The economic history of the Netherlands (1500–1815) covers the Netherlands as the Habsburg Netherlands, through the era of the Dutch Republic, the Batavian Republic and the Kingdom of Holland.
After becoming de facto independent from the empire of Philip II of Spain around 1585 the country experienced almost a century of explosive economic growth. The young Republic became the dominant trade power by the mid-17th century, partly due to its shipbuilding. In 1670, the Dutch merchant marine totalled 568,000 tons of shipping—about half the European total. Pillars of this position were the dominance of the Amsterdam Entrepôt in European trade, and that of the Dutch East and West India Companies (VOC and WIC) in intercontinental trade. The Dutch society had possibly the highest standard of living in Europe (and probably in the world) by the middle of the 17th century. Affluence facilitated a Golden Age in culture typified by the artist Rembrandt van Rijn (1606–1669).
However, around 1670 a combination of politico-military upheavals (wars with France and England) and adverse economic developments (a break in the upward secular trend of price levels) brought the Dutch economic boom to an abrupt end. This caused a retrenchment of the Dutch economy in the period up to 1713, in which the industrial sector was partly dismantled and growth in trade leveled off. The economy struck out in new directions, including whaling, colonial plantations in Suriname, and new types of trade with Asia. However, these riskier ventures often failed to bring commensurate gains. The VOC embarked on a period of profitless growth. The financial strength proved more durable, enabling the Netherlands to play the role of a major power in the European conflicts around the turn of the 18th century by hiring mercenary armies and subsidizing its allies.
These conflicts put an enormous strain on the resources of the Republic, however, and for that reason the Republic (like its opponent, the France of Louis XIV) was deeply in debt at the end of the War of the Spanish Succession. The regents of the Republic more or less abandoned its Great-Power pretensions after 1713, cutting down on its military preparedness in a vain attempt to pay down this overhang of public debt. That debt brought a significant rentier class into being that helped change the nature of the economy from one invested primarily in trade and industry into one in which a significant financial sector played a dominant role. By the end of the 18th century the Republic was the major market for sovereign debt, and a major source of foreign direct investment.
Wars with Great Britain and France at the end of the 18th century, and attendant political upheavals, caused a financial and economic crisis from which the economy was unable to recover. After the successors of the Republic (the Batavian Republic and the Kingdom of Holland) were forced to engage in policies of economic warfare against the French Empire, which proved disastrous for Dutch trade and industry; most of the gains of the previous two centuries were rapidly lost. The newly independent Kingdom of the Netherlands was faced in 1815 with an economy that was largely deindustrialized and deurbanized, but still saddled with a crippling public debt, which it was forced to repudiate (the first time that the Dutch state defaulted since the dark pre-independence days of the Revolt).
Development
The economic history of the Netherlands may be written from different perspectives. The following section approaches it as a developing economy, going through several stages, resembling a life-cycle. A sectoral approach may be found in other articles, such as Maritime history of the Netherlands, Dutch East India Company and Dutch West India Company for trade; the Greenland and Spitsbergen Fishery for whaling; and Financial history of the Dutch Republic for banking and finance, plus sundry articles on the history of industries.
Pre-Revolt economy
The territory of the northern maritime provinces that would later constitute the Dutch Republic (previously disparate fiefs of the Holy Roman Empire) were gathered together under the suzerainty of the Duchy of Burgundy in the late 15th century.Israel, The Dutch Republic, pp. 29–35 In the late Middle Ages these territories already formed part of a premodern economic system with its own measure of integration, brought about by intensive trade relations. That economic system formed the matrix in which the later economic development took place. The territory that would become the Southern Netherlands held a central position in this trade network at the time, while the provinces formed a periphery. Flanders and the Duchy of Brabant were further advanced industrially than Holland and Zeeland, and the metropolitan port city of Antwerp held the position of main entrepôt in northwestern Europe, as the hub in a far-flung trade web that spanned the whole known world. The ports in the northern provinces had only a regional importance, though Amsterdam had already built up a preponderant position in the Baltic trade, after making inroads on the monopoly of the Hanseatic League in the late 15th century.Israel, The Dutch Republic, pp. 9–21
Although the northern provinces had an as yet subordinate position in the aggregate economy of the Habsburg Netherlands, let alone in the entire Habsburg empire, they possessed economic features that set them apart from the rest of Europe, and presented them with opportunities that did not exist elsewhere. Unlike other parts of Europe these lands had not been ravaged severely by the plague pandemic of the 14th century, though like elsewhere that catastrophe contributed to scarcity of labor in the 15th century.Israel, The Dutch Republic, p. 14 The region also faced catastrophe of an ecological nature: the low-lying area was yet insufficiently protected against the sea and was repeatedly subjected to major flooding, of which the St. Elizabeth's flood (1421) was only an outstanding example. This resulted in a major permanent loss of arable land.De Vries and Van der Woude, p. 27 In addition, the land in the maritime provinces consisted mostly of peat bogs, which form poor land for agriculture, and were at the time extensively exploited for the fuel peat. This resulted again in extensive permanent loss of arable land.De Vries and Van der Woude, pp. 37–38 Because of these losses many people were driven from the land and forced to seek employment in urban centers. This caused a degree of urbanization even larger than that in Flanders, but also a labor supply for non-agricultural purposes that was more elastic than elsewhere in Europe.De Vries and Van der Woude, p. 666
Although the immediate result of this elastic supply was downward pressure on wages, it also presented an opportunity for explosive growth when aggregate consumer demand in Europe finally rebounded from the long depression, caused by the population losses of the pandemic. Besides, there were alternative employment opportunities that did not exist elsewhere. Technological developments in fisheries (new methods of cleaning and preserving herring developed in the maritime provinces around this time) caused a major change in the economics of fisheries.De Vries and Van der Woude, pp. 243–44, 666 Similar developments in shipping technology led to an explosion in seagoing trade. Finally, the development of dikes and drainage techniques (windmills, sluices) laid the base for new forms of agriculture (dairy farming) in the maritime provinces. These developments did not result directly in a major change in the economic structure of the Habsburg Netherlands. However, they provided a springboard for the developments that would follow the political upheaval that would become known as the Dutch RevoltIsrael, The Dutch Republic, pp. 169–241 in the second part of the 16th century.
This political development had a number of important economic consequences. First of all, it led to an economic rupture with the Habsburg Empire, seen as a loose economic entity. By the time the Revolt erupted the disadvantages of being part of this empire (heavy taxation to finance the military adventures of the Habsburg rulers) began to outweigh the advantages of belonging to its trade network. One of these advantages had been enjoying the services of the Antwerp entrepôt.De Vries and Van der Woude, p. 667
In the economic and technological circumstances of the time such an entrepôt (or to use the Dutch term: stapelmarkt) fulfilled important functions. The word has connotations of a duty-free port, but in an economic sense, a stapelmarkt was a place where commodities were temporarily physically stocked for future reexport. This was viable because of a legal monopoly for stockpiling a single commodity (wool), granted by a political ruler (like the Ports of the Staple designated by the kings of England in medieval times), but also more generally because of technical and economic reasons that still give certain advantages to a spoke-hub distribution paradigm. An important ancillary function of such a physical stock of commodities is that it makes it easier for merchants to even out supply fluctuations, and hence to control price gyrations in thin and volatile markets. Finally, where a physical market forms, market information can more easily be gathered. This was actually the most important economic function of a stapelmarkt in the primitive circumstances of the late 16th century.De Vries and Van der Woude, pp. 670, 690–92
Antwerp-as-entrepôt was already in decline before the Revolt, and before the Fall of Antwerp that sealed its fate as a major commercial center. But its demise started a scramble of other ports that wanted to take over its essential economic function, and Amsterdam (and to a lesser extent other major Dutch ports like Rotterdam and Enkhuizen) succeeded in doing so, though it was not a foregone conclusion that this prize would not go to London, Bremen or Hamburg. However, the political circumstances of the Revolt probably helped the displaced Calvinist merchants of Antwerp settle near their northern coreligionists, and bring their money with them. More important, however, must have been the advantages of Amsterdam, which already gave it a strong position in the Baltic trades: elastic supplies of shipping and labor, low transaction costs, and efficient markets.De Vries and Van der Woude, p. 668
The Golden Age
These developments set the stage for the era of explosive economic growth that is roughly coterminous with the period of social and cultural bloom that has been called the Dutch Golden Age, and formed the material basis for that cultural era. During the numerous years of Dutch economic growth the average GDP per capita increased by 0.18 percent per annum; at about 1810 the growth rate was about 1 percent annually. Amsterdam became the hub of world trade,Charles R. Boxer, The Dutch Seaborne Empire 1600–1800 (1965) the center into which staples such as rye and luxuries flowed for sorting, processing, and distribution, and then were reexported around Europe and the world.
In 1670, the Dutch merchant marine totalled 568,000 tons of shipping—about half the European total.
First stage: 1585–1622