- Dutch Primacy in World Trade, 1585-1740 by Jonathan Israel
Oxford, 462 pp, £45.00, June 1989, ISBN 0 19 822729 9
Jonathan Israel seeks, as few before him have done, to explain the phenomenal rise and then fall of the Dutch commercial hegemony by viewing it against a global background. His theme is its centrality ‘for over a century in the making of the Early Modern world’. His big book comes close to being a history of Europe, even of the whole world, or at least of commercial relations everywhere and the bearing of these on political relations. A copious supply of maps, tables, graphs, bolsters the epic story that he has to narrate. He tells it in sober language, but it is dramatic enough by itself to be in little need of adornment. The statistical evidence drawn upon is remarkable in its extent, and often requires expert judgment for its interpretation. His conclusions differ at various crucial points from generally accepted views. Some of these derive from Braudel, ‘the French grand maître’ as Israel calls him, whose ideas he takes as ‘landmarks to help plot our course’. Not seldom, nevertheless, he finds the master at fault; most frequently he convicts him of underrating the effectiveness of governmental measures against foreign trade.
This is a study nearly as much of war and its motives as of economic history. In the 1650s little Holland – more properly the United Provinces – fought Sweden in the Baltic, and Portugal in Ceylon. Wars were now accompanied by drastic action against enemy commerce, and by reprisals in kind. A nobleman could not take part in trade without derogation from his rank: a king, even as haughty a one as Louis XIV, was free to do so, directly or by proxy. The war provoked by Louis in 1689 had territorial objectives, but ‘it was also the most relentless economic war of the mercantilist period.’ Such conflicts imposed heavy burdens and losses on commerce. Privateers roved the western seas as pirates did the eastern. Many merchantmen carried guns, and had to be escorted by warships. Yet however much these overhead costs hampered growth, ‘national’ rivalries and feuds stimulated it; tooth-and-nail competition, it may appear, has been the price of progress. Comparison with Asia suggests that on balance Europe benefited from its self-imposed ordeals; elsewhere, both society and business enterprise were too inert to generate such struggles.
There can always be too much of a good thing, no doubt. Wars were being fought on a grander scale than ever before, and made correspondingly greater ravages. It is easy to agree with Israel’s opinion that chronic hostilities, and the Thirty Years War above all, offer the likeliest explanation of the 17th-century ‘general crisis’. Recession in Europe accelerated the European drive into the other continents; if these regions had not been available to nourish the sacred flame of profit with their blood, it may be asked whether nascent capitalism might have come to an untimely end, buried under the trampling feet of the armies.
A nation of two millions could only reach the pinnacle because, apart from geographical advantages, it had a unique political and social structure. It was a republic made up of seven provinces, presided over by the House of Orange, but extremely decentralised, every town as well as province enjoying much autonomy, and even the common people having an occasional voice in affairs. Admirers of absolute monarchy, then very fashionable, never understood how so crazy a system could go with so much national strength and unity. Israel emphasises that Braudel’s conception, shared by many, of the country as no more than the ‘city state of Amsterdam’ writ large, is highly misleading: unlike Venice or Genoa, Amsterdam was ‘merely the hub of a large clustering of thriving towns’.
Complex negotiations were needed for the setting-up of the VOC, or East India Company, the first joint-stock venture based on a balancing of interests of towns and provinces, with eight of the 17 directors – the famous ‘Heren XVII’ – assigned to Amsterdam. This meant that, far more than in England then or later, the public was being drawn into the push for economic expansion. Dutch techniques and institutions pioneered modern finance, with the Amsterdam Bourse, completed in 1611, rapidly accepted as ‘a world exchange which itself became an instrument of trade control’. Money was so effectively mobilised that credit was always available, at staggeringly low rates. A Dutch entrepreneur could borrow at 3 per cent; after three centuries of progress his British compeers are paying 14 per cent.
Dutch prosperity rested on practices the opposite of laissez-faire: ‘treaties, alliances, blockades, enforced restrictions, and monopolistic devices’. They added up, Israel says, to ‘a harnessing of the Dutch entrepôt to the machinery of the Dutch state’. Some might prefer to put it the other way round. But the difference of meaning would be tenuous. With big landlords relegated to the background by the revolution against Spain, power lay in the hands of an urban oligarchy: this was diverging into two wings, the ‘Regent’ or administrative and the commercial, but the two still formed a close harmonious élite. Trading companies were often launched by the state. So they sometimes were by royal officials – in France, for instance – but with no such rapport between ministry and merchantry as obtained in bourgeois Holland. In Asia governments were even less fit for partnership with business initiative. An annual subsidy was paid to the VOC, and donations of cannon, stores, fighting-ships, frequently came its way.
Another great organisation, the West Indies Company, was based on regional chambers supervised by the States-General, or federal assembly; it, too, was ‘intimately entwined with the ruling Dutch regent oligarchy’. Holland and Zeeland, the two big maritime provinces, regularly granted customs exemptions for risk-bearing, long-distance enterprises, and might supply armaments, even lend soldiers. Much of the history of capitalism has consisted (and still consists) of the taxpayer footing the bill for expenses, with the investor pocketing the profits. On a different level, exports of salted herrings, cloth and so on greatly benefited by rigorous official inspection ensuring standards of quality: something his own country badly needed, an English observer ruefully commented – as he might well do today.
Apart from all this, the Dutch hegemony was largely the result of an accidental confluence of things happening in Europe. Originally the northern provinces of the Netherlands lagged well behind some of the southern areas, which failed to escape from the Spanish grip. Infusions of new blood, as well as new opportunities, were wanted. There was first the exodus in the 1590s of a multitude of refugees from the south, fleeing political and religious persecution. More immigrants arrived during the Thirty Years War, from several countries including England – which itself had absorbed a flood of refugees or migrants from the Low Countries; London was a very cosmopolitan city, like nearly all centres, probably, that have been the focus of big historical changes. Most of the new arrivals were poor, and swelled a labour force whose living standards might have been expected to be depressed by their coming. It would seem that wages continued higher than anywhere else, and this must have put a premium on managerial ingenuity. House rents and food, on the other hand, were costly; and Jan den Tex’s Oldenbarnevelt brings out the fact that taxation was tailored, as in all well-regulated states, to fall disproportionately on the poor. It may be regretted that Israel does not tell us more about labour conditions – for example, in the vast merchant marine. A different category of newcomers were the Jews, mostly from Iberia, who were welcomed for the sake of their financial talents and useful connections abroad. Late in the century came the Huguenots, who were pouring into Britain as well and leaving their mark on industry.
Braudel was mistaken, according to this study, in thinking the bulk carrying trade of the Baltic, chiefly in grain, the main pillar of Dutch achievement throughout the 17th century; also in dating a comprehensive decline, as others have done, from about 1650, when Baltic freights dwindled. Israel insists on the primary significance of the ‘rich’ or ‘high-value’ branches of trade, and divides his whole period into seven phases, defined by Holland’s rising or falling share in them. First comes the time of the revolt against Spain, then the 12-year truce from 1609 to 1621, which saw a great advance and brought the Dutch to their first peak. Renewed war with Spain, and the European slump, led to ‘relative stagnation and profound restructuring’. After the end of the Thirty Years War in 1648, ground was promptly recovered, notably in the Mediterranean – thanks in part to the country’s now having a much wider range of manufactures of its own to export. Down to 1672, Dutch supremacy was at its height. More wars followed, bringing the United Provinces at times to the brink of catastrophe. In 1713 the peace of Utrecht showed them not wholly defeated, but with England moving forward resolutely into first place.
Much early Dutch shipbuilding relied on ‘minimal crews and maximum economy’ to handle bulk cargoes, Baltic especially. But already before the close of the 16th century, Israel maintains, the true counting-house élite had formed a permanent preference for southern and colonial markets. In the Baltic itself, and in other theatres, a long-term shift was taking place from bulk freightage of cheap commodities to carriage of more expensive goods, such as spices and manufactures. After all, it was the upper classes everywhere who had most of the purchasing power. During the truce, spices from the new Dutch outposts in the East Indies were capturing Mediterranean markets, as usual with firm official aid: armaments were provided for some of the convoys, a network of consulates was opened.
Spain and the Netherlands had been brought together by dynastic accident, but their relationship was to be long and close, if chequered: this is true of the northern provinces even after their breakaway, as well as of the south. Spanish wool and markets meant a very great deal to the Dutch; Spain needed Dutch shipping to fetch naval stores and other goods from the north. For this reason, during the revolt, Philip II had to lift his embargo on Dutch trade. After his death in 1598 his son renewed it, and inflicted heavy damage. When the truce expired, bans were once more laid on Dutch shipping, and in 1624 a special inspectorate, the Almirantazgo, was set up to enforce them. They were very far-reaching: one may be reminded at times of Napoleon and his Continental System against Britain. After 1648, a palsied Spain acquiesced in a Dutch economic ascendancy over the southern Netherlands; it was not Madrid, but spontaneous action by aggrieved southerners, that in 1699 temporarily threw it off. There was never any love lost between north and south, even though Dutchmen and the Flemings of the south-west were one and the same people. In every war Flemish privateers preyed on Dutch shipping; the Dutch persisted in keeping the Scheldt closed and Flanders thereby impoverished.
With Spain’s prostration, England became Holland’s prime rival and foe: inevitably, it may be, because these countries were the two most nearly akin, both of them breathed on by the daemon of capitalism, whereas Spain and Holland were different enough to be complementary. Tensions began early, in Europe and more acutely in Asia. Dutchmen tried to keep Englishmen out of the East Indies, claiming the eastern waters as theirs by right of conquest. Israel points to the irony of this argument being urged by a spokesman, the philosophic Grotius, who a few years earlier, in 1609, had written his Mare Liberum to urge the opposite argument against the Portuguese. Capitalism has never been much fettered by logical consistency, and Holland was as eager to ‘police’ the seas as Britain was later on with its invincible armadas.
The Commonwealth launched England on two centuries of upholding what it called its ‘Maritime Rights’, or Britannia’s divine right to rule the waves. Cromwell and his party would have liked a union with Holland under English direction – Israel makes a comparison with the Cromwellian union of Scotland with England; rejection of this proposal in 1651 was followed next year by the first Dutch War. Before long, a third challenger was coming forward, France, with Colbert setting up his Compagnie du Nord. France had not enough shipping to be able to dispense with Dutch carriers, in emulation of England’s Navigation Acts; but here again Israel finds Braudel wrong in failing to see how much injury could be done to Dutch trade, for which the French market mattered much more than the English.
Wars for trade in Europe found a natural continuation in the outside world. Modern Europe has had sundry spasms of uneasiness about a new ‘barbarian invasion’ in the offing: from the 16th century the Third World was actually suffering one, as barbarous in much of its behaviour as any Goth or Vandal doings. True, Europeans there were fighting one another quite as often as they attacked the native peoples, but the latter were often caught in their cross-fire. ‘From the outset, Dutch enterprise in southern Asia was state-backed and heavily armed’; Oldenbarnevelt and his government, when they helped to give the VOC its start, encouraged it to make free use of its armed strength, and to build fortified bases, and its charter stipulated a duty to do all it could to injure Spain and Portugal. Governor-generals of the burgeoning settlements, like Coen and Van Diemen, used force ruthlessly against any Asians who failed to comply with their wishes. Dutchmen were hardened by long years of strife in Europe, and stiffened by the self-righteousness of Calvinists who alone understood the grand truth of the total depravity of mankind.
One of their strategies, in which they improved on their Portuguese forerunners, was to get into their hands as much as they could of the carrying trade of Asia, just as they did in Europe. Funds were thus earned that could be used for purchase of goods for Europe, and for always heavy military and naval expenses. They got a foothold in Japan; they tried – anticipating Britain by two centuries – to break into the China trade by a coup de main, sinking hundreds of unarmed junks until the Chinese were compelled to allow them a depot on Taiwan. These high-handed acts and their legacy of ill will were to rebound against the Dutch in later times, Israel observes. In the mid-17th century there was some debate about whether tactics of violence were not costing too much but the decision was to go on with them, and to trust the Company’s ability to ‘bludgeon its way’ out of its difficulties. When spices lost their pre-eminence in European markets to new wares like raw silk and Indian textiles, it plunged into new adventures in southern India, still faithful to the rule of transacting business with a gun in one hand.
Founded in 1621, the West India Company was making a place for itself before long in the Caribbean, and going on to invade Brazil and occupy a good part of it until expelled by rebellion in 1646. Possibly some Brazilian insurgents looked back for inspiration to the Revolt of the Netherlands against Spain. Control of the rapidly growing sugar trade was the prize to be won. Sugar plantations sprouted all over the Caribbean, with each European colony making use of Dutch equipment, investment and loans. All this called for plenty of African labour, and between 1676 and 1689 the WIC imported 20,000 slaves for sale. Even investors had souls, of a sort, in the days before the second fall of man and the rise of Mrs Thatcher: the WIC won some of its subscribers by pledging itself to a crusade against Catholicism. A realistic approach to sales, however, compelled devout Calvinists to send out Catholic chaplains, to give theological instruction to slaves destined for the Spanish mainland. In time, the Inquisition came to be dissatisfied with the results of this tuition, and in 1688 a virtual Dutch monopoly of the supply of negroes to Spanish America ended. It had been the mainspring of action by the WIC along the Gold Coast, and in 1642 of the seizure from Portugal of Angola and the sugar island of San Thomé.
Prominent in Dutch annals in the Americas was the participation of Jews of Iberian origin. Most buyers of plantations in Dutch Brazil were Amsterdam Jews, whose relatives and agents flocked in their hundreds to the colony, where they outnumbered Protestant settlers. When Brazil was lost, they removed to the Caribbean, bringing with them their experience as planters. Others were to the fore in the slave trade. In the early 18th century, with demand for colonial products mounting faster than ever, plantations multiplied in all the Dutch settlements, particularly in Surinam. There more than a quarter of them, ‘concentrated in what was virtually a Jewish autonomous region along the Surinam river, belonged to Sephardi Jews’.
Industrially, Dutchmen might well have called their performance in the later part of the 17th century an economic miracle. Along the Zaan, close to Amsterdam, stretched ‘much the most intensive and varied industrial belt that then existed in the world’. This was, as Israel says, the first country to have a large urban proletariat, forming a large part of its entire work-force. It was still a small territory, with meagre resources, he adds (so is Japan, but today technology is vastly more potent). Its strong points did not lie in magnitude of output, but in specialised crafts: high-grade cloth, paper-making, tobacco-processing, diamond-polishing. Technical improvements came thick and fast, ‘contraptions and contrivances of every sort’.
Why did all this fail in the end to make Holland, instead of Britain, the birthplace of the Industrial Revolution? Over the question of whether, or how far, or why, its industries were going downhill in the 18th century, there has been intense controversy. Israel comes down on the side of an all-round worsening, a view unusual but, he remarks, in agreement with that of Dutch economic writers of the time. The root cause of a ‘catastrophic collapse’ starting in the 1720s he finds in the spread of protectionism abroad, as one country after another strove to establish manufactures of its own, with borrowed Dutch methods. Dutch industry was export-oriented, and its home market was too limited to support it in an onward march towards full industrialisation. Holland was sinking back into its earlier role as a passive warehouse for international exchanges.
This long and in many ways sombre record leaves many problems to be pondered, about the way our modern world has evolved, and the nature of a civilisation with capitalism red in tooth and claw for foster-mother. Homo Sapiens is a perpetual enigma, and historians have paid very little attention to the adage that the proper study of mankind is man. There is something extraordinary in the unshakable will to power of a people constantly soaked – to judge by Simon Schama’s recent study of Dutch culture and society The Embarrassment of Riches – in beer and tobacco fumes. Equally paradoxical are its heroic defence of its own liberty and its brutal readiness to crush the liberties of other races. So, too, with the willingness of Jews banished from Spain and Portugal to join in dragging from their homeland tens of thousands of Africans, and selling them into worse than Egyptian bondage among Spaniards and Portuguese in the New World. But single-minded devotion to profit, and belief in the legitimacy of blood and iron in its service, were the keynote of the new age then dawning, and not yet departed. Holland’s triumphant career made a very long-lasting impression on others. In the sabre-rattling years before 1914 the author of a history of the Netherlands, J. Ellis Barker, called on Britain to follow the Dutch example and be ready to fight for its share. ‘The law of the stronger is the law of nature ... Life is war.’
Outside as well as inside Europe, Israel argues convincingly, Dutch imperialism had deep effects on the lives of countless human beings, even if most of the earth’s population were peasants with eyes fixed all their lives on the ground. One of his instances is Ceylon, where the Dutch irruption caused ‘a degree of impoverishment and deterioration of life comparable with what was to be seen in many parts of the Indian Archipelago’. The end fitted the beginning: the Dutch entered Asia by force, and after the Second World War were driven out of it by force.