Necessity is the mother of invention. The lottery loans of Holland during the War of the Spanish Succession

Abstract

In the 18th century Holland and England used, among other tools, lottery loans to raise capital. This thesis examines what lottery loans are, why they were organized, and who invested in them. It will do so by studying the first lottery loan of Holland of 1711. The thesis will argue that the lottery loans were only issued in times of great financial distress. In 1711 wealthy investors demanded higher interest payments than the payments on the ordinary bonds of Holland. The province was forced to listen to the market, and issued a lottery loan, which was more profitable to the investors. We will see that most of the tickets were bought by wealthy investors, who were part of the regent class and had acces the capital market.