1774, Amsterdam - A Financial Innovation Is Born
The world's oldest investment trust was "Eendragt Maakt Magt" (Unity Creates Strength), established in Amsterdam in 1774 by Dutch merchant Abraham van Ketwich. The name was taken from the motto of the Dutch Republic. Van Ketwich conceived this structure in the aftermath of the 1772 financial crisis, when British banks failed in a chain reaction and Dutch investors suffered significant losses.
Van Ketwich's innovative idea was to "pool small amounts of capital and diversify investments across numerous bonds." At the time, individual investors needed enormous capital to achieve adequate diversification. Eendragt Maakt Magt issued 2,000 securities and invested the pooled capital in government bonds from Austria, Denmark, Germany, Spain, Sweden, Russia, and others, as well as plantation bonds. Investing in over 50 different bonds through a single fund - this is essentially the same structure as modern investment trusts.
What Happened Over 250 Years - Surviving Wars, Revolutions, and Depressions
In the 252 years from 1774 to 2026, the world experienced unimaginable upheaval. The American Revolution (1775), the French Revolution (1789), the Napoleonic Wars (1803-1815), two World Wars, the Great Depression (1929), oil shocks, the Lehman crisis, and the COVID crash. The Netherlands itself was conquered by Napoleon, occupied by Germany, and saw its currency change from the guilder to the euro.
Eendragt Maakt Magt was liquidated in 1824, having operated for approximately 50 years. During that time, investors reportedly received dividends of around 4% per year. Calculating 50 years at 4% compound interest, the principal grows approximately 7.1 times. Similar funds established as successors to van Ketwich's operated for even longer periods. The important point is that this financial innovation from 250 years ago had essentially the same basic design as modern investment trusts: diversification, professional management, and lowered barriers to participation through small-lot investment. These principles have not changed in 250 years.
Benjamin Franklin's 200-Year Compound Interest Experiment
As another example of long-term compounding, Benjamin Franklin's testamentary trust fund is also noteworthy. In his 1790 will, Franklin bequeathed 1,000 pounds (approximately $4,400 at the time) each to the cities of Boston and Philadelphia, with instructions for 200 years of compound investing. The design called for partial withdrawal after 100 years for public works, with the remainder invested for another 100 years.
When the 200-year investment period concluded in 1990, Boston's fund had grown to approximately $5 million. From $4,400 to $5 million in 200 years - approximately 1,136 times. Converted to an average annual return, this is approximately 3.5%. Philadelphia's fund, meanwhile, reached only approximately $2 million. Despite the same initial capital and same investment period, differences in investment policy and withdrawal timing produced a 2.5x gap. This experiment demonstrates not only the power of compound interest but also that the quality and consistency of management significantly influence long-term returns.Books covering the history of investment trusts feature even more examples of such long-term investing.
Three Universal Lessons from Ultra-Long-Term Investing
The first lesson is that "the principle of diversification has not changed in 250 years." The strategy van Ketwich practiced in 1774 - "diversifying across bonds from multiple countries" - is essentially the same as modern global diversification. Individual countries and companies may fail, but a sufficiently diversified portfolio survives.
The second lesson is that "not interrupting compounding is the most important thing." The primary reason for the gap between Boston and Philadelphia in Franklin's fund was differences in withdrawals and investment policy along the way. The power of compounding is maximized by continuing to reinvest without interruption. Selling during a crash and breaking the chain of compounding is the single most damaging action to long-term returns.
The third lesson is that "institutions and rules change, but mathematics does not." Over 250 years, currencies, tax systems, financial regulations, and political systems have changed repeatedly. However, the compound interest formula (1 + r)^n has not changed by a single millimeter. The only thing you can reliably trust in the world of investing is not trendy investment methods or charismatic investors' predictions, but the mathematics of compound interest.
Next Steps - Apply 250 Years of History to Your Own Investing
Put the same principles as investors 250 years ago into practice starting today. First, check whether your portfolio is sufficiently diversified. Is it concentrated only in Japanese stocks or only in U.S. stocks? Next, confirm that dividends and distributions are set to automatically reinvest. What matters is having a system in place that does not break the chain of compounding. Finally, calculate "how many years of investing do I have left?" At age 30, you have 35 years until 65; even at 40, you have 25 years. While it may not match 250 years, it is more than enough time for compound interest to fully demonstrate its power.