Going Dutch: How England Plundered Holland's Glory (40 page)

In May 1642 Johan Maurits wrote to Huygens, thanking him for having supervised the laying of a slate roof for the Mauritshuis, ‘for it would have been an intolerable inconvenience to have a house ill-roofed’. He asked Sir Constantijn to go on keeping an eye on his house’s progress, and he ended by assuring him that as a token of his gratitude he was sending him ample quantities of Brazil’s most desirable commodities: ‘some fine hardwood and some sugar’.
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Across the Atlantic Ocean from New Netherland, in the Dutch homeland, Amsterdam was the trading hub for the United Provinces from the beginning of the seventeenth century. Its role as the key port in the Netherlands had expanded at extraordinary speed in the course of the early decades of the century, not least because of Spanish pressure on its competitor Antwerp, whose position on the Scheldt river meant that it was vulnerable to blockading by hostile forces from the south. In the course of the century, Amsterdam achieved dominant status as the gateway through which foodstuffs, raw materials and finished products arrived in the Low Countries from surrounding territories. It was the main outlet for goods processed or manufactured in the Low Countries to be sold elsewhere. By mid-century, Amsterdam had also become the place to which goods were brought back from all over the world by the East and West India Companies. There they were stored (stapled) to await the moment when a demand for them would emerge somewhere and they could be reexported.
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Amsterdam was a gigantic warehouse for the known world, ‘the indispensable buffer in international trade’. The power of the city’s position in the international trading network, however, rested on more than simply warehousing and distributing goods. As a leading expert in Dutch economic history has argued, Amsterdam was a centre of information exchange as well as a staple market for goods. In other words, knowledge of potentially marketable products, the demand for them and their present and future potential prices, were concentrated in the highly literate, well-connected, diverse Amsterdam community. The scale and quality of the flow of information in Amsterdam were supported and encouraged by the city’s function as the gateway for goods. But the increasing importance of Amsterdam as a centre of distribution for everything from goods to ideas depended on people and correspondence flowing through the city.

At the Royal Society in London it was believed that established patterns of trading and trafficking in Amsterdam explained the dramatic growth in knowledge there, and the corresponding growth in wealth:

The Hollanders exceed us in Riches and Trafic: They receive all Projects, and all People, and have few or no Poor: We have kept them out and suppress’d them, for the sake of the Poor, whom we thereby do certainly make the poorer.
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Admiration for Dutch financial and commercial institutions was widespread in England after the Restoration. In 1668, Sir William Temple, newly appointed English Resident Ambassador to the United Provinces, wrote:

In this city of Amsterdam is the famous Bank, which is the greatest Treasure either real or imaginary, that is known any where in the World. The security of the Bank lies not only in the effects that are in it, but in the Credit of the whole Town or State of Amsterdam, whose Stock and Revenue is equal to that of some Kingdoms.
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Seventeenth-century clavichord lid, decorated with an allegory of Amsterdam as the centre of world trade.

Temple was probably exaggerating, but his envy of the financial resources Amsterdam could muster, particularly in time of war, was sincere, and was shared by others in England looking to improve the position of the English crown and government in relation to the large amounts of wealth in private hands. The superior administrative arrangements in the Dutch Republic were appreciated even before 1660. In the late 1630s an observer in Holland, William Brereton, reported that:

The customs and excise here [Amsterdam] are very great, but I could never attain to an exact knowledge thereof, though I applied myself to enquire; but this I heard, that this town affords as great revenues, to maintain the wars to the States, as four provinces – Zeland, Utrech, OverIsell and Friseland.
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While a petition to Cromwell during the Commonwealth period expressed admiration for the commercial shrewdness of the Dutch, and complained that:

It is no wonder that these Dutchmen should thrive before us. Their statesmen are all merchants. They have travelled in foreign countries, they understand the course of trade, and they do everything to further its interests.
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The pivotal role that Amsterdam played on the world stage as a hub of exchange for goods and knowledge, down to the 1688 Dutch invasion of England (and some years beyond), is well represented symbolically by the Amsterdam Bourse, or stock exchange. The magnificent Bourse – an open central courtyard, surrounded by colonnaded neoclassical buildings – opened for business in 1611.

Apart from grain, for which there was a separate corn exchange, every other kind of commodity was traded at the Bourse. It was the place to charter ships, to insure their cargoes, to obtain credit, to make payments, to rent warehouse space and to hire labourers for loading and unloading vessels. One went there to learn what was going on politically, at home and abroad. ‘The concentration of functions made the Bourse the nerve centre of Amsterdam’s commerce. No one who was in any way involved in wholesale trade could afford not to appear on the Bourse.’
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The Bourse was also where information of all kinds, from all around the globe, was exchanged and discussed, and turned into knowledge of prices, markets and trading opportunities. Recently, historians of science have argued convincingly that it was the concentration of precise, highly specific information on an astoundingly wide range of topics, from all over the world, that provided the conditions for the growth of modern science and medicine.
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The Bourse opened for only one hour a day – from 11 a.m. till noon – further adding to the sense of an urgently concentrated occasion and location for the transaction of goods and knowledge. At noon, tourists were allowed in, to admire the building and the activities with which it would still be humming after the merchants and brokers had stopped trading. Outside trading hours too, some of the more exotic objects which had arrived for trading were taken away for scrutiny, to assess their value to learning and their potential for the learned professions.

Economic historians are broadly agreed that after the Restoration, England introduced financial systems and institutions in London modelled on the Dutch, though they differ somewhat in their accounts of how closely emulative the English arrangements were, and how successfully the organisational arrangements were transplanted. Such detail need not, though, concern us here. What matters for the present story is that by the 1680s there was a recognisable similarity between financiers and their organisation in London, and those in Amsterdam. What this produced was a mutual sense of understanding and compatibility which eased and facilitated financial transactions. Dutch bankers could do business with their counterparts in London, and vice versa. By contrast, French business with both nations declined over the same period.

The beginnings of those distinctive and much-emulated Dutch mechanisms governing trade and finance are to be found in arrangements put in place in the founding charter of the Dutch East India Company (VOC). ‘The origin of modern stock exchanges that specialise in creating and sustaining secondary markets in the securities issued by corporations goes back to the formation of the Dutch East India Company in the year 1602.’ So writes one of the foremost authorities on Anglo–Dutch economic history.
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The immediate motive for the formation of the VOC was twofold: to avoid the strain on financial resources caused by competition between commercial trading ventures operating independently, and to consolidate profit in order to finance the military objectives necessary to withstand the expansionist ambitions of France and Spain.
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The founders of the VOC took advantage of the fact that a willingness to pool resources against weighty outside odds was a deeply ingrained Dutch habit. Taxation on a per capita basis, to raise the money to repair dykes, or to secure vulnerable borders against foreign aggressors, was a standard Dutch practice – one for which successive English administrations expressed envy down to 1688, after which similar taxes were levied in England.

Bottle cabinet containing decorated Japanese porcelain bottles, decorated with tendril and plant motifs, each base marked with the initials of the Dutch East India Company.

Economic historians today on the whole agree that the activities of the VOC and its English competitor, the East India Company, in the seventeenth century established the conditions for and management of international trade which have endured to the present day. Fundamental to these were the innovative arrangements for distributing risk evenly among investors.

Under the charter of the VOC, the States General empowered the new company to build forts, maintain armies, and conclude treaties with the rulers of the Asian territories with which it traded. To this end, the charter of the Company provided for a venture which would continue for twenty- one years, with a financial accounting only at the end of each decade (instead of following each completed voyage). All investors would be responsible for the Company’s debts, in proportion to their investment. This made the VOC what we now call a limited liability company.

It was further decided that the capital invested at the beginning of the venture would be fixed, and that investors who wished to liquidate their interest in the VOC could sell their share to a buyer at the Bourse, as if it were a physical commodity. In the early years, a large number of small founding shareholders exercised this option.
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While the WIC had sole charge of the New Netherland colony, and administered it on behalf of the States General, until forced to relinquish some control to local residents, the VOC was enormously successful in trade in Indonesia, the Moluccas and around the coast of India, where it maintained virtual commercial monopolies against the English and Portuguese who also traded in the region. At the end of its first ten-year trading period, during which the original trading capital had been enlarged by more than 40 per cent, dividends were paid to shareholders in the form of a distribution of pepper and mace. By the Company’s calculation, the value of the distributed spices amounted to a 125 per cent dividend – though many shareholders doubted whether they could actually realise that return in cash. Later returns settled down, and after 1650 they ran at about 4 per cent per annum.

After the mid-seventeenth century the VOC’s importance to the Dutch economy resided chiefly in its enormous size. It paid dividends and interest averaging nearly two million guilders a year throughout the period 1660–1780. It employed thousands of men, injecting between three and five million guilders of wages into the otherwise flat Dutch economy, while between one and two million guilders more went into the economy in the form of orders for supplies.

Competition between the VOC and the English East India Company was intense, and was responsible to a large extent for Anglo–Dutch friction throughout the seventeenth century. Given the financial power of both Companies in their home nations, it is not surprising that each exerted pressure on its respective government at key moments – notably in 1650 and 1688 – when it appeared possible that a close alliance between the English and Dutch states might amalgamate the two trading companies as part of one joint endeavour. And competition between the two Companies ensured that the financial mechanisms developed by the Dutch quickly found their way into the English methods of dealing with import–export, customs and excise, taxation, record-keeping and accounting by emulation. By the time the two nations effectively came under one sovereign rule in 1688, it was a comparatively easy matter to integrate – or at least, harmoniously operate side by side – their administrative and business systems.

While the Dutch West India Company and the English King were at loggerheads over New Netherland and the island of Manhattan, and while the English East India Company was casting an increasingly envious eye on the trading activities of its Dutch VOC rival along the west coast of Africa, farther to the east the Dutch East India Company was developing a robust international trade in an area close to its gardening-nation heart: horticultural exotica and pharmaceuticals. Once again, its interest in the region came into collision on a regular basis with the English, who were also intent on securing exclusive rights to new, lucrative types of merchandise and accompanying forms of new knowledge in medicine and horticulture.

We saw in the context of gardens and gardening how global trade literally transformed the English and Dutch landscapes, introducing species of trees, shrubs and flowers previously entirely unknown in Europe. The biggest transformation, however, was in the realm of new knowledges – particularly medical knowledge. Here, as so often before, Sir Constantijn Huygens may serve as our witness.

In 1674 the elderly Sir Constantijn paid a visit to the English Resident Ambassador, Sir William Temple, at his home in The Hague. Temple was housebound with a bad attack of gout, an affliction that had troubled him for a number of years. He later published an account of the visit: