Interest from 1540
Dutch interest rates 1540 - a little history (translated with the help of Google Translator)

(Source: Nederland De schatkist van Europa, by Martien van Winden, Uitgeverij Balans, 2001)

"The public finances should be in order. For thereby you avoid interest and redemption on the national budget pressures so that essential, essential government functions through compromised. They (the government, MvW) should not interfere in many cases desirable, or even very desirable but not essential. "
Prof. Dr. Jelle Zijlstra in 1993

No country in the world - starting from 1540 – had an average interest rate lower than the Netherlands. Interestingly, an investment in Dutch government bonds has been a safe investment through the centuries. This is an exceptional performance, matched only by a few countries. Countries such as France, Germany and Italy can not boast such a stainless past. Not to mention our experience with countries such as Russia and Bulgaria: "Simultaneously with the breaking of diplomatic relations with Bulgaria, the delegate for the loans of 1902, 1904 and 1907 left the country and left the defence of the interests of bondholders to a deputy, who was put in prison by the Military Authorities. "

A look at the rate chart from 1540 (see below) shows that, except for two big interest rate bumps, the Dutch interest rate tends to a natural average of 4 to 5%. There are good explanations for these two 'bumps'. The first bump of roughly 1550 to 1600 coincides with the Eighty Years War (Netherlands – Spain). A lot of money is needed in that period to finance the war and the bourgeoisie is even obliged to borrow money to the government. By the end of the sixteenth century, the national debt increased tenfold, and a record interest rate of 17% is quoted. That’s why during the Synod of Middelburg in 1581 people prayed for lower interest rates. And the prayers were answered. Soon after a sharp drop in interest rates occurred. The skirmishes decrease in intensity in the early seventeenth century and even a ceasefire is agreed. It is this decline in interest rates - from 17% to 4% - which is partly responsible for the explosive expansion of the Republic in the “Golden” - seventeenth - century.

The second interest rate bump, after the Second World War, is again caused by deteriorating public finances. Not war, but employment is now the ultimate goal of the government. There is irresponsible borrowing and spending on a large scale: "Naive Keynesian 'policies for the connoisseurs. In 1980, a state loan is emitted with a coupon of 12 ¾%! But then the tide turns. Federal Reserve Chairman Paul Volcker in the U.S.A. and our unsurpassed Dutch Central Bank President Jelle Zijlstra, act against the deteriorating state finances. It is from that time that a rigorous restructuring of public expenditure is put in motion that lasts to this day. Again it is a dramatic fall in interest rates – but now from 12% in 1980 to 5 ¾% in 2000 – that contributes to an explosive expansion - that of the past two decades.


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