Nipissing University

History 2155 -- Early Modern Europe

The Dutch Miracle

 Steve Muhlberger

When we think about great powers and important countries of the past, the Dutch and the Netherlands do not spring to mind.

Yet in the 17th century, there was much contemporary talk about the "Dutch miracle," the "Dutch secret" and the "stupendous wealth" of Holland, the dominant province among the United Provinces that successfully resisted Philip II.  (Quotes from  Fernand Braudel, who has written a lot on this subject.)

It seemed to be a country without resources, a spit of sand subject to frequent flooding, yet after 1590 it rose to be the richest country in the world in terms of per capita wealth, and a dominant factor in European and world trade, not to mention finance.

All of this despite (perhaps because of?) the fact that this tiny country was at war with Spain for 80 years (apart from one 12-year truce).    Spain itself depended on rebel-owned shipping to prosecute its war with the United Provinces.

The influence of the Dutch begs for an explanation.

Another fascination of the Dutch is that Holland and the UP were recognizably a modern country when few if any others would qualify.   It had some nobles and some traditional peasant society here and there, but it was for the most part cosmopolitan, tolerant, with an economy based on the most advanced industry and agriculture.   It had no monarchy (despite the leading role of the Princes of Orange).    Politics was dominated by a merchant bourgeoisie, more interested in profit than in formal empire or religious purity.

The sudden appearance of this remarkable society is a bit of an illusion.   Holland -- which with its capital Amsterdam was the key area -- had benefited from the long development of the greater Netherlands (present day Netherlands, Belgium and Luxembourg).     Geography brought Atlantic, North Sea-Baltic, and Rhine river trade together here.   The region, especially Flanders (not part of the later UP), was the home of much medieval industry (especially the cloth trade).

When the Habsburgs acquired and united the Netherlandish provinces in the early 16th century, it was an important power bloc, mainly for its taxable wealth.

In the 16th century, Antwerp now the biggest city in Brabant (just east of Flanders), was the port the Portuguese chose for marketing their spices and oriental goods.   German bankers -- the ubiquitous Fuggers -- were there for much the same reason.   This is where northern and southern European markets met.   After 1535, Spanish silver and overseas goods also began to flow into Antwerp.   Up to the Spanish bankruptcy of 1557, Antwerp was perhaps the center of the entire European economy.

But what about Amsterdam, Holland, and the future United Provinces?

The Dutch revolt was disastrous for Antwerp which became a prize of war.   It never really recovered from the sack of 1576.   Holland, the one area the rebels held firmly became the core of their new state.    This, together with economic factors, helped Amsterdam's rise.

Even before the 1560s and 70s, Holland had been benefiting from its disadvantages (as Japan has benefited from its disadvantages in the 20th century).

A big disadvantage was the inability to produce grain (the basic food) in sufficient quantities.   The Hollanders had long put their minds to finding other food sources, at home and abroad.

The four fisheries were: The Dutch not only ate these fish, but salted them down, packed them, and exported them.    Technological superiority helped them:   they created the first factory ships (described in class).   The ships that carried this bulk export carried other goods as well -- salt butter, cheese, whale oil, and grain.

The grain of course came from other countries -- the Dutch imported grain from the Baltic for themselves, and eventually took over the carrying trade entirely.

Again technology helped.   The Dutch created the fluyt or fly-boat, a cheap boat made from low-quality wood that could be sailed by fewer sailors than their competitors' boats could.    All of the raw materials for the Dutch merchant fleet came from other countries:   the Dutch just supplied the brains and the technical skills.   And of course the Dutch came to dominate the carrying trade in these foreign resources.

All of these trends were underway before the Sea Beggars made Holland the center of their revolutionary government.    The destruction of Antwerp's business benefitted Amsterdam.   In 1585, when Antwerp surrendered to the Spanish army, anyone who wished to leave was allowed to do so.   Much of the commercial population ended up in the northern city.

The war continued to expand the trade of Antwerp.   War justified Dutch efforts to seize Mediterranean trade routes formerly dominated by Italians (now under Spanish hegemony), and to attack both Spanish and Portuguese interests in Asia and America (Philip II was king of Portugal after 1580.

By 1630, the Dutch VOC (East India Company) had taken the choicest bits of the Indonesian and Indian Ocean trade from the Portuguese.   The West India Company took over much of the transatlantic trade, notably the slave trade.

By the 1640s, Amsterdam was the most important trading city in the world.   It warehoused and transshipped goods from all continents; it was the place to be if you were an investor and wanted to keep track of price movements in any kind of goods whatever.

As they dominated the financial markets of the oceanic world, the Dutch were in a good position to devote some of their profits to advanced industrial projects.   For instance, they eventually stopped making cheap cloth, which anyone could make; they imported the stuff, redyed it, refinished it, and sold it at a big mark-up.    The Dutch dominated new high-tech trades like lens-grinding, printing, and jewel-facetting.

And they were also innovative money-marketers, who helped develop the stock markets of later times.

Some political and social factors that supported the Dutch phenomenon

The frontier with Spanish-held territory stabilized in the 1590s (a chain of fortresses), which allowed the Dutch both to work in peace and profit from war.   An import tax on trade with the enemy helped pay for the Dutch war effort.

The political system was very decentralized and dominated by merchants, not landed aristocrats or princes.   The government of the UP, of the provinces, of the cities, were not permitted to seize the wealth that made Holland and the UP so unusual.   The tax system was based on indirect (sales) taxes, burdensome for the poor but favorable to the rich.

Nevertheless the poor of the UP were pretty well off by contemporary standards -- wages were high, public charities were well run, and Holland was proverbially clean.

And there was a large middle class that could afford some luxuries -- the work of Dutch painters like Rembrant.

Dutch society was, in fact, one where everyone was a commoner, and the very wealthy "regents" were in touch with the middle class and could not ignore their political opinions.   For instance, city militias that kept order, were largely manned by the lesser citizens.

Finally, there was a certain degree of domestic peace growing out of religious tolerance.   The dominant religious group was the Calvinist Dutch Reformed Church.   It had definite aspirations to complete dominance.   However, the bulk of the population had no taste for repression, and the Catholic majority was not harassed.   Also many other religious groups existed and allowed to maintain their own institutions (there are 10 kinds of parish registers in the records of Rotterdam).

The general attitude was that business was more important in orthodoxy.    Maybe a lot of people in 16th and 17th century Europe felt that way, but in this particular region, the attitude won out.

It should, however, be pointed out that this tolerant, relatively egalitarian society was a ruthless imperial power overseas.   Though the Dutch domestic economy was the major motor of prosperity, great wealth was extracted from Indonesians and Africans, through the slave trade, slave-run plantations, and trade arrangements that turned whole Indonesian societies into something like plantations.   The exploitive side of European commercial expansion is just as evident as the ingenuity and tolerance the Dutch manifested at home.

Why did the Dutch position decline?

This is getting ahead of our chronology, but we have time for a brief look at this question.   The Dutch decline was a relative one; the Netherlands since the 16th century has always been a reasonably advanced economy by world standards.

The relative decline of the 17th and 18th centuries has a lot to do with the end of civil war in larger, neighboring countries, England and especially France.   Once these civil conflicts ended, these powers could use their greater resources to start horning in on the overseas trade the Dutch had seized, and to keep the Dutch out of their European markets.

Also in the late 17th century, the Dutch were caught in the middle of  a huge English-French rivalry that involved them in expensive wars that strained the economy.

Finally, the Dutch developed their own hereditary aristocracy, as the "regents" became an established ruling class not so interested in innovation as they were in using their wealth to ape "real" aristocrats abroad.

In the second term we will see the English supplant the Dutch both in technical innovation and economic importance.

Copyright (C) 1999, Steven Muhlberger.