Dutch Empire and Trade

A rare sunny it is, and a good day to write while there is a spot in the sun to be found.

Class today was focused on the Dutch Empire, and it was most satisfying. Dutch independence laid the groundwork for the first major market economy in early modern Europe. Little mystery, then, that the Dutch totally dominated trade over the next century, only to brought done by 80 years of sustained war, completed by a combined invasion of French forces, and heavy British naval assaults.

Dutch Merchant shipping during this time period went from being almost non-existent, to being much greater than the cumulative shipping tonnage of the rest of Europe combined. The Bank of Amsterdam was the first fully functioning merchant bank in the world, and issued the first stable bills of exchange.

My professor, in a move not foreseen, pointed out the power of corporate ventures to allow groups of middle class people to split the risk on an innovative venture, and how this led to the massive fiscal success of the Dutch middle class. 30% of all land and properties were in the hands of the urban middle classes; a fact previously unseen in history, possible only under a free market, where risk taking and group ventures are rewarding propects.

Dutch power was only brought low after 100 years if sustained war, with the final blow coming from a combined effort of England and France. The amusing thing is that the Dutch won these wars, but collapsed because of the disruptions to their trade fleets. They simply ran out of capital to continue their trade.

One might ask why England and France felt the need to bring the Dutch low.

The answer, quite simply, is that trade is that malicious acts of trade are just as damaging as malicious acts of war; the Dutch were masters of wresting trade from their competitors. Because there was such widespread wealth in the United Provinces, the Dutch were able to fund their efforts from many different sources. The Dutch middle classed was composed of hundreds of thousands of persons, willing to help finance massive commercial ventures in return for a share of the rewards. In the rest of Europe, one does not find the same phenomenon. All costs, in say France, Portugal, or Spain, were fronted by the crown, and the crown reaped all rewards. But the crowns were risk averse, and not only were they not as decisive, they also did not have the same amount of flexible capital as the Dutch merchant classes. Competitive Dutch trade companies did things more efficiently, and instead of consistently trading only in the same goods, actually assessed the wants of their Indian counterparts, and worked to supply higher value commodities to Indian spice traders. In time, the Dutch were masters of the Spice, slave, textile, and grain trades, and also were supplying the bulk of loans to the other European powers.

There was only one way that Spain, France, and England could hope to become competitive again. They attacked the Dutch.

The competitive trade of the Dutch was not harmless to these other nations. England went from being the foremost supplier of textiles to a distant second, not to mention the hunger caused by the UP using their grain monopoly to drive up prices. Portugal’s trade empire was wiped from the map. Spain lost their slave trade, was getting gauged on grain, and was being forced to borrow money from Dutch lenders in order to keep from starvation. France lost their trade in the Mediterranean as soon as the Spanish, driven by debt, were forced to open the strait of Gibraltar to the Dutch.

The world is and will always be at war. Trade is war. An act that damages another country’s trade has always been understood as an act of hostility, and nations have always fought to protect their economic best interests. Think of the Greeks, attacking one another for plunder, slaves, and land. Economic motivations have always been one of the strongest reasons for war, and it will always be that way.

Hostilities are not always commenced by the barrel of a gun, as the Dutch proved. The most brutally devastating warfare is waged in the market place. The Dutch won the Dutch-Anglo wars; a series of lopsided military victories, all three of them. But they were destroyed because of disruptions in trade.

George Washington’s farewell address is among the greatest orations in history; it also espouses some impossible ideals. There is no such thing as avoiding foreign entanglement, unless you intend to only trade amongst yourselves, and even then, your act of abstinence from trade may be seen as an affront by those who would like to engage in trade with your people. A free nation can never avoid foreign attachments, because there are simply greater goods to be gained by trading with the world than there are in remaining aloof.

Think on our involvement in the Quasi War with France. The French attacked because we were engaging in trade with England. We argued that our English trade shouldn’t matter, because we traded with France as well. But France understood what we were yet to learn. The act of trading with someone is a kind of alliance, to trade with someone’s enemies is an act of war. It has been, and always will be. In this era of global trade, we are tied to all at once, and we are directly interested in the maintenance of marshal peace in the world. Those who attack our partners in trade are our enemies, whether we own them or not.

By what right do we play world police? By what right do you jump in when someone attacks your friend on Facebook, or in a bar. We are responsible for our friends, whether we like it or not. Even when they have done something stupid, you protect your friend in the immediate future, but do everything in your power to ensure they do not make the mistake again.

Then there are those who just keep getting into fights and counting on you to jump in; they are leaches, and not true friends, and there may come a day when you must leave them to the wolves.