yuhu's crazy ideas

Dutch Commercial Empire

Edited by yuhu, (May, 2004)

I. Introduction: Factors In the Rise of the Dutch

1. Economic and Social factors

There existed the virtual absence of feudalism, manorialism, and serfdom in Holland. Holland in the 15th century had only 12 feudal families, owning just 10% of the lands, which, they rented out as freehold tenancies to a virtually free peasantry. About half of the peasantry in Holland owned their lands outright, most of the rest held rental lands, without any other obligations.

2. Agricultural factors

They invested in Agriculture. this whole region enjoyed a very high level of agricultural productivity, the very highest in northern Europe. High agricultural productivity freed labour and resources for employment in trade and industry, and thus promoted both urbanization and commerce, especially overseas trade, which in turn promoted further demographic growth. by the mid-15th century, Holland had become 45% urbanized.

3. Political factors

Most of this region was technically or theoretically part of the Habsburg Empire, the so-called Holy Roman Empire. but the German emperors in fact had almost no influence in this far distant corner of their loose empire.

With the absence of strong monarchical rule, the mercantile towns gained much power in most of the Low Countries, especially in the county of Holland. When the last count of Holland (William of Bavaria) died, in 1417, without a direct male heir, his daughter Jacqueline became Countess. In the 1420s, a civil war ensued. the town governments thus won the war.

By the Treaty of Delft in 1428, Jacqueline was forced to leave, and then to abdicate in 1432, making Philip duke of Burgundy the new count of Holland.The Estates or parliament of Holland consisted of 17 town representatives and only 1 member for nobility; Holland was thus ruled decisively by the towns, and the towns by the merchants, with little interference from the prince until the Revolt of the Netherlands against Spain, in 1568.

II. The Dutch Overseas Commercial Empire of the Seventeenth Century

1. The Seizure of the East Indies Spice Trade from the Portuguese

For all the European powers, the lust for bullion and spices were the chief lures that produced the race for overseas colonies: bullion in the West and spices in the East. While the Spanish seized control of New World silver, the Portuguese temporarily gained control of the East Indies spice trades;

The Portuguese, however, proved to be too weak in manpower, shipping, and capital resources to maintain a permanent monopoly. Their control over Indian Ocean commerce had already been broken, much earlier, in the 1530, by an alliance of the Ottoman Turks and Arabs with Gujerat in NW India. Together managed to restore the Mediterranean link with Venice, thus giving Venice an Indian Summer of renewed prosperity in later 16th century.

The Portuguese still retained an important share, distributing their spices from Antwerp, until 1549 when they shifted their spice staple to Lisbon, principally in order to gain closer access to the now cheaper American silver, flooding into Seville.

The Lisbon Spice Staple allowed the Dutch to take over the European distribution of spices from Lisbon, because the Portuguese lacked their own commercial facilities. But then, in 1580, Spain absorbed Portugal and denied the Dutch entry into Lisbon.

Furthermore, in 1580s and 1590s, Mediterranean warfare with the Turks also disrupted the alternative spice route via Venice. Thus both the Dutch and the English now had a strong incentive to establish their own direct sea route to the East Indies (and Dutch sailors had served with Portuguese).

The Dutch reached the East Indies first, in late 1590s, and immediately set out to dislodge the now weakened Portuguese. The Spanish government, embroiled in European warfare, was quite unwilling to waste resources in defending these Portuguese outposts.

In 1601, Dutch inflicted a crucial defeat on the Portuguese fleets in East Indies, crippling their power. Though it took Dutch many more years fully to dislodge the Portuguese, who held on to scattered posts in Indies and India.

2. The Dutch East India Company was formed in 1602:

It ensured that Dutch had the supremacy in the East Indies for next 350 years (to World War II). The Dutch government granted the company a full monopoly on Asian trade.

Government also provided the company with military power to impose colonial rule: to stamp out all competition in East Indies from native Indonesians, Chinese, and Europeans. Aim was to give the company monopsony power in buying spices in East and monopoly power in the West.

The English seemed to be the greatest threat, after the defeat of the Portuguese. They had also set out in late 1590s to establish a direct sea route to East, and established their own East India Company ahead of the Dutch, in fact, 1600. But the English proved to be a paper lion, because they lacked the military power of the Dutch.

The ‘Massacre of Amboyna’ in 1622 was the crucial test. The Dutch invaded, arrested, and hanged a dozen English merchants on that spice island.The English took this subtle hint that they were unwelcome and, lacking any government support, deserted the East Indies for India, where the government, learning a valuable lesson, did support them militarily.

In India, the English also developed a spice trade, but it was distinctly secondary, inferior to the East Indies spice trade, though subsequently in 18th and 19th centuries, India would prove much more valuable. Although Dutch never achieved a complete monopoly in the European spice trade they certainly dominated it, indeed to extent of dealing a fatal blow to the Venetian economy.

3. Dutch Trade with Asia

In first half of 17th century, spices clearly dominated that trade, they were source of great prosperity for Dutch East India Company, producing enormous dividends. Even in early 18th century, when its relative importance had declined, spices produced 40% dividends for six straight years, in 1715-20.

From the later 17th century, however, the spice trade had changed; Spices had declined in relative importance for both the Dutch and the English, evidently as a result of changes in European tastes and cuisine, thus a much simpler cuisine no longer desired spices except pepper.

From 1660, mass-consumption commodities of ‘New Colonialism’: as other commodities took the place of spices to expand Dutch trade with Asia, includin India, Persia, China, Japan.

these commodities included luxury textile, cotton textiles, Porcelain, Chinaware, Beverages, Plant fibres, Luxury Manufactures and Metalwares. These latter items accounted for about 65% of Dutch imports from Asia by the 18th century, with broad European markets.

While this Asian trade was enormously profitable for the Dutch, and also the English, this Asian trade produced a very large trade deficit for Western Europe, because Asian countries had little demand for European trades.

4. Dutch Trade in the Caribbean and Latin America

In the West Indies, the only important acquisitions, small ones, were again taken from the Portuguese: small part of Brazil and Caribbean island of Curaçao. Spain, controlling most of Latin America, proved too powerful to lose territory to the Dutch, though they did lose Caribbean islands to English.

In 1621, the Dutch formed the Dutch West India Company, modelled on the East India Company. But this Company, in contrast to the East India Company, was a failure: it failed to get any sort of trade monopoly; and it failed to compete effectively with the English and French in dominating Caribbean trade, trade with Spanish.

The Company instead turned its efforts more to outright piracy, which proved to be very unprofitable: the military costs exceeded the revenues. Such a failure was the company that it was dissolved in the 1680s. But at least the Dutch made fairly good use of Surinam and Curaçao: to engage in trade with Caribbean and South America: trade in tobacco, sugar.

5. Dutch Trade with North America

The Dutch actually arrived ahead of the English and chose the best spot for a settlement. Nieuw Amsterdam is established in 1614 at the mouth of the Hudson River, as a trading post and then colony named Nieuw Amsterdam, taken over by the Dutch West India Company on its formation in 1621. Enlarged along the Hudson River valley to become the colony of New Netherland, with Fort Orange in the north. Like the French, the Dutch concentrated on the highly lucrative fur trade. A focus on the fur trade thus virtually ensured that little or no settlement would take place.

While some settlement did take place later in 17th century, the colony of New Netherland remained dangerously small, underpopulated, and increasingly wedged in by the much larger English colonies. In 1660, it had only half the population of Connecticut, a small English colony.Finally, at the beginning of the second Anglo-Dutch war, in 1664, the English seized Nieuw Amsterdam -- which they renamed New York. That was the effective end of the Dutch in North America.

III. Dutch Shipbuilding and Commercial Supremacy

Dutch commercial supremacy was to a very considerable extent sustained by an equally impressive supremacy in ship-building, which gave the Dutch very significant cost advantages in the shipping trades;

But that supremacy in shipbuilding and shipping was, in turn, largely dependent upon the prior supremacies achieved in commerce. In essence, Dutch supremacy in shipbuilding, the foundation of the Dutch supremacy in shipping itself and the carrying trades, was largely founded upon: the prior Dutch supremacy in the Baltic trades, and in particular on a virtual Dutch monopoly control over the vital Baltic sources of naval spars (masts), ship timbers, and naval stores.

The fact is that the Dutch could acquire the basic building blocks of the shipbuilding industry more cheap than anybody else. But the Dutch supremacy in shipbuilding was also built on technological innovation and technical expertise.

The Dutch Fluitschip was a superior cargo boat: representing the optimum trade-off between cargo space and speed. It was not a radical innovation, but the end product of evolutions in ship design that took place over the 15th and 16th centuries.

posted by yuhu @ 8:34 AM