Show and Tell with Profs. Goetzmann and Rouwenhorst
Since its creation, the International Center for Finance (ICF) has focused on acquiring historical financial documents. This important collection contains bonds, securities, financial instruments, and documents related to the history of financial markets over the years. Professors William Goetzmann and Geert Rouwenhorst teach courses.
This week, members of the Yale Global Executive Leadership Program stopped by the ICF for a brief introduction to the historical financial document collection. In attendance was Juan Carlos Garcia, an ICF board member, and generous supporter of the growing collection.
Featured pieces:
1719 Tax-Farming Royal Decree
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This rare document is an official royal decree (Arrest du Conseil d'État du Roi) issued in Paris on 27 August 1719 and printed by the Imprimerie Royale under the authority of King Louis XV and the regent, Philippe II, Duke of Orléans. It represents a pivotal moment in the financial history of France during the rise of John Law's Compagnie des Indes, the powerful joint-stock corporation that would soon give rise to the Mississippi Bubble.
The decree cancels the existing tax-farming contract held by Aymard Lambert and transfers administration of major national taxes-including the gabelle (salt tax), aides (excise taxes), stamp duties, and large farms—to the Compagne des Indes for a new nine-year term. In exchange, the Company agrees to pay the Crown 48.5 million lives annually, assuming unprecedented control over core state revenues.
Crucially, the decree authorizes the Company to lend the Crown 1.2 billion livres—a massive sum—to help retire the national debt. To raise this capital, the Company is empowered to issue new rentes (perpetual annuities) and bearer shares, fueling the speculative boom of 1719.
By extending all Company privileges for fifty years, this act formalized the Company's dominance over French finance and commerce. Issued only months before the dramatic market collapse of 1720, the decree is a key artifact of the most significant financial experiment of early modern Europe.
1486 Rent Charge Agreement
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Date: 5 September 1486
Language: Late medieval French (Flemish region)
Origin: Bailiwick of Lille, Douai, and Orchies (then under Burgundian/Habsburg rule)
This parchment records a rent-charge agreement, a formal financial transaction in which Gerard, son of Sir Daniel of Lille, grants Jean de Cuinghien, the illegitimate son of Sir John de Cuinghien, a life rent of 20 livres of Flanders annually, payable in two installments. In exchange, Gerard receives 200 lives upfront, with the right to redeem the rent by repaying that sum. The act was witnessed and sealed under the authority of Baldwin de Lannoy, Knight and Lord of Molembaix and Soire-le-Château-an important Burgundian noble serving as councillor and chamberlain to Maximilian I (King of the Romans) and Philip the Fair, his son.
Translation: To all to whom these letters shall come, Baldwin de Lannoy, knight, lord of Molembaix and of Soire-le-Chateau, councillor and second chamberlain of our lord the king of the Romans, ^ and our most redoubtable lord Philip, his son, archduke of Austria, duke of Burgundy, count of Flanders, governor of the sovereign bailiwick of Lille, Douai and Orchies and its appurtenances, greetings.
We make it known that before Jacques? Descamaung and Hubert Denis, auditors deputed by us in the name of our lord to take, hear and receive the inspections, agreements, bargains and obligations made under the seal of the sovereign bailiwick, Gerard, titular son of Sir Daniel, staying at Lille, appeared in his own person and stated that of his own free will and for his own profit, he has granted to Jean de Cuinghien, illegitimate son of Sir John, the buyer, for the term of his own life and those of Marc and Thomas de Cuinghien, the children of Sir John de Cuinghien, knight, lord of Hallennes and Rodes, or the longest lived, a sum of twenty lives of the money of Flanders in rent payable each year for his natural life, due in two annual payments on 5 March and 5 September each year, starting on 5 March next after this agreement was made, payable to the people concerned or the bearer of these letters. For this, Gerard has received 200 livres.
[Long and complicated details of the terms of repayment, and penalty clauses in the case of late-payment or default. In summary, payment of the rent shall cease when Gerard re-pays the 200 livres back to Jean.]
1790 Six Percent Loan
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This bond certificate, issued under the Act Making Provision for the Debt of the United States (August 4, 1790), is a tangible artifact of the nation's first formal funding system.
Known as the "Six Percent Loan of 1790," it was part of Treasury Secretary Alexander Hamilton's landmark plan to consolidate federal and state debts incurred during the Revolutionary War. The document, printed and completed in manuscript, certifies that the bearer is entitled to interest at six percent per annum, payable semiannually, and is redeemable according to the terms established by the U.S. Treasury.
The 1790 funding program marked the birth of the American national debt and established public confidence in the new government's financial integrity. Bonds like this were among the earliest U.S. securities to circulate and trade, providing the foundation for the development of the American bond market and the rise of Wall Street. This certificate thus embodies a defining moment in the creation of the United States' fiscal identity and financial infrastructure.
The goal of the collection is to identify securities that represent important innovations in financial markets. Many of the pieces represent a new method of raising capital, or a special event or period in capital market history. Each piece in the collection is, in effect, a contract between a company or country and an investor. The design of these contracts were, in some cases, remarkably creative and some of the securities had a lasting impact — not only on world finance, but on global politics.
Learn more about the ICF's world financial history collection at the Origins of Value Virtual Museum.
