Why was the Dutch economy so strong in the 17th century?

by First-Of-His-Name

With little industrial base. tax revenue and manpower, how was it that they had such huge influence when compared to the powers of France, Spain, Portugal etc? How did the Dutch fleet get as large as it did?

Jack_Merchant

Contrary to what you would assume, industrial activity in the Netherlands was a very important driver for its economic success. The Netherlands had an abundance of cheap energy sources in the form of peat and wind. It also had cheap transportation thanks to its proximity to the sea as well as its location on the Rhine/Meuse/Schelde river deltas.

By the end of the 16th century, the Dutch Republic also received a massive influx of manpower in the form of refugees from the Southern Netherlands fleeing the Spanish repression of the Protestant uprisings there. In particular, the 1585 Spanish sack of Antwerp led to tens of thousands of people moving to the Republic bringing their human and financial capital and knowhow (notable persons moving to the Netherlands were, among others, the printer Elsevier, mathematician and engineer Simon Stevin, cartographer Hondius, and painter Frans Hals). By the early 17th century, up to 10% of the population of the Republic was of 'Belgian' origin. As a result of the 30-years' war, the Netherlands also received many immigrants from Westphalia in Germany.

In addition to a growing population, the Republic also grew in landmass thanks to all the land reclamation projects: the polders. These could be used for intensive live stock production, while food prices fell thanks to the near-monopoly the Dutch Republic had in the Baltic grain trade. Known as the moedernegotie (mother of all trade), this trade was almost as important as the more wellknown East Indies trade to the wealth of the Dutch Republic. The cheaper food of course helped to support the greater population.

Technological advances made Dutch industry more productive and its shipping more competitive: better windmills, sawmills, and perhaps most importantly, in shipping, the introduction of the fluyt, a type of cargo vessel that was cheaper to build and could carrry a lot more cargo with a smaller crew than the ships used by foreign competitors (enabling the Dutch to sustain a larger merchant fleet with limited personnel, though they also were happy to hire personnel from abroad).

Because of Dutch competitiveness in transportation, a kind of model developed in which raw materials like cotton, tobacco or marl were shipped here to be turned into textiles, cigars, or porcelain/earthenware, while already existing industries like cheesemaking became more competitive. And that's not even to mention other important industries like paper, paint, printing, shipbuilding among others. So, in addition to its incredibly prominent position in international trade , the Dutch Republic was also a nation of industry.

So the Republic had a good-sized industrial base, it had massive income thanks to its trade and industry, only its manpower was limited in comparison with foreign rivals. Here, however, there was a solution: mercenaries. The Republic could and did field massive mercenary armies, while it built up an infrastructure to create a professional standing army which still relied largely on foreign personnel. Perhaps even more effective was paying other nationas to fight on behalf of the Republic: among others, the Dutch financially supported the Danish and French intervention in the 30-years war, and later bought the support of Prussia/Brandenburg and the Holy Roman Emperor in the 1672 war against the French.

Of course, foreign competitors eventually caught up with Dutch technology, while its industry was also hobbled by the mercantilist policies of rival states (chiefly France). Eventually, the need for massive military spending to ensure the sheer survival of the Republic in the face of the threat of Louis XIV brought the Republic into decline. But I'd argue that the Dutch Republic was influential precisely because of its economic success, to which industry contributed and which led to the tax revenue that enabled the Dutch to compete.

ed: probably the best source for anything relating to the Dutch Republic is Jonathan Israel's The Dutch Republic: Its Rise, Greatness, and Fall 1477-1806 (1998). I've also consulted this Dutch source on Dutch industry in the Golden Age.