript Library is unique among the tens of thousands of manuscripts that reside there. This bond was issued in 1648 by a Dutch water board to finance improvements to a local dike system. ![]()
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