Life of Being a Crown Prince in France

Chapter 1116: Chapter 1022: A Little Financial Shock for the Netherlands

However, the news censorship not only failed to stabilize the stock price of the Dutch East India Company but also triggered market panic.

Although almost all the newspapers carried articles like “the situation at the Cape of Good Hope will not affect the East India Company too much,” the citizens of Amsterdam were evidently more inclined to believe other sources of information.

For instance, the large number of pamphlets that appeared on the streets.

As early as the day De Witt received the order from the Crown Prince, the printing presses in Brussels had already begun secretly preparing these pamphlets—a task trivial for a French news publishing agency accustomed to large-scale public opinion warfare.

Over 30,000 pamphlets of various styles flooded into Amsterdam.

Note that the total population of this city is barely over 170,000. Virtually a copy for each household.

The pamphlets mainly introduced the British Army’s offensive in South Africa and analyzed the severe blows that the East India Company would suffer after losing the Cape of Good Hope, concluding that record losses were inevitable.

Yes, the Dutch East India Company had been losing money since the Anglo-Dutch War ten years ago, but the amounts were still within people’s psychological tolerance.

All the Dutch were gritting their teeth, waiting for the company to find new financial paths to turn losses into profits.

Yet the pamphlets’ messages delivered a heavy blow to the people.

What followed was a massive sell-off of East India Company shares in the stock market.

Of course, this was orchestrated by De Witt.

Though he only had 330,000 Dutch guilders of capital, equivalent to 4 million francs, he managed to “sell” over 2.4 million guilders’ worth of East India Company stocks, in line with the operation method taught by the Crown Prince.

A week ago.

In a villa east of Amsterdam, the famous big investor Acosta handed a signed contract to the “Scot” in front of him: “Mr. Maien, good luck.”

Although he didn’t quite understand what this “Scot” was up to, the latter offered him a surefire, profitable business—

He only needed to “lend” 40,000 shares of the Dutch East India Company—worth 400,000 Dutch guilders—to Maien to instantly gain a 4,000 guilder benefit fee.

Of course, Maien didn’t have 400,000 guilders to pay him, but he also wouldn’t take his shares, instead commissioning the Amsterdam Bank to manage everything—the stocks themselves and the funds obtained from selling the stocks.

On this basis, Maien also deposited 40,000 Dutch guilders in cash at the Amsterdam Bank as risk collateral.

If Maien’s operations with these stocks resulted in a loss reaching the limit of 40,000 guilders, the bank would be entitled to immediately reclaim his batch of stocks.

And then hand over the stocks and collateral to Acosta.

That is, the latter could earn 4,000 guilders without any risk.

In effect, this is akin to the leveraged short selling prevalent in later eras, yet it perfectly circumvented all short selling prevention regulations of the Amsterdam Stock Exchange—

In fact, more than a century ago, the Dutch stock market already had short selling methods such as “naked short selling.”

This involved someone rallying a group of stockholders to form a short selling alliance.

Subsequently, these people started selling the stock to the market, but with this era’s transactions being inefficient, many deals would take days or even half a month to close.

In the interim, they would resell the stock to others.

This soon created a situation of market oversupply, causing stock prices to plummet.

The short sellers would then buy back stocks at low prices, complete the real transaction, and cash out.

Therefore, from the late 17th century, the Dutch stock market strengthened its regulations, prohibiting “transactions without actual stock clearance.”

This resulted in short sellers needing vast amounts of stocks to impact the market sufficiently, thus requiring enormous upfront capital investments.

Using Joseph’s method, the short sellers indeed possess stocks and can close the deal immediately.

Concurrently, they only need to prepare a small amount of collateral beforehand, achieving leverage ten or even dozens of times over—provided the stock price continuously declines without triggering a margin call.

Thus, De Witt managed to generate a sell-off of 2.4 million guilders using less than 200,000 guilders.

All of this was actual selling, not “naked short selling.”

Yes, Maien was one of his traders under his command.

Currently, De Witt still holds nearly 100,000 shares of the East India Company to maintain the selling rhythm.

The massive sell-off coupled with all kinds of negative news about the Cape of Good Hope caused the Dutch East India Company’s stock price to keep declining.

Although the Dutch Government injected nearly 1.5 million guilders to stabilize the market, within just over ten days, the shares fell to 397 per trading unit.

That is a drop of a full 24%!

At noon on April 11, when the East India Company stock fell to the whole number threshold of 400 per trading unit, market sentiment collapsed.

De Witt didn’t have to continue his operations; Dutch citizens began selling their East India Company shares, resulting in widespread lamentation.

The Dutch Prime Minister Schmelpenink wanted to legislate to ban the rampant pamphlets, but he faced opposition from the opposition party in Congress—citing that it would not align with the spirit of publishing freedom.

This is the helplessness of a parliamentary system.

The opposition party couldn’t wait for the ruling party to make a big mistake so that all the votes would go to them.

But now the situation at the Cape of Good Hope was known to everyone, so forcibly confiscating all the pamphlets wouldn’t have much effect either.

As the stock price of the East India Company reached 420 per trading unit, the content of the pamphlets flooding into Amsterdam changed.

“A historical disaster, who should be responsible for the East India Company’s situation?”

“It was the British invasion that destroyed the East India Company and also ruined our lives.”

“The British stole the hen that lays the eggs. How shall we live in the future?”

There were even newspapers, despite news censorship, beginning to publish similar content—the newspapers’ directors, journalists, and printers had lost significant money due to the East India Company and were overwhelmed with rage at the bans.

The previously stirred national sentiment combined with actual economic losses led to protests erupting on the streets of Amsterdam, demanding that the government send troops to reclaim the Cape of Good Hope.

Of course, the current Netherlands didn’t have the strength to confront the British in a showdown.

In the square in front of the Amsterdam Stock Exchange, a brown-haired young man stood at the base of a statue, raising his arm and exclaiming: “The shameless British are invading our Cape of Good Hope!

“The cannons of the British Army shelling the Cape were cast from ingots of the Birmingham Kovak Steel Company.

“This company was developed with our money.

“While the East India Company’s stock price plummeted crazily, theirs rose by 12%!”

Visit and read more novel to help us update chapter quickly. Thank you so much!