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Dutch control of the herring trade touched off a cycle where the Dutch
would get profits, invest those profits in new ventures, which generated
more profits and so on. This initially led into two general areas of
development, foreign trade and the domestic economy, each of which fed
back into the cycle of profits and so on. Both of these also led to
expansion of trade across the globe to the Mediterranean, West Indies,
Africa, East Indies, and the South Pacific, which also fed back into the
cycle of profits.
In terms of foreign trade, the Dutch first expanded their operations
into the Baltic Sea where they traded for Norwegian timber, Polish
grain, and Russian furs for both home consumption and selling abroad.
The Baltic trade became so important that the Dutch referred to it as
the "Mother Trade."
All this trade required durable, efficient, and cheaply built ships
that could operate in the rough waters of the North and Baltic Seas as
well as the shallow coastal waterways that were typical of the
Netherlands. What the Dutch came up with was the fluyt , a marvel of
Dutch efficiency and engineering. The fluyt was both sturdy enough to
withstand rough seas and shallow draught for inland waterways. Unlike
other countries' merchant ships, which doubled as warships, the fluyt
carried few, if any, guns, leaving extra space for cargo. It was cheaper
to build, costing little more than half as much as other ships, thanks
to the use of mechanical cranes, wind-driven saws, and overall superior
shipbuilding techniques.
The fluyt also had simpler rigging that used winches and tackles,
thus requiring a crew of only 10 men compared to 20-30 on other European
ships. This resulted in two things. First of all, the Dutch could carry
and sell goods for half the price their competition had to charge,
giving them control of Europe's carrying trade. Second, they were able
to dominate Europe's shipbuilding industry.
Meanwhile, the Dutch were developing their domestic economy in two
ways. First they invested in a wide variety of industries, some
traditional and some new: textiles, munitions, soap boiling, sugar
refining, tobacco curing, glass, and diamond cutting. The need for
efficient handling of all the money from this and other enterprises
spurred the Dutch to develop another aspect of their economy: financial
institutions For one thing, they established the Bank of Amsterdam in
1609, the first public bank in North-West Europe, being modeled after
the Bank of Venice (f.1587). The vast sums of cash this bank attracted
in deposits allowed it to lower interest rates, which in turn brought in
more investments, and so on. Even in wartime, the Bank of Amsterdam was
able to lower its interest rates from 12% to 4%. The Dutch also created
a stock market. At first this was just a commodities market. Only later
did it evolve into a futures commodities market where, by the time a
shipload of such goods as wool or tobacco landed, someone had already
bought it in the hope of reselling it for a profit.
The success of the Baltic Mother Trade and their domestic economy led
the Dutch to expand their foreign trade on a global scale. They did this
in three basic directions. First was the Mediterranean, where recurring
famines hit in the 1590's, signaling the start of a "Little Ice Age"
that would afflict Europe for the next century. This opened new markets
for Polish grain, which the Dutch traded in return for, among other
things, marble. (It was this Italian marble which Louis XIV would buy
from the Dutch for his palace at Versailles.) The Dutch even expanded
this Mediterranean trade to include doing business with the Ottoman
Turks.
Second, when Portugal (then under Spain's rule) closed access to its
supplies of salt, the Dutch crossed the Atlantic to find salt in
Venezuela. While there, they found the plantations in the West Indies
needed slaves, which got them involved in the African slave trade. They
also discovered an even more lucrative condiment in the Caribbean than
salt: sugar. Soon, the Dutch were founding their own colonies (e.g.,
Dutch Guiana) and sugar plantations and gaining control of the sugar
trade. Soon, sugar was rivaling even the spices of the Far East in
value. However, this is not to say the Dutch ignored the Far Eastern
trade.
However, breaking into the lucrative Asian Spice market, the third
new direction of Dutch expansion, was not so easy. For one thing, they
had to find the East Indies. Amazingly, the Portuguese had kept the
South East Passage around Africa a secret for a full century since da
Gama's epic voyage. The Dutch looked in vain for a northeast passage
around Russia. They also sought a southwest passage, which Oliver van
der Noort found (1599-1601), making him the third captain to
circumnavigate the globe after Ferdinand Magellan and Sir Francis Drake.
But that route was no more practical for the Dutch than it had been for
the Spanish and English.
Finally, Jan van Linschuten, a Dutch captain who had served Portugal,
showed the way around Africa in 1597. Although the first voyage was not
a financial success, the second was, bringing back 600,000 pounds of
pepper and 250,000 pounds of cloves worth 1.6 million florins, double
the initial investment. Investors rushed to get in on the action,
forming the Dutch East Indies Company in 1602. This privately owned
company operated virtually as an independent state, seizing control of
the spice trade from Portugal's weakening grip. From there, always in
search of new markets, the Dutch explored the South Pacific, discovering
Australia, New Zealand, and Tasmania, the last two names bearing
evidence of their presence.
Such a far-flung trading empire, combined with the struggle with
Spain, required a navy to protect its merchant ships. Therefore, the
Dutch developed such a navy, excelling in this as well as their other
endeavors. At this point, warships generally followed the principle of
the bigger the better. As a result, the man-of-war, as it was called,
was a huge and bulky gun platform that did not suit the Dutch needs. For
one thing, they needed more of a shallow draught vessel that could sail
in their home waters. They also needed a long-range ship that could
protect their far-flung commercial interests. The result was the
frigate, a sleeker shallow draught vessel with only about 40 guns, but
capable of long-range voyages. Dutch frigates, along with their
excellent sailors and captains, made the Dutch the supreme naval power
of the early 1600's and also helped them dominate the warship-building
industry, building navies for both sides in a Danish-Swedish war and
even for their French rivals. And, of course, this brought in more money
and pushed the Dutch to expand their domestic industries and finance
operations in three ways. |
