The rise and fall of the Dutch domination of European trade



owedtojoy

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The traditional trade 'map of commerce' whose main artery ran from the Baltics via the Low Countries to the Bay of Biscay and the Iberian Peninsula with offshoots to Norway and the British Isles remained essentially unchanged in spite of the opening up of European colonies and the rise of transatlantic trade. This Baltic-Cadiz route remained the greatest employer of European shipping. In 1660 it was dominated by the Dutch.

The impressive Dutch trading network came to be in spite of, or perhaps because of, the Dutch Republic's 80-year-war with the Spanish. The Dutch dominance of European trade is well-illustrated by a comparison of its merchant marine to those of other European powers. In 1670 it totaled 568,000 tons. That was more than the merchant marines of France, England, Scotland, the entire Holy Roman Empire, Spain and Portugal combined.

The basis of this Dutch trading network was the huge grain surplus produced in the Baltic, primarily by Poland-Lithuania. Almost all of it was shipped to the Dutch Republic and about 80% of it was shipped in Dutch vessels. The Dutch then re-exported about 40% of it to those parts of Europe, primarily in the south, which did not produce enough food to feed their own populations. This abundance of basic food in allowed Dutch farmers to specialize and their cash crops, and the products made from them, in turn went to markets all over western and northern Europe.

More important in terms of value were the 'rich trades'; commodities (spices, sugar, silk etc.) that the Dutch gathered in Southern Europe and then sold in Northern Europe. By the 1660s this was creating seven times the profit the freight from the Baltics were creating.

What then explains this dominance? Part of it is surely technological. The Dutch created a ship known as a Fluyt which gave them a hugely competitive edge. It maximized carrying capacity and minimized cost due to standardized designs and labor-saving services adopted by shipyards in Amsterdam. An English ship of 250 tons was 60% more expensive than its Dutch rival because of this. Furthermore, the Fluyt was purely a ship of trade and had no pretensions of being a warship. This allowed a 200-ton Fluyt to be crewed by 10 men, as opposed to 30 for the comparable English ship. Through this the Dutch could undercut their rival carriers by between 33% and 50%.

Another aspect was a drive to exploit the resources available outside of Europe. By 1602 the Dutch East India company had been founded and one of "the greatest commercial undertakings in European history was underway". The Dutch wrestled pre-eminence in South-East Asia from the Portuguese and by 1660 the Portuguese were confined to Goa and Macao while the Dutch were in Cochin (India), Malacca, Indonesia, Formosa, and modern Sri Lanka. This ruthless accretion of dominance in that part of the world allowed for massively profitable goods to be shipped to Europe.

A third aspect of this dominance is financial. The Bank of Amsterdam (1609) quickly eclipsed Venice and Genoa as Europe's premier money market and was soon joined by a loan bank. The Amsterdam Stock Exchange gave Dutch merchants a head-start in managing their business affairs. Credit could be obtained as easily nowhere else in the world, the same went for insurances for goods. Indeed, these services were so good that during the Third Anglo-Dutch War the English fleet was insured at Amsterdam.

Dutch primary would continue for a long time. But by the middle of the next century there was serious decline both in relative terms as well as in absolute terms. By the end of the eighteenth century the rich trades receded and the Dutch fishing industry collapsed.

By 1650 the Dutch population became stagnant. There may have been low-growth until 1700, but the eighteenth century was most definitely marked by demographic stagnation. Dutch predominance also attracted the hostility of foreign powers. This was reinforced by common economic beliefs at the time that, simply put, held that the amount of silver and gold coinage was finite and that there one country could only prosper at the expense of the others. The English and French, with their sights set on the Dutch, implemented mercantile policies, such as the Navigation Acts and tariffs for cargo carried in foreign ships. Every time a government implemented such a policy, the Dutch suffered. Sweden, for example, passed an act which barred foreign ships from their ports except if that ship was carrying produce of its own nationality. It hurt Swedish merchants and consumers, but it hurt the Dutch more.

Direct action in the form of war was also taken by France and England. Decades of incessant warfare eventually exhausted the Republic's resources. The burden of taxation to maintain the debt accumulated and the armed forces, in particular, inflicted structural damage on the Dutch economy. High indirect taxes on consumption led to correspondingly increased wages and diminished competitiveness for producers.

The technological gap was also closed by foreign powers and the Dutch faced increasingly fierce competition because of it as well. As the rest of Europe developed their own commerce after the Thirty Years War, the Dutch entrepot was less needed. Some sectors, of course, continued to expand, but domestically there was a marked turn away from manufacturing and trade towards finance and especially loans to foreign governments. It became, in the words of Charles Wilson a 'rentier economy'. A far more passive player in Europe's economy.

Source: Tim Blanning, The Pursuit of Glory.
Geoffrey Parker's The Dutch Revolt is an excellent account of the Dutch Rebellion against Spain, and the eventual creation of two new countries - the Netherlands, and the Spanish Netherlands, the beginnings of Belgium.

One amazing fact is that the money to pay the Spanish Army was either borrowed from, or passed through, banks in Amsterdam. The Dutch put the commercial reputation of their banks above the risk of defeat. Maybe they were just super-confident?

The Dutch did well in the mid-17th century in their wars against Cromwell's Protectorate and the restored Charles I, but the British realised that they had to break the Dutch to become a commercial world power, and eventually sheer superiority of resources made them the winners.
 

Malcolm Redfellow

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I'm sure Dame_Enda's point (post #79) about English /Cromwellian preference to Exclude must be valid. I hadn't intended to address that, in the constraints of these dialogue boxes — but here goes...

In terms of the politics of the Provinces, though, other matters must have had at least equal weight — and that's a power-struggle. I tend to see the issue more about how the Union of Utrecht (1579) would continue to apply, and how Holland was achieving a kind of ascendancy over the other provinces. There seems to have been conflict between the urban and the rural populaces: the towns were rioting and voting against (I'm not sure how strongly we should account various incendiary preachers); but the countryside seems to have gone with the flow. There was, but of course, resentment that Holland was dealing unilaterally with England. When it came to the crunch the ridderschap (i.e the college of noble families) went 6-4 for Exclusion.

In any case, the worst of the dissension passed:
  • De Witt was a consummate negotiator and pacifier (his vamp on the Florentine republic, how hereditary principle was antagonistic to republican government, sold well), and the Exclusion crisis strengthened him and Holland within the Republic — while dissent was endemic in the other provinces;
  • Friesland (which had been most hostile) began to benefit from improved trade conditions; Zeeland had condemned exclusion but gained greatly from the peace;
  • but Holland was effectively calling the shots (literally) through control of the militia.
Most significant, surely, was that the case was altered:
  • the Dutch had won control of the world supply of cinnamon (from Ceylon) and other spices;
  • they were strengthening positions in India;
  • the Dutch were winning the trade wars against the English (indeed, only Portugal — which was also engaged in conflict with Spain — held out); and as a result were dominating trade with Spain and its Empire, with Italy and with the Near East;
  • while, 1655-60, the English had became involved in another messy war with Spain.
Bottom line: whoever won the first Anglo-Dutch war, the Dutch won the peace.

All of that skims over how I failed dismally to explain the complexity of what ensued (the doings in Overijssel, which ended in calling out the republican army defeated me). So to move things on, I'll have to settle for noting De Witt's "Harmony" of 1655, which acknowledged Willem Frederick as Stadtholder and i/c the army, but with umpteen strings attached. Still, let's not gloss over how Princess Mary was hostile to Willem Frederik, whom she saw as threatening the interests of her son (and guess who that was?), while Great Elector Friedrich Wilhelm was taking an educated interest. Various off-stage discussions, including Charles II Stuart, were already happening.

Oh, and a few other considerations:
  • The Peace of the Pyrenees (1659) finally concluded a quarter-century of wars between France and Spain.
  • Throughout that period Spanish policy had maintained its main land force in the (southern) Spanish Netherlands — even if that meant revolts in Catalonia and Portugal had to take lower priority.
  • Only at the Battle of the Dunes (i.e. Dunkirk) in 1658 did Spain suffer a terminal defeat — with, of course, significant English participation.
  • After the 1659 Peace, Spanish silver no longer flowed north (owedtojoy's point in post #82: sorry, nearly missed that). Spanish forces in the Netherlands were reduced from 70,000 in 1658 to just 33,000 in 1661: by 1690, at another time when France was on the assault, it was down to at most 15,000. Resources were redirected against Portugal and to support the American empire (it took until 1668 before Philip IV cried quits on trying to recover Portugal).
  • All of that meant the Dutch and the erstwhile Spanish Netherlands (not hermetically-sealed jurisdictions any more) were cutting into long-standing Hispanic trade with South America — three examples:
  • in September 1686 the States of Flanders were petitioning for a direct navigation between Ostend and Buenos Aires;
  • around that time Flanders was inviting itself to colonise Santo Domingo (Cromwell, of course, had a go in 1655, but the English settled for Jamaica instead), rather than allow the French to get in ahead of them;
  • Max Emmanuel of Bavaria (who was nominally the governor-general of the Spanish Netherlands — though at the specific request of Stadtholder (and now king) Willem/William III — was happy to sign a charter to set up the Flemish East India Company, in the name of the King of Spain.

If this continues, I really, really must address Dutch involvement in the 1660 Restoration — which was where I was going two posts ago,
 
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O'Quisling

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I like the Dutch. There's a sort of blunt pragmatism in them which is quite endearing. When they say they are going to do something they generally do it as well. Lot to admire in them.
"Give the Dutch Ireland and they'd feed Europe."
- an old one but still relevent.
The other half of that may be too harsh: "Give the Irish the Netherlands and they'd drown!"
 


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