Leendert Pieter de Neufville
Leendert Pieter de Neufville | |
|---|---|
| Born | Template:Birth date Amsterdam, Dutch Republic |
| Died | July 28, 1811 (aged 82) Rotterdam, Dutch Republic |
| Occupation(s) | Merchant, banker |
| Known for | Trading silk, linen, grain; supplying gunpowder to Prussian military; involvement in early shadow banking; 1763 financial crisis |
Leendert Pieter de Neufville (born Amsterdam, March 8, 1729 – died Rotterdam, July 28, 1811) was a prominent Dutch merchant and banker who specialized in trading silk, linen, and grain. His enterprise experienced significant growth throughout the Seven Years' War. De Neufville covertly supplied gunpowder to the Prussian military and profited from the army's delegation of bill of exchange management, which enhanced his acceptance loan business—an early form of what is now known as shadow banking.
Beginning in 1762, he engaged in the melting down of debased coins prohibited in Prussia and Saxony, with the intention of reselling the extracted silver. In the spring of 1763, he collaborated with Berlin financier Johann Ernst Gotzkowsky on a large-scale speculative grain transaction. The financial turmoil of July 1763 ensued after De Neufville defaulted on payments owed to Gotzkowsky. On August 3, 1763, he suspended payments, leaving debts to over one hundred creditors primarily located outside the Dutch Republic.
Early life
Leendert Pieter de Neufville was born to Pieter Leendert de Neufville (1707–1759) and Catharina de Wolff (1708–1760), both adherents of the Mennonite faith. His father was engaged in trading textiles and rye across eastern Germany and the Mediterranean but faced bankruptcy in 1735, necessitating the sale of ship shares to settle outstanding debts.
In 1750, Leendert Pieter along with his brothers David and Balthasar assumed control of the family’s trading and banking enterprise. The Neufville brothers traded a variety of commodities including silver (valued at 82,429 guilders), almonds, sugar, Meissen porcelain, and gum. By 1757, Leendert Pieter had begun to collect artworks, continuing a familial interest in art patronage.
Seven Years’ War
Throughout the conflict, De Neufville rose to become one of Amsterdam’s most affluent and respected banking firms by leveraging opportunities created by the wartime economy. He was among the first to supply forage and uniforms to Prince August Ferdinand of Prussia’s forces during the 1757 campaign in Bohemia. Military suppliers such as Charles William Ferdinand, Duke of Brunswick-Wolfenbüttel also placed contracts with him. His alliance with a Hamburg-based merchant enabled De Neufville Bros. to serve as a reliable intermediary for commercial transactions between Amsterdam and Hamburg, establishing Prussia as an "emerging market" with Hamburg functioning as a critical trade center.
Starting in 1758, De Neufville regularly purchased gunpowder and expanded his business into shipping and insurance sectors. Between 1759 and 1762, his turnover at the Bank of Amsterdam increased tenfold. Additionally, he supported individuals like Gotzkowsky and Schimmelmann in assisting Saxony with its war levies imposed by Frederick II. Nonetheless, when the British Parliament threatened to withdraw subsidies to Prussia in 1762, Frederick was compelled to revise his war financing plans accordingly.
In late 1761, Frederick prohibited circulation of foreign debased coins minted in Rethwisch within Prussia and Saxony. Anticipating financial gain from this policy change, De Neufville began importing these coins from Mecklenburg, Plön, and Zerbst for melting purposes—ordering as many as 300 wagons of coinage—to extract silver for resale to Prussian merchants.
On February 6, 1762, De Neufville notified Frederick—who was then stationed in Breslau—that French representatives had approached him with peace overtures and that he was interested in acting as an intermediary in negotiations. In May 1762, he acquired an estate near Heemstede where he experimented with silver refining techniques; however, contemporary reports suggest these efforts met with limited success.
Following the Peace of Hubertusburg
In April 1763, De Neufville journeyed to Berlin to confer with his associate Gotzkowsky and paid a visit to Frederick the Great. He proposed the revival of the Prussian Asiatic Company, offering an investment of one million guilders. Gotzkowsky observed that Frederick personally encouraged De Neufville to formulate plans for economic recovery. Additionally, Dutch financiers Schimmelmann and Stenglin expressed interest in reestablishing the company alongside De Neufville.
On the night of 19/20 April, Gotzkowsky acquired a substantial quantity of oats through the Russian envoy Vladimir Sergeevich Dolgorukov. This grain, stored in Kolberg and along the Pommerania coastline, was surplus stock left by Russian forces departing from Poland. Both Russia and Prussia were eager to sell quickly to reduce security expenses. Given the scarcity of grain and famine conditions in Prussia, this transaction promised profit opportunities for Gotzkowsky and De Neufville, who covertly partnered with collectors Stein and Leveaux. De Neufville advanced 100,000 guilders upfront via exchange bills on behalf of the syndicate, while Gotzkowsky undertook responsibility for the remaining one million guilders payable over twelve months. Russian merchants Svešnikov and Rogovikov purchased one-fifth of the grain; the remainder was allocated among Gotzkowsky, De Neufville, Leveaux, and Stein. Notably, only Gotzkowsky and Svešnikov signed the contract.
On 12 April 1763, Frederick released wartime grain reserves in Lower Silesia, triggering a 75% collapse in wheat prices, followed by declines across other commodities. By June 27 (N.S.), the grain deal involving Gotzkowsky had escalated to a matter under Russian Empire government scrutiny. Legal obstacles obstructed export plans, and upon arrival two months later, half the grain was found spoiled. To mitigate losses, Gotzkowsky suggested paying only two-thirds of the owed 1,170,448 guilders but failed to reveal Svešnikov’s conflicting interests. The Russian senate rejected this proposal on 18 July, insisting on immediate payment in Dutch guilders rather than devalued Saxon currency.
Liquidity
De Neufville regularly settled 240,000 guilders weekly through bills of exchange at Amsterdam’s Bank ("Wisselbank"), maintaining an outstanding portfolio totaling 1.2 million guilders—half issued for clients and half drawn on himself. Between April and August 1763, he borrowed 335,793 guilders, frequently on unusually brief eight-day terms. Interest rates surged sharply from 4% up to 12%.
By May 1763, Amsterdam’s markets were under severe strain; silver bars sourced from northern Germany traded at a steep discount of 7%, signaling deteriorating economic conditions. The market for discounted bills collapsed entirely on June 1 when Frederick demonetized debased wartime coinage prior to introducing new currency. This action caused a liquidity crunch especially in Silesia since demonetized coins lost as much as 41% of their collateral value. Consequently, Prussian merchants increasingly relied on short-term financing via bills drawn on Amsterdam.
In June, Prussia partially restored pre-war currency standards; however, demonetization had created a significant shortage of trustworthy money. In Saxony, silver coins underwent intense scrutiny amid fears they would be exchanged for gold at unfavorable rates. Holders suffered losses due to depreciation in war coin values.
On June 24, De Neufville obtained authorization to open a glass manufacturing operation in Haarlem. Four days later, Berlin banker Carl Leveaux drew bills amounting to 12,900 guilders and 5,160 Thaler on De Neufville for cash payments; delays in silver shipments were reported. De Neufville supplied Leveaux with silver valued at 149,300 guilders and shared one-third of resulting profits. The firm Bachmann & Co in Magdeburg also engaged in this silver trading activity.
By late June 1763, De Neufville’s balance at the Bank of Amsterdam had declined to levels last seen in 1751. His financial statements reflected typical distress experienced by heavily leveraged traders confronted with liquidity shortages.
Perfect storm
The withdrawal of Leveaux and Von Stein from the grain transaction came as a severe blow to De Neufville and Gotzkowsky. This restructuring intensified the burden on De Neufville, who ended up responsible for three-fifths of the arrangement. Gotzkowsky had extended at least two million Prussian thaler to Saxony to support Frederick’s war efforts and was still holding onto unsold municipal bonds as well as a large collection of paintings gathered during the conflict. Alongside this, he managed a silk factory, a jewelry enterprise in Leipzig in partnership with J.R. Streckfuss, and a porcelain manufacturing business (now known as KPM) that was underperforming. By July 1763, both men were grappling with liquidity shortages and faced the threat of insolvency. Earlier that year, De Neufville had also suffered losses on the London stock exchange.
The Bank of Amsterdam closed twice annually—in January and July—for a fortnight to reconcile accounts (in 1763, from 15 to 29 July). During this closure, it was improbable that De Neufville could secure the substantial funds he required, compelling him to await the Wisselbank’s reopening on 2 August.
Liquidity pressures severely impacted speculators such as De Neufville and Arend Joseph & Co., which declared bankruptcy on 28 July 1763 and fled to Culemborg, known as a sanctuary for insolvent debtors, after only three days of grace. The combined shocks—the increased liquidity demands from the Gotzkowsky deal and the loss of access following A. Joseph’s collapse—led to De Neufville’s downfall, culminating in his business closure on 29 July. Although a rescue plan was considered, it was ultimately dismissed.
On 1 August, the Wisselbank rejected money transfer requests. The following day, Amsterdam bankers declined to lend De Neufville the 700,000 guilders owed to Gotzkowsky. While Hope & Co., the Clifford family bankers, Warin, and Muilman sought to form a lending syndicate, Andries Pels & Zoonen refused to join. Without consensus, De Neufville’s suspension of payments effectively became bankruptcy. By the morning of 4 August, news had reached Hamburg, prompting merchants there to urge Amsterdam bankers for preferential treatment in bankruptcy proceedings under threat to their bill market—resulting in a three-month halt of Amsterdam’s market for Hamburg bills.
In response, six prominent Amsterdam bankers proposed depositing silver and gold bars at the Wisselbank instead of coins; between 4 and 15 August, bullion was accepted as collateral, leading to a rise in bullion deposits over subsequent weeks.
De Neufville’s collapse triggered a contraction in interbank lending; banks ceased accepting bills while creditors withdrew financing secured by bills. This sparked financial contagion—widespread withdrawal of capital across institutions—impacting private cashiers whose deposits were withdrawable on demand but lacked enforceability. The crisis spread internationally with bankruptcies recorded in Amsterdam (38), Hamburg (90-97), Stockholm, and Danzig. Leveaux declared insolvency on 9 August. Bankers’ reluctance to extend credit further tightened market conditions.
Banks closed on 5 August; all bills drawn on Amsterdam were protested without acceptance. A run on cashiers ensued on 6 August. For the first time ever, the Bank of Amsterdam and Stadsbank van Lening remained open late to accept gold and silver—expanding their operating hours similar to modern repo facilities—utilizing unminted silver bullion made available after Prussia demonetized its currency.
On 8 August, De Neufville announced intentions to auction six horses and seven coaches by month-end; by 15 August one of his vessels was put up for sale. Defaults on Amsterdam bills surged alongside Hamburg bankruptcies in late August; a second wave of insolvencies struck Amsterdam by 19 August.
On 21 August Frederick the Great petitioned Amsterdam’s city council and States General to support De Neufville Bros., proposing their exclusion from bankruptcy chambers and formation of a special committee. Two days later, De Neufville authorized Swiss banker Jean Conrad Sollicoffre to manage his accounting records, asserting he could raise trade capital amounting to 1.3 million guilders if obligations were fulfilled.
De Neufville objected to being excluded from recovery measures on 25 August; however, his request for suspension was denied on 29 August. Creditors initiated legal proceedings on 30 August; no extensions were granted through October. On 3 September emergency loans were provided in Amsterdam to protect vulnerable firms; creditors compelled the sale of 500 silver bars used as collateral by Joseph and De Neufville.
By 11 September De Neufville returned debased coins valued at 50,000 guilders to Carl Leveaux. On 23 September the States-General declined to establish a separate committee dedicated to De Neufville’s case.
Bankruptcy
On 7 October 1763, De Neufville was declared bankrupt and placed under guardianship due to the expiration of most bills. The Amsterdam Chamber of Insolvent Estates assumed control over his possessions. An inventory process commenced on 10 October, and by 24 October, his estate was appraised at around 7,022 guilders, notably excluding any paintings. His case underwent examination the following day. By November 1763, the financial turmoil had subsided, and exchange rates returned to stability. De Neufville committed to reimbursing creditors in stages—initially 70%, then 60%, followed by 50%—but ultimately settled only about 10%, prompting legal proceedings against him in 1770.
Other activities
In 1756, De Neufville married Margaretha Smid, a Lutheran, while he himself was Reformed and lived at Keizersgracht 15. Beginning in 1757, he actively collected art and took part in seventeen auctions between 1759 and 1763. On 18 May 1763, he acquired pieces from Cardinal Silvio Valenti Gonzaga's collection. That summer, distinguished visitors including Landgravine Caroline Louise of Hesse-Darmstadt and Margrave Charles Frederick came to see him. On 4 July 1763, De Neufville purchased fifteen paintings—featuring works by Gerard Dou, Frans Hals, and Jan van Huysum—from Willem Lornier's collection for a total of 9,115 guilders; this transaction remained unsettled. An auction of his art was scheduled for December 1763 but was postponed after he regained authorization to manage his financial matters; a partial auction eventually took place in June 1765.
De Neufville ultimately declared bankruptcy again around 1775. He continued residing in Amsterdam until 1777 after selling his estate in Heemstede, then relocated to Rotterdam in 1778 and remarried in 1805. Between 1787 and 1800, he concentrated on acquiring real estate near Delft without engaging in bills of exchange, amassing numerous property titles. Another art auction occurred in 1804, highlighting his particular appreciation for German painter Christian Wilhelm Ernst Dietrich. In the year he passed away, creditors received an additional repayment of one percent.