The Political Economy of the Dutch Republic

The Political Economy of the Dutch Republic

Edited by Oscar Gelderblom

The Political Economy of the Dutch Republic

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The Political Economy of the Dutch Republic

Edited by Oscar Gelderblom Utrecht University, The Netherlands

© Oscar Gelderblom 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Oscar Gelderblom has asserted his moral right under the Copyright, Designs and Patents Act, 1988, to be identified as the editor of this work. Published by Ashgate Publishing Limited Ashgate Publishing Company Wey Court East Suite 420 Union Road 101 Cherry Street Farnham Burlington Surrey, GU9 7PT VT 05401-4405 England USA www.ashgate.com British Library Cataloguing in Publication Data The political economy of the Dutch Republic 1. Finance, Public – Netherlands – History – 18th century 2. Netherlands – Politics and government – 1556–1648 3. Netherlands – Politics and government – 1648–1795 4. Netherlands – Economic policy 5. Netherlands – Economic conditions I. Gelderblom, Oscar 336.4'92 Library of Congress Cataloging-in-Publication Data The political economy of the Dutch Republic / [edited by] Oscar Gelderblom. p. cm. Includes index. ISBN 978-0-7546-6159-7 (alk. paper) 1. Netherlands–Economic conditions–16th century. 2. Netherlands–Economic conditions– 17th century. 3. Netherlands–Economic conditions–18th century. I. Gelderblom, Oscar. HC324.P65 2008 330.9492'04–dc22 2008030956 ISBN 978 0 7546 6159 7

Contents

List of Figures List of Tables Notes on Contributors Preface   Introduction Oscar Gelderblom 1 Emulating Success: Contemporary Views of the Dutch Economy before 1800    Erik S. Reinert

vii ix xi xv 1

19

2 Holland’s New Fiscal Regime, 1572–1576   James D. Tracy

41

3

The Efficiency of Taxation in Holland   Wantje Fritschy

55

4

The Political Economy of Bread in the Dutch Republic   Jan de Vries

85

5

Mutual advantages: State Bankers as Brokers between the City of Amsterdam and the Dutch Republic   Marjolein ’t Hart

6

Tax Morale and Citizenship in the Dutch Republic   Maarten Prak and Jan Luiten van Zanden

7

Rural Development and Landownership in Holland, c.1400–1650   167 Bas van Bavel

8 Financing Water Management in Rijnland, 1500–1800   Milja van Tielhof 9

The Organization of Long-Distance Trade in England and the Dutch Republic, 1550–1650   Oscar Gelderblom

115

143

197

223

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10 The Union of Utrecht, Tariff Barriers and the Interprovincial Beer Trade in the Dutch Republic   Richard Yntema

255

11 Local Particularism Challenged, 1795–1813   Thomas Poell

291

Index  

321

List of Figures

3.1 Annual rate totals per year of the 0.5 per cent, 1 per cent, etc. property tax in Holland (‘200e etc. penningen’) (1621–1707)   3.2 Composition of Holland’s public revenue 1668–1794   3.3 Chronological survey of taxes in existence in Holland from 1572 to 1795   3.4 Survey of the changes to Holland’s tax system from 1572 to 1795   3.5 Rate differentiation in property taxes (‘200e etc. penningen’) (1707–1794)   3.6 Number of contemporary publications per five year period with opinions on economic issues in the Dutch Republic (1601–1785) discussed in Laspeyres (1863)   4.1A Old system bread pricing   4.1B Revenue and expense per unit of grain baked into bread   4.2A New system bread price schedule   4.2B New system bread weight schedule   5.1 The Amsterdam district receivers and their family-relations   6.1 Tax pressure in England, Holland and France   9.1 The balance of cumulative investments and returns in Dutch and English East India trade (1595–1630)   9.2 Customs revenues in England and the Dutch Republic (1566–1640)   9.3 New loans contracted by the English crown from customs farmers and other lenders (1604–1639)   9.4 Interest rates on government bonds in England and the Dutch Republic, and on private IOUs in the Dutch Republic (1596–1620)   10.1 The welfare effect of a tariff on Holland beer  

65 66 68 72 77 82 88 88 95 95 120 148 237 244 249 251 262

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List of Tables

3.1

Personnel and salaries (in guilders) of Holland’s Finance Office, 1640–1790   4.1 Fixed costs of bread production per last of grain in Holland: 1596–1683   4.2 Bakers and millers in the Netherlands, 1819   5.1 Distribution of the outstanding debt over the district receivers and the Receiver General of Holland, 1667 and 1683   5.2 Distribution of invested sums, Amsterdam receiver 1628–1675   5.3 Details of annuities 1665–1675, receiver Amsterdam District 5.4 Age of nominee at time of purchase (annuities on one life)   5.5 Years that annuities (on one life) yielded returns   6.1 Municipal expenditures in Zwolle, 1709   6.2 Average municipal annual expenditures in Leiden, 1755–64   7.1 Percentages of land owned by burghers and urban institutions in various villages in Holland (mid-sixteenth century)   7.2 Percentages of land owned by burghers and urban institutions in various villages in Holland (mid-sixteenth century) 8.1 Sources of revenue of the regional water board of Rijnland   9.1 Estimated overseas imports in England (1621) and the Dutch Republic (1636)   10.1 Population in Flanders, Brabant, and Holland, 1550–1650    10.2 Estimates of aggregate demand for Beer in Holland, 1550–1650    10.3 Excise taxes on beer in the Gemeene Land, 1579     10.4 References to trade barriers on beers brewed in Holland in the Resolutions of the States of Holland, 1600–1661   10.5 The receipts of the harbor tax in Overijssel, 1640–1750   10.6 Tax revenues on foreign beer in Friesland, 1630–1750  

62 99 108 117 124 130 136 136 158 161 182 194 202 233 267 269 273 277 285 287

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Notes on Contributors

Bas van Bavel is professor of economic and social history of the Middle Ages at Utrecht University. He has published two books, and articles in Past & Present, Continuity & Change, Economic History Review. These cover social-property systems, the link between social structure and demography, proto-industrialization, and the late medieval jump start of the Holland economy. Also, he worked on the rise of wage labour in the Low Countries and the development of land and lease markets. In general, his research activities in recent years have focused on reconstructing, analyzing, and explaining economic growth and social change in pre-industrial North-Western Europe, emphasizing long-term transitions and regional diversity, and using comparative analysis – both over time and across regions – as the main tool. Wantje Fritschy is senior lecturer in the history department of the Vrije Universiteit in Amsterdam. She has a personal professorship in the history of public finance of the early modern period. Her recent publications include “Indirect taxes and public debt in ‘the world of Islam’ before 1800,” in La fiscalità nell’economia europea secc. XIII-XVIII, ed. S. Cavaciocchi (Firenze: Firenze University Press, 2008) and “Holland’s public debt and Amsterdam’s capital market (1585–1609),” in Banca, crédito y capital. La Monarquía Hispánica y los antiguos Países Bajos (1505–1700) eds C.S. Ayá and B.J. García García (Madrid: Fundación Carlos Amberes, 2006). She is currently working on global comparisons of public finance in the early modern period. Oscar Gelderblom is associate professor in economic and social history at Utrecht University. His main research interest is the history of trade, migration, entrepreneurship and finance in Europe before the Industrial Revolution. Together with Joost Jonker he published the prize winning article “Completing a Financial Revolution. The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595–1612,” The Journal of Economic History, 64 no. 3 (2004). His current work is on the evolution of financial markets in preindustrial Europe. Marjolein ’t Hart is associate professor in economic and social history at the University of Amsterdam. Among her publications are The Making of a Bourgeois State. War, Politics and Finance during the Dutch Revolt (Manchester: Manchester University Press, 1993) and A Financial History of the Netherlands with eds Joost Jonker and Jan Luiten van Zanden (Cambridge: Cambridge University Press, 1997).

xii

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She is now writing a book on the Dutch wars of Independence and is working on a project on state power and urban autonomy. Thomas Poell is assistant professor of media and culture studies at Utrecht University. He is interested in Dutch processes of democratization from the late eighteenth century to the present. His most recent publication is The Democratic Paradox. Dutch Revolutionary Struggles over Democratisation and Centralisation (1780–1813). PhD thesis, Utrecht University, 2007. He is currently working on a project concerning the role of the media in democratic conflicts in the Netherlands between 1795 and 2007. Maarten Prak is, together with Jan Luiten van Zanden, chair of social and economic history at Utrecht University. He also director of the Research Institute for History and Culture of the Faculty of the Humanities. He recently published, together with S.R. Epstein, an edited volume on Guilds, Innovation and the European Economy, 1400–1800 with Cambridge University Press. He currently writes mostly about citizenship and about cultural industries in Early Modern Europe. Erik S. Reinert is professor of technology, governance and development strategies at Tallinn University of Technology, Estonia, and heads The Other Canon Foundation in Norway. His main interests are the theory and history of uneven economic development, the economics of technology, and the history of economic thought and policy. His recent book How Rich Countries got Rich ... and why Poor Countries stay Poor (New York: Carroll & Graf, 2007) was awarded the 2008 Myrdal Prize by the European Association for Evolutionary Political Economy. Milja van Tielhof is programme director at the Institute of Dutch History in The Hague and postdoctoral researcher at Utrecht University. She is broadly interested in social, economic and environmental history. Among ������������������������������ her recent publications is Waterstaat in stedenland. Het hoogheemraadschap van Rijnland voor 1856 (Utrecht: Matrijs, 2006), jointly written with Petra J.E.M. van Dam. ������������ Her current projects include early modern institutions for water management and associational life in the nineteenth century. James D. Tracy is professor of history at the University of Minnesota. His most recent publication is The Founding of the Dutch Republic. War, Finance and Politics in Holland, 1572–1586 (Oxford: Oxford University Press, 2008). With Manfred Hoffman, he is editor of volume 78 of the Collected Works of Erasmus, soon to be published by the University of Toronto Press. He is editor of the Journal of Early Modern History, and his current research is on the Ottoman diplomacy of the Austrian Habsburgs, based on the correspondence of diplomats accredited to the Sublime Porte, c.1553–1580.

Notes on Contributors

xiii

Jan de Vries is Sidney Hellman Ehrman professor of history and economics at the University of California at Berkeley. His recent publications include (with Ad van der Woude), The First Modern Economy. Success, Failure and Perseverance of the Dutch Economy, 1500–1815 (Cambridge: Cambridge University Press, 1997) and The Industrious Revolution. Consumer Behavior and the Household Economy, 1650 to the Present (Cambridge: Cambridge University Press, 2008). His current research concerns the history of globalization and the crisis of the seventeenth century as a global phenomenon. Richard Yntema is associate professor of history at Otterbein College in Westerville, Ohio. His most recent publication is “Political Power and Economic Policies in Habsburg Holland: The Decline of Gouda’s Brewing Industry, 1510– 1568,” in Power and the City in the Netherlandic World, eds Wayne TeBrake and Willem Klooster (Leiden: Brill, 2006). He is interested in the dynamics of economic development in early modern Europe and is currently completing a manuscript entitled Beer and Burghers that analyzes the growth and decline of Holland’s brewing industry between 1500 and 1800. Jan Luiten van Zanden is professor of economic history at Utrecht University and senior researcher at the International Institute of Social History in Amsterdam. His research focuses on long-term changes in the world economy, in particular in Western Europe and Indonesia, in order to try to explain why some countries are rich and others are poor. His analysis of the European development path between 1000 and 1800 The Long Road to the Industrial Revolution will be published by Brill in 2009. In 2004 he was awarded the Spinoza premium by the NWO (the Netherlands Organization for Scientific Research).

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Preface

This book originated in a workshop organized by the editor in Utrecht in April 2003, funded by the Dutch National Research Council NWO, the N.W. Posthumus Institute NWP, the Stichting Unger-van Brerofonds, the History Department of Utrecht University, and the University Board of Utrecht University. The Stichting Unger-van Brerofonds also offered financial support for the preparation of the book manuscript. The editor is grateful for the support of these institutions. The editor also wishes to thank all participants of the workshop for their contributions, for their efforts to transform the conference papers into the chapters of this book, and for their patience to see their work in print. A special debt of gratitude is owed to Jean-Laurent Rosenthal and the late Larry Epstein, both of whom acted as discussants of the papers in the workshop in April 2003. Their contributions have greatly enhanced the quality of the arguments put forward in this book. Oscar Gelderblom Utrecht, October 2008

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Introduction Oscar Gelderblom

During the first half of the seventeenth century, the Dutch Republic emerged as one of Europe’s leading powers. By 1609 it had gained its de facto independence from Habsburg Spain following a prolonged military struggle which began with the Dutch Revolt in the late 1560s. The political and military strength of this small country was based on large-scale borrowing from an increasingly wealthy middle class of merchants, manufacturers, and public officials. Land taxes and excise duties levied on a wide range of consumables secured the interest payment on these loans. The authorities were able to raise tax revenues to unprecedented levels because of the country’s thriving commercial agriculture, export-oriented manufacturing, and international trade. The growth of these sectors, in turn, was built on the provision of an impressive range of public goods, including military protection, a flexible legal system, patent laws, water management, education facilities, and last but not least, a social welfare system that helped to sustain a large urban reserve of skilled and unskilled labor. Until at least 1670 the political and economic organization of the Dutch Republic compared favorably with the rest of Europe, where economic growth was limited, and rulers relied on crude tax regimes, forced loans, privileges to business elites, and defaults on government debt to finance their political endeavors. However, during the eighteenth century the United Provinces lost much of their luster. Agriculture stagnated, foreign trade suffered from increased competition, and the country lagged considerably behind the leaders in its transition to industrial capitalism. After the War of Spanish Succession had forced the Dutch Republic  ���������������������������������������������������������������������������� The author wishes to thank the anonymous reviewers of this book for helpful suggestions and comments, and Bas van Bavel, Joost Jonker, Maarten Prak and Jan Luiten van Zanden for comments on earlier drafts of this introduction.   �������������������������������������������������������������������������������� For a comparison of the Dutch Republic with other European states see Stefan R. Epstein, Freedom and Growth: The Rise of States and Markets in Europe, 1300–1750 (London: Routledge, 2000); Charles Tilly, Coercion, Capital and European States, AD 990–1990 (Cambridge: 1990). Thomas Ertman excludes the Dutch Republic from his analysis but he does highlight the bureaucratic and patrimonial absolutism that shaped most continental states in Europe: Thomas Ertman, Birth of the Leviathan. Building States and Regimes in Medieval and Early Modern Europe (Cambridge/New York: Cambridge University Press, 1997). Comparisons between the Dutch Republic, the Italian city-states and the Swiss Confederation are made in: Charles Tilly and Wim P. Blockmans, eds, Cities and the Rise of States in Europe, A.D. 1000 to 1800 (Boulder, San Francisco and Oxford: Westview Press, 1994). 



The Political Economy of the Dutch Republic

into virtual bankruptcy and a subordinate role in international politics, the rulers and businessmen who had previously shaped political and economic institutions to their mutual benefit seemed unable to adapt them to changing domestic and foreign circumstances. In the late eighteenth century warfare, a new democratic ideology, and, ultimately, in 1795, the invasion of French troops were added to this institutional sclerosis. After two decades of French rule, the Congress of Vienna finally reunited the northern and southern parts of the Netherlands into one kingdom, ruled by the autocratic William I. It is a major challenge for students of Dutch history to explain the rise and the decline of the Dutch Republic within one conceptual framework. Such an encompassing analytical model underlies Jan de Vries and Ad van der Woude’s handbook The First Modern Economy (1997), which considers both the expansion of the Dutch economy in the sixteenth and seventeenth centuries, and its stagnation in the eighteenth century, as part of the process of modern economic growth. However, De Vries and Van der Woude pay limited attention to political developments. The state figures into their model as the guardian of secure property rights, but the complex interaction between economic and political actors within and between towns and provinces is not addressed. The opposite is true for the work of Jonathan Israel, who consistently relates economic success and failure to changes in political circumstances. Israel underestimates the importance of longterm economic trends, however, and he largely dissociates Dutch economic and political performance in the eighteenth century from its earlier achievements. This collection of essays explores the interaction between political and economic developments which explain the particular trajectory of the Dutch Republic. The volume’s point of departure is that of Adam Smith’s concept of political economy, as he defined it in The Wealth of Nations (1776): Political œconomy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.

  ����������������������������������� Jan de Vries and Ad van der Woude, The First Modern Economy. Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (Cambridge: Cambridge University Press, 1997).   ����������������� Jonathan Israel, Dutch Primacy in World Trade, 1585–1740 (New York: Oxford University Press, 1989); Jonathan I. Israel, The Dutch Republic: Its Rise, Greatness, and Fall, 1477–1806 (Oxford: Clarendon Press, 1995).   Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. Library of Economics and Liberty. Retrieved December 12, 2007 from the World Wide Web: http://www.econlib.org/library/Smith/smWN1.html, Book IV, Introduction.

Introduction



The United Provinces taxed their subjects and borrowed from them in exchange for public goods. This volume analyzes the underlying bargaining process between provinces, towns, and various groups of economic actors, and the effect this had on the organization of public finance, the provision of public goods, and economic performance. Two questions stand out. How did the political economy of the United Provinces affect its political and military strength and the competitiveness of its agriculture, industry and trade? And how important was the balancing act between political and economic actors in comparison with numerous external factors, including political and military pressure, economic crises, or technological change?

The Dutch Revolt A cursory reading of the Dutch Republic’s history would seem to support the current popular notion among political scientists and economic historians that political revolutions in early modern Europe were crucial for the establishment of more representative forms of government, the reorganization of public finance, the creation of more secure property rights, and, ultimately, economic growth. England’s Glorious Revolution (1688–1689) is the hallmark case. According to North and Weingast (1989) the offering of the English crown to William III in exchange for parliamentary control over public expenditure effectively constrained the new ruler and safeguarded the interests of taxpayers, entrepreneurs, and public debt holders. These changes marked the beginning of England’s ascent to political and economic primacy in the eighteenth century. The Dutch Revolt, or rather the Union of Utrecht signed by the rebel provinces in 1579, may be likened to the Glorious Revolution because it put decisions about taxation and warfare into the hands of the States General. Like the English kings, the stadholders of the House of Orange retained an important role in politics, but their power was balanced by the urban magistrates and landed elites that dominated the provincial estates. Following these political changes was a very long period of rapid economic growth, a tenfold increase in fiscal revenues, and the creation of a public debt of unprecedented proportions. 

 ���������������������������������������������������������������������������� Douglass C. North and Barry R. Weingast, “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England,” Journal of Economic History XLIX, no. 4 (1989); cf. also North’s earlier statements on this issue in: Douglass Cecil North and Robert Paul Thomas, The Rise of the Western World; a New Economic History (Cambridge: Cambridge University Press, 1973), and Douglass North, Structure and Change in Economic History (New York: Norton, 1981).   ���������������������� Marjolein C. ’t Hart, The Making of a Bourgeois State: War, Politics, and Finance During the Dutch Revolt (New York: Manchester University Press, 1993); Wantje Fritschy, “A ‘Financial Revolution’ Revisited: Public Finance in Holland During the Dutch Revolt, 1568–1648,” The Economic History Review, New Series 56, no. 1 (2003).

The Political Economy of the Dutch Republic



And yet the relationship between political change and economic growth is more complicated than North and Weingast suggest. In Britain the struggle between the parliament and the crown, and related fiscal reforms, had begun already in the first half of the seventeenth century, and continued into the eighteenth century. As for the impact on the economy, long-term trends in returns on capital and on land do not reveal any break around 1690. Likewise, in the province of Holland, major improvements in public debt management preceded the Dutch Revolt by several decades. As James Tracy (1985) has shown, during the 1540s armed conflicts with the Hanseatic League, Guelders, and France, and the financial demands made by Emperor Charles V to fight these wars, led Holland to raise its contribution to the central treasury. The States of Holland took on a collective responsibility to sell life and term annuities secured by new provincial excise duties to public officeholders, merchants, and other wealth owners, none of whom were under an obligation to buy these securities.10 Furthermore, the process of unification of the Netherlands, begun under the Burgundian dukes and then vigorously pursued by Charles V, had created a property rights regime that remained essentially unchanged during the Republic.11 There is also growing evidence to suggest that the economic boom of the Dutch Golden Age was rooted in a process of agricultural specialization and commercialization dating back to the late fourteenth century.12 Significantly, the  ������������������������������������������������������� On seventeenth-century developments, see M.J. Braddick, The Nerves of State: Taxation and the Financing of the English State, 1558–1714 (Manchester: Manchester University Press, 1996); Robert Brenner, Merchants and Revolution. Commercial Change, Political Conflict, and London’s Overseas Traders, 1550–1653 (Cambridge: Cambridge University Press, 1993); On fiscal changes in the eighteenth century: Peter Mathias and Patrick O’Brien, “Taxation in Britain and France, 1715–1810: A Comparison of Social and Economic Incidence of Taxes Collected for the Central Government,” Journal of European Economic History 5 (1976); John Brewer, The Sinews of Power. War, Money and the English State (London etc.: Unwin Hyman, 1989).   ��������� Epstein, Freedom and Growth; G.C. Clark, “The Political Foundations of Modern Economic Growth: England, 1540–1800,” Journal of Interdisciplinary History 26, no. 4 (1996); Stephen Quinn, “The Glorious Revolution’s Effect on English Private Finance: A Microhistory, 1680–1705,” The Journal of Economic History 61, no. 3 (2001). Also Peter Temin and Joachim Voth, “Credit Rationing and Crowding out During the Industrial Revolution: Evidence from Hoare’s Bank, 1702–1862,” Explorations in Economic History 42, no. 3 (2005). 10  ������������ J.C. Tracy, The Financial Revolution in the Habsburg Netherlands. “Renten” and “Renteniers” in the County of Holland, 1515–1565 (Berkeley: 1985). 11  ��������������������������������� W.P. Blockmans and W. Prevenier, The Promised Lands: The Low Countries under Burgundian Rule, 1369–1530 (Philadelphia: 1999). For the early origins of the Republic’s financial institutions: Jaco Zuijderduijn, “Medieval Capital Markets. Markets for Renten between State Formation and Private Investment in Holland (1300–1550),” 2007). 12  ������������������������������������������������������������������������������ For Holland’s economic performance in the sixteenth century, see De Vries and Van der Woude, First Modern Economy. The classic account of early commercialization in Dutch agriculture in the sixteenth century is: J. de Vries, The Dutch Rural Economy 

Introduction



new class of merchants and entrepreneurs created in this process was to become one of the principal stakeholders in the towns that helped shape the political organization of the Dutch Republic.13 The political and fiscal organization of the Dutch Republic, as laid down in the 1579 Union, was not set in stone. The federal nature of the state, with foreign affairs and warfare being the sole prerogatives of the States General, however, remained untouched. Likewise, the distribution of provincial contributions to the Generality’s budget did not change for more than two centuries. But within these boundaries, in the face of changing economic and political circumstances, Dutch regents, entrepreneurs, and taxpayers showed a remarkable ability to renegotiate specific arrangements regarding the level and administration of taxes, the organization of government borrowing, and the provision of public goods. The most prosperous cities, Amsterdam in particular, implemented a host of institutional innovations for the purposes of private finance, shipping, and trade in both the seventeenth and eighteenth centuries.14 When considering, in addition to this, the financial constraints that issued from political and military competition with England and France, one has to be careful in postulating that an institutional sclerosis in the Dutch Republic set in once the Golden Age was over.15 in the Golden Age, 1500–1700 (New Haven: 1974). On developments before 1500: W.P. Blockmans, “The Economic Expansion of Holland and Zeeland in the Fourteenth–Sixteenth Centuries,” in Studia Historica Oeconomica. Liber Amicorum Herman Van Der Wee, ed. E.A. Aerts et al., (Leuven: 1993). B.J.P. van Bavel and J.L. van Zanden, “The Jump-Start of the Holland Economy During the Late-Medieval Crisis, c.1350–c.1550,” Economic History Review 57, no. 3 (2004). 13  ��������� ’t Hart, Making; For the rise of the new mercantile elite, see: Clé Lesger, The Rise of the Amsterdam Market and Information Exchange: Merchants, Commercial Expansion and Change in the Spatial Economy of the Low Countries, c.1550–1630 (Burlington VT.: Ashgate, 2006). See also Milja van Tielhof, The ‘Mother of All Trade’. The Baltic Grain Trade in Amsterdam from the Late 16th to the Early 19th Centuy (Leiden: Brill, 2002). 14  ���������������������������� De Vries and Van der Woude, First Modern Economy.���������������������������� Cf. ��������������������������� also: Oscar Gelderblom and Joost Jonker, “Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595–1612,” The Journal of Economic History 64, no. 3 (2004); Oscar Gelderblom and Joost Jonker, “Amsterdam as the Cradle of Modern Futures Trading and Options Trading, 1550–1650,” in The Origins of Value. The Financial Innovations That Created Modern Capital Markets, ed. W.G. Goetzmann and K.G. Rouwenhorst (Oxford: Oxford University Press, 2005). For innovations in eighteenthcentury trade: J.P.B. Jonker and K.E. Sluyterman, At Home on the World Market : Dutch International Trading Companies from the 16th Century until the Present (The Hague: Sdu Uitgevers, 2000). 15  ������������� W. Fritschy, De Patriotten en de financiën van de Bataafse Republiek. Hollands krediet en de smalle marges voor nieuw beleid, Hollandse Historische Reeks (1988), pp. ������������������������������������������������������������������������������������ 57–73; A less positive appraisal of the organization of Dutch public finance in the eighteenth century is found in: Tom Pfeill, ‘Tot redding van het vaderland’. Het primaat van de Nederlandse overheidsfinanciën in de Bataafs-Franse tijd 1795–1810, Neha-Series Iii (Amsterdam: NEHA, 1998), and Jan Luiten van Zanden and Arthur van Riel, The Strictures



The Political Economy of the Dutch Republic

There are then two issues at stake in the contributions to this volume. On the one hand, the authors consider the effect that the creation of an independent Dutch state in the late sixteenth century had on the country’s property rights regime, its public debt management, fiscal policies, and economic performance. The crucial question here is: how much of the Burgundian–Habsburg legacy actually survived the Dutch Revolt, and what was new about the Dutch Republic’s institutional set-up? On the other hand the essays revisit the typically negative verdict on Dutch political and economic institutions in the eighteenth century. Did local and provincial particularism or the complacency of economic and political elites really bring the United Provinces down? Or were the implemented fiscal, financial, and economic reforms simply not sufficient in the competition with larger powers? These questions are addressed in two sets of essays, one focusing on continuity and change in public debt management and fiscal policies, the other on long-term developments in Dutch agriculture, manufacturing, and trade. Public finance In the second quarter of the sixteenth century the province of Holland created a funded debt, based on the sales of annuities and the levying of excise duties to pay the interest. As a result Holland was able to contribute more to the central government while paying less for its debt service. In his contribution James Tracy demonstrates how these new expedients were of little use to Holland when its towns revolted against Philip II. The civil war of 1572–1576 plunged the economy into a deep crisis, raised provincial taxation, and pushed up interest rates on public loans to 30 or 40 percent. It was only through ad hoc measures which ignored the principles established in the earlier reorganization of public debt that Holland managed to raise enough money to pay William of Orange’s troops. Interest payments on existing annuities were suspended. New short-term loans (obligatiën) were issued and not repaid but rather converted into long-term annuities. Some of the more demanding creditors were paid off with confiscated ecclesiastical property in lieu of redemption. Furthermore, towns lost control over two-thirds of their beer and wine excises, the revenue of which was added to the common means (gemene middelen) of the province. In return, they gained the right to use these now provincial tax revenues to pay garrisons billeted within their city walls. These were initially conceived of as emergency measures implemented to overcome of Inheritance: The Dutch Economy in the Nineteenth Century (Princeton: Princeton University Press, 2004). �������������������������������������������������������������� Johan Aalbers provides the best overview of the international constraints on the Dutch Republic following the War of the Spanish Succession: Johan Aalbers, De Republiek en De Vrede Van Europa : De buitenlandse politiek van de Republiek der Verenigde Nederlanden na de Vrede van Utrecht (1713), voornamelijk gedurende de jaren 1720–1733; Deel 1: Achtergronden en algemene aspecten (Groningen: WoltersNoordhoff, 1980).

Introduction



administrative disorder and imminent military threats. But the new arrangements in fiscal authority between local and provincial governments became permanent. When the fighting on Dutch soil ceased, the States of Holland did not want to relinquish control over the raising of what had been urban excises. In exchange, town magistrates insisted on the local use of the actual revenues. The establishment of provincial control over the majority of local taxes in Holland marked the beginning of what Wantje Fritschy (2003) has aptly called a tax revolution.16 Between 1580 and 1650 Holland’s tax revenues increased tenfold, due primarily to a massive increase in the amounts of excises. The government obviously benefited from the growing economic activity in the Golden Age, but as Fritschy shows in this volume, the improvements in the fiscal system were equally impressive. More and more goods were made subject to excise duties, moderate taxes on income and wealth were introduced, and most importantly, great strides were made in the administration of public finance. The creation of a provincial Financiekantoor (finance office) in Holland, registering the income and expenditure of all provincial receivers, made possible both structured financial policies and close monitoring of public officials and tax farmers. In the long run, these administrative changes proved very important for they enabled the government to reorganize public finance in periods of financial distress. For instance, in 1680 and 1707 detailed information on tax revenues from the finance office was used by the provincial authorities to adjust the fiscal system to changing patterns of consumption and production. On both occasions the least remunerative taxes were abolished, and new taxes designed to maximize revenues from different groups of tax payers were introduced. The detailed reconstruction of the taxation of bread in Jan de Vries’ essay provides further evidence for the ability of the Dutch to maximize fiscal revenue. From 1596 onwards town magistrates in the Dutch Republic organized regular baking trials to establish exactly how much rye or wheat was needed for a standard loaf of bread. This enabled the local authorities to tax the full input of grain, rather than some fictitious amount as was done in other European countries. To prevent an excessive tax burden on bakers, the town magistrates also specified the fixed costs involved in baking, and then proceeded to set a bread price that generated a reward sufficient to cover both fixed and variable costs, including taxes. Close monitoring of the bread market also taught local rulers that well-off consumers preferred the more expensive wheat bread. This knowledge was then used to crosssubsidize the production of rye bread: bakers were allowed to sell wheat bread at prices high enough to compensate for the very small profits (if any) they made on rye bread. De Vries points out that the primary purpose of the system of crosssubsidization was to maximize tax revenue from the preferred bread consumption of the middling groups. It was not a measure taken to ease the burden on the poor. Taxation was likely to have made Dutch rye bread 25 percent more expensive than a similar loaf purchased elsewhere in Europe. 16

 ��������������������������������� Fritschy, “Financial Revolution”.



The Political Economy of the Dutch Republic

The political economy of bread thus presents an intriguing puzzle regarding the fiscal regime of the United Provinces. Merchants, artisans, retailers, farmers, and other middling groups paid the bulk of all excise duties and land taxes. Indeed, the government managed to adjust its fiscal regime to the consumer preferences and purchasing power of its constituents. But why did the burghers accept the extraordinary tax burden? Maarten Prak and Jan Luiten van Zanden argue in their essay that town magistrates in the different provinces worked hard to secure the commitment of local citizens. This is apparent from several ad hoc fiscal measures implemented in the 1740s, after the Republic had been dragged into the War of Austrian Succession. To meet the costs of fighting France, the United Provinces had to raise additional funds. They borrowed money to cover immediate expenditures but they then had to raise taxes to service the new debt. The implementation of the emergency taxes in Leiden in Holland and Zwolle in Overijssel reveals how the middling groups were won over. First, the town magistrates organized the collection of taxes themselves. Leiden and Zwolle were strongly committed to the interests of their citizens – as is evidenced by, among other things, their provision of local public goods – and the town magistrates’ control must have reassured them. Second, tax payers were by and large allowed to determine their own assessment, sometimes in combination with ex post inspection of the tax registers. A third strategy, practiced in Zwolle but not in Leiden, was to give the urban middle class the right to actually veto the introduction of new taxes. Together these measures made for a remarkably smooth acceptance of the emergency taxes, and helped the Dutch Republic pull through the War of the Austrian Succession. Rationalization of the fiscal regime constituted only half of the changes in public finance in the United Provinces. Equally important was the impressive growth of government debt, in particular that of Holland. In the opening decades of the Revolt this province had borrowed an average of five to ten million guilders per year to fund its war efforts. In the 1590s, when the Spanish threat receded and previous emergency loans were renegotiated or redeemed, the provincial estates opted to return to the well-tried sale of life and term annuities. Over the next half century they succeeded in raising large amounts of money this way. By 1650 the value of term and life annuities stood at 53 million guilders.17 And yet these traditional expedients did not suffice to fund the war against Spain. Therefore, shortly after 1600 the States of Holland began selling short-term obligations to pay for additional expenditure. Unlike the obligations sold to military commanders in the 1570s, the new bonds were no longer redeemed but rolled over on expiry. A similar technique had been used in Antwerp before, where bonds had found a ready market among merchants and sovereigns, including Charles V. The bonds were sold in Holland on an unprecedented scale. In 1650 the value of obligations

17  ���������������� E.H.M. Dormans, Het tekort. Staatsschuld in de tijd der Republiek, NEHA Series III (Amsterdam: NEHA, 1991), pp. 47, 58.

Introduction



outstanding was nearly 80 million guilders; by 1730 it had risen to well over 200 million guilders.18 The public sale of loans of this size required considerable organization. New issues had to be tailored to the fiscal revenues available to service the debt; obligations which had expired had be rolled over; and lenders willing to invest in Holland’s public debt had to be found. In her contribution to this volume Marjolein ’t Hart analyzes the public debt management of the provincial tax receivers in the Amsterdam district. This public official was responsible for the collection of taxes, the sales of annuities and bonds, and the payment of interest on these loans from their tax receipts. Following regular instructions from the States of Holland the receiver issued loans on the local capital market. Throughout the seventeenth century successive holders of the receiver’s office came from a single Amsterdam family with excellent connections to a large number of potential lenders. They used their contacts with the wealthy to place Holland’s annuities and bonds. Although these informal dealings did not suffice to place all debts, they did constitute an important share, and hence reduced search costs for the Republic’s principal financial officers. Despite their extraordinary ability to raise taxes and loans, the Dutch could no longer compete in the eighteenth century with the great powers of Europe. Fiscal revenues were simply too small. England’s system of public finance was modeled on that of Holland but it could access a much larger land surface and population, and could thus levy up to four times the amount of taxes compared to the United Provinces. France was able to compensate for its much poorer public debt management by taxing a population 20 to 25 times the size of Holland. The end of the Dutch Republic as a great power came with the War of the Spanish Succession. By the end of the war debt service took up more than 60 percent of Holland’s fiscal revenue, and in 1715 the Union actually had to suspend interest payments on its loans for a period of nine months.19 In the following decades the States of Holland and the States General had to work extremely hard to restructure their debts and restore creditworthiness. The contributions of Fritschy, Prak and Van Zanden show the fiscal ingenuity and determination with which local and provincial governments met their financial obligations in the eighteenth century. This is why in the 1760s and 1770s at 2.5 percent the bond yields of Holland were still the lowest in Europe. Indeed, it was not until the fourth Anglo-Dutch war (1780–1784) that the Republic’s financial problems became insurmountable, one reason for this being that despite the intention laid down in the Union of Utrecht in 1579, the land provinces had never developed a fiscal system as sophisticated as that of Holland. Most provinces did 18

 ���������������������� Ibid., pp. 47, 58, 91.  ���������������������������� W. Fritschy and R. Liesker, Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden. Deel IV. Holland (1572–1795), ed. Instituut voor Nederlandse Geschiedenis, vol. 100, Rijks Geschiedkundige Publicatiën. Kleine Serie (The Hague: Instituut voor Nederlandse Geschiedenis, 2004). 19

10

The Political Economy of the Dutch Republic

introduce excise duties at some point in the late sixteenth and early seventeenth centuries, but revenues were nowhere near those of Holland’s common means.20 In the eighteenth century the government also had to contend with a stagnating economy. The dynamic interaction between agriculture, trade and manufacturing that served to bolster each of these sectors in the sixteenth and seventeenth, had lost much of its potential. Colonial trade continued to thrive but the European trade in agricultural products and Dutch manufactures declined in the face of growing foreign competition and protection.21

The Dutch economy The economic difficulties of the eighteenth century were in marked contrast to the prolonged growth of the Dutch economy in previous centuries. In the first chapter of this volume, Erik Reinert shows how for one-and-a-half centuries mercantilist thinkers from Sweden, England, Germany, France, Spain, and Italy used the Dutch situation as a benchmark for the development of their own economies. Jealously, and almost unequivocally, contemporary observers from these countries highlighted the prosperous development of livestock farming, the fisheries, long-distance trade, shipping, and manufacturing, and the dynamic interaction between these sectors, as being the key elements underlying Dutch economic success. Furthermore, they stressed the benefits of pragmatic government intervention, most notably the attempts of town magistrates, in attracting skilled workers and entrepreneurs to stimulate local manufacturing. Few mercantilists blamed the Dutch state for the stagnation of the economy in the eighteenth century. They invariably ignored Adam Smith’s later concerns about high taxes and bad government. Some criticized what they saw as the complacency and incapacity of Dutch entrepreneurs, but most economic writers stressed the limited size of the territory and the growing political and economic competition from other European nations. The mercantilists’ emphasis on the interaction between agriculture, manufacturing, shipping, and trade in the Dutch economy in the sixteenth and seventeenth centuries still sounds plausible. Modern research has revealed regular shipping and trade of domestic products, large flows of migrant workers, and massive urban investment in agriculture and rural industries.22 But the question of what caused the rise of these product and factor markets remains. Why 20  ���������������������������� W. Fritschy and R. Liesker, Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden. , ed. Instituut voor Nederlandse Geschiedenis, vols 86, 91, 94, 100, Rijks Geschiedkundige Publicatiën. Kleine Serie (The Hague: Instituut voor Nederlandse Geschiedenis, 1996). 21  ���������������������������� De Vries and Van der Woude, First Modern Economy; Jonker and Sluyterman, At Home. 22  ���������������������������� De Vries and Van der Woude, First Modern Economy; Bavel and Zanden, “JumpStart”.

Introduction

11

were farmers and manufacturers in the United Provinces able to produce large marketable surpluses, and why were these goods – as well as the labor, land, and capital required to produce them – exchanged so easily on domestic and foreign markets? Was it because the Dutch Revolt created more secure property rights for entrepreneurs? Or did the Dutch benefit from a far more gradual evolution of growth-enhancing institutions that may be traced back as far as the late medieval period? The essays of Bas van Bavel, Milja van Tielhof, and Oscar Gelderblom suggest that institutions which were quite different in origin safeguarded the owners of land and capital from arbitrary expropriation of their property and opportunist behavior of other parties. Van Bavel analyzes the transformation of Holland’s peasant economy into a highly commercialized agriculture-based one between the fourteenth and seventeenth centuries. A crucial element in this development was the growth in urban landownership in combination with widespread short-term leases to commercial farmers. Van Bavel shows how secure property rights to land were created during the reclamation campaigns of the high Middle Ages. Peasant ownership was firmly rooted in customary law, and this allowed peasants to continue the small-scale exploitation of their land for a very long time. Short-term leases, therefore, were a later development. It was only during the first half of the sixteenth century that the legal enforcement of lease arrangements emerged in the Habsburg Netherlands, the result of a complex set of circumstances, including inflation, improved land registration, the reception of Roman law, and the growing wealth and power among urban elites. The impact on the economy was tremendous. By 1620 urban landownership was likely to have amounted to 60 percent of total acreage. The owners of this land would have gained a regular income from leases and would have left the exploitation of their land in the hands of commercial farmers. Van Tielhof for her part shows how the commercialization of Dutch agriculture critically depended on soil improvement through continuous and large-scale drainage. Her case study of the Rijnland water board in the south of Holland traces the institutional foundations of the system of water management in this area back to 1200. From then on farmers and villages were required to supply labor to maintain sluices and dikes. In the course of the sixteenth century, the greater scale and complexity of waterworks, probably in combination with the growth of urban landownership, led to the replacement of these labor services by the hiring of specialized contractors. To fund these works, the water board began levying a morgengeld, a levy on land at different rates according to the quality of the soil. To secure a steady flow of income, the water board left the collection of the water tax to representatives of village communities, which in turn often farmed it out to professional collectors. Occasional administrative irregularities notwithstanding, the system worked very well for most of the seventeenth century. In contrast to the commercialization of agriculture, the rapid growth of longdistance trade in the late sixteenth and seventeenth centuries was closely linked to the Dutch Revolt. One obvious example of this was the Fall of Antwerp in 1585 which led to the reorientation of international commodity flows to Amsterdam.

The Political Economy of the Dutch Republic

12

But two further changes also stand out. One was the subjection of all imports and exports to customs duties. Local authorities feared that the new tax would be an unsustainable burden on commerce, but trade continued to grow, so that the tariffs could be kept at modest levels. To give in to objections from the trading community the customs revenues were earmarked for the protection of the merchant fleet. A second achievement was the formation of the VOC in 1602. The Dutch East India Company united a number of smaller companies that had sprung up in various towns in Holland and Zeeland since 1595. These early companies had enjoyed limited liability through the century old partenrederij. Moreover, they had been extremely lucrative investment projects with net profits exceeding the starting capital of the VOC by at least 50 percent. What was new about the Dutch East India Company, however, was the monopoly it enjoyed and the ten-year term for initial investments (later converted into an indefinite term). In combination, these factors promised high returns, and a business continuity which enabled the company directors to set up a permanent trading organization; they also created a vigorous market for VOC shares. Added to the latter development was the introduction of bills obligatory – a common debt instrument in use in Antwerp since the 1540s – to produce the pledging of VOC shares as collateral for these obligations.23 To assess the benefits of these institutional changes, Oscar Gelderblom compares the organization of long-distance trade in England and the Dutch Republic. Both countries began to explore new markets within Europe and beyond in the second half of the sixteenth century. At first glance the role of the central government appears to have been rather similar in both cases. Customs duties were a major source of income for the two governments, and the English crown, like the States General, chartered a joint-stock company for the organization of the Asian trade. And yet crucial differences existed. Measured as a percentage of the value of their trade, merchants in London paid much higher import and export duties than their counterparts in Amsterdam, simply because the royal customs were the principal source of public revenue in England. The East India Company also raised capital per voyage to Asia. Therefore it lacked the retained earnings necessary to establish a permanent trading organization as the VOC had done. There was no rapid accumulation of capital in London, no company shares to trade, and no collateralization of these shares in obligation loans. Before 1650 interest rates on obligations in London typically stood two to three percent higher than in Amsterdam. In addition to the higher capitalization and profitability of colonial trade in the United Provinces, the Dutch commercial regime had also changed the terms of public finance. While the English crown had to make do with costly advances from syndicates of customs farmers, the provincial receivers of Holland began to negotiate obligations at gradually declining rates on local money markets. In due time the short-term character of these loans – worth approximately

 ������������������������������������ Gelderblom and Jonker, “Completing”.

23

Introduction

13

75 million guilders by 1650 – disappeared and they effectively became part of Holland’s consolidated debt.24 In the second half of the seventeenth century, however, the Dutch gradually lost their competitive edge. England reorganized its Asian trade and France set up its own East India Company. At the same time the VOC directors failed to capitalize on the opportunities the secondary market for company stock had created, and preferred to raise capital through issuing debt rather than equity. The company managed to service these loans with the revenues from its annual auctions until the last two decades of the eighteenth century, when wars with England and France prevented VOC ships from returning to the Netherlands. The abundant supply of capital in the Dutch Republic after 1640 also led the water board of Rijnland to rely on loans to raise money for the maintenance of dikes and sluices. The rates of the morgengeld were adapted to meet increased financial demands but eventually revenues fell below expenditure and in the second half of the eighteenth century, Rijnland needed provincial subsidies to keep going. A complicating factor was that the benefits of drainage in the Rijnland spilled over into neighboring communities – notably in the province of Utrecht – and the water board failed to reach an agreement on the renewal of outdated terms to share drainage costs. Similar problems with fragmented authority were at the heart of the decline of the Dutch beer industry. Richard Yntema’s reconstruction of the development of brewing between the sixteenth and eighteenth centuries shows how provincial rivalry harmed producers throughout the Dutch Republic. In the sixteenth century, breweries in Haarlem, Delft, and Gouda flourished as a result of exports to the southern provinces. Between 1580 and 1640 beer brewers in the province of Holland compensated for the loss of this Flemish market by expanding their sales into other parts of the Dutch Republic. However, after 1640 this domestic trade broke down. Increasing financial demands from the States General and the wish of the other provinces to stimulate their own brewing industries, led the latter to raise tariffs on imported beer. This reduced to a trickle of exports from Holland to other parts of the Dutch Republic. Under increasing pressure the Dutch towns began levying higher tariffs on each other’s beer, which precipitated the collapse of the entire industry in Holland. To meet local demand for beer, small-scale breweries were set up in towns across the United Provinces – effectively reversing the local specialization that had given the Dutch beer industry its competitive edge in the sixteenth and early seventeenth centuries.

The End of the Dutch Republic At the end of the eighteenth century the Dutch economy was still one of Europe’s wealthiest economies. In addition to the extraordinary riches of the urban elites, it had highly developed goods and factor markets, and an estimated domestic product 24

 ��������� Dormans, Tekort.

The Political Economy of the Dutch Republic

14

per capita second only to that of England. Yet the economic dynamism of the Golden Age had long since vanished. The growth in domestic markets had stagnated, the once booming export trade in agricultural produce and colonial products had lost its vigor, and few attempts were made to emulate foreign examples of mechanized manufacturing. Political prospects were even gloomier. In the second half of the eighteenth century, the Dutch Republic still fielded an army of 40,000 troops, and its standing navy numbered over 80 large armed vessels, but this military force no longer sufficed to keep up with the great powers.25 While England and France vied for primacy in European politics and the Atlantic economy, the Dutch Republic had become a passive bystander who could only pursue a policy of neutrality, or enter into strategic alliances with other states to secure the territorial integrity of the United Provinces and its colonial possessions.26 This very dependence on the power struggle between England and France can explain why it took until 1795 before any attempts were made to unify the Dutch Republic politically and to centralize the Republic fiscally. Given the overwhelming military strength of the great powers after 1715, no financial effort on the part of the United Provinces would have sufficed to claim a more dominant position in European politics.27 At the same time it was extremely unlikely that the Dutch Republic would be overrun by either of the two countries, for one would never have let the other get away with such a major disruption of the existing balance of power. Why then did the Dutch Republic come to an end in the closing decade of the eighteenth century? In the concluding essay of this volume, Thomas Poell demonstrates how the political and fiscal reform that started with Batavian Revolution of 1795 resulted from three developments, each necessary but in and of itself insufficient to create a politically unified and fiscally centralized state. First there was the deep financial crisis caused by the war with England in the early 1780s and by France’s military offensive and occupation of the Netherlands in 1794 and 1795. Then there was the democratic ideology first introduced by the patriotten in the mid-1780s which altered the Dutch mindset with regard to representative government. The financial problems might have been overcome, had the seven provinces and their constituent parts been able to achieve a voluntary rearrangement of the Union’s political and fiscal institutions. However, by 1795 there were too many players involved and their political and economic interests varied too widely to achieve this. Thus, it took excessive financial demands from the French occupier, combined with the political pressure they put on the Dutch authorities, to force the towns and provinces to overhaul the principles agreed upon in the Union of Utrecht two centuries earlier. Even then it took more than a decade of political struggle between constantly changing coalitions of local and provincial rulers with different ideological and

25

 �������� Israel, Dutch Republic, p. 1095. Fritschy, Patriotten,������� p. 63.  ��������� Aalbers, Republiek, passim. 27  ���������� Fritschy, Patriotten. 26

Introduction

15

political agendas before a financial union with an amalgamated debt and a national tax system, supervised by state commissioners, was to be created in 1806. The French occupation did not solve all financial and economic problems.28 In 1813 the Kingdom of the Netherlands found itself saddled with an oversized bureaucracy, an enormous public debt, and an economic structure that produced no incentives for investment in new industrial technologies in the northern provinces. On paper, the unification with the southern Netherlands in 1815 created a stronger state and a more diversified economy but the union only survived for 15 years. Furthermore, the Congress of Vienna had decided to strengthen the role of the Orange stadholders, rather than that of parliament. As a result King William I was able to embark upon an “autocratic experiment” that fostered patronage, and frustrated any attempt by parliament to monitor, let alone influence, the state budget. In retrospect, it was only William’s abdication of the throne in 1840, followed by Van Hall’s financial reorganization during 1844–1845 and the liberal constitution of 1848 which realigned the powers of king and parliament, that made possible a revision of the fiscal system and the introduction of policies more conducive to industrialization and growth.

Looking ahead The remarkable history of the Dutch Republic does not lend itself to simple generalizations about the bargaining processes that shaped the state and the economy. The differences in political and economic organization between Holland and the other provinces are too great. Holland was the richest province with the most advanced economy and a political system that raised public revenue to unprecedented levels. It was Holland’s economic and political strength that enabled the Dutch Republic to play a dominant role in Europe in the seventeenth century. The contributors to the present volume also draw extensively on the history of this one province. However, their essays also point to a broader interpretation of the political economy of the Dutch Republic. In the first place the extensive knowledge of Holland’s history allows a detailed reconstruction of institutions designed to solve a number of economic problems that were by no means specific to the Dutch Republic. This wider relevance of Dutch history is most apparent in the essays on the regulation of bread prices, the commercial exploitation of farmland, and the funding strategies applied to new ventures in long-distance trade. These essays explicitly compare the solutions found for these problems in Holland with those in other European countries. The same approach may be observed with regard to other themes addressed in this volume. The detailed reconstructions of institutional change in the funding of water management, the monitoring of the state’s fiscal operations, or the enforcement of 28  ��������������������������������������������������� The following is based on Van Zanden and Van Riel, The Strictures of Inheritance: The Dutch Economy in the Nineteenth Century.

16

The Political Economy of the Dutch Republic

tax compliance in Holland may also be compared with the solution of similar problems in other pre-industrial societies. In the second place, Holland’s history offers a prime example of how political crises can influence institutional development. The Dutch Revolt created a double constraint on the executive: the States General could only act upon agreement of the seven provinces, while decision making in each of the provinces was based on continuous bargaining between the towns and noblemen. But was this substantially different from earlier negotiations between the nobility, the prosperous towns of the coastal provinces, and the Habsburg rulers? Surely the basic tenets of Holland’s system of public finance, as well as the legal framework for the exchange goods, land, labor, and capital had been established before Dutch Revolt. Thus, the response of Holland’s rulers and entrepreneurs to new economic opportunities or political challenges relied on existing rules and practices. What difference then did the Dutch Revolt make for the state and the economy? This is where the history of Holland alone cannot provide answers. The history of all 17 provinces that once belonged to the Habsburg Netherlands, however, can, for within this larger area we find regions with very different economic opportunity structures. In the coastal provinces of Flanders, Brabant, Holland, and to a lesser extent also Friesland and Zeeland, commercial farming, trade, and manufacturing flourished from the late Middle Ages onward – historical roots that might explain both Holland’s Golden Age, and the resilience of the Antwerp economy after the Revolt. In most of the land provinces a much more traditional economic structure existed – albeit one with notable pockets of early growth, such as the Guelders River Area or the Liège area. The 17 provinces are a “historical laboratory” not only in an economic sense. The unification of the Netherlands begun under Burgundian rule and completed with the recognition of the Netherlands as a separate Kreitz within the Holy Roman Empire, created a number of political and legal institutions that applied to the entire Netherlands. Then, in the third quarter of the sixteenth century the Dutch Revolt led to the division of the Habsburg Netherlands. In the North, the Dutch Republic became what has been termed the first modern economy – with highly developed commodity and factor markets. In the South, the virtual cessation of maritime trade forced a reorganization of the economy that in the early seventeenth century compensated for some of the activity lost, yet could not prevent a prolonged crisis that lasted until 1750. Thus, the Dutch Revolt has provided us with a natural experiment. After the separation of the northern and southern provinces, the Spanish (later Austrian) Netherlands were ruled by deputies of foreign monarchs who relied on a small elite bureaucracy in Brussels to govern the country. They operated within narrow financial margins set by a small number of towns in Flanders and Brabant refusing to hand over control of their purse strings to the central government.29 Meanwhile in the Northern provinces, and in Holland in particular, the reorganization of the 29  ���������������� Herman Coppens, De financiën van de Centrale Regering van de Zuidelijke Nederlanden aan het einde van het Spaanse en onder Oostenrijks bewind (Ca. 1680–1788),

Introduction

17

fiscal system allowed the provincial estates to control tax revenues, and to secure the issue of massive public loans on them. A comparison between the 17 provinces that shared the Burgundian–Habsburg legacy, but then found themselves under different political regimes after the Dutch Revolt, can shed crucial light on the political and economic impact of this political crisis. It can do so all the more as both maritime provinces and inland provinces with similar economic outlooks also found themselves on different sides of the dividing line. Such a comparative analysis is a logical next step in furthering our understanding of the economic and political history of the Netherlands between 1500 and 1800.

vols 54/142, Verhandelingen van de Koninklijke Academie voor Wetenschappen, Letteren en Schone Kunsten van België. Klasse der Letteren (Brussel: Paleis der Academiën, 1992).

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Chapter 1

Emulating Success: Contemporary Views of the Dutch Economy before 1800 Erik S. Reinert

Introduction The economic success of the Dutch Republic from the late sixteenth century onwards did not go unnoticed by contemporary economic thinkers across Europe. Giovanni Botero, Antonio Serra, Josiah Child and many others wrote extensively on the strength and weaknesses of the Dutch economy. These pre-Smithian economists are normally grouped together in the history of economic thought under the decidedly derogatory label of ‘mercantilists’. Under its standard Whig conception, any idea in the history of economic thought – as identified almost a century ago by English historical economist Ashley – instead of being judged by its relevance in a given context, is either hailed as a surprising early anticipation of a healthy neoclassical economic principle or as an example of hopelessly illconceived theories. This chapter argues that this mercantilism had some clear analytical advantages over neo-classical economics as a tool to understand the rise and fall of the Dutch Republic. Not only was the pre-Ricardian economists’ toolbox much larger than today’s, the mercantilist theories also included a large number of factors which the profession presently is attempting to re-introduce into mainstream economics. Among them are innovations and technology, increasing returns, institutions, geography, synergies, path dependency, the understanding that not all economic activities contribute in equal measure to economic growth, the idea that economic policy should be context-specific, and the fundamental question of why economic development differs across time and space. The contemporary mercantilists are therefore likely to provide a much richer analysis of the Dutch Republic than what is found in the works of the classical economists.   ���������������� William Ashley, An Introduction to English Economic History and Theory (New York, 1920), vol. 2, p. 381.   �������������������������������������������������������������������������������� Innovations were part of English economics from the time of Francis Bacon (1561– 1626) up to, and including, James Steuart’s important work, An Inquiry into the Principles of Political Economy: being an Essay on the Science of Domestic Policy in Free Nations. In which are particularly considered Population, Agriculture, Trade, Industry, Money, Coin, Interest, Circulation, Banks, Exchange, Public Credit, and Taxes (London, 1767), 2 vols.

The Political Economy of the Dutch Republic

20

Mercantilism can be seen as both a theory of state- and nation-building, and a strategy for industrial import substitution, though both elements are really two sides of the same coin. To the laggard countries of early modern Europe, the Dutch Republic provided important inspiration on both these accounts. That inspiration did not come from Dutch policies as such, but rather from asking what policies would have to be implemented in the laggard countries in order to achieve the same results as those observed in the Dutch productive system – always taking into account the particular local circumstances. The economists of the time looked at nations in the same way today’s businessmen look at the performance of companies, but instead of maximizing profit they wanted to maximize national value added (GDP) and employment. Just as companies may lose money and even go bankrupt, nations may lose out in this dynamic game. In this respect, from about 1550, the European theatre presented an extraordinary case of increasing poverty and failure – that of Spain – and resounding success obvious to any visitor, as in the cases of Venice or the Dutch Republic. Later, when it became evident that the Italian city-states had fallen behind the Dutch Republic, it was clear to the Italian economists that the Dutch and others had copied them and beaten them at their own game.

Engines of growth To the keen early observer the formula behind the wealth of the Venetians and the Dutch was reasonably straightforward. They compared the presence, strength and variety of the activities and institutions that dominated economic life in the rich countries with the absence or weakness thereof in the poorer ones. As Josiah Child wrote, when explaining the purpose of his 1688 economics treatise: ‘The means whereby [the Dutch] have thus advanced themselves, are sufficiently obvious, and in a great measure imitable by most other nations ..., which I shall endeavour

 ������������������������������������������������������������������������������� For a general discussion on mercantilism, see Erik Reinert and Sophus Reinert, ‘Mercantilism and Economic Development: Schumpeterian Dynamics, Institution Building and International Benchmarking’, in K.S. Jomo and Erik S. Reinert (eds), Origins of Development Economics, (London/New Delhi, 2005), pp. 1–23. For mercantilism as a theory of state- and nation-building see also Gustav Schmoller, The Mercantile System and its Historical Significance (New York, 1897/1967). For mercantilism as an economic strategy, see Cosimo Perrotta, ‘Early Spanish Mercantilism: The first Analysis of Underdevelopment’, in Lars Magnusson (ed.), Mercantilist Economics (Boston, 1993), pp. 17–58.   ����������������� Cesare Beccaria, Elementi di Economia Pubblica (Milan, 1769/1970), pp. 32–3). See also Sophus Reinert, ‘The Italian Tradition of Political Economy: Theories and Policies of Development in the Semi-Periphery of The Enlightenment’, in K.S. Jomo and Erik S. Reinert (eds), Origins of Development Economics (London/New Delhi, 2005), pp. 24–47. 

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to demonstrate in the following discourse.’ In 1613 Antonio Serra had made a similar observation, identifying the mechanisms that made Venice so wealthy and Naples so poor. The methodology used by Child, Serra and their contemporaries was in its essence one of benchmarking, of attempting to generalize and theorize from the experiences of failing and successful nations. This approach is in our view a core feature of mercantilism. ‘Mercantilism was born in response to the failure of Spain’ writes Perrotta, referring to the 1500s. We could add that mercantilism further developed – during the 1600s and 1700s – as a response to the successes of the Dutch Republic, of Tudor England, and of Colbert’s France. The best mercantilist writers were practical men, not people dedicated to what used to be called ‘metaphysical speculations’. One pragmatic and logical approach in order to establish a national economic policy was to look for what had worked, or not worked, in other nations. Economics as a science was therefore not born in wealthy and successful areas – in Venice or the Dutch Republic where wealth only seemed ‘natural’ – but in the poorer cities and nation-states that were trying to understand what factors had created the few ‘islands’ of wealth in an otherwise poor Europe. This is one of the key insights from Etienne Laspeyres, the author who probably most thoroughly has studied the economic literature produced by the Netherlands’ own writers during the time of the Republic. This chapter argues further that understanding how the Dutch Republic was perceived by contemporary European economists can best be achieved through the lenses of what Enlightenment economists referred to as emulation – ‘the endeavour to equal or surpass others in any achievement or quality’. Emulation can be seen as an alternative principle to the later Ricardian notion of comparative advantage. Historically, emulation has been the successful catching-up strategy of all nations industrializing by following the examples of Venice and the Dutch



 �������������� Josiah Child, Brief Observations Concerning Trade and Interest of Money (London, 1668).   ��������������� Antonio Serra, Breve trattato delle cause che possono far abbondare l’oro e l’argento dove non sono miniere (Naples, 1613). Erik S. Reinert and Sophus Reinert, ‘An Early National Innovation System: the Case of Antonio Serra’s 1613 Breve Trattato’, Institutions and Economic Development/Istituzioni e Sviluppo Economico, 1/3 (2003): 87–119.   ������������������������������������������������������������������������������� Perotta, ‘Early Spanish Mercantilism: The First Analysis of Underdevelopment’, p. 19.   ������������������� Etienne Laspeyres, Geschichte der Volkswirtschaftlichen Anschauungen der Niederländer und Ihrer Literatur zur Zeit der Republik (Nieuwkoop, 1863/1961), reprint. On Laspeyres’ book, see Wolfgang Drechsler, ‘Etienne Laspeyres’ History of the Economic Thought of the Netherlanders: A Law & Economics Classic?’, European Journal of Law And Economics, 10/3 ( (2000): 235–42.   ������������� Istvan Hont, Jealousy of Trade. International Competition and the Nation-State in Historical Perspective (Cambridge, MA/London, 2005). Erik Reinert, How Rich Countries Got Rich … and Why Poor Countries Stay Poor (London/New York, 2007).

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Republic (asymmetrical trading), while free trade and comparative advantage have been successful strategies once a symmetrical trading relationship (trade among nations at the same level of development) has been achieved.10 Emulating successful nations was a practice which had already started during the late 1400s with Henry VII and the Tudors in England (cf. infra). From a monetary point of view the basic question was a relatively simple one. Everyone knew that huge amounts of gold and silver flowed into Spain from the Americas. Starting around 1550, however, it became increasingly clear that this flow of bullion did not cause generalized wealth in Spain. The gold and silver ended up elsewhere, in nations that generally had no mines. It was clearly observable that wealth and purchasing power left the nations producing the raw materials – even if the raw materials were gold and silver – and accumulated in those nations that were home to a diversified manufacturing sector. In various forms, the statement that manufacturing was the real gold mine, much more valuable than the gold mines themselves, is found all over Europe from the late 1500s through the 1700s, from Giovanni Botero (1590) to Tommaso Campanella (1602) and Antonio Genovesi (in the 1770s), all in Italy, to Gerónimo Uztáriz (1724/1751) in Spain, and Anders Berch (1747) in Sweden.11 Their basic understanding was that only in barren areas lacking natural resources and with few possibilities for food production – such as in Venice and in the Dutch Republic – would such development come ‘naturally’. In other areas the transition from diminishing return activities (agriculture) to increasing return activities (manufacturing) – as they were identified by Serra (1613) – from ‘natural activities’ to ‘artificial activities’ – using the terminology of Thomas Mun (1621) – required heavy-handed government policies. Here again, the achievements of the Dutch Republic – rather than its policies– was the object of attention of foreign economists and foreign rulers alike. Successful business and its profits were also viewed very differently at the time of the Dutch Republic than in neoclassical economics. Businessmen and traders of all times and ages have sought profit. It is therefore somewhat illogical to find that at the core of today’s economic theory of capitalism is a situation where no profit, or very little, is made – that of ‘perfect competition’. The kind of economic success that creates national wealth is, in effect, Schumpeterian dynamic imperfect competition, that is, the kind of rents that increase the size of the economic pie. Seen in this perspective, economic development is a situation 10

 ��������� Reinert, How Rich Countries Got Rich, passim.  ��������������������������������������������������������������������� References to Botero, Genovesi, and Campanella; Gerónimo de Uztáriz, The Theory and Practice of Commerce and Maritime Affairs (London, 1751), vol. 1, p. 9; �������������� Anders Berch, Inledning til Almänna Hushålningen, innefattande Grunden til Politie, Oeconomie och Cameralwetenskaperna (Stockholm, 1747), p. 217; Giovanni Botero, The Reason of State (New Haven 1956), p. 152; Tommaso Campanalla, Manuscript in Bibliotheque Nationale de France, Ital. 875, entitled ‘Di fra Tomaso Campanella Discorsi della Monarchia di Spagna Fatti nell’anno 1590 che fu 30 dell età sua’. 11

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that is tied to successful rent-seeking of a particular kind. If capitalism is about making profits, then economic development is successful profit-making – not merely ‘normal’ profits – when and if these profits, through markets and policy measures, result in an increase in the standard of living of the nation’s population. If the purpose of the actors of an economic system is to create ‘rents’, it is not meaningful to label rent-seeking in general as something ‘wrong’. Our approach to mercantilism is therefore very different from that of Ekelund and Tollison (1981), but closer to that of Thorstein Veblen, whose distinction between ‘good’ and ‘bad’ capitalists, and implicitly ‘good’ and ‘bad’ rent,12 was whether they increased the size of the economic pie available for distribution. Many of the rents created and collected in the Dutch Republic did so. In our view, the study of early successful economic development, or early successful rent-seeking, is also useful in order to explain differences in economic growth today. Some of the most powerful economic mechanisms – like compound interest and increasing and diminishing returns – are timeless. As Alfred Marshall (1890) points out, diminishing returns appear very early in the history of mankind, in the Genesis of the Bible, when ‘the land was not able to carry them all’. The existence of diminishing returns made economics into ‘the dismal science’. We would similarly claim that the opposite mechanism – increasing returns – is at the core of the synergetic and cumulative mechanisms that made early economic development possible in Europe. A study of the economists contemporaneous with the Dutch Republic shows that these mechanisms were operating in the Republic and were – with varying degrees of clarity and sophistication – known to them.

Imperfect competition, rents and synergies Perhaps the most significant economic breakthrough marking the end of scholasticism and the birth of the Renaissance was the recognition that economic wealth was not a zero-sum game. Giovanni Botero (1590), from Piedmont in Italy, was one of the first economists and social scientists who clearly saw that the gain of one actor did not have to mean the loss of another. From the very beginning, it was clear that the main force that brought the world out of the zero-sum mode was the manufacturing industry. In his Ragion di Stato, Botero himself writes ‘such is the power of industry that no mine of silver or gold in New Spain or Peru can compare with it, and the duties from the merchandise of Milan are worth more to the Catholic King than the mines of Potosi and Jalisco. Italy is a country in which … there is no important gold or silver mine, and so is France: yet both countries are rich in money and treasure thanks to industry.’13 12  �������������������������������������������������� To Veblen ‘good’ capitalists base their income on production, whereas ‘bad’ capitalists base their income on vendibility. It may be argued that Veblen did not see the importance of finance for innovations. 13  ����������������� Giovanni Botero, Della ragione di stato. Libri ������������ dieci (Rome, 1590), p. 152.

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There existed, then, profits (rents) that did not necessarily reduce the wealth of others. This was particularly the case with manufacturing-based rents rather than feudal rents. Our proposition is that early economic development in all of the most successful European states – Venice, the Dutch Republic and England – was able to harvest three different kinds of rents which, for the nations in question, increased the size of the economic pie. The three kinds of rents were: manufacturing rents, at the core of which are increasing returns that are absent in agriculture (Serra 1613); long-distance trading rents; and raw-material based rents. In Venice the raw-material based rent was from salt. Frederic Lane comments that the young Venetian Republic hesitated to go to war, but was always determined in defending the saltpans under its domination.14 Salt was the first non-luxury long-distance commodity traded, and the control of salt has been important from Ancient China to the Mayas of Yucatan. Due to the power that the control of the salt supply brought with it, this commodity was often brought under government control, e.g. in Ancient China. The importance of salt for the finance and growth of the Venetian Republic is well documented in Jean-Claude Hocquet’s Il Sale e la Fortuna di Venezia.15 In the Dutch Republic the raw material controlled was fish, and there are important Schumpeterian elements attached to the development of the Dutch fisheries. The first one is the discovery of pickling, or salting, of herring in the fourteenth century. The importance of pickling is emphasized by Huet,16 who puts the date of its invention at the first part of the fourteenth century. In order to fully utilize this new invention, a second innovation was needed: a large vessel, the herring buss carrying from 18 to 30 men – a ‘factory ship’ gutting and salting the fish while at sea – which could remain at sea for up to eight weeks.17 This technology was fully developed by 1600 and remained stable for the next 200 years. In England the raw-material based rent was wool, the control and use of which formed the basis for the economic strategy of the Tudors, starting in 1485. The export taxes put on wool were an important element in the Tudor strategy of industrializing England. Daniel Defoe (1728) propounded a vision of the first Tudor monarch Henry VII, who came to power in 1485, to industrialize on the basis of assuring England’s competitors having more expensive raw materials than the English manufacturers. Growing up with his aunt in Burgundy, Henry VII  ���������������� Frederick Lane, Venice. A Maritime Republic (Baltimore, 1973), p. 58.  ���������������������������������������������������������������������������������� Also in the Dutch Republic, salt refining, essential to the fishing industry, was among the important processing industries or trafieken [Jan de Vries and Ad van der Woude, The First Modern Economy. Success, Failure and Perseverance of the Dutch Economy, 1500–1815 (Cambridge, 1997)] but did not reach the strategic importance it had earlier in Venice. 16  �������������������� Pierre Daniel Huet, A View of the Dutch Trade in all the States, Empires, and Kingdoms of the World (London, 1722), p. 25. 17  ���������������������������� De Vries and Van der Woude, The First Modern Economy, p. 244. 14

15

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(1457–1509) observed the general wealth there, created by the manufacturing of woollen cloth with English raw materials. After conquering the throne of England, Henry started encouraging their own woollen manufacturers, ‘building upon other Mens (sic) Foundations, and improving on the Inventions of the Flemings’ as Daniel Defoe puts it.18 The new king raised the export duties on raw wool and the import duties on finished cloth. Under Elizabeth I, when sufficient manufacturing capacity had been built up, wool export was prohibited. The effect of these policies can be seen in Florence, where they caused a general economic decline and an attempt by the Medici to diversify into silk. The early economists argued that rents spread through the labour markets by various mechanisms. When the division of labour grows, new activities require more skills, possibilities for technological spillovers are created (cf. infra), there is more competition for labour, alternative ways of making money raise the wage level, and – as in the nineteenth-century United States – a ‘high wage strategy’ becomes a political possibility. As these rents increase, the tax-base of the nation also increases. Among German Cameralists, it was observed that people working with machinery were able to pay higher taxes than those who were engaged only in manual work, and advancing manufactures and advanced technology therefore became a logical part of a strategy to raise the income of the state. The advanced mercantilists had a systemic view of society, and – with differing degrees of sophistication – they saw the synergetic and cumulative interaction of the factors mentioned above as being the true engines of growth and welfare. These cumulative mechanisms, they argued, create strong path dependency: ‘So true it is, that when commerce has once changed its course, it is the most difficult thing in the World to bring it back again’ says Pierre Daniel Huet (1630–1721) in his work A View of the Dutch Trade in All the States (1722). Joshua Gee, in his 1729 treatise, presents a similar argument: The Trade of a Nation is a mighty Consequence (sic), and a Thing that ought to be seriously weighed, because the Happiness or Misfortune of so many Millions depend upon it. A little Mistake in the Beginning of an Undertaking may swell to a very great one. A Nation may gain vast Riches by Trade and Commerce, or for Want of due Regard and Attention, may be drained of them (emphasis added).

The mercantilists discussed the ‘stickiness’ and cumulativeness of national wealth much in the same way a business strategist today would discuss the importance of industry market shares. In both cases, volume is a key to lower costs and consequently to more market power. The nations that attempted to copy the Dutch Republic were acutely aware that the Dutch strategy was one of high volume and  ������������������ See Daniel Defoe, A Plan of the English Commerce (London, 1730), p. 300, and Erik S. Reinert, ‘Catching-up from Way Behind – a Third World Perspective on First World History’, in Jan Fagerberg et al. (eds), The Dynamics of Technology, Trade, and Growth (Aldershot, 1994). 18

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low margins (e.g. Uztáriz 1724/1751), and this strategy created considerable barriers to entry for would-be competitors. In the countries which were attempting to catch up with the Dutch Republic, the accumulated learning and economies of scale in Dutch trading and manufacturing needed to be compensated not only through tariffs and subsidies; laggard countries also faced considerable barriers caused by the leading nation’s ‘increasing returns from the use of force as an economic service’.19 The most sophisticated model of economic growth at the time – and one that also fits the Dutch Republic quite well – is that of Antonio Serra (1613), who analyses the wealth of Venice and the poverty of Naples. Serra’s is a system where ‘the number and variety of industrial professions’ (i.e. the degree of division of labour), ‘the quality of the population’, ‘the presence of a great commerce’, economic policy (‘the regulations of the State’) – under the presence of increasing returns to scale in manufacturing (but not in the production of raw materials) – create a selfreinforcing system of growth where each factor reinforces the others.20 Venice is aided by her extensive manufactures; a factor which brings a great many people there, not only because of the trades themselves, in which case the effect would be attributed to them, but also as a result of the concurrence of these two factors together, because one gives strength to the other, the great concourse due to commerce and due to the geographical situation being increased by the manufactures, and the manufactures being increased by the great concourse due to commerce, while commerce is made greater by the same concourse of people. (Serra 1613, translated in Reinert 1999; emphasis added.)

Daniel Defoe, in his Plan of the English Commerce (1730), expresses a simpler system of cumulative causation where the interactions of manufactures and navigation mutually reinforce each other: Manufacture supplies Merchandise Navigation supplies Shipping, Manufacture is the Hospital which feeds the Poor Navigation is the Nursery which raises Seamen Manufacture commands Money from Abroad. Navigation brings it Home Manufacture leads the Ships out Navigation loads them in Manufacture is Wealth Navigation is Strength.

19  ���������������� Frederick Lane, Profits from Power. Readings in Protection-rent and Violencecontrolling Enterprises (Albany, 1979), pp. 45–8. 20  �������������������������� Reinert and Reinert, 2003.

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To conclude, Manufacture for Employment at Home, and Navigation for Employment Abroad, both together, seem to set all the busy World at Work; they seem to joyn Hands to encourage the industrious Nations, and if well managed, infallibly make the World rich.21 (emphasis added)

A different way of expressing the necessity and interrelationship of several factors at once is to refer to them as ‘pillars’ that are all needed to sustain the economic structure, as Pieter de la Court does for the Dutch Republic in his Interest van Holland (1662/1702). The metaphor of pillars effectively conveys the message that all the elements are essential. Navigation, the fishery, commerce, and manufactures are the four pillars of the State; that these ought not to be weakened nor incommoded by any incumbrance whatsoever; for it is they (sic) make the inhabitants to subsist, and enrich the country, by bringing into it foreigners of all sorts &c.’ (emphasis added)

Contemporary authors like Huet (born in 1630) and Uztáriz (born in 1670) emphasize the importance of the synergies between fisheries and manufacturing in the Dutch Republic: that manufacturing alone would not have created the same wealth as manufacturing and fisheries do in combination. This argument is also found in modern scholarship which emphasizes the numerous cross-linkages from the fishing industry in the Republic to the rest of the economy.22 The importance of these kinds of linkages and synergies for agricultural development, which recognized the benefits accruing to agriculture from the proximity of manufacturing, was perhaps the most important new insight in economics in the early 1700s. ‘Husbandry … is never more effectually encouraged than by the increase of manufactures’ writes David Hume in his History of England (1767, vol. III). The Dutch fisheries and manufacturing sectors combined may indeed have played the same role of modernizer of the agricultural sector as that which so many eighteenth- and nineteenth-century economists attributed to the manufacturing sector alone. Agricultural labour productivity in the maritime sector of the Republic was double that of the inland sector, partly reflecting a greater capital intensity in the maritime zone.23 Already in 1596 Giovanni Botero commented on the strength of Dutch inventions, imitations, and manufacturing as well as on the strength of Dutch husbandry. Building on earlier observations by Florentine chronicler Lodovico Guicciardini (1567), he noted that the pastures and cows ‘produce a lot of milk’, and ‘it is assumed that cheese and butter bring in more than one million in gold annually because large quantities are exported to the surrounding countries, to 21

 �������������� Daniel Defoe, A Plan of the English Commerce, pp. 68–9. Emphasis in text added.  ���������������������������� De Vries and Van der Woude, The First Modern Economy, pp. 236, 268. 23  ����������������������� Jan Luiten van Zanden, De economische ontwikkeling van de Nederlandse landbouw in de negentiende eeuw, 1800–1914, A.A.G. Bijdragen 25 (Wageningen, 1985). 22

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Germany, England and Spain’. The Dutch sheep ‘produce three or four lambs at a time, and the cows often two calves; the cows produce so much milk that one who has not seen it would not believe it’.24

Nature’s incentives Although some mercantilists stressed the importance of fish as a raw material controlled by the Dutch, it was clear to all of them that the Netherlands lacked most other natural resources. Pieter de la Court – himself a Dutchman – devotes an entire chapter to the abysmal lack of natural resources in Holland. ‘Our country yields almost nothing out of its own bowles’, he says25, also quoted by McCullagh.26 The mercantilists, however, believed this scarcity of resources was a blessing rather than a curse. Joshua Gee27 is among the many writers who ascribe the Dutch engagement in trading to the deficiency of valuable land. Botero (1596/1622) comments on Holland’s lack of natural resources, but wealth in products. The absence of raw materials creates an abundance of goods made from the same raw materials: ‘Holland, without vines, without flax, without wood and with very little cultivated soil, abounds incredibly with wine, linen, ships, and grain.’28 Not only did the Netherlands lack natural resources, the ports were also ‘positively bad’.29 Uztáriz comments in the following manner on the connection between Dutch barrenness, its lack of possibilities for food production, and its specialization in other areas: … by the help of commerce, they are become so populous, that were all their broad rivers, arms of the sea, gulphs, marshes, and waste land, converted into fruitful pastures, all would not suffice to maintain the inhabitants with food. But as a fourth part of that district is not cultivated, and its pastures are about another fourth, the rest being water, or land that yields neither fruit, grass, trees, or any thing useful in life, some writers insist that their harvests cannot support a fourth of their own consumption, the worst circumstance a people can labour under.30  ����������������� Giovanni Botero, Relazioni universali (Venice, 1596/1622), p. 48.  ���������������������� [Pieter de la Court], The True Interest and Political Maxims of the Republick of Holland and West-Friesland. (London, 1702), part 1, chapter 9. 26  ���������������������� W. Torrens McCullagh, The Industrial History of Free Nations, Considered in Their Relation to Their Domestic Institutions and External Policy, vol. 2, (London, 1846), p. 270. 27  ������������ Joshua Gee, Trade and Navigation of Great Britain Considered (London, 1729), p. 128. 28  �������� Botero, Relazioni universali, p. 57. 29  ����������� McCullagh, The Industrial History of Free Nations, p. 12. 30  ��������� Uztáriz, The Theory and Practice of Commerce and Maritime Affairs, vol. 1, pp. 149–50. 24

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A late English author comments, bordering on the heroic, on how the harsh surroundings moulded the Dutch character: That undismayed and undisheartened the early Frisian race should have lived on amid their often-broken, but as often-mended dykes, learning by each new catastrophe how to improve on former expedients, with no rash confidence that even these repairs would prove effectual, is the first and, on the whole, perhaps the greatest fact in the book of their national life. From it all the rest of their dauntless venture, daring and endurance, seems to grow naturally and credibly. What work could they be put to do harder than this? Day and night, all the year round, from sire to son, to keep wakeful watch lest their country should sink into the sea!31

A late contribution to this discussion, from Sweden, sums up the mercantilist argument with emphasis on population density. The author is a student of Anders Berch who held the Chair of Economics in Uppsala: How things really are in national economics, is nowhere clearer than in the case of the United Netherlands. They have virtually no domestic (resources), but still, through the industry of its large population, exceed in strength the immense but sparsely populated and idle Spain. (The Netherlands) knows well how to use the folly of others to its own benefit. We see how poor Spain is with all its gold and silver mines, the best ports and the best soil in the world, because of its lack of inhabitants. On the other hand how its large number of inhabitants make the United Provinces mighty, with their miserable ports and the worst climate on earth.32

Early economists paid much attention to what Serra (1613) calls ‘the quality of the people’. In Serra’s book, the Genovese work harder than the Venetians, but other factors (like geographical position) cause the Venetians to come out as being the wealthiest. In the ‘quality of the people’, the Dutch score very high with early economists, but – most importantly in our view – the industriousness of the people is normally mentioned in connection with the scarcity of resources: the one is considered to be almost a result of the other. That necessity is the mother of inventions (and imitations) was obvious to most of the contemporary economic observers, including Montesquieu. A final theme touched upon by many mercantilists is the importance of foreign immigration – particularly the skills that migrants brought with them. Immigration was often increased by religious and other prosecutions, a fact that both Holland and England – starting with the Tudors – consciously used to their advantage. 31

 ����������� McCullagh, The Industrial History of Free Nations, p. 8.  ����������������� Gustaf Westbeck, Tankeförsök om Särskilda Näringars Idkande (Uppsala, 1747), pp. 4–5. 32

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Attracting skilled workers from competing countries was an important part of the strategy of emulation, and preventing such migration was an equally important strategy to prevent others from emulating.33 The Venetian Republic prohibited the migration of skilled workers under threat of the death penalty, while at the same time the Dutch were most welcoming of such workers: Not only were strangers of every race and creed sure of an asylum in Holland, but of a welcome; and singular pains were taken to induce those whose skill enabled them to contribute to the wealth of the state to settle permanently in the great towns.34

In his first work – Het Welvaeren der Stad Leyden – Pieter de la Court indeed puts immigration at the centre of the engine of growth in that city. Leyden’s welfare is neither the result of wise laws promoting manufacturing nor of the guilds, but a result of warring neighbours. The policy here must be not to tax foreigners more than the locals. This principle must also be extended to the students. If costs – rents, luxury taxes etc. – are too high, manufacturing will be forced into the countryside.35

Lessons from the Dutch experience The wealth of the Dutch Republic – their ‘great treasures’ and ‘how they have made themselves absolute owners of all the commerce in Europe’ as declared in the subtitle of one book on the subject36 – was of great interest to the other European nations. From the late 1500s through the 1700s political economists from outside the Netherlands frequently comment on the economic success, and later decline, of the Dutch Republic, and attempt to draw lessons from the Dutch experience for domestic use. The economic success of the Dutch Republic, and its mirror image in the failed economic policies of Spain during the same period, provided inspiration to economists of many nations.37 ‘The worse the situation, the less laissez-faire works’, says Keynes. The Dutch Republic, having an early advantage both in trade and in manufacturing, could 33  ������������������������������������������������������������������������������� Sophus Reinert, ‘The Italian Tradition of Political Economy’, in K.S. Jomo and E.S. Reinert, 2005. 34  ����������� McCullagh, The Industrial History of Free Nations, vol. 2, p. 267. 35  ����������� Laspeyres, Geschichte der Volkswirtschaftlichen Anschauungen der Niederländer, pp. 185–6. 36  ��������������������������� Pedro Francisco Goyeneche, Comercio de Holanda, o el gran thesoro (sic) historial y político del floreciente comercio, que los holandeses tienen en todos sus estados y señoríos del mundo (Madrid, 1717). 37  ������������� Daniel Huet, A View of the Dutch Trade in all the States, Empires, and Kingdoms of the World, p. vii.

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achieve economic success with much less policy intervention than could the nations that followed. Dutch policy and Dutch economics were by nature fairly pragmatic, essentially responding to the policy of its neighbours and, as Laspeyres says, it is not easy to find consistent principles behind the policies, as it was in France.38 We would argue, though, that the goals behind Dutch policy were not much different from those of Colbert’s France. Having had a first mover advantage it was, however, not necessary for the Dutch to use customs duties extensively in order to promote manufacturing until into the eighteenth century, when the catching-up policy of their neighbours was successful to the point of seriously wounding Dutch manufactures. Nevertheless, the primacy the Dutch Republic put on manufacturing in the seventeenth century is clear, as when de la Court says: ‘So desirous were the people of Amsterdam to increase their manufactures, that in 1614 they offered large sums of money to the employers and artisans of Aix and other places to induce them to come and settle in their city, and their offers, we are told, were accepted.’39 The goals of the Dutch and the goals of the French, English and later German mercantilist writers that followed were essentially the same, but the contexts were different, and consequently also the policies. French economic writers observed the development of their neighbours in the Dutch Republic with much interest. The rudimentary tariff legislation under Henry IV, in 1581, specifically targets Dutch cloth, and so do the policies of the first French mercantilist Barthélemy Laffemas in 1597.40 The voluminous correspondence of Colbert, who by his contemporaries all over Europe is almost unanimously referred to as ‘the great Colbert’, contains literally hundreds of references to the political economy of the Dutch.41 One of Colbert’s complaints is the Dutch prohibition of imports from France, and also – a complaint echoed by Huet – the role of the Dutch in ‘copying and falsifying’ French products. However, the early Dutch protectionist measures seem to have been directed at France in times of conflict and/or war. As Laspeyres comments, Dutch trade policy is distinguished by the fact that systematic protection only occurs in the period of decline, starting around 1725. Charles Dutot, a cashier in the Compagnie des Indes, in his Political Reflections upon the Finances and Commerce of France (1739) ends the book with the quote from Pieter de la Court mentioned above: ‘Navigation, the fishery, commerce, and manufactures are the four pillars of the State.’ These elements – navigation, fishery, commerce and manufacture plus the role of foreigners – are noted by most 38

 ����������� Laspeyres, Geschichte der Volkswirtschaftlichen Anschauungen der Niederländer, p. 134. 39  ����������� McCullagh, The Industrial History of Free Nations, p. 267. 40  ��������������������� Barthélemy Laffemas, Reiglement (sic) general pour dresser les manufactures en ce rayaume, et couper le cours des draps de soye, & autres merchandises qui perdent & ruynent l’Estat (Paris, 1597). 41  ��������������������� Pierre Clément (ed.), Lettres, Instructiones et Mémoires de Colbert (Paris, 1861– 1872).

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of the foreign commentators when they attempt to explain the wealth of the Dutch, however with different emphasis. In England few mercantilists of the 1600s and 1700s fail to mention the Dutch, who are almost always cited as an example for emulation. Josiah Child opens his 1668 book with a comment on the prodigious increase of the Netherlanders which is ‘the envy of the present and may be the wonder of all future generations’. In his 1693 book, Child returns to the Dutch as being the example to imitate: ‘If we intend to have the Trade of the World, we must imitate the Dutch, who make the worst as well as the best of all manufactures, that we may be in a capacity of serving all Markets, and all Humors.’42 English economist William Petty (1623–1687) studied in The Dutch Republic for two years as a young man, and even wrote a ‘Collection of the Frugalities of Holland’ – a text lost at sea, however. What was later to become ‘Petty’s Law’ on the stages of growth of various economic sectors, was based on his observations of Holland. Petty saw the primary sector of an economy as dominating initially, later to be followed by growth of the secondary (manufacturing) sector, and finally the tertiary service sector would become dominant. As did virtually all pre-Smithian economists, Petty viewed the transition from agriculture to manufacturing as a necessary evolution. For the latecomers, this required tariffs. It is important to note that at the time, the term ‘free trade’ was used to describe the absence of trade monopolies, not the absence of tariffs.43 The obvious urban biases of early economic development made Petty suggest that England, like Holland, should industrialize and buy its foodstuffs abroad. By observing Holland it became clear that density of population obviously was one of the secrets of riches. Petty – as did so many of his contemporaries – not only wanted population to rise as rapidly as possible, he wanted to diminish the population of the already thinly populated areas of Britain and bring as many as possible to London. Italian economists were the first to recognize the synergetic growth of the cities as a product of the division of labour and the inventions that were only possible in manufacturing, not in the production of raw materials. An early and muchquoted work on the Netherlands is Descrittione di tutti i Paesi Bassi written by the Florentine Lodovico Guicciardini (1521–1589). The core of this book consists of a detailed description of the economic potential of the many towns in different parts of the Low Countries. In Sulle grandezze delle città (1588) Giovanni Botero considers cities to be not only the cradle of manufacturing, but also of freedom, culture and wealth in Europe. In what is a very early book on geography and ethnology at the global level – Relationi universali (first edition 1596) – Giovanni Botero partly uses Guicciardini as a source, but has clearly also visited the Netherlands himself. Botero gives an account of the ‘Schumpeterian’ qualities of the Dutch both as inventors and  �������������� Josiah Child, A New Discourse on Trade (London, 1693), p. 90.  ���������������� Edwin Seligman, Curiosities of Early Economic Literature (San Francisco, 1920),

42 43

p. ix.

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imitators, and lists some of the things they have invented. In the style of the early Italian economists Botero emphasizes ‘the quality of the people’: the Dutch ‘drink immoderately’ and ‘believe lightly’ and ‘even the women have very great abilities in commerce’.44 During the settecento Italian economists like Antonio Genovesi and Cesare Beccaria analyse how Italy has fallen behind the Dutch Republic and other countries that have taken over Italy’s previous strength in manufacturing and trade. This comparative analysis provides important inputs into the intellectual ferment that created the Italian risorgimento.45 Spanish economists were naturally very interested in the economic success of the Dutch Republic, where the successes of the sixteenth and seventeenth centuries provided such a contrast to the decadence of Spain during the same period (from about 1550). The economic decadence of Spain did not occur for lack of competent economic advice from its own economists.46 Spanish economist Gerónimo de Uztáriz (1670–1732) is of particular interest not only because his very influential Teórica y practica de comercio y de marina (1724/1751) contains many references to the Dutch Republic, but also because of Uztáriz’ personal knowledge of the Netherlands due to a military career of almost 20 years. He attended the Royal Academy at Brussels and served in the Low Countries both during his military service and later as captain in the infantry, before becoming Prime Minister to the Spanish viceroy of Sicily in 1705.47 Furthermore, using the work of Uztáriz we can observe how ideas travelled in Europe at the time. His book was translated into English, French and Italian. Uztáriz’ first publication was the foreword to the 1717 Spanish translation of Huet’s Commerce de Holland mentioned above (in Goyeneche). Uztáriz’ conclusion is in line with the contemporary mainstream: ‘[Manufactures] is a mine more fruitful of gain, riches, and plenty, than those of Potosi’,48 and he presents a long list of policy measures aimed at making the Spanish economy more like that of the Dutch Republic. In Germany, during a period of violence and extreme difficulty, Veit Ludwig von Seckendorff (1626–1692) was the first important economist.49 In the reconstruction of Germany after the Thirty Years War (1618–1648), Seckendorff  �������� Botero, Relazioni universali, p. 49.  ������������������������������������������������������ Reinert, ‘The Italian Tradition of Political Economy’. 46  ������������������������������������������������������ Earl Hamilton, ‘Spanish Mercantilism before 1700’, in Facts and Factors in Economic History, Articles by Former Students of Edwin Francis Gay (Cambridge, MA, 1932). 47  ��������������������������������������������������������������������������� Earl Hamilton, ‘The Mercantilism of Gerónimo de Uztáriz: A reexamination’, in Norman Himes (ed.), Economics, Sociology and the Modern World (Cambridge, MA, 1935), pp. 114–29 and Reyes Fernández Duran, Jerónimo de Uztáriz (1670–1732). Una Política Económica para Felipe V (Madrid, 1999). 48  �������������������������������������������������������������������������������������� Potosi, at about 4,000 metres in present Bolivia, was the richest of all mines in the world. At the time it was the second largest city in the world after London. 49  �������������������������������������������������������������������������������� See Erik S. Reinert, ‘A Brief Introduction to Veit Ludwig von Seckendorff (1626– 1692)’, European Journal of Law and Economics, 19, May (2005): 221–30. 44 45

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– in the service of Duke Ernst der Fromme (the Pious) of Sachsen-Gotha – came to set an example for the management of the many small German states. Seckendorff travelled to the Netherlands, accompanying Duke Ernst, and the wealth and religious tolerance he observed there made a considerable impression on him.50 To Seckendorff, the Dutch appeared to be ‘examples of the wisest and in production and trade (in Gewerb) the most experienced people’. From his travels in the Dutch Republic, Seckendorff came to understand the crucial need for manufactures and the importance of population density. Economic activities needed to be clustered rather than spread, an argument that Antonio Serra had already raised in theory in 1613. Seckendorff’s economic measures therefore included the promotion of manufactures and the resettlement of artisans from the countryside to the cities, where they were likely to make a much better living. He also promoted the extension of agriculture and activities adding value to the produce of the land.

The Decline of the Dutch Republic Starting in the 1630s, Dutch envoys and authors started reporting on other nations’ growing willingness to promote and protect their own shipping and manufacturers. The English navigation acts of 1651 and Colbert’s acts protecting French manufacturing (1660 and 1663) stimulated the transfer of production and trade from Dutch to English and French hands. The measures were clearly hurting Dutch interests, and in Holland the discussion at the time focused on whether the English or the French policy was the most harmful to the nation.51 As the eighteenth century advances, we find more and more comments about the decay of Holland in the economic literature. An important reason for the decline is seen in other nations’ attempts to take over the activities that created the most profit for the Dutch – that is, a successful policy of emulation and ‘import substitution’ both in shipping and manufacturing (a point made by both Bernard Mandeville and James Steuart). In this section we shall look at how the contemporary economists – and later Adam Smith – were able to identify elements that explain this decline. Briefly comparing these insights to modern scholarship suggests a more solid hypothesis about the fallacy of the city-state political economy in general and that of the Dutch Republic in particular. Adam Smith saw the deindustrialization of Holland as a result of high taxation on bread and other necessities of the common man: ‘These and some other taxes of the same kind, by raising the price of labour, are said to have ruined the greater

50  ������������������������ Michael Stolleis (ed.), Staatsdenker in der Frühen Neuzeit (Munich, 1995), p. 158. 51  ����������� Laspeyres, Geschichte der Volkswirkschaftlichen Anschauungen der Niederländer, pp. 125, 127.

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part of the manufactures of Holland.’52 Typical of economic theory as it developed from his writings, Smith considered the decline of Holland as a) self-imposed by internal mistakes (indirectly by too big government); b) the result of a single factor of explanation, understood at the level of prices, rather than in the realm of production; and c) void of any analysis of power relations, so important to the mercantilists. England’s success in ‘blowing the Dutch out of the waters’ played no role in Smith’s analysis. Asking if the decline of the Dutch Republic was inevitable is a tempting exercise in counterfactual history. One could ask if an earlier reversal of the policy of free trade and small duties, rather than only in the 1720s, would have given a different outcome. As O’Brien, Griffiths and Hunt53 say ‘Apart from Switzerland, few states followed Holland in allowing attachment to commerce and free trade to undermine national industries.’ An anonymous Italian visitor to Holland in 1786 makes an additional interesting point54: ‘Why do the Dutch, who are so skilled in commercial affairs, not establish an easy remedy to the decadence of their manufactures? They do still have poor provinces that are maintained by the charity of the other provinces. Why do they not establish the manufactures in these (poor) provinces, copying the English who have established the greatest part of their manufactures where money is scarce, and, as a consequence, food is cheaper?’55 Probably the key element here is that the industrial developments in England at the time were qualitatively entirely different from the industries that were dying out in the Dutch Republic. The late 1700s in England represent the birth of a new techno-economic paradigm:56 during this period the technological improvements in cotton spinning, the leading industry, increased English labour productivity by up to 25 per cent per year. Having lost touch with the technological frontier, as the Dutch Republic clearly had, competing against areas where such rare ‘productivity explosions’ take place is virtually impossible. Any attempt to meet the challenge of English cotton spinning, which was well ahead on the learning curve, would

52  ����������������������������������������������������������������������������� ‘In Holland the money price of the bread consumed in towns is supposed to be doubled by the price of such taxes’, (Smith, The Wealth of Nations, vol. 1, p. 405). 53  ���������������������������������������������������������������������������� Patrick O’Brien, Trevor Griffiths and Philip Hunt, ‘Political Components of the Industrial Revolution: Parliament and the Cotton Textile Industry, 1660–1774’, The Economic History Review, New Series, 44/3 (1991): 418. 54  ����������� Anonymous, Relazione di una scorsa per varie provincie d’Europa del M.M .... ��a Madama G. in Parigi (������������������������� Pavia, 1786), pp. 110–11. 55  �������������������������������������������������������������������������������� There were attempts to prevent the migration of industry to the poorer areas of the Republic (De Vries and Van der Woude, The First Modern Economy, pp. 293, 337). However, it is argued that this would not have improved the situation very much because ‘the lower costs did not enlarge the market’, and this policy would therefore only have delayed the deindustrialization (ibid., p. 337). 56  ����������������������������������������������������������������������������������� Carlota Perez, ‘Technological Revolutions, Paradigm Shifts and Socio-institutional Change’, in Erik S. Reinert, Globalization, Economic Development and Inequality: An Alternative Perspective (Cheltenham, 2004).

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have required firm policies and high tariff barriers. One hundred years later, the United States built its steel industry against English competition behind tariff barriers of up to 100 per cent. Such policies would have been completely alien to the principles that the Dutch Republic had inherited from the Golden Age, a time when the Republic itself had been in the position where England now was: the main beneficiary riding and cashing in on the waves of new technologies. To the extent our anonymous Italian of 1786 provides his own explanation for Dutch decline, this development is due to the ‘laziness’ of the Dutch inhabiting ‘this coffee house of Europe’. He admires the past achievements of the Dutch, and recognizes the classical mercantilist argument that commerce ‘domesticates Man and forms him to society’. But he argues that the Dutch Republic at this point suffers from an overdose, where commerce dominates over everything else and exhausts society rather than perfecting it further. In a phrase that recalls the analysis of the decadence of Spain 200 years earlier, our Italian traveller refers to people who are so wealthy that they feel they would lose their honour if they worked. Although manufacturing is decaying all over the Republic, the situation in Utrecht – which is the refuge of the national nobility – is worse than elsewhere: manufacturing has disappeared almost completely, says the Italian traveller. The data surrounding the decline of the Dutch Republic are controversial, but the sequential decline of the Hanseatic League, the Italian city-states and the Dutch Republic indicates that the era of small city-states was over. Two overriding factors seem to combine, irreversibly increasing the minimum efficient size of capitalism: Larger nations, like France and England, have themselves built manufactures and overseas trade, and their conscious attempts to extend the synergies of the citystate to a larger geographical territory is a core element of mercantilist nationbuilding.57 Regarding the decay of the Dutch Republic, we find this type of analysis confirmed by contemporary economists. In his ‘Nature and Character of States’ (Natur und Wesen der Staaten) (1760), Johann Heinrich Gottlob von Justi (1717–1771) provides some very perceptive comments on the decay of Holland. Justi uses the fact that Holland is built on water to create a metaphor conveying the message that a certain era – a certain way of producing wealth – has come to an end. Holland is like a house on pillars on water, where the pillars are rotting:

 �������������� The idea of a minimum efficient size of an economic system, reflecting systemic increasing returns, was not new at the time. In Xenophon such ‘systemic increasing returns’ were seen as curing the problems of a city by increasing its size. One could argue that the present trend towards globalization is just a further move in this same direction. The theories of German economist Karl Bücher and others in this respect are discussed in Erik S. Reinert, ‘Karl Bücher and the Geographical Dimensions of Techno-Economic Change’, in Jürgen Backhaus (ed.), Karl Bücher: Theory – History – Anthropology – Non-Economies (Marburg, 2000), pp. 177–222. 57

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... the example of Holland can be held against me: a country that lacks almost all the gifts of nature and that even in its little corner of the world must keep up the most expensive dikes in order not to be swallowed by the sea; but in spite of that, due to the industrious inhabitants, is a flourishing state. To this I reply that while I recognise that the poverty of the soil can be compensated by the industriousness of the inhabitants, that will still only be on borrowed and artificial ground. This is a structure that has been erected on piles that have been driven into the seabed, in which it is possible to live comfortably for a while. In the end, however, these piles will decompose, and the structure will collapse. Such an artificial ground have all nations that have flourished only by virtue of the comfort of their navigation and their hard work, without any natural wealth. This ground will only exist as long as other nations are so naïve that they do not see that, with their own industriousness, they could busy themselves with the production that they have (previously) left to be done by that hard-working people.58

In other words, as other nations learned to follow the Dutch strategy, she would ‘fall behind’. We can assume this to happen both in trade and in manufacturing. In our opinion Justi is pointing here to several things: a) there is a catching-up; foreign nations understand that they will be better off if they increase their manufacturing and shipping, and b) the rules of the game are changing; city mercantilism is no longer enough as a larger Hinterland is needed. Interestingly, at the time when the decay of the Dutch Republic is becoming increasingly evident, the mercantilists start emphasizing the important synergies between manufacturing and agriculture. Although Botero had already commented on the successful Dutch husbandry in the 1500s, agriculture then tended to be disregarded as a source of wealth during the time of the city-states. Now agriculture, but only if manufacturing was present, increasingly came to be seen as a source of wealth. We may speculate that the small weight of agriculture in the city-states, which had once been their key strength, became a weakness as nation-state mercantilism gradually gained force. Part of the explanation would be the importance of the farming population – which represented the vast majority of the population in most European countries – as a home market at a time when industrialization increasingly addressed the needs of ordinary people while rural self-sufficiency diminished. Justi changed the rules in Serra’s model (1613): nature-given comparative advantage (geographical position) has diminished in importance, and man-made comparative advantage has increased in importance. Recreating and extending the observed urban advantage became a central challenge as city mercantilism gave way to nation-based mercantilism. Justi’s comments here are in line with 58

 ����������������������������������� Johann Heinrich Gottlob von Justi, Die Natur und das Wesen der Staaten, als die Grundwissenschaft der Staatskunst, der Policey, und aller Regierungswissenschaften, desgleichen als die Quelle aller Gesetze, abgehandelt (Berlin, 1760), pp. 35–6. ��������� Emphasis in text added.

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later observations by Friedrich List and Immanuel Wallerstein, who both point out that, while England achieved this increased size through national unity, the failure of the Hanseatic League, the Italian city states and Holland did not develop beyond a collection of city-states, which they see as a main reason for their loss of leadership.59 The work of Jakob Friedrich von Bielfeld (1717–1770) contains an extensive typology of the reasons for the decadence of states. Bielfeld’s book (1760) was an economic bestseller with a total of 12 editions, and one chapter (Chapter XV in vol. 2) addresses the Decadence of States. To Bielfeld there are two types of causes of decadence, Foreign and Intrinsic. Among the 12 foreign external causes are large-scale migrations (barbarian invasions), wars, too much quarrel and warfare with neighbours (‘it can take one century of war to obtain the same result as a couple of written treaties’), too large geographical extension of the empire (the Roman empire is one example), loss of independence (Portugal’s dependence on England is one example), national projects which are too ambitious and vain (like Carl XII’s plans for Sweden), civil wars which carve up the empire, dividing the power between two rulers, and the weakening of authority and loss of control of the territories (Portugal’s loss of control over Brazil and Genova’s loss of control over Corsica are Bielfeld’s examples). The intrinsic reasons for the decadence of a state are 20: a ‘vicious Constitution’, a King unfit to rule (un Souverain incensé), minorities which weaken the ruler, ministers who betray the ruler, lax law enforcement, contempt for religion, fanatisme, ‘exaggerated despotism’, too much liberty, negligence of useful production in favour of the frivolous (The Portuguese who take their manufactured goods from England, only to play the guitar and fill up the churches to pray in front of some Saint is the example of horror given here.), a useless nobility too proud to work (also emphasized by Justi), ridiculous laws, depopulation of the state (celibacy being one of the causes), colonies that become too strong (the Spanish possessions in the Americas being the example), epidemic diseases, alcoholism, lenient military discipline, too high debts, internal strife in the state administration, and changing the basic principles of the constitution. Which of these 20 different intrinsic causes of decadence, according to Bielfeld, did Holland suffer from? Bielfeld mentions Holland in two cases: He sees too much liberty – Liberté dégénere en libertinage – being the cause of ‘the lethargy of Holland’ in 1760. Bielfeld’s use of the word ‘lethargy’ in describing the Dutch contrasts sharply with Botero’s use of the words ‘ferocity and bravery’ about the Dutch 170 years earlier, adding that they ‘respect no foreign power or force’. These statements support a ‘life cycle’ theory of economic development as does Kindleberger. This also resembles the very early theories of history represented by the twelfth-century Arab historian Ibn Kaldoun, where a dynamic desert tribe 59  ���������������� Friedrich List, Das Nationale System der Politischen Oeconomie (Stuttgart, 1841), chapters 1–3. ���������������������� Immanuel Wallerstein, Det Moderne Verdenssystem (Oslo, 1978), vol. 2, pp. 90–93.

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invades and occupies a city, only slowly to degenerate, and in turn to be taken over by a new ‘brave tribe’. Adding to this the eighteenth-century idea of the stages of economic development – hunting and gathering, pasturage, agriculture and industry – we may superimpose world-wide cycles of technological change and progress onto a cyclical theory of growth and decay in specific geographical areas. The factors that present themselves as candidates for the decline of the Dutch Republic are many, and – as in the case of the much slower rise of the same Republic – we must assume that the economic, political, and institutional factors collude with and mutually reinforce each other. Mirroring the concerns of the early economists, Kindleberger presents a long list of factors causing the decline of the Dutch Republic: ‘wars; foreign mercantilism; foreigners copying Dutch techniques; the shift of Europe away from using Amsterdam as an entrepôt, first in trade, then in finance; the loss of capital in loans to France in the Revolution; and the levying of indemnities by France’, all external. Internal factors listed are ‘withdrawal from trade and industry by finance, high taxes on consumption (a point also made by Mandeville); provincial resistance to central directions, especially in matters of taxation; the persistence of guilds; loss of skilled workers; conspicuous consumption (which Mandeville had seen as a reason for growth, not decline); skewed income distribution, and many more’.60 Like Florence and many Italian city-states, the Dutch Republic seems, then, to have failed to convert successfully from ‘city mercantilism’ to ‘national mercantilism’, a centralized system where the benefits observed in the cities were extended, through a central government, to a larger geographical territory. This failure in the long term to build synergies created by economies of scale in trade and production to the extent achieved later by its rivals, had probably also been responsible for the previous decline of coalition which was much like that of the Dutch states – the Hanseatic League.61 Like Florence – whose industries suffered from the English Tudor strategy of import substitution and high export taxes on wool – the Dutch Republic may have been unable to respond to the economic challenges posed first from England and France, and then from Germany. We would argue that the virtuous circles created cumulatively by the triple rents; long-distance trade, fisheries and manufacturing, seem to have been weakened in parallel. The mutually reinforcing factors of high profits in these three types of economic activities degenerated synergetically – through cumulative causation – in much the same way as they had been generated, but in a much slower process, over the centuries building up to the Golden Age. The final result was the parallel loss of economic, military, and political power that throughout history seems to hinge on what Frederick Lane62 – the great historian of Venice – calls ‘increasing returns from the use of force as an economic service’. 60  ���������������������� Charles Kindleberger, World Economic Primacy 1500–1900 (New York, 1996), pp. 103–4. 61  ������������������������ Compare ibid., pp. 83–4. 62  ������ Lane, Profits from Power, pp. 45–8.

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Chapter 2

Holland’s New Fiscal Regime, 1572–1576 James D. Tracy

As noted in the Introduction, the Dutch Republic of the seventeenth century had a remarkable capacity to raise huge amounts of revenue, year after year, without causing harm to the economy. Two further general points are worth keeping in mind. First, while all seven of the United Provinces had their quotas, e.g. in the annual war budget, contributions from the one province of Holland outweighed all the others combined: though its population accounted for about 40 percent of the national total, Holland was responsible for around 65 percent of the budget in the closing decades of the sixteenth century, and 58 percent for most of the period between 1616 and 1792. Second, like all European governments that fought wars during this era, the Republic borrowed at levels vastly in excess of its annual income. For example, in 1665–1666, the quotas of all the provinces in the annual war budget amounted to about 30,000,000 guilders. Already in 1640, however, while the States General representing all the provinces carried about 11,000,000 guilders in debt, debt carried by the States of Holland ran to a bit more or less than 100,000,000 guilders. In other words, it would not be too much to say that the corporate credit of the province of Holland was the key to the Republic’s financial success. Holland’s credit was of course not created out of whole cloth during the Revolt. During the Habsburg era, Holland, together with some other provinces and a number of large towns, enjoyed the confidence of lenders, even at times when the central government in Brussels had a hard time borrowing on the Antwerp exchange. But Holland’s transition from being a credit-worthy Habsburg province to being the fiscal backbone of the Dutch Republic was not without difficulty. In fact, rebel Holland started out as a small patch of territory that was militarily beleaguered and nearly bankrupt. In its earliest stage, from 1572 to 1576, the Dutch Revolt held sway only in the two small provinces of Holland and Zeeland. 

 ������������������������������������������������������������������������ For the seventeenth-century Republic as a whole, see Marjolein ’t Hart, The making of a bourgeois state. War, politics and finance during the Dutch Revolt (Manchester, 1993).   ���������������������������� R. Liesker and W. Fritschy, Gewesetlijke financiën ten tijde van de Republiek der Verenigde Nederlanden, vol. IV, ���� Holland (The Hague, 2004), Table I.4.2, p. 22.   ������������������� Liesker, Fritschy, Gewestelijke financiën, Holland, Table I.1, p. 6, Table I.3, p. 8.   ���������������� James D. Tracy, A Financial Revolution in the Habsburg Netherlands. Renten and Renteniers in the County of Holland, 1515–1565 (Berkeley, California, 1985).

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In Holland, the more wealthy and populous of the two, Spanish troops controlled much of the countryside south of the IJ, while Amsterdam and a few other towns remained loyal to Spain. Rebel towns in Holland south of the IJ were thus islands in a royalist sea, defended more by their garrisons of professional soldiers than by the townsfolk. The new regime’s financial prospects looked even more bleak. Prior to 1572, the provincial parliament or States of Holland issued obligations (promissory notes) accepted by major bankers at no more than 12 percent annual interest. By contrast, in 1575 the going rate, for obligatiën of much smaller values had risen to 30 percent or even 40 percent. Despite this near-collapse of Holland’s standing in the credit markets, the Lords States juggled cash and credit so as to keep the crucial town garrisons contented, while paying off loans at a rate that was minimally necessary for lenders to keep on lending. How they did so is the subject of this essay.

Gemene middelen Under Hapsburg rule, Holland’s most dependable revenue was the provincial excise and land tax, dedicated to the payment of interest and principal on States of Holland bonds or renten. For the year ending 30 April 1572, Meester Jacob Bol, receiver for the common territory, reported 202,801 guilders in revenues; the single most important tax was the excise on beer and wine in Holland’s 29 cities, which yielded 84,071. At the first session of the new regime (15 July 1572), the Lords States voted to divert the excise and land-tax to the needs of war, specifically to the payment of the all-important town garrisons. This meant of course that interest payments on States of Holland renten were effectively suspended; this was a major reason for the decline of Holland’s credit-worthiness.

  Resolutien van de Staten van Holland (278 volumes, n.p., 1543–1793), hereafter abbreviated as RSH, 30 June 1575, “between 30 percent and 40 percent”; RSH 14 April 1576, let rich burghers be invited to lend on the promise of getting back principal and 20 percent interest in six months.   ������������������������������������������������������������������������������������ “Staten van Holland voor 1572,” Nationaal Archief, The Hague, hereafter abbreviated as NA, 3. 01.28, nr. 328; the first 50 pages are missing.   ���������������������������� Pieter Christiaenszoon Bor, Oorsprongk begin ende vervolgh der Nederlandsche oorlogen, (37 Books in 4 vols, Amsterdam, 1679–1684), hereafter abbreviated as Oorsprongk, Book VI, p. 388.   ������������������������������������������������������������������������������������ There is no record of formal action until RSH 10 May 1575, when the States resolved that “as far as possible” renten-holders were to receive one year’s worth of the three years’ interest now due; cf. RSH 9 September 1574: Dordrecht’s magistrates ask for 1,000 guilders to satisfy investors in Cologne and Neuss for whose renten Dordrecht was responsible for paying interest on; the reply was, “habeant patientiam.” NA 3.01.28, Valkensteyn lists payments of 8,386 guilders for interest on gemene lands renten (sold before 1572) in his first account, and only 432 guilders in his second. 

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Early results of the new fiscal regime were not encouraging. For the 14 months from 1 May 1572 to 30 June 1573, Franchoys van Valkensteyn, “successor to Meester Jacob Bol who fled to the enemy”, reported only 24,699 guilders for the crucial beer and wine excise. In February 1573, because of alleged “confusion” concerning the excises, the States doubled the beer tax, to four guilders or eight stuivers per barrel, and doubled also the wine excise; in 10 May 1574 the latter was apparently raised again, to 20 guilders per aam of Spanish or Rhenish wine, and ten guilders per oxhead of French wine. But for the year ending 30 June 1574, expectations again outran receipts, as Valkensteyn’s beer and wine excise receipts, though more than double the previous year’s total, were still only 64,242.10 On 8 May 1574 the towns of South Holland, counting on the provincial excises, had promised William of Orange 30,000 guilders a month for the six months beginning 1 July; in a letter to Jan van Nassau, Orange wrote that “after so much wastage and destruction in the country” this grant of 180,000 guilders was “a fine and handsome sum.”11 So it would have been, had the towns lived up to their promise. By November it was clear that 30,000 guilders a month would not have been enough. Orange threatened for the first, but not the last time, to resign from his post as Governor and Commander-in-Chief if the States did not adequately support the garrisons that defended Holland’s towns against invading Spanish troops. Hence the deputies agreed to raise South Holland’s monthly allotment to 45,000, through the first four months of 1575. Since the provincial excises were not bringing in anything close to 30,000 a month, much less 45,000, the town deputies meeting in the States steeled themselves for a drastic step: from that point on, cities would be entitled to keep only one-third of the urban beer and wine excise taxes that had long been their principal source of revenue. The remaining two-thirds was to be pooled with the provincial beer and wine excises.12 In fact, the appropriation of city revenues by the provincial states was slow to be accepted. But if town magistrates and their elite constituencies did in the end acquiesce in this revolutionary change,

  ��������������������� NA 3.01.13, nr. 20, “bordereel [summary] of the late Franchoys van Valkensteyn’s first account as receiver-general.” 10  �������������������������������������������������������� RSH 15 February 1573, 10 May 1574; NA 3.01.13, nr. 20, “bordereel of the late Franchoys van Valkensteyn’s second account as receiver-general.” 11  ������������������������������������������������������������������������� RSH 8–10 May 1574; Orange to John of Nassau, 7 May 1574, Letter 491, IX, 395–8. 12  ������������������������������������������������������������������������������ RSH 25 November, 10 December 1574. NA 3.01.29, nr. 757, an eighteenth-century memorandum on Holland’s fiscal history, cites RSH 25 November 1574. For �������������������� an illustration of how this resolution affected town finances, J.H. van Dijk, “De geldelijke druk op de Delfsche burgerij in de jaren 1572–1576,” Bijdragen voor Vaderlandsche Geschiedenis en Oudheidkunde, 7e Reeks, V (1935): 169–86, pages 174–6. Before ��������������������������� 1572, the States of Holland was comprised of deputies from six voting cities and from the college of nobles, each delegation having one vote; during the Revolt the number of cities with voting rights increased to 18.

44

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it was only because (as will be explained shortly) the towns were also given a decisive role in the disbursement of locally collected provincial revenues.13 On 10 December 1574 the States approved a new budget for the whole package of provincial excises, now reinforced by two thirds of the town excises, and henceforth known as the “common means,” or gemene middelen. The provincial beer and wine excise in the walled towns was expected to bring in 20,000 of the needed 45,000 guilders a month, with estimates ranging from 600 to 9,000 guilders for the various other levies.14 Once again, however, the projections were too optimistic. The gemene middelen for 1575 brought in something like 30,000 guilders a month, counting what town magistrates held back to pay their garrisons.15 Totals collected by the receiver for the common territory – now called the receiver-general – did increase from 129,508 for the 12 months ending 31 July 1574, to 351,503 for the 17 months from August 1574 through December 1575, 16 or about 21,000 per month on average – far short of the 45,000 per month Holland had pledged. Even so, in April 1575, South Holland raised its monthly quota once more, to 55,000 guilders, as part of an overall agreement between Holland and Zeeland for 100,000 a month. Holland’s total of 77,500 per month (counting 22,500 from North Holland) was to support 60 garrison companies distributed over both parts of the province.17 Finally, as William of Orange mobilized for counter-strikes against Spanish offensives in the early months of 1576, Holland and Zeeland raised their joint pledge to 210,000 guilders a month for 100 infantry companies and 100 warships. Accordingly, excise rates were raised to unprecedented levels, including 21 guilders per barrel of Jopenbier, a luxury import from Hamburg, and 30 guilders per aam of Spanish or Rhine wine.18 13  ����������������������������������������������������������������������������������� Brill, with the islands of Voorne and Putten, could not be persuaded to accept the new arrangement for six months: RSH 11 May 1575. North of the IJ, towns insisted on keeping half their excise revenue, provided they used it to improve their fortifications: RSH 14 December, 11 May 1575. In most of Holland’s towns, members of the vroedschap or city council were co-opted into membership and held office for life. 14  ��������������������� RSH 10 December 1574. 15  ������������������������������������������������������������������������������ RSH 19 February 1575: the five particular receivers (see below, note 54) have collected only 23,799 guilders for January, not counting an estimated 7,465 that some towns have withheld or will withhold to pay their garrisons. 16  ������������������������������������������������������������������������������������� The first figure is taken from NA 3.03.13, nr. 21, Niclaas van der Laan’s account as receiver-general, subtracting from Van der Laan’s total the 6,360 for “imposts and excises in Zeeland.” The second comes from NA 3.01.13, “Recueil van de eerste groote rekening van Jacob Muys als ontvanger generaal,” from the revenue section entitled “from the hand of the five receivers.” The dates for this account are not given, but under the heading of quotisatiën (for this term, see below) it includes levies up through November 1575. 17  ������������������������������������������������������������������������������� RSH 17 April 1575; cf. RSH 20 June, 22 June–6 July 1575: South Holland’s quota was apparently reduced to 50 thousand. I assume the total of 60 companies does not include those stationed in Zeeland. At an average of 1,300 guilders per company per month, a total of 77,500 guilders a month for all of Holland would support 60 companies. 18  ���������������������� RSH 15, 23 March 1576.

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By this time, Holland’s gemene middelen were raising more than the pre-1572 provincial excise and land tax had ever done.19 But 300,000 or 400,000 guilders a year was a mere pittance when measured against the demands of Holland’s military budget. In May 1573 Orange claimed to have “more than 25,000 men” under his command in Holland and Zeeland – the equivalent of 153 companies of 150 men, with annual wages of something approaching 2,400,000 guilders.20 From other sources it seems he had about 12,000 infantry at his disposal in the summer of 1573, during the siege of Haarlem,21 not counting units on garrison duty in Holland’s towns and sconces. In May 1574 he had 61 companies in South Holland and 20 in North Holland; if these had only 150 men each (some would have had more), infantry wages alone would have been about 1,260,000 guilders.22 One has to reckon about as much again for all the other expenses of warfare on land, including officers’ pay, victuals, artillery and munitions, fortifications, and the costs of resisting sieges.23

Repartitiën Out of necessity, the difference between gemene middelen income and the costs of war was made up by borrowing on a massive scale. Since burghers found their own town corporations more credit-worthy than the province of Holland, the provincial war budget depended on the willingness of the town corporations to serve as fiscal intermediaries. In other words, magistrates induced their fellow-townsmen to lend to the province by pledging the faith and credit of the town corporation as a guarantor for debts charged to the States. With Amsterdam remaining loyal to Spain until 1578, Delft was the largest and wealthiest town under Orange’s rule, and thus the leader in transactions of this kind; in the repartitie or quota-setting  ����������������������������������������������������������������������������������� In Jacob Muys’ first account as receiver-general (cited above, note 11), the total for licenten, the next-most important revenue, was 67.549. Licenten and the related convooien are not discussed here, because little information has survived as to how much was collected. 20  ����������������������������������������������������������������������� Orange to Louis of Nassau, Delft, 5 May 1573, G. Groen van Prinsterer, Archives ou correspondence inedited de la Maison d’Orange-Nassau, Ie Serie (8 vols, Leiden: 1835– 1847), Letter 413, IV, pp. 88–9. When the infantry was re-organized into companies of 150 men a year or so later (23,000 men would be equivalent to 153 such companies), annual wages for the men, not counting officers’ pay, averaged about 1,300 guilders a month, or 15,600 a year. 21  ��������������������������������������������������������������������������������� That is, Lazarus Muller’s ten companies (3,000 men?), Lumey de la Marck’s 4,000, and Orange’s 18 companies (about 5,000?). 22  ������������������������������������������������������������������������������ Orange to John of Nassau, Dordrecht, 7 May 1574, Groen van Prinsterer, Letter 491, IV, 395–8. In Zeeland he had at this time 14 companies. 23  ����������������� Jan Willem Wijn, Het Beleg van Haarlem, (The Hague, 1982), 156–7: after rejoining Holland in 1577, Haarlem tried to reduce its liability for Holland’s current debts by presenting an estimate for 520,000 guilders in costs incurred during the siege. 19

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for successive loans demanded from the towns, Delft was assessed for as much as 35 percent of the total.24 Collectively Delft’s burghers provided some 106,131 guilders for the cause between August 1572 and April 1574.25 If one assumes that this was only about 35 percent of the sums lent by the burghers of all loyal towns through April 1574, there may have been about 300,000 guilders in such loans. Over the next 18 months (May 1574 through November 1575) there were seven more repartitiën totaling 168,000 guilders.26 In theory, the repartitiën were usually intended to supply what was lacking from the gemene middelen to make up South Holland’s monthly quotas of 30,000, 45,000, or 55,000 guilders; the loans involved should thus have been repaid from future gemene middelen income.27 But since the precious receipts were always needed for the war, the burgher loans had to be continued into an indefinite future. Counting loans negotiated individually as well as those imposed by repartitie, the towns will have asked to raise about 600,000 guilders in total between August 1572 and November 1575; because towns were slow to meet their quotas,28 the actual amount raised by repartitiën was a good deal less. Yet even if all the towns had met all their repartitie quotas, 600,000 guilders would not have been enough to cover Holland’s deficit. The gap had to be filled in a variety of other ways, such as borrowing on the credit markets at rates of 30 percent or 40 percent,29 or asking Holland’s creditors to wait a bit longer.

Holland’s creditors The new government could not have survived had its principal clients – officials, purveyors, and military commanders – not extended credit by waiting patiently for settlement of their claims. Custom dictated that men of power and influence – those frequently chosen for one-year terms as burgomasters or town-councilors – should put their wealth to good use.30 In the same way that wealthy burghers before the  ��������������������������������������������������������������������������������� RSH 13 September 1574, the quotas for a levy of 60,000 crowns (120,000 guilders) for the relief of Leiden. 25  �������������������������������������������������������������������������������� J.H. van Dijk, ����������������������������������������������������������������� “���������������������������������������������������������������� Rekeningen betreffende het financieel aandeel van Delft aan den Vrijheidsoorlog 1572–1577,��”� Bijdragen en Mededelingen van het Historisch Genootschap te Utrecht, 55 (1933): 43–124, here 48–52. 26  ���������������������������������������������������������������������������������� NA 3.01.13, nr. 21, “Recueil van der eerste rekening van Jacob Muys als ontvangergeneraal”: the eight subscriptions (with each city’s quota, and how much it actually raised) are listed under quotisatiën. 27  ����������������������� E.g., RSH 29 July 1575. 28  �������������������������������������������������������������������������������� RSH 19 February 1575: many towns have still not met their quotas for the 60,000 crowns for the relief of Leiden, approved in July 1574. 29  ����������������� RSH 20 June 1575. 30  �������������������������������������������������������������������������������� RSH 16 May 1575: during the siege of Haarlem, 33,000 guilders was raised on the credit of burgomaster Pieter Janszoon Kies, together with Jonkheer Jan van Vliet, a member of Holland’s college of nobles. Cf. RSH 15 September 1575 (Hendrik Duyst of Delft and 24

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Revolt signaled their support for the Habsburg government by investing in Holland renten, patriots of the new order invested in Holland loans or obligatiën.31 Of the merchants and purveyors who extended credit, some perhaps sympathized with the Revolt: Cornelis Lambrechtszoon lent Captain Maarten Ruychaver 2,680 guilders to cover two months’ wages for his two mercenary companies.32 Others, like “Cornelis Pieterszoon cum sociis,” who lent 8,000 guilders in 1574, perhaps sensed a business opportunity. England’s merchant community made corporate investments in the Revolt, no doubt for a combination of reasons. The “merchants of Ipswich,” a North Sea port where many Dutch refugees had settled, provided 50,000 guilders, of which Holland was to repay two-thirds and Zeeland one-third. The Merchant Adventurers, who traditionally had their staple for the wool cloth trade in Antwerp, now beleaguered by a Dutch blockade, loaned 100,000 guilders.33 Soldiers probably provided even more credit, though not altogether voluntarily. Lazarus Muller, who had raised ten companies of Low Germans for service in North Holland at the start of the Revolt, was owed 40,000 guilders. Colonel Edward Chester, who stood surety for two years’ wages for his five companies of Englishmen, claimed debts of 14,000.34 Many such debts from the years 1572–1576 were still on Holland’s books some years later, as may be seen from a 1582 list of “obligations owed to military men”. Count Philip von Hohenlohe, who signed on in 1575 as Orange’s field commander for South Holland, had unpaid debts of 30,554 guilders, while the heirs of Orange’s late brother, Louis of Nassau, were owed 30,358.35 Merchants doing business in Holland could cash in their credits through a kind of debt-exchange in which sums they owed for taxes decreed by the States

Willem Janszoon van Heemskerk of Haarlem used their own money to buy 2,000 to 3,000 guilders’ worth of beer for Leiden); RSH 8 October 1574, another loan by Duyst; SH voor 1572, 3.01.13, nr. 23, Van der Laan’s account as receiver-general for year ending 31 July 1574, expense rubric for “interest” (Jan Cinq of Gouda). 31  ������������������������������������������������������������������������������������� NA 3.01.13, no. 21, p. 20 (Jean Taffin, Orange’s court preacher, for 3,200 and 2,016 guilders); RSH 1 August 1575 (Dieuwer Dirksdochter, sister of Willem Bardesius, principal adviser to North Holland’s governor, for 2,800 guilders). 32  ���������������������� RSH 19 September 1575. 33  ������������������������������������������������������������������������������������� Both loans are mentioned in NA 3.01.14, nr. 231, a list of loans (mainly to military commanders) still outstanding in 1582. Cf. RSH 17 October 1575: Holland disclaims responsibility for what the Merchant Adventurers have loaned. Holland for a time refused to accept any responsibility for the Merchant Adventurers’ loan. 34  ��������������������������������������������������������������������������� RSH 16, 22 March 1575 (the 40,000 owing to Lazarus Muller); RSH 28 August, 24 October, 23, 26 November 1574 (Chester). According to Bor, Oorsprongk, VII, 504, the five English companies that fled Valkenburg castle as units of Valdez’ army approached, and were subsequently denied admission to Leiden because of their cowardice, were commanded by Colonel Edward Chester. 35  �������������������������������������������������������������������������� NA 3.01.14, nr. 231, summary of debts outstanding in 1582, mainly but not exclusively to military men (Hohenlohe, the Walloon captains, and many other regimental or company commanders).

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were canceled out and at favorable rates.36 One often sees arrangements of this kind in connection with the licenten, or export fees that merchants had to pay for goods sent outside of Holland.37 However a military man no longer in service had nothing to bargain with except his precious debt-recognizance or obligatie. To be sure, creditors could liquidate their obligatiën on the secondary market, undoubtedly at a discount.38 To make it clear that would-be lenders had this option, the States occasionally specified that an obligatie was payable either to the creditor “or to the bearer” (toonder).39 But high-ranking military men seem to have hung on to their obligatiën, despite the fact that the Lords States gave such debts a low priority, especially for former soldiers now living beyond Holland’s borders. The above-mentioned document from 1582 lists debts of 1,157,641 guilders owed to military men, including 368,465 for the German cavalry commanders who, ten years previously, had participated in William of Orange’s abortive effort to relieve the Spanish siege of Mons.40 But not all of Holland’s creditors were so patient.

A safety valve for Holland’s debt: geestelijke ende geannoteerde goederen The burghers who provided credit through the repartitiën were the most demanding of creditors, for they had means of exerting pressure on the town governments that guaranteed their loans. In the simplest of terms, burghers could not be expected to keep on lending unless some of their old debts were liquidated. Prior to 1572, the States could handle short-term debt by rolling it over into long-term renten at lower rates of interest; but this option was effectively foreclosed, owing to the suspension of payments on pre-Revolt renten.41 In June 1576, when 100,000 36

 ���������������������� RSH 15 September 1574.  ����������������������������������������������������������������������������� RSH 25 September 1574, October 1574, 18 October 1575, Rijksarchief van NoordHolland, Haarlem, hereafter abbreviated as RANH, 4 March 1575. 38  ������������������������������������������������������������������������������� NA 3.01.14, nr. 231, the 1582 summary of debts: Willem Aerts Bouman has bought “certain states’ obligatiën” for 6,000 guilders, Pieter Bom has an obligatie for 2,500 once held by Barthold Entens, Lumey’s erstwhile second in command (d. 2 May 1580: F.G.J. ten Raa and F. de Bas, Het Staatsche Leger, 1568–1795, (Breda, 1911– ), I, 173). See also RSH 1 September, 9 November 1574. 39  ������������������������������������������������������������������������������ RSH 9 January 1575: for his payment of 4,302 guilders in wages to two English companies, Joachim Oertel, Orange’s commissioner of war, was promised 600 guilders in cash, a pension of 300 guilders a year, and an obligatie for 2,000 guilders; 15 February 1575, evidently at Oertel’s request, the obligatie be made out as indicated. Oertel’s father, Matthaeus Oertel, had been Antwerp factor of the Fugger firm. 40  ��������������������������������������������� NA 3.01.13, nr. 231. The debt for the German ritmeesteren was originally 500,000 guilders. 41  ������������������������������������������������������������������������������������ A few creditors accepted new States of Holland renten in settlement of their debts, but at rates not hitherto seen, e.g. RSH 26 November 1574: in settlement of 11,000 in obligatiën to various English captains, now held by Col. Chester, plus a further 2,000 for wages paid to the troops, Chester and his one-year-old son Robert are given a lijfrente of 37

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guilders were desperately needed to counter a Spanish offensive, burghers of Holland’s towns were forced to invest in redeemable renten at 1:12 or lijfrenten at 1:6 – but on the proviso that the sums they had to invest were to be diminished by their contributions to a repartitie decreed in August 1575, and by any money spent for the purchase of domain lands that were now offered for sale.42 In other words, by buying domain lands, one could avoid having to put money in Holland renten. By default, the only source of money for debt payments that could not be avoided was confiscated property. In the same way that the duke of Alba’s government prior to 1572 had inventoried and sold the property of Hollanders condemned in absentia by the Council of Troubles,43 Holland’s new government declared that the goods of all persons who had abandoned Holland for provinces still loyal to Spain were to be inventoried and either administered or sold for the common cause. Similarly, since the Lords States had decreed that only ministers of the “Reformed Evangelical Religion” should have freedom to conduct public worship in Holland, all of Holland’s Catholic ecclesiastical corporations were dissolved and their properties forfeit. Thus newly appointed “receivers of ecclesiastical and inventoried property” began assuming their duties in Holland’s various districts in the early months of 1573. Initial collections were disappointing in some areas, but in the fertile agricultural zones on either side of the Maas, where monasteries all over the Low Countries had been important land-holders, there were revenues to support a variety of war-related assignations. 44 On behalf of their burgher-creditors, town magistrates demanded access to this same pool of resources. Thus in October 1574, the States ordered that the magistrates of Delft be given a copy of the register of ecclesiastical properties in Delftland, so as to assure the city’s burghers concerning the ultimate security (hypotheek) for their loans. Revenues from monasteries whose properties were familiar to townsfolk seemed especially appropriate. In Brill, where subscribers impatiently awaited repayment of loans totaling 10,000 guilders, magistrates were authorized to cover these debts 2,600 guilders a year, payable over two lives; the interest rate was thus 20 percent. During the “tight money” years of the 1550s, lijfrenten for two lives were sold by the states at rates as high as 1:6 (16.66 percent), but with the proviso that the states could redeem these renten by repaying the capital, as was done through the so-called conversion-renten issued in the 1560s. 42  ������������������������ RSH 4, 8, 23 June 1576. Losrenten could be redeemed by the issuer, lijfrenten were extinguished by the death of the named beneficiary. 43  ������������������������������������������������������������������������������� “Graafelijkhgeidsrekenkamer,” Nationaal Archief, hereafter abbreviated as GRK, 4856, 4868, 4870. 44  ��������������������������������������������������������������������������� NA 3.01.28, nr. 4543 (account of Willem Dionysi, burgher of Dordrecht, for 9 January–31 October 1573), nr. 4542 (account of Jacob Cornelis van Moerkerke for Beyerland and Stryen, in the Dordrecht region, from 10 April 1573 apparently until the end of 1573); nr. 4544 (account of Pieter van der Goes, bailiff and dijkgraaf of Delfland, for 27 February 1573–31 December 1574), and nr. 4547 (account of Cornelis van der Wolff for The Hague, from May through 31 December 1573). The first two accounts cover ecclesiastical as well as inventoried property, the last only inventoried property.

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by issuing lijfrenten at 1:12, funded by revenues from the former monastery at Rugge, just outside the walls.45 Full settlement of debt often required liquidating confiscated property, not just using the income. For example, in September 1574, one influential creditor accepted 130 morgen of land formerly belonging to the Augustinian Canons Regular at Leiderdorp, outside Leiden, valued at 15,000 guilders, in settlement of claims totaling 14,670 guilders.46 The question of how much debt was cleared off the books in this way is only a small part of a larger mystery as to the sum total of Holland’s debts. Unquestionably the largest single category of debt was for compensation of the peasants and landholders whose fields were set under water when sluice-gates were opened and dikes were cut for purposes of defense. When William of Orange ordered massive flooding of South Holland in order to break the Spanish siege of Leiden (Autumn 1574), the expected damage to crops and rural property was estimated at 6,000,000 guilders.47 This figure seems high, but 6,000,000 guilders is likely to be a conservative guess for the damages of all the various military inundations decreed by Orange and the Lords States. Once Spain’s troops had left Holland there were tax-levies for repairing dikes that had been cut for reasons of state,48 although the sources I have used do not indicate that individual claimants were ever compensated for property damage or crop losses caused by flooding for military reasons. Debts owed to military commanders (including the German ritmeesters) and to the burghers who participated in repartitiën organized by their magistrates may each be estimated at 1,000,000 guilders; debts to purveyors, more readily canceled through the kind of exchanges mentioned above, were perhaps about half as much. Finally, the capital value of Holland’s pre-1572 renten debt49 was certainly in excess of 1,000,000 guilders.50 All together, Holland’s debts were likely in the vicinity of 9,500,000 guilders. By contrast, annual income could

45

 �������������������������������������� RSH 22 October 1574, 27 November 1574.  ��������������������������������������� RSH 28 September 1574 (Arend van Dorp). 47  ���������������������������������������������������������������������������������� RSH 30 July, 1 August 1574: expected damage to crops and rural property estimated at 3,000,000 crowns, or 6,000,000 guilders. 48  ����������������������������������������������������������������������������� RSH 1 October 1576, 16 April, 5 July, 8 September 1577; RANH 15–16 April, 21 May 1577. 49  ��������������������������������������������������������������������������������� RSH 3 July 1577 states that all unpaid interest (July 1572 through June 1577) is to be capitalized at 1:16, on the understanding that interest on the accumulated debt was henceforth to be paid from the tax of four stuivers per barrel of beer (RANH 26 January, 27 April 1577). For holders of Holland renten living in enemy country, interest for the years 1572–1576 was declared forfeit as a cost of war; they could claim interest only starting in 1577. 50  ������������������������������������������������������������������������������ NA, “Staten van Holland voor 1572,” 2305, Coebel’s account for the provincial excise and land tax for the year ending 30 April 1567, shows payments of 59,685 guilders in renten interest; at 1:16 this would mean an outstanding debt of 954,960. NA 3.01.14, no. 342, payments of interest on Holland renten (1593): for renten issued up through 1572, the total was 61,735 guilders, or, at 1:16, 987,760. 46

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not have exceeded 1,000,000 guilders. Holland’s most important revenue, the gemene middelen will have yielded about 450,000 guilders for the year ending 31 December 1576,51 and it is doubtful that all other sources of income combined would have brought in as much. Moreover, key taxes were earmarked for military use – the gemene middelen for town garrisons, and the licenten for the fleet – leaving nothing to spare for debt retirement. Finally, as noted above, since the earmarked revenues were not enough for these vital needs, Holland could only pay for the war by adding still more to its debt. In other words, Holland’s finances resembled, on a smaller scale, the ever-tottering finances of the Spanish monarchy. For example, in 1560, well before his troubles in the Low Countries began, Philip II had debts estimated at 29,000,000 Spanish ducats, or about 40,000,000 guilders. The income side of the ledger for 1560 showed no revenue that was not already pledged, and for 1561 only 1,320,000 ducats.52 But state solvency was not the prime consideration for sixteenth-century finance ministers. Rather, the objective was to postpone the day of reckoning – and thus keep one’s troops at their posts – just a bit longer than the enemy could. In this context, historians have long understood that Spain had the great disadvantage of operating at a distance; money to pay the troops came from Philip II’s Genoese bankers, whose charges for interest and remittance could as much as double the cost of using Iberian revenues for war in the Low Countries. The mutiny of July 1576 – ending what would turn out to be the last major assault on Holland and Zeeland by Spanish troops – was organized by seasoned veterans who had not received their monthly wages for more than two years. Conversely, it has been equally clear that the nascent Dutch Republic was able to operate within what may be called interior lines of fiscal supply. What must be emphasized is that the Lords States – a body mainly comprised of town magistrates – consolidated this advantage through a system of accounting that made the towns directly responsible for keeping their own garrisons contented. From province to towns: a devolution of fiscal responsibility The quid-pro-quo that made Holland’s town corporations yield two-thirds of their precious excise revenues to the needs of the province was a devolution to the town corporations of responsibility for the disbursement of provincial funds. Prior to 1572, collection of the provincial excise and land tax was overseen by

 ���������������������������������������������������������������������������������� An extrapolation based on a) 351,503 or 20,676 per month for the 17 months to the end of 1575, and b) “Staten van Holland voor 1572,” 3.01.14, nr. 99B (818,497 or 68,208 per month for the year ending 31 December 1578). 52  ��������������� Modesto Ulloa, La Hacienda Real en el Reinado de Felipe II (Madrid, 1977), 61–2. On Spain’s war budget during the 1570s, Parker, Spanish Road, 137–41. 51

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the “particular receivers” of Holland’s seven domain-revenue collection districts.53 Surviving account summaries of receiver-generals’ accounts for the first few years of the Revolt indicate that the particular receivers continued to supervise the farming of excises in Holland’s 30 towns54 as well as the collection of taxes on land in rural areas.55 It was also in keeping with tradition that their accounts were heard by ad-hoc committees made up of States deputies and auditors from the chamber of accounts (rekenkamer), now based in Delft.56 As Holland’s “Head and High Authority,” William of Orange stood for the principle that the allocation of funds must not be captive to local interests. In Holland north of the IJ, the particular receiver, based in Hoorn, functioned as “receiver-general” for North Holland’s network of small revenue districts. Local collectors were expected to bring in their gemene middelen balances to Hoorn, as ordered by the States of North Holland, the governor of North Holland and, for good measure, William of Orange himself. Yet town magistrates were not always impressed by orders from above, even if issued in the name of His Excellency. Enkhuizen, for example, closed the local office of North Holland’s receiver-general, and instructed local revenue collectors not to deliver their receipts to provincial officials.57 In South Holland, where the towns were often isolated from one another because of Spanish control of the countryside, there was no question of having receipts brought to Delft. Instead, successive receivers-general sought to maintain their right to approve or disapprove disbursements by the particular receivers. Again in keeping with traditional practice, particular receivers had to render accounts 53  �������������������������������������������������������� For the pre-Revolt excise and land tax, the land tax or morgental was also collected by these receivers. 54  ��������������������������������������������������������������������������� RAZH, “Staten van Holland ��������������������������������������������������������� voor 1572,” no. 2295, Coebel’s account for 1 May 1556–30 April 1557, grouping the cities according to their domain-revenue collection district: Dordrecht, St. Geertruidenberg, Gorinchem, Heusden, Zevenbergen [South Holland]; Haarlem, Alkmaar [Kennemerland]; Hoorn, Medemblik, Enkhuizen [WestFriesland]; Amsterdam, Edam, Monnikendam, Naarden, Weesp, Muiden [Amstelland]; Leiden, Woerden, Oudewater [Rijnland]; Delft, The Hague, Rotterdam, Schiedam, Vlaardingen [Delfland]; Gouda, Schoonhoven, Heukelom, Asperen, and Leerdam [Gouda]. For the excise, The Hague counted as a city, though it was not walled. 55  ��������������������������������������������������������������������������������� NA 3.01.13, nr. 21, “Recueil ende sommier” of Nicolaas van der Laan’s account as Holland’s receiver-general for the year ending 31 July 1574: in the subsection for “imposts” under “income,” some farmers of particular excises (e.g. beer and wine in Dordrecht) are mentioned by name. 56  ��������������� J.W. Koopmans, De Staten van Holland en de Opstand. De Ontwikkeling van hun funkties en organisatie in de periode 1544 – 1588 = Hollands Historische Reeks, 13 (The Hague, 1990), pp. 139–41. Members ��������������� of the rekenkamer appointed between 1572 and 1576 include Nicolaes van der Laen of Haarlem (d. 1584), Engelbrecht Cornelisz. of Maasland (d. 1575), Cornelis Harmensz. van Naarden of Delft, Pieter van der Goes of Delft (the son and grandson of former advocates of the states), and Dirk Jorisz. de Bye (d. 1591), also of Delft. 57  ��������������������������������������������������� RANH, 3, nr. 237, 23, 26 August, 19 September 1574.

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regularly and when they did, they were expected to present, for each disbursement, a corresponding authorization or “discharge” from the receiver-general. But the particular receivers were in every case burghers of the towns where they kept residence; when pressed for scarce cash, would they obey the receiver-general in Delft, or their own burgomasters? Urban magistrates naturally gave first priority to local needs, and professional soldiers were a town’s first line of defense against Spanish attacks. Since the soldiers were not content with being paid once a month, they demanded weekly “loans,”58 and magistrates had to find the cash by persuading their burghers to make loans. In theory, one might forward claims for reimbursement of such loans to Delft or Hoorn and then wait for the provincial bureaucracy to work its will. However, talking with a local man – that is, the particular receiver domiciled in that town – was quicker and more effective.59 In truth, the Lords States were not altogether averse to the idea that local receipts should pay for local garrisons. Although Brill’s request to apply its quotas in two repartitiën to use monthly wages for its garrison companies was turned down (October 1574), two repartitiën for the following year were to “pay the soldiers,” with each city presumably taking care of its own garrison. In May 1575, when four companies were thought necessary for protection of the small town of Gorinchem, Delft and Rotterdam were instructed to pay monthly wages for these companies, “just as if they were quartered in your own cities”.60 Clearly, the pressures for disposing of revenues locally were strong. Jacob Muys van Holy (c.1540–1592) presented himself as a champion of the principle of centralization in finance. A leading figure in his native Dordrecht’s adhesion to the Revolt, Muys was also a member of the council of finance, the financial section of Orange’s Council. When his name was proposed as receivergeneral for Holland south of the IJ (October 1574), Muys would not accept the post until the States assured him that particular receivers would no longer be allowed to spend provincial revenues without first obtaining a discharge from the receivergeneral. Yet in January 1575, about a fourth of the gemene middelen income was paid directly to local garrisons without passing through the hands of the particular receivers who were responsible to the receiver-general. In March the council of finance delivered to the States a formal remonstrance: magistrates were taking money from the particular receivers and paying their garrisons directly, without 58  ������������������������������������������������������������������������� Some examples: RSH 24 August 1574, 9 September 1574, RANH 3, nr. 237, 26 December 1574, 3 February 1575, 20 February 1575. 59  �������������������������������������������������������������������������������� Collectors for the revenue-districts in South Holland (not counting Amstelland, still under Spanish rule) were normally based in Dordrecht (South Holland), Haarlem (Kenemerland), Leiden (Rijnland), Delft (Delfland and Schieland) and Gouda (Gouda). North of the IJ, West Friesland was later split into three districts, each with a particular receiver “on the same basis as South Hoilland”: RANH, 3, nr. 238, 14 February 1577. 60  ���������������������������������������������������������������������������� RSH 2 October 1574; NA, 3.01.21, “Recueil” of Jacob Muys’s first account as receiver-general, repartitiën for 45,000 (March) and 10,000 (May); RSH 7 May 1575.

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benefit of payment-orders from the council of finance; this usually meant that magistrates paid soldiers as they wanted to be paid, by the week, and thus paid them too much.61 Thus while magistrates of the major towns did not have full control over provincial revenues collected locally, it seems that Orange’s loyal partisans, Jacob Muys and the council of finance, were fighting a losing battle.

Conclusion For a man of Orange’s experience in matters of state, decentralization in decisionmaking authority was a recipe for disaster. Indeed, what could be expected of a polity in which, as Orange said of the States General a few years later, the deputies gathered together not as councilors having authority to consider the common weal of the United Provinces, but as advocates of their particular provinces and towns? Following Orange’s assassination in 1584, his complaints about the “particularism” of the states assemblies were taken up with even greater force by the partisans of Robert Dudley, Earl of Leicester, who served as Queen Elizabeth’s Governor-General for the Netherlands provinces during the years 1586 and 1587. Members of Leicester’s entourage – not just Englishmen, but also refugees from the southern provinces now re-conquered by Spain – could find no explanation for the Hollanders’ insistence on local control of their finances, except by imputing to town magistrates and revenue officials a desire to pocket the money for themselves. Yet the logic of centralization did not fit the demands that faced the Lords States, especially during the period when Holland was not just threatened by Spanish assaults but also divided by civil war (1572–1576). In these years, Holland could be defended against Spain only by holding the towns; the towns could be held only by their professional garrisons; and the garrisons would not fight unless paid more or less as they demanded to be paid. In later years, because burghers were still expected to provide loans for emergency needs, town magistrates still insisted on having some oversight of how provincial revenues were spent, so that the claims of their constituents would not be ignored. Difficult as it might have been for Orange and other men of vast experience to grasp, local control was the key to rebuilding Holland’s credit, and Holland’s credit was the key to everything else that followed.62

61  ��������������������������������������������������������������������������������� RSH 1 November 1574 (a “discharge” from a higher official absolved the collector of responsibility for the sum in question); RSH 19 February 1575, 23,799 guilders collected by the five receivers, 7,465 paid to the garrisons; RSH 18 March and 18 February 1575. ���� For Jacob Muys, Koopmans, De Staten van Holland en de Opstand, sub nomine. 62  ������������������������������������������������������������������������������������� Control of Holland’s revenues by the provincial States (and by the town governments) is a major topic in my “The Founding of the Dutch Republic: War, Finance, and Politics in Holland, 1572–1588,” forthcoming from Oxford University Press.

Chapter 3

The Efficiency of Taxation in Holland Wantje Fritschy

Introduction The Union of Utrecht of 1579, which marked the start of the Dutch Republic, announced general centralised taxes for the provinces of the Netherlands in revolt against their Spanish king as the most efficient method to pay for the war effort. Prior to this the province of Holland had already introduced ‘common means’ – consisting of indirect taxes on articles of consumption and direct taxes on, for instance, cattle and sown lands – for all the cities and the countryside. The ‘general means’ proposed in the treaty of the Union were modelled on these ‘common means’ of Holland. Although by the start of the seventeenth century all provincial estates assemblies had adopted most of the ‘general means’ mentioned in the treaty, taxation did not in fact become centralised and ‘general’. The main effect of the Union of Utrecht was that from then on, like in Holland, also in the other provinces the cities had to accept that their most important sources of local tax revenue became ‘common’ sources of income, and, as such, only a small part of what taxation yielded would still accrue to city governments. The fiscal autonomy of the cities had thus been curtailed, though each province had retained its fiscal autonomy. As a result, the amount of tax income that went into the central coffers remained small in comparison to the amounts collected and spent by the provinces. Contrary to the intentions of the Union of Utrecht, not only did the number of ‘general means’ among the provinces vary, but the rates at which they were levied were also quite different. In all the provinces these ‘general means’ had to be supplemented by direct taxation on real estate and transfer taxes, again at different rates in each of the provinces. In cases of emergency each of the provinces had to decide individually whether it would increase the number or the rates of the ‘general means’, raise additional taxes on property and income, or resort to the capital market to realise additional funds. Since 1586 only the custom duties were,   �������������������������������������������������������������������������������� I owe thanks to Oscar Gelderblom and Jan van den Noort for their comments on an earlier version of this paper.   ������������������������������������������������������������������������������������ Lists of ‘general means’ for some provinces with the year of introduction are to be found in L. van der Ent et al., ‘Public finance in the United Provinces of the Netherlands in the seventeenth and eighteenth centuries’, in Crises, revolutions and self-sustained growth. Essays in European fiscal history 1130–1830, M.Ormrod, M. Bonney and R. Bonney eds, (Stanford 1999), pp. 249–93, 254.

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in actual fact, ‘general’ for the Republic as a whole. But even in years of peace, customs revenue would pay for little more than about 12 per cent of the defence budget of the Dutch Republic in the seventeenth and eighteenth centuries and in war years much less than this. Decisions on the amounts to be spent on war, on land and at sea were taken each year in the assembly of the States General of the Republic. Each of the provinces was allocated a specific portion of the agreed expenditure. Since 1616 conflicts over this allocation had been avoided by fixing it. Until the end of the eighteenth century approximately 60 per cent of the agreed expenditure had to be spent by Holland, with smaller percentages having to be spent by each of the other provinces. The bulk of the funds that the provinces had agreed to spend was not paid to a central treasury, but rather managed directly by the provinces themselves. Although they did not actually become ‘general’, the introduction of the taxes called the ‘general means’ was a major step towards a more efficient tax system. In particular Holland’s ‘common means’ turned out to be quite lucrative and became the source of admiration and envy in other European states. During the first decades of the Revolt the ‘common means’ had been Holland’s main direct source of financing the war. Since about 1600, however, Holland’s burghers had come to view them as a reliable source of funding for interest payments on a consolidated debt, and this had the effect of massively increasing the possibilities for war financing. In England excises became an important part of central revenue only at the end of the seventeenth century. Like in Holland they subsequently contributed significantly to the state’s creditworthiness. Judgements about the efficiency of the fiscal system of the Dutch Republic have been varied. The political institutions of the Dutch Republic have been criticised for their inability to generate enough money to combat the rising power of Britain and France during the eighteenth century. This failure has been attributed to the decentralisation of power in the Republic which hampered efficient decisionmaking and made it difficult to enforce resolutions at the provincial level. Dutch public policy has been further criticised for having created a fiscal system that   �������������������������������������������������������������������������������������� W. Fritschy, ‘A “financial revolution” reconsidered: public finance in Holland during the Dutch Revolt, 1568–1648’, Economic History Review 56, 1 (2003) 57–89.   ��������������� M.J. Braddick, Parliamentary taxation in 17th-century England (Bury St Edmunds 1994) Ch. 4 ‘The excise’, pp. 168–231; the first, largely unsuccessful attempts to introduce national excises date from the 1640s; P. O’Brien and Ph. Hunt, ‘England 1485–1815’ in The rise of the fiscal state in Europe, c.1200–1815 (Oxford 1999), pp. 53–100, 90; P. Dickson, The financial revolution in England a study in the development of public credit 1688–1756 (London 1967).   ����������������������������������������������������� J. Hovy, ‘Institutioneel onvermogen in de 18e eeuw’, Algemene Geschiedenis der Nederlanden IX (Bussum 1980), pp. 126–38; J.L. van Zanden and A. van Riel, Nederland 1780–1914. Staat, instituties en economische ontwikkeling (Amsterdam 2000) [transl. The strictures of inheritance (Princeton 2004)].

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was socially unfair as well as being the cause of economic stagnation during the eighteenth century. Taxes on primary necessities are said to have been unreasonably high to ensure the payment to lazy rentiers of interest on the everincreasing public debt. Moreover, the resulting higher wage level, especially in the province of Holland, would have caused the loss of competitive advantages, resulting in growing unemployment. Other scholars, however, point to the fact that the same federal structure had not prevented the Dutch Republic from having the status of a major power in the seventeenth century. They also point to the high amount of revenue per capita that continued to be realised in the eighteenth century and the declining proportion of taxation on primary necessities in Holland’s tax system. It is true that after the federal Republic had come to an end as a result of the Batavian Revolution of 1795, the centralisation of the tax system in 1806 led to an increase in revenue from 39 million guilders to 47 million guilders. However, this increase was not nearly enough to compete with the much larger states. It should also be noted that part of this increase resulted from the simple fact that people in other parts of the Netherlands since then had to pay the same rates on primary necessities as the people in the province of Holland, while the rates in Holland had become simply too small. These circumstances suggest that the Dutch Republic was simply too small – and the costs of funding wars too high – to compete militarily with much more populous states. Even if Dutch economic development in the eighteenth century had been more favourable, the relatively small population would still have limited its tax base. Indeed, the demographic situation was such that the doubling of its size by the temporary addition of the Southern Netherlands between 1815 and 1830 was still not enough to place the Netherlands on an equal footing with the   ���� The locus classicus is Ch. Wilson, ‘Taxation and the decline of empires. An ��� unfashionable theme’, Bijdragen en Mededelingen van het Historisch Genootschap 77 (1963) 10–26.   ���������������������������������� J. de Vries and A. van der Woude, Nederland 1500–1815. De eerste ronde van moderne economische groei (Amsterdam 1995), pp. 781–2 [transl. The first modern economy success, failure, and perseverance of the Dutch economy, 1500–1815 (Cambridge 1997), Section 4.2.2.2]. http://www.inghist.nl/Onderzoek/Projecten/GewestelijkeFinancien/ Verzamelposten/translations.   ������������� H. Zwitzer, ‘De militie van den staat.’ Het leger van de Republiek der Verenigde Nederlanden (Amsterdam 1991), p. 138; C.A. Davids, De macht der gewoonte? Economische ontwikkeling en institutionele context in Nederland op de lange termijn (Amsterdam 1995); W. Fritschy, ‘Binnenlandse constituties of buitenlandse omstandigheden?’ Bijdrage aan het discussiedossier over J.L. van Zanden en A. van Riel, Nederland 1780–1914. Staat, instituties en economische ontwikkeling (Amsterdam, 2000), Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden 117, 3 (2002) 344–51.   ����������������������������������������������������������������������� At the end of the eighteenth century, the Dutch Republic numbered only approximately two million inhabitants, Great Britain had roughly nine million and France about 20 million.

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other major powers of the time. The Dutch were able to regain and retain their independence after 1813 because this was in the interest of the more powerful European states, not as a result of the greater fiscal efficiency of a centralised kingdom. This chapter will not continue to address the debate on the institutional and social–economic fiscal efficiency of the Dutch Republic as a whole. Rather, it will focus on Holland as the most important of the seven provinces and the one which contributed approximately 60 per cent of the war expenditure by the Dutch Republic.10 Holland has sometimes been described as a ‘league of eighteen cityrepublics’ similar to the Republic’s designation of a league of seven autonomous provinces.11 This description is, however, not in accord with Holland’s fiscal system. Already during the early years of the Revolt the spectacular increase in the number, rates and scope of Holland’s ‘common means’ taxes (i.e. ‘common’ to all cities in contrast to their own local taxes) belies this view. As for taxation cities were hardly autonomous since the start of the Revolt, and this drastically curtailed their possibilities for pursuing particularistic fiscal interests.12 This chapter will argue that the development of Holland’s tax system, when viewed from the perspective of the executive functions fulfilled by its ‘Finance Office’ during the seventeenth and eighteenth century, does not support the image of inefficiency commonly associated with local ‘particularism’ after the end of the Revolt. After discussing this Finance Office in more detail, the continuing efficiency of taxation in Holland will be illustrated firstly by the important reorganisation of ‘ordinary’ provincial taxation in the 1680s, and secondly by the changes in ‘extraordinary’ taxation since 1680. To determine whether the administrative efficiency displayed by the Finance Office was not neutralised by economic disadvantages, judgements by contemporaries concerning the economic effects  ����������������������������������������������������������������������������� Extensively annotated results of recent research on Holland’s public finance are published in R. Liesker and W. Fritschy, Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden. Deel IV Holland (1572–1795) (Den Haag 2004). The accompanying database of Holland’s public revenue and expenditure is accessible on www.inghist.nl; references to sources on Holland’s public finance in this chapter have been limited to information not supplied in the book. 11  �������������������������������������������������������������� P. Blaas, ‘Stedelijke naijver. Een inleidende verkenning’, in De betekenis van interstedelijke conflicten in de geschiedenis. Enige beschouwingen en casestudies, ed. P. Blaas and J. van Herwaarden (Den Haag 1986), pp. 11–27, 15 (a historiographical survey on ‘local jealousy’ in the Dutch Republic); see also S. Groenveld, ‘De institutionele en politieke context’, in Van tresorier tot thesaurier-generaal. Zes eeuwen financieel beleid in handen van een hoge Nederlandse ambtsdrager (Hilversum 1996), pp. 55–89, 56. ������������ J.L. Price, Holland and the Dutch Republic in the seventeenth century. The politics of particularism (Oxford 1994) sketches an image of ‘extreme decentralisation’ in this province. 12  ������������������������������������������������������������������������������������� Fritschy, ‘A “financial revolution” reconsidered’, pp. 67–70; idem, ‘Three centuries of urban and provincial public debt: Amsterdam and Holland’, in Urban public debts, urban governments and the market for annuities in Western Europe, 14th–18th centuries, eds M.Boone and C.A. Davids (Leuven 2003). 10

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59

of Holland’s fiscal policy will also be evaluated. The general argument of this chapter will be that Holland witnessed a growing rationalisation of its provincial tax system,13 not unlike that which occurred at the beginning of the nineteenth century at the national level, or similar developments in other parts of Europe during the course of the eighteenth century.14 Holland’s Finance Office Holland’s Finance Office, the ‘Kantoor van de Financie van Holland’ was the heart of the province’s financial administration. The office performed many of the fiscal tasks of the ‘Gecommitteerde Raden’, the executive board of the States of Holland, which prepared and executed the decisions of the ‘States of Holland’. It is not clear when exactly the Finance Office was established, but it was certainly operative in 1624. For that year instructions for the chief clerk and the other clerks have been found, together with a resolution of ‘Gecommitteerde Raden’ on how the activities in the office should be organised in terms of which registers should be kept and how this should be done. The functions of the Finance Office were not unlike those of the Council of Finance and the general treasury in Burgundian and Habsburgian times, but its functions would become much more sophisticated. The ordinance of 1624 shows the office’s most time-consuming task to be the registration of payments forthcoming, although it also had to maintain a register of all of Holland’s revenues with ‘nothing excepted and everything clearly distinguished each in a separate chapter, to be renewed yearly’. Although such regularly updated registers containing ‘all revenues’ no longer exist prior to 1726, yearly information on the total revenue of Holland’s most important taxes, the ‘common means’, is available from 1624 onwards. The Finance Office may have actually started regular activities in this year, as this was also the year in which the ‘Gecommitteerde Raden’ became more clearly separated from the States of Holland. Until 1624 the resolutions of the ‘Gecommitteerde Raden’ had been part of those belonging to the States of Holland. Subsequently, a separate series came into use. In contrast to the provincial audit chambers, which audited accounts, often in arrears, not more than once a year, the Finance Office was focused on ‘proactive’ financial control and on regularly monitoring Holland’s public coffers. It demanded monthly reports on the revenue and expenditure of the 18 district tax 13  �������������������������������������������������������������������������������� Similar processes were observable in other provinces; W. Fritschy, ‘Domeinen en financieel beleid in Overijssel in de 17e eeuw’, in Doel en middel. Aspecten van financieel overheidsbeleid in de Nederlanden van de zestiende eeuw tot heden (Amsterdam 1995), pp. 75–97. 14  ������������������������� R. Bonney, ‘Revenues’ in Economic systems and state finance, ed. R. Bonney (Oxford 1995), pp. 423–505, 438–9; C. Capra, ‘The Austrian monarchy and the Italian states’, in idem, pp. 295–315, 300–303.

60

The Political Economy of the Dutch Republic

receivers in Holland’s cities, and through this office the ‘Gecommitteerde Raden’ specified the payments to be made by these receivers. Holland’s audit chambers were notoriously lax in their duties, even the most important, the ‘Rekenkamer ter Auditie’ of Holland’s ‘Southern Quarter’. This made the audit chambers unsuitable as a source of information for the preparation of fiscal policy – their initial purpose during the reign of Charles V.15 The efficient functioning of Holland’s Finance Office was a source of concern for ‘Gecommitteerde Raden’. This can be seen, for instance, in the dismissal in 1624 of chief clerk Henrik Doudijns and his son who was one of the clerks. The two did not perform their duties as required. They had not only been rude in their comportment towards Their Highnesses, but also were often absent from the office without permission. The ‘Gecommitteerde Raden’ urgently implored the States of Holland to appoint in Doudijns’ place someone who possessed the necessary financial qualities, and not simply to appoint someone to this office as a favour to someone else. When it proved difficult to find someone with the requisite financial knowledge quickly enough, they opted to reappoint Doudijns for a time, instead of appointing someone without the relevant knowledge of all financial affairs. This did not mean that he was not dismissed very soon after someone had been found.16 Another example of the attention paid to professionalism is that, according to a directive from 1634, the bookkeeper in Holland’s Finance Office had to be skilled in Italian double entry bookkeeping. Already in 1621 attempts at the application of double entry bookkeeping in Holland’s public finance had been found. Perhaps this was related to the fact that Simon Stevin, who introduced the system of double entry bookkeeping in the Netherlands, had been the teacher of Prince Maurits of Orange, the successor of William of Orange as stadholder. Surveys of Holland’s financial practices, displaying some characteristics of double entry bookkeeping, were made for Prince Maurits in the years 1621–1623 after the renewal of the costly war with Spain at the end of the Twelve Years Truce between 1609 and 1621.17 However, with the exception of these rudimentary examples from 1621– 1623, there is no evidence in the seventeenth century that Holland’s Finance Office succeeded in producing the complete and well-organised yearly surveys which double entry bookkeeping was supposed to make possible. This does not mean that no administrative improvements were made, but given that most of the archives of the Finance Office had been destroyed during 15  ���������������������������������������������������������������������������� H. de Schepper, ‘Beleid en bestuur inzake de hoge overheidsfinanciën in het Bourgondisch-Habsburgse Nederland’ in Van tresorier tot thesaurier-generaal, pp. 17–52, 36. 16  �������������������� See also P. Knevel, Het Haagse Bureau. 17de-eeuwse ambtenaren tussen staatsbelang en eigenbelang (Amsterdam 2001), pp. 160–61. 17  ����������������������������������������������������������������������������������� In Amsterdam the use of double entry bookkeeping in public finance only started in the 1660s; W.F.H. Oldewelt, ‘De boekhouding van Amsterdam’, Jaarboek Amstelodamum 63 (1971): 11–28, 19.

The Efficiency of Taxation in Holland

61

the eighteenth century, evidence for such improvements is mainly indirect. What we do know, for example, is that from 1650 onwards Holland’s Finance Office was able to produce detailed printed overviews of the sums for which each of the ‘common means’ were farmed out. No longer did these overviews indicate only the total revenues for Holland’s Southern and Northern Quarter in the form of a hand-written list which is available for the period 1624–1650; rather, they included clearly specified yearly revenues of each tax for each of the sixteen tax districts in print. That this readily available, detailed information concerning the revenue of the ‘common means’ must have contributed to the increased efficiency of Holland’s tax system can be deduced, for instance, from the considerable reorganisation of Holland’s tax system around 1680 to be discussed in more detail below. Table 3.1 offers an overview of the developments between 1640 and 1790 of the administrative structure in Holland’s Finance Office located in three chambers in the governmental heart of the Dutch Republic, the ‘Binnenhof’ in The Hague. The data were taken from the few surveys of administrative expenditure in the province of Holland preserved in the archives of ‘Gecommitteerde Raden’.

Table 3.1

Personnel and salaries (in guilders) of Holland’s Finance Office, 1640–1790 1640

chief clerk(s) (‘commies’)

1.800

clerks (‘klerken’)

6.254

1650

7.492

1660

4.400

1670

1680

2.000

4.800

1730

1740

1750

1760

1770

1790

4.800

4.800

4.800

4.800

4.800

4.800

4.400

first and second chief clerks third chief clerk bookkeepers

1.425 1.136

1.240

1.240

4.105

2.646

1.425

1.425

1.425

2.525

first bookkeeper

1.100

second bookkeeper

1.100

clerks for the liquidation against the Generality

1.605

2.990

3.105

2.200

1.467

3 clerks and 1 clerk for the lottery clerks (about 1100 guilders per clerk)

10.640

3.108

3.108

4.908

4.200

4.200

8.800

8.987

8.800

9.034

7.941

clerks

2.400

inspector general room keeper Total

6.693

700 10.795 11.722

8.745

900

900

2.000

2.000

900

900

900

13.405 19.553 18.133 16.895 21.933 21.459 19.466 17.518

Sources: ARA, GRZK, 3996, RANH, GRNK, 1242–1255, Rapport 1797; electronic database on www.inghist.nl/Onderzoek/Projecten/ GewestelijkeFinancien/Verzamelposten/translations.

The Efficiency of Taxation in Holland

63

The number of employees suggests that between 1660 and 1750 in particular growing importance was attached to the functioning of the Finance Office, although the size of the financial bureaucracy still remained quite modest. In 1660 the personnel seems to have numbered about eight individuals, in 1680 about 15, in 1750 about 20. It should be noted that the data exclude the ‘Office for the Means for the Common Country’(‘Kantoor der Gemeenelandsmiddelen’) established in 1750, when the farming out of the common means tax was replaced by the collection of these taxes by government officials. Until then the provincial common means tax had been farmed out by provincially appointed tax receivers. I will not enter here into an extensive discussion of the efficiency or inefficiency of tax farming in Holland. However, two points are worth mentioning. Firstly, unlike, for instance, in France, tax farms in Holland were not very large, and taxes were farmed out in open competition and under the supervision of representatives of other cities to prevent fraud. This makes it likely that, particularly during the seventeenth century, profit margins for tax farmers would not have been very great.18 In the eighteenth century this may have changed, as the widespread tax rebellions of 1748 were evidently related to the contrast between the wealth of tax farmers and the necessity to increase taxation at the end of the War of Austrian Succession. Secondly, the claim of some contemporary authors that tax yields doubled due to the abolition of tax farms in1750 is unfounded.19 Revenues from the formerly farmed taxes increased significantly from 8.5 million (after the deduction of ‘remissions’) in the final years before the abolition to about 10.3 million guilders (after the deduction of collection expenses) in the years after the replacement of tax farming by tax collection. About two-thirds of this increase was the result of the higher rates of taxes on milled grain, slaughtered cattle and peat and coal, and therefore not a result of the disappearance of tax farming. Only for direct taxes on cattle, for the stamp-tax (‘klein zegel’), and for the so-called ‘salt, soap, gentlemen’s and redemption-money’ – a tax which had not been farmed out at all before – was a substantial increase to be observed that was not due to an increase in rates, but to increased administrative efficiency. The total collection costs for these ‘common means’ taxes after the abolition of tax farming in the second half of the eighteenth century can be calculated quite accurately at about 9 per cent of revenue, and the collection costs for the ‘common means’ taxes were higher than those for other taxes. The collection costs for all taxes together in Holland in the last decades of the eighteenth century had been less than 5.5 per cent and in the other provinces about 7 per cent. We know that a contemporary expert serving as the first Dutch minister of Finance, Isaac Gogel (1765–1821), was quite impressed by the performance of Holland’s tax system. In the first years of his own unified tax system, collections costs amounted to eight 18  ������������������� A.Th. van Deursen, Het kopergeld van de Gouden Eeuw. III Volk en overheid (Assen 1979), p. 31. 19  ���������� E. Luzac, Hollands Rijkdom IV (Leiden 1783), p. 388.

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64

per cent. For Britain collection costs of ten per cent have been reported for the eighteenth century.20 In 1818, at the time of the new kingdom of the Netherlands, they would rise to about 17 per cent, as was noted by the same Gogel.21 This suggests that the tax system in Holland during the Republic was characterised by high cost efficiency. The existence in Holland of a centralised provincial institution such as the Finance Office, shows that at the provincial level, centralisation had already progressed considerably, which meant that inefficient ‘local particularism’ had less chance to sabotage the efficient functioning of the fiscal system than is sometimes believed. The next section will examine in more detail the advantages of this centralisation of information for Holland’s public finance at a time when a massive increase in ‘ordinary’ revenue was required.

The reorganisation of ‘ordinary’ taxes in Holland in the 1680s The dramatic attack from four sides on the Dutch Republic in 1672 and the ensuing war of 1672–1678 obviously had serious financial consequences for Holland. In the ‘year of disaster’, 1672, the most important source of revenue in Holland, the ‘common means’, fell from 7.9 million guilders in 1671 to 7.0 million guilders. By increasing the rates of taxes on primary products like peat and salt, it proved possible to raise this amount again to 8.5 million in 1677. However, to pay for the huge war costs the most important source of additional revenue during the war was extraordinary levies on all people with property worth more than a thousand guilders (‘100e and 200e penningen’). In 1672, a rate of 2 per cent of the property value was set, in 1673 and 1674 an unprecedented rate of no less than 3 per cent, and in 1675–1678 alternately 2 per cent and 1 per cent (see Figure 3.1). This property tax is likely to have generated an additional average revenue of no less than about 6 million guilders per year, as the yield of 0.5 per cent had been set at 2.23 million guilders, a fixed percentage of which had to be furnished by each of the cities.

20

 ������������������������������������������������������������������������������������ P. Mathias and P. O’Brien, ‘Taxation in Britain and France, 1715–1810. A comparison of the social and economic incidence of taxes collected for the central governments’, Journal of European Economic History 5 (1976): 601–50. 21  ����������������� J.M.F. Fritschy, De patriotten en de financiën van de Bataafse Republiek. Hollands krediet en de smalle marges voor een nieuw beleid (Den Haag 1988), p. 150.

The Efficiency of Taxation in Holland

65

Figure 3.1 Annual rate totals per year of the 0.5 per cent, 1 per cent, etc. property tax in Holland (‘200e etc. penningen’) (1621–1707) Roughly half of these levies between 1672 and 1678 took the form of forced loans. In addition to the average annual debt of approximately 2.5 million guilders for loans on the free market, the forced loans resulted in an increase in Holland’s debt of 38.6 million guilders during this period of war. This means that the interest payments due by Holland, amounting to about 5.5 million guilders before the war, rose to about seven million guilders after the war. In other words, compared to 1672, ordinary expenditure in 1679 had risen by about 1.5 million guilders. The prevailing financial norm at the time was that extraordinary levies, like the property taxes mentioned above, and loans, should pay only for extraordinary expenditure, or the necessary additional expenditure on the army and the navy in times of war.22 Ordinary expenditure in normal times – for administration, justice, defence and debt service – had to be paid for by ordinary taxation. By far the most remunerative ordinary expedient were the ‘common means’. In addition, Holland levied the land- and house tax (‘verponding’), and a so-called ‘collective means’, the most important element of which was a transfer and inheritance tax. At the end of the 1670s the proportions of these three taxes in total revenue were 72 per cent, 23 per cent and 5 per cent, respectively (Figure 3.2). 22  ����������������������������������������������������������������������������� NA, FH 797, ‘Memorie van 1755’ f35v:, ‘dat het niet te praesumeeren was, dat iemand zoude willen adviseeren dat de ordinaris lasten van de provincie van Holland met extraordinaris consenten zouden werden goedgemaakt’.

The Political Economy of the Dutch Republic

66 

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Figure 3.2





























Composition of Holland’s public revenue 1668–1794 (guilders)

The first available detailed printed report on Holland’s public finance that was published on behalf of the Finance Office dates from 1678.23 The report concluded without qualification that the welfare of the state (‘het welvaaren van de staat’) required adjustments in the ‘common means’. As a consequence of its recommendations, a thorough reorganisation of Holland’s common means was initiated in 1680 which had the effect of increasing its total revenue from 7.9 million guilders in 1679 to 9.6 million guilders in 1680. This was an increase therefore of 1.7 million guilders, or no less than 21 per cent. How was this achieved? State Pensionary Fagel, the president of ‘Gecommitteerde Raden’, had suggested the following measures to the States of Holland: (1) changes in the taxes on wine and brandy, (2) a revision of the so-called ‘gentlemen’s money’ (‘herengeld’) on servants and (3) an increase by a quarter or a third in the tax on the milling of grain (‘gemaal’). He thought that each of these measures could yield about 400,000 guilders, indicating that he intended two-thirds of the newly generated revenue to come from taxes on luxury consumption.24 Eventually the

23  ���������������������������������������������������������������������������������� From a comparison of the structure of the information in this survey with that of the financial data in the main registers of Holland’s Finance Office – the ‘Grootboeken Holland’ – preserved from 1751 onwards, it appears that all the information in this report must have originated from this office. The comparison of the structure of the information in the 1678-report with these eighteenth-century registers leaves no doubt, therefore, that they must have already been kept at that time. Rapporten en Memoriën over de Finantiën van Holland. Met de bijlagen tot dezelve behorende, in de Jaren 1678, 1721, 1728 en 1750 uitgebracht ter vergadering van dezelve Provintie; herdrukt als bijlage bij het Rapport der Commissie tot het Onderzoek naar den Staat der Finantiën van Holland (Den Haag 1797). 24  ��������������������������������������������������������������������������������� NA, toeg.nr. 3.01.04.01, Staten van Holland, inv.nr. 113, ‘Resoluties Staten van Holland’ 20 January 1680.

The Efficiency of Taxation in Holland

67

tax on the milling of grains was increased by a third and it was collected in the countryside henceforth as a ‘capital tax’ (‘hoofdgeld’) based on the estimate that per year, 1/28 ‘last’ (about 108 litres) of grain per person was consumed. These changes in the tax on the milling of grain alone yielded an additional 683,000 guilders. An increase in the tax on ‘horned cattle’ (‘hoornbeesten’) yielded a further 228,000 guilders. Increases in the rates of the taxes on wine and brandy turned out to raise only an extra 193,000 guilders. The result of these measures was that the greatest increase in taxes had been that on bread, despite the fact that during the war taxes on primary necessities like peat and salt had already been raised. Was this the direct result of the unwillingness of the ruling class to increase the tax burden on the rich by, for instance, increasing the tax rate on wines? Or was it (also) the result of the fear that raising the rates on wines might not result in sufficient additional revenue because it might result in declining consumption? A similar fiscal decision in 1707, in the middle of the far more costly War of Spanish Succession (1702–1713), does suggest that the latter scenario was likely to have been the case.25 In 1706 the cities of Leiden and Brielle announced in the Assembly of the States of Holland, that after six consecutive years of property taxes of two per cent per year, they were no longer able to agree to this heavy extraordinary taxation for the following year. As an alternative to this source of this revenue, a loan at double the interest rate was issued; to pay for the additional interest burden, the tax rate on peat was again increased. After 1707 the tax on property was restored to the two per cent level. In this case the available figures on tax revenues do not leave much doubt as to why the tax on peat was preferred to pay for the interest on the loan above that on wine.

25  �������������������������������������������������������������������������������� As there were experiments with the ‘redemption’ of the wine tax in some cities, especially in Amsterdam, the 1670s figures on the revenue from the taxes on wine are not a reliable indicator of developments in consumption for this period.

Figure 3.3 Chronological survey of taxes in existence in Holland from 1572 to 1795 (the grey bars offer a graphical representation of the duration of each of the taxes; tax names in bold font indicate taxes collected, not farmed) SHULRGRIH[LVWHQFH



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The Political Economy of the Dutch Republic

70

The revenue from the wine tax was not only much lower than that from peat, but it had also declined during the first five years of the war from 416.598 guilders in 1701 to 359.042 guilders in 1705. The revenue from the tax on peat had not declined; it had in fact increased from 1.429.286 guilders in 1701 to 1.483.396 guilders in 1705. The income as well as the price elasticity of the demand for wine was obviously higher than that of a primary necessity like peat.26 It seems plausible that the income of wine drinkers had suffered from the incessant extraordinary taxation during the war. Although the concept of elasticity was of course unknown at the time, it is clear that the well-organised information available from Holland’s Finance Office must have enabled the ‘Gecommitteerde Raden’ to draw the appropriate conclusion. If the tax yield had to be raised, and if a continuation of direct taxation was no longer acceptable, it was clearly more rational and efficient to raise the tax rate on peat than to raise it on wines. This was particularly crucial as the additional revenue of the peat tax was pledged for interest payments on a new loan; it would harm credit if the revenue proved to be inadequate. Likewise the rash decision to include bread as the most sure way to increase tax revenue after the war of 1672–1678 was an unavoidable and efficient decision. In addition to raising the tax rate on bread, a radical restructuring of the rest of the tax system with respect to the common means also took place after 1678. This is additional proof that the ordinary tax policy at the end of the seventeenth was not exclusively aimed at having the poor bear the brunt of the tax load. Figure 3.3 offers a schematic overview of all the taxes successively introduced in Holland between 1572 and 1795. The grey bars behind the tax-types indicate their duration during the period of 1572 to 1795. This figure shows how, gradually, more and more taxes had been introduced to raise the yield of Holland’s tax system. It also shows the radical change in the tax system that occurred in 1680 when many taxes were abolished. In Figure 3.4 the data from Figure 3.3 have been rearranged to show more clearly what happened in 1680 – that is, that no less than 16 of the 42 ‘common means’ then in existence, i.e. more than a third of the total number, were abolished in 1680 and replaced by a tax based primarily on property and the number of servants. Moreover, many of the taxes not abolished were thoroughly revised. The so-called Groot Placcaet Boek Volume III (The Hague 1683), the collection of prevailing legislation, contains no less than 200 pages with new or revised tax legislation. The taxes abolished were among the least remunerative in the tax system. Eleven of the twenty-one taxes, each yielding on average less than 0.52 per cent of total tax revenue between 1650 and 1680, were abolished, and eight of the ten  ����������������������������������������������������������������������������� A. Wegener Sleeswijk, ‘Binnenlandse belastingen en internationale handel’ in Ondernemers en bestuurders: economie en politiek in de Noordelijke Nederlanden in de late Middeleeuwen en de vroegmoderne tijd, Clé Lesger en Leo Noordegraaf (red.) ����������� (Amsterdam 1999), pp. 557–73 offers a detailed analysis of the effects of tax increases on both the trade in, and the consumption of, wine in the middle of the eighteenth century. 26

The Efficiency of Taxation in Holland

71

taxes, each yielding on average less than 0.25 per cent, were abolished. Many of the taxes abolished were on primary necessities: on candles, shoes, woollen cloth, herring and other salted fish, oil, and cod-liver oil, soap, a wholesale salt tax and a retail salt tax (the others were: gold brocade cloth, import of tobacco pipes, pitch and tar). The more remunerative taxes on salt and soap were replaced by direct taxation by means of an estimate of salt- and soap-consumption to be paid by people whose property was valued at no less than 300 guilders. The so-called ‘gentlemen’s money’, which had yielded only about 25,000 guilders per year before 1680, was in this way replaced by a completely new ‘salt, soap, gentlemen’s and redemption money’ (‘zout-, zeep-, heren- en redemptiegeld’). The amount to be paid in this tax was partly in proportion to estimated consumption, partly in proportion to the total property-value of the tax payer, and partly on the number of servants in his household. Furthermore, this new tax was no longer farmed out; it became a direct tax collected on behalf of ledgers and it would yield about a million guilders, quite a good compensation for the loss of both the indirect salt and the indirect soap taxes. The net result of this change from indirect to direct taxation was a revenue increase of 539,271 guilders. An evaluation of the result was found among the printed surveys of the revenues of the ‘common means’ tax. It is clear that it was the centralisation of information in Holland’s Finance Office on the relative yields of the wide array of taxes existing in Holland at the time that had enabled the ‘Gecommitteerde Raden’ to restructure Holland’s tax system to produce such impressive results. In fact the sum of the changes in Holland’s tax system after 1678 is akin to the well-known and highly praised revolutionary changes in the tax system realised by the famous Gogel for the entire Netherlands after the collapse of the old Republic in 1795. Gogel’s first initiative had consisted of gathering information on tax yields and expenditure in all of the seven provinces which had been kept secret by the provinces to this point. The information he had collected had made him aware of the potential, however slight, for a revolutionary tax reform. In order to raise tax revenues substantially, he would not be able avoid raising the tax on the milling of grain any less than Holland was able to in 1680, and his rationalisation of the tax system also consisted primarily of abolishing the least remunerative of the extant indirect taxes (on firewood, butter, building materials, fruits, import of tobacco and pipes) and the introduction of a directly levied personal tax called the ‘personeel’.

Figure 3.4 Survey of the changes to Holland’s tax system from 1572 to 1795 (the grey bars offer a graphical presentation of the duration of each of the taxes; tax names in bold font indicate taxes collected, not farmed) SHULRGRIH[LVWHQFH



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74

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A difference between the tax reforms of 1680 and 1795 is that Gogel’s ‘personeel’ tax was levied on the house-rents paid and not on a combination of the number of servants, the assessment of salt and soap consumption and the assessment of the property tax. Of course a major difference between the two tax reforms, and Gogel’s main accomplishment, lay in the unification of the tax system of the seven provinces, and as a percentage of total tax revenue, his results were decidedly more impressive.27 Nevertheless the parallels between fiscal developments at the national level at the end of the eighteenth century and fiscal developments at the provincial level of Holland at the end of the seventeenth century are striking. One might add that the Dutch tax reforms were not unlike developments in PiedmontSavoy, where the ‘Victor Amadeus reforms (…) endowed the Savoyard state with one of the most efficient administrations in Europe, far ahead of the cumbersome structures of the French and Spanish monarchies, or the outmoded institutions of other Italian states’.28 What seems to have contributed to the success of the tax reforms in 1680 was an administration able to monitor the results of its tax efforts, thereby enabling the States of Holland to adopt more efficient measures. Holland’s government was able and willing to implement effectively the information it had gathered on the common means. This depiction is in stark contrast to the image of a province crippled by the decentralisation of power across 18 quarrelling cities, each jealously trying to protect its own burghers in general, and its wealthy burghers in particular, from rising taxation. In the Dutch Republic the provinces closely guarded information on tax yields from one another, but in Holland the ‘Gecommitteerde Raden’ through its Finance Office had at its disposal information on tax yields concerning all taxes in all cities. Ordinary tax revenue was raised by abolishing many inefficient taxes, which at the same time likely curtailed costs. I conclude that the degree of fiscal centralisation, realised for the ‘common means’ in Holland’s Finance Office by 1680, fostered a remarkable degree of institutional efficiency in its tax system.

Changes in ‘extraordinary’ taxation since 1680 Extraordinary taxation offers yet another illustration of the increasing efficiency of taxation in Holland during the Republic. The aforementioned survey of extraordinary taxation since 1621 (Figure 3.2) depicts not only the unprecedented burden of extraordinary taxation during the war of 1672–1678, but also the resumption of such taxes during the subsequent Nine Years War against France from 1688 to 1697. Furthermore, Figure 3.2 shows that after the Nine Years War it was no longer possible to abolish extraordinary taxation. Evidently it was no longer 27  ������������������������������������������������������������������������������������� He increased total tax revenue in the Netherlands from 38,8 million to 46,6 million, i.e. by 20 per cent; total ordinary taxation in Holland increased in 1680 compared to 1679 from 11.8 million to 13.5 million, i.e. by 15 per cent. 28  �������������������������������������������������������������� Capra, ‘The Austrian monarchy and the Italian states’, p. 300.

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75

considered possible to pay for the increased interest burden by another increase in one or more of the common means. This is not surprising since the results of the radical restructuring of the tax system in 1680 ultimately proved insufficient. These reforms had soon been followed by a drastic ten per cent increase in the rates on all common means taxes. At first this was only partially imposed in 1683 and 1684; however, from 1687 onwards it was in full effect. Less than five years after the Nine Years War, the Republic was involved in the European War of Spanish Succession. The huge financial burden this war created, with an increase in the Republic’s debt from 160 million to 310 million guilders, is well known. This does not mean, however, that by this point in time, war was only financed by loans in order to spare the rich from property taxes and to provide them with interest income. Figure 3.2 shows that immediately after the start of the War of Spanish Succession in 1702, the rate of the extraordinary property tax was doubled from one per cent to two per cent of property value. It is true that property taxation would not reach the three per cent level observed during the war of 1672–1678. But in contrast to what had been the case then, during 1702–1713 all property levies were real taxes as opposed to partly forced loans which were of course preferred over taxes by the taxpayer because they secured interest income. The point to be emphasised here is that, despite the fact that during this war it was not difficult to obtain sufficient loans on the free market, property taxes, which did not burden the government with interest payments, were nevertheless levied.29 A change in the way these property taxes were levied had occurred in the meantime. At the start of the war of 1672–1678 the ledgers for the property tax dating from 1654 had become obsolete and had to be revised. As it would take some time before they were ready, it was decided to require in advance the percentages on the value of immovable property by way of an additional ordinary land and house tax (‘verponding’), and the percentages on the value of stock property by way of a deduction of the interest paid on public bonds. This deduction could easily be implemented, as the provincial tax receivers of the common means were the ones in charge of the interest payments on the provincial public debt. It was also quite easy to tax the ‘possession’ of salaries of public officials in advance by deducting the amount due before paying them. Taxpayers were allowed to deduct the amount already paid in these three ways from their assessment in the property tax after the new ledgers had been completed. The ‘pre-assessments’ alone happened to result in a much higher tax yield than the old system. It is not surprising then that in 1680 the decision was made to retain the separate extraordinary land and house tax and that with the start of the Nine Years War in 1687, the system with the preassessments was to be adopted again. For the levying of extraordinary taxation, provincial governments were very much dependent on the co-operation of the separate cities. Here ‘local particularism’ 29  ����������������������������������������������������������������������� W. Fritschy, ‘The poor, the rich and the taxes in Heinsius’ times’, in Anthonie Heinsius and the Dutch Republic 1688–1720, J. de Jongste and A.J. Veenendaal eds ����� (Den Haag 2002), pp. 243–58.

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had a real chance to harm tax efficiency, as the assessments and the collection of the property tax had to be organised by the city governments. The taxing of property in bonds through a deduction of interest payments at the source by the provincial receivers, and by simply reducing salaries with the required percentage in advance, was much more efficient and reliable than the assessment of the total property of citizens by city officials. Moreover the ledgers for personal assessment were not only much more prone to obsolescence than, for instance, the ledgers for the land and house tax, the financial report of 1728 also mentions that during the period of 1697 to 1722 arrears accrued by the cities in the ‘personal’ assessments had come to total more than 4.2 million. No more than about 2.4 million guilders of this part of the property tax had actually been transferred by the locally appointed receivers to Holland’s general receiver during this period. However, although the amount in arrears per year was more than 60 per cent of what was due, this equated to no more than about 170.000 guilders on average per year in arrears, or less than one per cent of Holland’s total tax revenue of about 17.4 million for that period.30 The other components of the property tax were not only easier to handle but also much more remunerative as can be seen in Figure 3.2. The extra amount that could have been obtained from more strictly enforcing a much-hated tax was clearly judged to be no longer sufficient, as the States decided to abolish the personal tax ledgers altogether in 1723. However the taxes on immovable property by means of the extraordinary land and house tax, those on property with stock by means of the interest reduction on bonds, and the reduction of salaries for public officials were of course retained. In the meantime yet another change in Holland’s ‘extraordinary’ taxation system, which by then had become as ordinary as that of the ‘ordinary’ taxation system, occurred after 1707. This change could be characterised as ‘fine-tuning by differentiation’ and is illustrated in Figure 3.5. Prior to 1707, a flat tax rate on all components of property had existed. When the States of Holland decided in 1707, under the pressure of the cities of Leiden and Brielle noted above, to halve this rate from two per cent to one per cent, they decided at the same time to exclude bonds, annuities and life annuities from this reduction. These continued to pay two per cent of their value. In 1709 the high rate of two per cent on all components of property was restored, but after the war a differentiation was again introduced.

  Rapporten en Memoriën (rapport 1728).

30

The Efficiency of Taxation in Holland

Figure 3.5

77

Rate differentiation in property taxes (‘200e etc. penningen’) (1707– 1794)

Already by the end of the Nine Years War (1688–1697) ‘ordinary’ taxation no longer sufficed to cover the full amount of ‘ordinary’ expenditure, because of increased interest payments. The same was true after the more costly War of Spanish Succession (1701–1713). That is why even though the tax on land and houses was reduced to 1 per cent, the ‘extraordinary’ tax on bonds, annuities and life annuities remained, though by this point at the reduced rate of 1.5 per cent. To alleviate the depression in agriculture in 1720, the tax rate on land was reduced even further to 0.5 per cent, while, by contrast, in 1732 the tax rate on life annuities was raised to 2 per cent. Each of the 4 components now had its own rate according to the perceived greater or smaller capacity to shoulder the tax burden. In 1745, during the War of Austrian Succession (1740–1748), the tax on houses and bonds and annuities was temporarily raised to 2 per cent again and that on life-annuities to 2.5 per cent. Furthermore, in 1732 an effort was made to revise completely the register of the house tax. This not only led to a fairer contribution of this tax throughout Holland’s cites, but also raised the revenue of the ‘ordinaris verponding’ (land and house tax), and of course that of the ‘extraordinaris verponding’ as well, from about 2.6 to about 2.9 million guilders per year. One might wonder whether Holland’s fiscal policy should be blamed for failing simply to convert the debt to a lower rate of interest instead of levying a property tax on bonds and annuities. However, Figure 3.5 shows that in fact the maintenance of this tax made fiscal policy actually much more flexible and effective than it would have been in the case of a formal debt conversion. Holland was evidently able to force bondholders to be satisfied with less interest payments than originally promised and was not dependent on their voluntary acceptance of a conversion. It is doubtful, for instance, whether a voluntary conversion to

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an interest rate of only two per cent would ever have succeeded in the middle of the war of the 1740s. In my view therefore this specific as well as periodical rate differentiation in Holland’s property tax further attests to the efficiency of taxation in Holland. An interesting detail relating to these changes in ‘extraordinary’ taxation is that until 1741 the tax receivers retained a financial compensation of one per cent for the ‘collection’ of the tax on the value of bonds, which required hardly any effort, because it was in fact ‘collected’ by means of an interest-reduction. However, receivers appointed after 1741 no longer enjoyed this lucrative addition to their income; according to a report made in 176031 their incomes had been nearly halved compared to those of their predecessors. It is testimony again to the increasing efficiency of Holland’s tax system, that this sinecure was abolished in 1741. It must be acknowledged, however, that the revenue realised from the property tax was in fact much less than two per cent of the real value of taxable property in Holland. This became obvious when, under the threat of a French attack in 1747, a completely new tax of two per cent of the value of moveable as well as immovable property – only one per cent for those with property worth between one to two thousand guilders – had again been imposed. For the first time this tax was as a national levy – as such it was levied not only in Holland, but in all provinces. The utmost secrecy had been promised regarding the revenue it would generate in order to prevent the possibility of anyone being able to determine the (real) taxability of persons, cities or provinces.32 We know now that its revenue in Holland generated the considerable sum of 20.2 million guilders. The two per cent in property taxes from 1707 to 1713 had yielded only about nine million per year. An explanation for its success can perhaps be attributed to the relief felt about the return of a stadholder from the Orange family at the end of the war and after a long ‘stadholderless period’ (1702–1747).33 Does this attest to the inefficiency of Holland’s tax system? Or does it demonstrate that, if it was necessary to collect more taxes, it proved possible to obtain much higher sums? 31

 ���������������������������������������������������������������������������� Res.SH 23-9-1760 ‘Staat van hetgeene de ontfanger-generaal en de respective Ontfangers van de gemeene Lands Middelen (…) hebben opgegeeven te weesen het effectief inkoomen van der selver Ampten, soo aan Tractement als Emolumenten, van welke natuur die ook souden moogen zyn, geduurende de laatste vijf jaaren door een gereekent; mitsgaders hoe veel Capitaalen op der selver Comptoiren na de resolutie van den 5 Augusty 1741 zijn genegocieert, en hoe veel Capitaalen daar tegens zijn afgelost, met byvoeging van het gemis het welk zy daardoor koomen te lyden; alsmeede hoedanige lasten zy tot de behoorlijke directie hunner Comptoiren genoodsaakt zyn te supporteeren.’ 32  ������������������������������������������������������������������������������ Resolution States of Holland 12 September 1747 art. 12: ‘[teneinde] de vreese voor eenige consequentie – dewelke uit deeze liberale Gifte nooit getrokken mag worden – tot eenige schattinge of tauxatie, ten eenenmale uit het gemoed der Ingezeetenen mooge geweert zijn’. 33  ��������������������������������������������������������������������������������������� In 1788 another incidental property tax, this time of 4 per cent, yielded 53.3 million (i.e. even 26.7 million per 2 per cent). In 1792, 2 per cent of property yielded 19.5 million guilders, a decrease which must be mainly due to the drop in the value of bonds.

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The economic effects of Holland’s fiscal policy as seen through the eyes of contemporaries The previous two sections have shown how an increasing number of taxes was extracted from Holland’s population in an increasingly efficient way. How should this fiscal policy be judged in terms of its economic effects? Sources containing the views of contemporaries about this issue are not abundant. The best-known economic author in Holland in the 1660s, Pieter de la Court, was explicit in his view that wars and high taxes were not as deleterious to trade and industry as many other regulations which harmed merchants and manufacturers. He primarily scorned customs duties. The best taxes in his view were those on articles of consumption, on real estate and on assessments.34 This implies that he cannot have been too unhappy with the economic efficiency of Holland’s tax system at this time. Another oft-cited contemporary text is the so-called ‘Deductie’ of Amsterdam delivered to Holland’s ‘Gecommitteerde Raden’ by order of the Amsterdam city government at the end of 1684. In 1678 Amsterdam had already been able to accelerate the peace negotiations with France to put an end to the costly war at a time when the stadholder was still unsure as to whether this was desirable. For the same financial reasons, Amsterdam had fiercely opposed the stadholder’s wish to augment the army further in 1683 for the purpose of supporting Spain in its ambition to combat France in Luxembourg.35 According to Amsterdam the army should only be used for the defence of the Republic, not for other aims.36 The ‘Deductie’ of 1684 consisted of an elaborate enumeration of the reasons why the tax burden should be lowered in times of peace. The Government should be careful, argued the ‘Deductie’, that taxation in peacetime does not harm the economy, as this would lower tax yields in the future. The two main dangers cited were uncertainty as to tax rates, which would hamper industry and trade, and massive direct taxation, which would lead to the migration of citizens. These warnings were no doubt directly inspired by the massive recent changes in fiscal policy. As we have seen above, during the war of 1672–1678 taxes on salt and peat had been raised. Furthermore, in 1680 not only had the 34

 ������������� O. van Rees, Geschiedenis der Staathuishoudkune in Nederland tot het einde der achttiende eeuw (Utrecht 1865) Vol. I Chpt. IV.5 ‘Pieter de la Court’, pp. 362–400, 384–5. 35  ���������������������������������������������������������������������������� D.Roorda, ‘De Republiek in de tijd van stadhouder Willem III 1672–1702’, in Algemene Geschiedenis der Nederlanden 8 (Haarlem 1979) 282–96, 289–91; J. Israel, Nederland als centrum van de wereldhandel (Franeker 1991), pp. 338–9 [= J. Israel, Dutch primacy in world trade, 1585–1740 (Oxford 1989]). 36  ��������������������������������������������������������������������������� NA, SvH inv.nr. 568 ‘Deductie van redenen bij de heeren Gedeputeerdens der stad Amsterdam op speciale last van de heeren haare Principalen aan de heeren Haar Edel Groot Mogende Gecommitteerdens op de 8 December 1684 mondeling voorgedragen en vervolgens in geschrifte overgegeven, streckende tot redres van de Financtie dezer Provintie.’

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taxes on bread, cattle, wine and brandy been raised, but the whole system of the common means tax had also been restructured. All this was still not enough so that in 1683 the decision of a ‘tiende verhoging’, a ten per cent increase in the rates of all common means, had been taken. Direct taxation was , however, generally considered to be even more harmful economically than taxes paid ‘unnoticed’ through higher prices. Amsterdam’s burgomaster N. Witsen, who had been a member of the committee which had to revise the ledgers for the extraordinary property-taxes during the war of 1672– 1678, wrote that as far as he knew no less than 300 families had left Amsterdam because of the extraordinary property taxes during the war. Many others had gone bankrupt because they had not been able to pay the amounts asked and had hesitated to object to their assessment for fear of losing their credit.37 Nevertheless high prices for primary necessities were not advisable; in particular the high tax on peat, firewood and coal, the rate of which had been doubled during the war and increased again by ten per cent in 1683, was considered to be very disadvantageous for Holland’s industry. The ‘tiende verhoging’ introduced in 1683 was discontinued after 1684, despite the fact that it had raised the revenue of the common means by another 0.5 million guilders during these two years. It is likely that this decision was the result of Amsterdam’s objections. Moreover extraordinary taxation by way of the 100th and 200th ‘penningen’ on property ceased as well, at least for the years 1685 and 1686. By 1687, however, not only was the ‘tiende verhoging’ reintroduced never again to disappear during the old Dutch Republic, but also extraordinary taxation was again imposed from that point on and without interruption, as seen in Figures 3.1 and 3.2. The explanation for this is not, of course, that Amsterdam’s influence in the States had diminished; rather from that point on French economic warfare came to be seen as even more harmful to Holland’s economic welfare than additional war expenditure and higher taxes. By this time Dutch trade had decreased by about 25 per cent due to French mercantilist measures. This aroused feelings of bitterness in the people of Amsterdam and Leiden towards France, as the French ambassador in The Hague noted when he wrote to his king.38 This was one of the reasons why by then, even Amsterdam supported the stadholder in his ambition to drive away England’s Catholic king, thereby regaining England as an ally against France, even though this would mean another costly war. It would also explain the acceptance in Amsterdam of the reintroduction of the ‘tiende verhoging’ as well as that of extraordinary property taxes. The French threat to the welfare of the Republic was evidently felt to be greater than the fear of damage to the economy by an increase in the tax burden.

37  �������������� J.F. Gebhart, Het leven van mr. Nicolaas Cornelisz Witsen (1641–1717) (Utrecht 1881), p. 121. 38  �������� Israel, Nederland als centrum, p. 340.

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The same applied to the participation of the Dutch Republic in the huge and financially disastrous War of Spanish Succession. After the stadholder had died in 1702 and Holland had refrained from appointing a new one, the Republic’s participation in this war was arguably motivated more by economic than by political reasons – hence Amsterdam’s wholehearted support. De Vries and Van der Woude rightly state that fiscal policy between 1688 and 1713 should be characterised as a huge investment to maintain welfare in an attempt to destroy French mercantilism – even if it failed to achieve this aim.39 Amsterdam’s ‘Deductie’ of 1684, frequently discussed in the literature, is very interesting indeed for its evaluation of the possible harmful economic consequences of Holland’s fiscal policy. As discussed above, its content was, however, very much determined by a quite specific set of fairly drastic measures taken in the years just prior to 1684. Moreover its message seems to have resulted immediately in a change in tax policy. When these measures subsequently had to be rolled back again, Amsterdam no longer objected. One should therefore be sceptical as to whether this document is representative of the general opinion of contemporaries concerning Holland’s fiscal policy during the entire period of the Dutch Republic. One source which offers a more general overview of contemporary opinion on what was advantageous or disadvantageous for the economy of the Dutch Republic is Etienne Laspeyres’ prize-winning study on this subject, published in 1863.40 Laspeyres’ book discusses no less than 644 publications on economic topics, written in the Dutch Republic between 1600 and 1782, and one of the six parts of his book is devoted to the subject of taxation. Figure 3.6 shows the total number of publications found by Laspeyres containing views on economic issues per five-year period (the dotted area). The black and white area shows the number of publications that pertained to taxation in the book. The white area shows the number of publications mentioned only in relation to customs in the Dutch Republic, and thus which are not relevant to the arguments in this chapter which are confined to Holland.

39

 ���������������������������������� J. de Vries and A. van der Woude, Nederland 1500–1815. De eerste ronde van moderne economische groei (Amsterdam 1995) , pp. 781–2 [= J. de Vries and A. van der Woude, The first modern economy success, failure, and perseverance of the Dutch economy, 1500–1815 (Cambridge 1997)]. 40  �������������� E. Laspeyres, Volkswirtschaftlichen Anschauungen der Niederländer und ihrer Literatur zur Zeit der Republik (1863).

The Political Economy of the Dutch Republic

82 

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Figure 3.6









































Number of contemporary publications per five year period with opinions on economic issues in the Dutch Republic (1601–1785) discussed in Laspeyres (1863)

The main conclusion to be drawn from this figure is that, with the exception of the years 1746–1750, taxation was not a fiercely and widely debated issue by contemporaries in the Dutch Republic interested in economic matters. Between 1746 and 1750 the ‘common means’ were the subject of a fierce debate. Revolts against the tax farmers everywhere in the country resulted in the temporary suspension of the ‘common means’ after they had been increased to pay for the additional interest burden due to the Austrian War of Succession. It was not possible in 1750, however, to avoid having them reintroduced as the returns from the personal taxation that had been introduced in its stead proved to be utterly insufficient. The vast majority of publications with views on economic subjects found by Laspeyres, however, offer no views at all on taxation. It is clear that tax policy was not considered a very relevant issue in discussions about the economy of the Dutch Republic.

Conclusion For a proper evaluation of the fiscal system of the Dutch Republic, we must distinguish between its administrative efficiency and its economic effects. On the one hand, the costs of raising and spending monetary revenues – direct costs as well as the possible rents appropriated by interested parties – should be kept at the lowest possible level without jeopardising the total amount of revenue raised. On the other hand, the utility of the public goods paid for by taxation should be maximised, and the possible damage to economy and society minimised.

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A rigorous quantitative approach to address these issues is hardly possible. The scraps of evidence presented in this chapter do nevertheless seem to allow for an evaluation of the efficiency of Holland’s fiscal regime. The goal of taxation by way of ‘general means’ for the entire Republic would remain unrealised. The centralisation of taxation at the provincial level, however, had already enhanced tax yields, particularly in Holland, in a revolutionary way by the beginning of the Revolt against Spain. Efficiency does not seem to have diminished much in Holland thereafter. The centralisation of information by Holland’s Finance Office enabled it to raise ‘ordinary’ as well as ‘extraordinary’ tax revenue in rather sophisticated and efficient ways and at times when this proved to be necessary. Although in Holland tax farming was to be replaced by tax collection after the tax revolts in the mid-eighteenth century, it is unlikely that tax farming was much less cost-effective than tax collection. Holland’s tax system has often been blamed for the fact that it did not tax mercantile incomes generated from moveable wealth, except for obligations, (life) annuities, and income from public offices. However, it would be anachronistic to think that a full-scale yearly income tax, yielding an important part of total tax revenue, was a real possibility at the time. Even in England, deemed the state with the most efficient tax system in the world in the eighteenth century,41 direct taxation according to ability to pay had remained non-existent.42 In his famous Essays in Taxation the nineteenth-century economist Edwin Seligman discussed ‘principles of efficiency and suitability’ and ‘economic analysis and fiscal facts’.43 Many of his observations on the fiscal regimes in the late nineteenth century can be readily applied to Holland’s tax system at the time of the Dutch Republic. Take, for example, Seligman’s comment on the appropriate government level at which to tax various economic activities: ‘A tax on land, for instance, is apt to be best administered by local authorities’ (but) ‘when (New York’s) excise tax was transferred (…) from local to state officials, the effectiveness of the administration was so enhanced as vastly to increase the revenue.’ (p. 378).

The distinction is the same as the one between Holland’s ‘verponding,’ which continued to be administered locally, and Holland’s ‘common means’, which came to be administered provincially. How much the effectiveness of their administration was enhanced by this centralisation at the provincial level was not only obvious in

41

 ����������������������������������������������������������������������������� P. O’Brien in his mission-statement for the conference on ‘The formation and efficiency of fiscal states in Europe and Asia circa 1500 to circa 1913’, Buenos Aires, July 2002; results to be published in 2009. 42  ��������������������������������������������� O’Brien and Hunt, ‘England 1485–1815’, p. 90. 43  ������������������������������������������������������������������������������������ Originally published in 1895; a facsimile of the tenth edition (1931) was published in 1974.

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Holland’s ‘tax revolution’ of 1574, but again during the fiscal reforms of ordinary taxation in 1680 and of extraordinary taxation thereafter. Seligman’s observations also put into perspective the alleged failure of income taxation: ‘When we come to consider the facts (…), a striking consideration that confronts us (…) is that (…) only a very inconspicuous proportion of the taxes in the civilised countries of to-day stand in any direct relation to the income of the taxpayer. (…) In England for example it is well known the so-called income tax is merely a collection of taxes on the thing, which yields the income, rather than on the person who receives it. (…) The only exception is the famous schedule ‘D’, which is notoriously the least successful of all.’ (pp. 321–2)

This harks back of course to Holland’s property tax, which until 1723 included ‘personal ledgers’. Like the ‘schedule D’ these attempted to tax income beyond only the revenues from land, houses, bonds, and public offices. Like the schedule D they were ‘notoriously unsuccessful’ which is why they were finally abolished. It also suggests that the high yields of incidental taxes on property after 1747, if anything, are proof rather of the economic inefficiency of these emergency measures than of the inefficiency of Holland’s tax system as a whole. The oft-cited negative evaluation of the economic efficiency of Holland’s tax system in the ‘Deductie’ van 1684 seems to have been temporary, as well as exceptional. The explanation for the low level of theorising on the effects of provincial taxation on the economy in contemporary writing is that it was, generally speaking, not seen as particularly harmful or economically inefficient. Tax revolts were, on the whole, relatively rare and the elite clearly believed that the disadvantages of taxation in general would be counterbalanced by the political and economic aims served by its revenue.

Chapter 4

The Political Economy of Bread in the Dutch Republic Jan de Vries

From the middle ages until deep into the nineteenth century, urban magistrates throughout Europe controlled the price at which bread could be sold in their towns, and often in rural districts as well. Thus, while the prices of the bread grains were normally set by markets, bread prices were almost always regulated prices. Bread prices were governed by the English assize, the French taxe du pain, German Bäckerordnungen, and the annonaria of Italy. It follows from this that any understanding of the standard of living of urban Europeans – whose chief source of calories derived from the “staff of life” – requires knowledge of how the regulated price of bread differed from the market price of grain, and, more importantly, why it differed. This is particularly important for the Netherlands, whose numerous and populous cities not only set bread prices for their inhabitants but for the rural areas as well, and where from an early time, most households purchased bread from bakers rather than prepare it at home. Moreover, the system of municipal bread price regulation, generally known as the broodzetting in the Netherlands, took on a distinctive form soon after the establishment of the Dutch Republic. Beginning in the 1590s a new form of price regulation became the vehicle to pursue public policy, not only with respect to the proper price and quality of bread, but also with respect to the organization and scale of the milling and baking industries, the distribution of industry costs among different classes of consumers, and the generation of what became the Republic’s largest single source of tax revenue. The overall impact of these policies was sufficiently large and enduring – the system was not fundamentally changed until 1855 – to have a substantial macroeconomic impact, and that impact – on real wages, production costs, and international competitiveness – has been a subject of debate from the eighteenth century to the present day. My aim in this study is simply this: to identify the objectives of this regulatory regime. In order fully to understand the innovative character of the Dutch broodzetting and its impact, we must begin be placing it in its European context. The regulation of bread prices was common to most of urban Europe. This regulation of the price of bread (of a fixed weight) or – more commonly – the weight of bread (of a fixed price) was governed by a formula that I will call the “old system.” The old system was replaced – first in the Dutch Republic beginning in the 1590s – by a “new

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system.” But its novelty and implications will be apparent only if I begin with a brief account of how the regulation of bread prices typically proceeded under the “old system,” a regulatory regime that continued to prevail elsewhere in Europe until well into the eighteenth century.

The Old System The old system sought to establish a simple rule of thumb for the determination of bread prices. It achieved this by relying on proportions and ratios rather than on more complex quantitative data. To begin, the old system identified a common volume measure for grain (quarters in England, setiers in France, viertels in Brabant, zakken and mudden in the Netherlands, etc.). This volume measure of grain was then divided into three parts: one part was set aside to compensate the miller, a second part was to defray the cost of the grain itself, while the third part was dedicated to compensating the baker for his costs and labor. Thus, the miller ground the measure of grain in return for a share of the resulting flour. In England this was often 1/16th or 1/24th of the flour. In the southern Netherlands by the sixteenth century, the miller took as his fee a fixed number of pounds (eight to ten) per viertel. The rest went to the baker, to be converted into loaves of bread. Most of those loaves represented the second part of the grain measure, and was dedicated to defraying the cost of that grain. The administrators of bread pricing established a loaf price that would equal the cost of the measure of grain when multiplied by the number of loaves that they had set as the official, or expected bread output per unit of grain. The third share of the grain – an unspecified residual amount – was also converted to bread, and the proceeds from these “extra” loaves covered the cost of the baker’s other ingredients, labor and capital. In addition, these extra loaves were the source of any profit he might enjoy. The characteristic feature of “old system” bread-price schedules is the following formula: the loaf will cost as many pence (deniers, penningen, etc.) as the volume grain measure costs in pounds (livres, gulden, etc.). In France, bread prices continued to be governed in this way deep into the eighteenth century. Bread was priced at as many deniers per pound as the setier cost in livres Tournois.  �������������������� Christian Petersen, Bread and the British Economy, c. 1770–1870 (London, 1995), pp. 51–2.   ��������������� E. Scholliers, De levensstandaard in de XVe en XVIe eeuw te Antwerpen (Antwerp, 1960), p. 186. ����������������������������������������������������������������������� Judith Miller’s study of eighteenth-century French practice found that “milling fees in Upper Normandy were between 6 and 10 percent of the grain ground (9 percent in Rouen). Research in other areas of France indicates similar ranges.” Judith Miller, Mastering the Market. The State and the Grain Trade in Northern France, 1700– 1860 (Cambridge, 1998), p. 32, fn. 12.   ��������������������������������������������������������������������������� This venerable relationship is repeated in many sources. Ernest ������������������ Labrousse, Esquisse du mouvement des prix et des revenues en France au XVIII siècle (Paris, 1933), p. 577. 

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The livre Tournois contained 240 deniers, and the official output of bread per setier was 240 pounds. In Holland around 1500 a similar rule prevailed: the 12pond rye bread cost in penningen what the last of rye cost in Rijnseguldens. The Rijnsegulden then contained 256 penningen, so the bakers were expected to produce 256 12-pond loaves from a last of rye. In the Friesian city of Leeuwarden, the mid-sixteenth century regulation of rye bread set the price of an 11-pound loaf at as many penningen as a last of rye cost in gold guldens (guldens of 28 stuivers). In all cases, the object was to find a combination of currency system, grain volume unit, and loaf size whereby the grain and the bread would sell for the same number of (different) coins. Figure 4.1A illustrates the relationship of grain price to bread price in a classic “old system” schedule. The great administrative advantage of this system is its simplicity. Once the grain price is established, so is the price of bread. It requires only a minimum of record keeping; no conversion tables need to be published and distributed; indeed, consumers could even be attracted to the system’s “transparency.” In truth, the old system was anything but transparent. The visible portion – the official number of loaves x the bread price = the price of a unit of grain – reveals nothing about the shares of that unit of grain that had been allocated to the miller as his “toll” and to the baker as his “advantage bread,” to use the name given it under the old English Assize of Bread. Moreover, the superficial parallelism of bread and grain prices belied the peculiar and highly undesirable social implications of this durable rule of thumb.

Long after this ancient pricing system had been superceded in many areas, it continued to reappear in policy discussions. In the 1770s Controller General Turgot endorsed it. Steven Kaplan, The Bakers of Paris and the Bread Question, 1700–1775 (Chapel Hill, N.C., 1996), pp. 516–17; Alain Guerreau, “Measures du blé et du pain à Mâcon (XIVe–XVIIIe siècles),” Histoire et Mesure 3 (1988), 163–219; Judith A. Miller, “Politics and Urban Provisioning Crises: Bakers, Police, and Parlements in France, 1750–93,” Journal of Modern History 64 (1992), 227–62.   ������������ W.S. Unger, De levensmiddelenvoorzieningen der Hollandsche steden in de Middeleeuwen (Amsterdam, 1916), pp. 108–9. �������������������������������������������� The references are for Amsterdam ordinances of 1477 and 1506.   ������������������������������������������������������������������������������ G.A. Leeuwarden, Bakkersboek, 1542–1802. The document is undated, but appears to date from at or shortly after the beginning of the Bakkersboek in 1542. Leeuwarden bakers were expected to secure 4928 pounds of bread from a last. A 1582 Leeuwarden schedule describing how the weight of small wheat rolls (wegge) was to decline as the price of wheat rose, adheres, as nearly as possible, to the same rule. When the price of wheat doubled, the weight of a loaf of constant price fell by (nearly) half. An ordinance of the Overijssel city of Deventer, also undated but apparently from either 1509 or 1552, follows the same rule: coarse rye loaves declined in weight by one half as the price of the grain doubled. G.A. Deventer, Middeleeuws archief, no. 299.   ��������������������������������������� Alan S.C. Ross, “The Assize of Bread,” Economic History Review, second series 9 (1956), p. 333. The Dutch referred to overbroden; Germans to Backpfunde.

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Figure 4.1A Old system bread pricing

Figure 4.1B Revenue and expense per unit of grain baked into bread

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Old system bread price schedules allocated to the baker not a fixed income but a fixed quantity of bread: the baker’s “advantage bread.” It was the revenue from this hidden quantity of bread that constituted the fund from which the baker covered his production, capital, and labor costs. The size of this revenue, and hence the profitability of the baker’s enterprise, varied directly with the price of grain, with which the price of bread moved in complete sympathy. The higher the price of grain, the higher the baker’s revenue per unit sold. Yet, his costs did not rise at the same rate, and for two reasons: first, because most costs of production varied little if at all in the short term; second, because the cost of grain was, in fact, spread across a larger number of loaves than assumed by the bread price schedule. The consequences of these two factors for the baker’s income are shown graphically in Figure 4.1B. Under this pricing regime, total revenue rises from zero (under the notional situation where the price of grain is zero), while the full cost of producing bread, even when the grain costs nothing, is, of course, positive. Because of this discrepancy between actual loaves and official loaves inherent to old system bread pricing, the full costs of producing bread rise less steeply than the revenue curve. Thus, below point A, the baker’s revenue is inadequate to cover all costs, while above that point, the baker enjoys progressively larger “excess” revenues. The old system, if it fixed point A within the range of commonly occurring prices, confronted the baker with a highly uncertain income, but one that could be very high precisely when the consumer was faced with poverty and even famine. In this system’s defense one can note that these profits are expressed per unit of grain baked into bread, and that the baker’s “throughput” was very likely to fall in periods of high prices. Thus, the windfalls available to the baker probably would not rise quite as steeply as shown in Figure 4.1B. For all that, the old system remains a crude and socially objectionable method of regulating bread prices, since it reinforces the “natural” volatility of grain prices with a second, even more volatile return to the baker. This approach to bread price regulation lived on long after the Middle Ages in which it arose. In England, the old system was abandoned only with the

  ���������������������������������������������������������������������������������� According to Davis, the medieval English assize sought to secure a profit for the baker of four pence per quarter of wheat, but did so by reserving for the baker the proceeds from the sale of “advantage bread” that accounted for over one-third of the bread yielded by a quarter of wheat. The sale of this bread generated the target revenue at a low grain price (18d. per quarter), but gave the baker progressively more revenue as the wheat price rose. James Davis, “Baking for the common good: a reassessment of the assize of bread in Medieval England,” Economic History Review 57 (2004), 465–502.   ��������������������������������������������������������������������������������� Davis, “Baking for the common good,” p. 479, defends the medieval assize in this way. For this to be a reasonable defense, one must assume that the elasticity of demand for bread is highly negative, such that higher prices elicit no increase at all in spending for bread.

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promulgation of a new Assize of Bread in 1709; French policymakers often modified, but did not definitively abandon the old system until shortly before the Revolution, and by then Parisian bread prices had been deregulated.10 In Berlin, the Bäckerordnung abandoned the Backpfunde (i.e., the baker’s allowance) only in 1774.11 In all these cases, the old system was replaced with an approach to bread price regulation that had been introduced in the Netherlands in the last decade of the sixteenth century.

The New System The new approach to bread price regulation differed from the old in this: it made an explicit distinction between the fixed and variable costs of producing bread.12 The new system differed from the old in but one thing, but this one thing represented a major shift: from an economy based on more or less hidden shares of inputs to a fully monetized allocation of costs; from a system based on rules of thumb to one requiring careful, continuous administration. Earlier regulators had not been unaware of the distinction between fixed and variable costs; indeed the medieval English Assize specified the various fixed production costs in some detail. But they did not devise bread price schedules that incorporated fixed and variable cost components; they were deterred, presumably, by the complex administration required both to define the fixed costs and to publicize and enforce the resulting price schedules. In the Dutch towns, archival evidence concerning bread prices under the old system is scant and consists primarily of ordinances setting out the duties of the bread commissioners and the simple rules relating the price of bread to that of grain. Few books recording the   ������������������������������������������������������ Sidney Webb and Beatrice Webb, “The Assize of Bread,” Economic Journal 14 (1904), p. 199; Petersen, Bread, pp.99–101. 10  ������������������������������������������������������������������������������� See the “modified old system” schedules described in Alain Guerreau, “Measures du blé et du pain à Mâcon,” Histoire et Mesure 3 (1988), 163–219; Kaplan, Bakers of Paris (pp. 496–8) refer to a 1781 memorandum of Mathieu Tillet, submitted to the Academy of Sciences, to establish a “scientific” bread price schedule. Kaplan reports that it was adopted in several provincial cities, which implies that the remnants of the old system lingered on in most places where regulation was not abandoned. 11  ����������������� August Stalweit, Die Getreidehandelspolitik und Kriegsmagazinverwaltung Preussens, 1756–1806 (Berlin, 1931), p. 313. 12  ������������������������������������������������������������������������������ In this study the term “fixed costs” has a meaning that differs somewhat from its conventional use by economists. The standard definition of fixed costs is those costs of production that do not vary with the volume of production. In this study, fixed costs are those that do not vary over time. They include true fixed costs – the equipment and physical facilities of the bakery – but also include what might better be called “stable costs” such as labor, fuel, taxes and non-grain ingredients. I have chosen to call this complex of costs “fixed costs” to emphasize what most distinguishes the new system from the old, the separation of costs that vary in the short term and those that do not, that remain fixed.

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chronology of bread prices survive, probably because they were not essential to the administration of old system regulation. But in the course of the 1590s the towns of Holland introduced new administrative structures to regulate bread pricing, and their archives provide an extensive documentation of proposed price schedules, baking trials, correspondence with magistrates and bakers, and bread price books, recording the week-by-week course of grain and bread prices.13 The change took place in a period of sharply rising grain prices, which may have fixed official attention on the inequitable character of the old system. It also took place at a time of explosive urbanization, driven in large part by a massive immigration, first from the Southern Netherlands, followed by an ongoing stream of migrants from Germany and Scandinavia. Germans quickly emerged as a significant force in urban bread production, a position they would hold until the nineteenth century.14 It is possible, but by no means certain, that securing a dependable bread supply and the internal peace of the bakers guilds required more than the usual attention from the municipal authorities at this time. But the main catalyst to change in these years was probably the introduction by the province of Holland of a system of excise taxes, including an increased excise tax on milled grain (Impost op het Gemaal). The reasons for turning to this form of taxation must be set aside here. However, once the decision was made, it added a new fixed component to the cost of bread, and as this cost rose it made a review of the old bread pricing rules unavoidable.15 The operation of the new system required that regulators define the fixed costs of baking bread, establish the number of loaves that could be baked from a unit of grain, and, of course, determine week-by-week the actual price of grain. That

13  ����������������������������������������������������������������������������� The archives include: G.A. Leiden, Secretarie archief 1574–1816, no. 2536–9, Broodzettingsboeken; also, Gildenarchief, no. 173–4; G.A. Amsterdam, Broodcommissie, P.A. 5243, no. 4, Broodprijzen; G.A. Haarlem, Stadsarchief, Stukken betreffende de broodzetting, 1593–; Broodzettingsregisters, no. 1930A (R 412–17); G.A. Delft, Stadsarchief vóór 1795, no. 980, Broodzettingsboek; G.A. Dordrecht, Tijd van de Republiek, no. 4762–7; Outside Holland, I have examined: G.A. Kampen, Oud Archief, no. 2206–8; G.A. Deventer, Archief Republiek, no. 279–80; G.A. Zwolle, no. 488–91; G.A. Utrecht, Stadsarchief, secretarie, no. 2023, Rijdingboeck. 14  ���������������� Erika Kuijpers, Migrantenstad. Immigratie en sociale verhoudingen in 17e-eeuws Amsterdam (Hilversum, 2005), pp. 226–44. 15  ��������������������������������������������������������������������������������� By fastening upon the grain mill as the locus of a major tax, Holland (and, soon thereafter, all the Republic’s provinces) also brought to an end the old practice of paying the miller with a share of the grain. The monetization of milling dates from at least 1576, when Leiden establishes a fixed milling fee (maalloon) for wheat and rye. In England, by way of contrast, the miller’s toll-in-kind was not abolished by law until 1796 (Petersen, Bread, pp. 51–2).

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is, they had to set the parameters and observe the independent variable of the following equation:16 Y = a+bX, where: Y = the price of a loaf of bread of a fixed weight a = the fixed costs per loaf b = the reciprocal of the number of loaves per unit of grain X= the price of a unit of grain The fixed cost established the Y-intercept, while the number of loaves across which the fixed and variable costs were distributed set the slope of the linear function that determined the price of bread for any given price of grain, (See Figure 4.2A). To administer this system the magistrates of the Dutch towns usually appointed a commission of broodzetters. This body was charged to meet weekly (in Amsterdam they convened every Saturday at 2 p.m. at the Town Hall) to determine the prevailing prices of wheat and rye, to consult the ruling price schedules, and announce and publicize the bread prices for the coming week. The price lists were then posted at stipulated public places.17 While price setting was a weekly occurrence, the determination of the parameters took place only as needed, at intervals that varied from a few years to many decades. To inform themselves, the commissioners conducted baking trials (proefbakken). The documents reporting on these baking trials make interesting 16

 ���������������������������� The weight based formula is: W = b/(X+a) Where W = the weight of a loaf of bread of fixed price a = the fixed costs per unit of grain b = the weight of bread produced from a unit of grain X = the price of a unit of grain A visual display of the effects of the two factors is more complex in the case of the reciprocal equation, but when it is recalled that W is simply the inverse of Y in the equation above, it will be apparent that the issues are no different, (See Figure 4.2B). 17  ����������������������������������������������������������������������������� In Amsterdam prices were posted at the Oude Kerk, Nieuwe Kerk, Stadhuis, and Korenmarkt. Handvesten van Amsterdam (Amsterdam, 2de stuck, 1748); G.A. Amsterdam, pp. 882–92 (Ordonnantie voor de Brootwegers, M Folio 179 24 Dec. 1653). In ����������� Leiden, the 1596 ordinance stipulated that price notations were to be taken every Tuesday, before 1 p.m., and the new bread prices would go into effect at noon the next day. These prices were posted at the Raadhuis, the St. Pieters Kerk, Pancras Kerk, Vrouwen Kerk, and Saaihal. G.A. Leiden, Stadsarchief tot 1816, no. 2550. “Rapport omtrent broodzetting en maalloon, 1803.” Utrecht �������������������������������������������������������������������� had a similar procedure: the new prices, known there as the rijding, was announced every Saturday. The 1626 ordinance governing the bakers’ guild clarified that the prices announced on Saturday “are in force from Sunday morning through Saturday evening. [On Saturday evening] bread is to be sold according to the previous rijding; bakers may not withhold their bread on pain of forfeiture.” ����������������������������������� G.A. Utrecht, ro. 461, Backergilde ordonnantie, 30 Oct. 1626.

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reading. They take the form of laboratory reports, recording the results of each step of the milling and baking process, which was measured and monitored with the greatest care by representatives of the commissioners and the bakers. Cornelis Eversdijk, who had served as a commissioner of the broodzetting described the process as follows:18 [The Commissioners] ordered trials for every type of bread that was customarily consumed in the city, taking note of everything with the greatest curiosity, and observing everything with their own eyes: as in the measuring of the grains and in the weighing thereof; likewise with the milling, sifting, kneading, baking, etc., and in assiduously recording the weights of the grain, flour, bran, dough, and of the baked bread; likewise the quantities of the milk, water and other ingredients necessary thereunto. And from all this was prepared a consistent ordering on which basis, from that time onward, the schedule of bread prices has been governed.

The baking trials represented efforts to “demystify” the baker’s craft – to turn an art into a science. The bakers, of course, could always protest that such conditions were artificial, unrepresentative, and unrealistic, and they often did so. But throughout the 250 years of the new system broodzetting the commissioners never ceased their reliance on the baking trial. To determine the number of loaves of a given weight to be produced by a measure of grain19 the commissioners sought evidence from the baking trials about the weight of the grain (i.e., its specific gravity, which varied a bit by harvest and by grain quality), its weight after milling (which could be affected by the milling techniques used), the types of bread produced,20 and the standard by which bread

18  ��������������������� Cornelis Eversdijck, Paste-boeck vanden Broode (Middelburg, 1663), pp. 5–6 “…eenige Commissarissien uit hare Achtb. Collegie, namentlijk Eversdijck, Van Stapelen en Secretaris Brune…[hebben] proven doen maken op alle de soorten van broot diemen aldaer inde Stadt gewoon was te gebruiken: hebbende op alles seer curieuselicken gelet, en met hum oogen overal selfs by geweest: so in’t meten van greinen, als in’t wegen van de selve: Item by het malen, buelen, kneden, backen, etc. end wel neerstelicken aengeteickent de gewichten, soo van’t meel, blomme, gruis, deigh, als van’t gebacken Broot: Item de quantiteit van melck, water, en andere materialen daer toe noodigh: en hier uit gemaeckt eene pertinante ordre, waerna, van die tijd aen de Paste van de Broode is geordiniert.” 19  ������������������������������������������������������������������������������������ The usual measure was the Amsterdam last, the standard measure of the international grain trade. The last (3004 liters) is a large measure, divided into sacks (zakken) and/or mudden. Since these subdivisions varied in size from town to town while the last was everywhere the same, I have sought to standardize the quantitative data of this study to the last. 20  ��������������������������������������������������������������������������������������� Bakers in most cities supplied only a single type of rye bread, but there were several qualities of wheat bread. The finer, and “whiter” the bread, the fewer the number of pounds of bread yielded by a measure of wheat.

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was weighed (fresh, warm bread still retained moisture, and therefore weighed more than the same loaves after cooling). After taking all these factors into account, the commissioners responsible for the initial new system price schedules set the number of loaves of rye bread of a fixed weight that the average baker should be able to extract from a last of rye: this was 946 six-pond loaves in Leiden and 962.5 in Kampen. This farine science soon proved to be more of a political science, however, as the commissioners yielded to bakers’ protests to lower this norm: in 1606 Kampen’s schedule assumed a production of 872 six-pond loaves, Haarlem in 1614 set its norm at 896 and Leiden in 1621 reduced its norm to 880. Later, in 1650, the norm fell further, to 868 in Haarlem and 864 in Leiden. There they remained until around 1800, when every city for which I have data raised the norms again, now to a bit over 1000 six-pond loaves per last. With every adjustment in this norm, the slope of the equation relating the price of grain to the price of bread was changed. The fixed costs established by the commissioners set the intercept of the linear functions shown in Figure 4.2A. By “fixed costs” I refer to all expenses incurred in baking except the cost of the grain itself. The commissioners conventionally divided these costs into • •

• •

miller’s fee [maalloon]: which were usually set by the city for each grain sort. production costs: including ingredients (such as yeast, milk, salt, oil, with the proceeds from sold bran subtracted), fuel, and incidental labor expenses. baker’s fee [bakloon]: which represented compensation for the labor and capital of the baker. Taxes [Impost op ’t gemaal]: the provincial and municipal excise taxes levied on every last of milled grain

The Political Economy of Bread in the Dutch Republic

Figure 4.2A New system bread price schedule

Figure 4.2B New system bread weight schedule

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All of these expenses together represented the costs that had to be distributed among the total number of loaves of bread produced per last of grain, and therefore set the intercept of the linear equation. The commissioners’ third and final task, which recurred weekly, was to determine the “market price” for wheat and rye. This act of observation was not as straightforward as one might think. Which market to observe, which prices to use from those generated in the course of the week, and which grades of grain to include in the average were all matters of ongoing debate. To summarize, the commissioners drafted bread price schedules once they had determined the full fixed costs of bread production and had established a realistic estimate of the bread yield. They then declared the price of the various types of bread sanctioned for production after determining, week-by-week, the prevailing market prices of wheat and rye. This elaborate system was not intended to regulate prices in the sense of holding them below the market level, or to protect consumers in periods of high prices.21 On the contrary, the spirit of the new system was to “discover” as precisely as possible the long-run, fully-allocated cost of production. The resulting bread prices were not “just price” in the theological sense; they were “fair prices” at which the average baker could achieve a customary standard of living while consumers were assured of bread of a defined quality at published and predictable prices. The new system did have the desirable effect of moderating bread price fluctuations, but this had nothing to do with intervention in the market system; it had everything to do with the replacement of the old system of proportions with the new system of fixed costs. Bread prices under the old system rose and fell at the same rates as grain prices; under the new system the fixed cost component dampened the effect of grain price fluctuations on the ultimate price of bread. Thus, when grain prices rose, the price of bread rose by a smaller percentage; when grain prices fell, the price of bread fell by a smaller percentage. Did this fixed component cause bread prices in the long run to rise above those that would have prevailing under the old system? The old system had raised the overall level of bread prices by spreading the cost of grain over fewer loaves of bread than the grain could actually produce. Under the new system, bread prices incorporated a specified fixed cost component. If that specification was accurate, there is no inherent reason why bread would become more costly on average.

 ������������������� The claim that the broodzetting was designed and implemented to protect consumers is often assumed, uncritically. For example, Jan Luiten van Zanden, “Kosten van levensonderhoud in Holland en Oost-Nederland 1600–1850,” Tijdschrift voor sociale geschiedenis 11 (1985), 313–14, describes the broodzetting as a municipal policy representing “ an attempt to control the cost of living, in part with an eye to preventing social unrest.” The quote is from the English translation, in Jan Luiten van Zanden, The Rise and Decline of Holland’s Economy. Merchant capitalism and the labour market (Manchester, 1993), p. 130. 21

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The new system of bread pricing was technically superior to the old system. By monetizing all aspects of bread production, it exposed the interest of every participant rather than shield it in an (intentionally) obscure system of quantities and proportions.22 Like any regulatory system, it was subject to abuse, but it was a large step toward the construction of a rational market economy. It was more than that. The new system also offered magistrates a new tool with which they could raise new public revenues and pursue public policy. With the new system in hand, Dutch magistrates gradually set about presenting consumers with price structures for the various types of bread very different from those that would have emerged in an unregulated setting.

The Pricing of Bread From at least 1596, when Leiden introduced a modern regulation of bread prices, until 1855, when the regulation of bread prices in the Netherlands was ended (and with it, the excise taxes with which it was closely linked),23 bread prices were set every week in nearly every city of the country. Grain prices varied but little from town to town, given the good internal transportation system and the dominance of the Amsterdam market in the setting of rye and Rotterdam in the setting of wheat prices. The allowable fixed costs were determined locally, but they, too, bore a strong family resemblance across the towns of Holland, and indeed, of all maritime provinces. The inland provinces tended to have lower costs, but they did not differ from the maritime provinces in their manner of determining the fixed costs of baking bread. Over time the fixed costs set by the broodzetting commissioners displayed three interesting features, each of which reflected a particular policy objective rather than the actual costs of production.

22

 ������������������������������������������������������������������������������������ Witwold Kula concludes his survey of the regional variation in systems of metrology with the observation that “The price as a mechanism reducing to a common denominator all the factors playing some part in a given transaction is a relatively recent phenomenon. In the mentality of the preindustrial society it was the measure that, to a large extent, played that role.” Witwold Kula, Measure and Men (Princeton, 1986), p. 109. He goes on to cite as examples pre-colonial West African practices of using smaller (feminine) measures for selling and larger (masculine) measures for buying; larger measures in the countryside than in the towns to mask the cost of transport and merchants’ profit, and different measures for the repayment of loans than for their issuance to conceal the interest payment. 23   Koninklijk Besluit (Royal Decree) of 17 April 1854 abolished the state regulation of bread prices, which had become a task of provincial rather than municipal government in 1823. Provincial (later, national) excise taxes, introduced in 1584, were abolished in 1855, but municipal excises continued until 1865, and in some jurisdictions into the 1880s.

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Cross-subsidization While the costs of production of wheat and rye bread differed by little (and contemporaries believed the heavy manual labor of kneading rye exceeded the labor inputs in wheat bread preparation), the baker’s fees (bakloon) allowed for wheat were always a multiple of those allowed for rye. From the very beginning of the new system until the end of the eighteenth century, regulators allowed the price of wheat bread to include production costs three times those allowed for rye bread. Thereafter, the ratio was closer to 2:1 rather than 3:1. Almost all bakers produced both types of bread but gained most of their profit from the sale of wheat bread. In eighteenth-century Holland, wheat bread accounted for approximately 70 percent of the bread by weight, but it provided 90 percent of the bakers’ net revenues.24 What motivated the introduction of this policy? The sources are silent, but it is likely that it was in part not new at all, but rather an effort to replicate a feature of the old system. Under that system the revenue available to the baker to cover his production costs (excluding the cost of grain) and provide his income derived from the sale of the “extra” loaves he could produce – his “advantage bread.” I noted above that the size of this revenue rose and fell with the price of bread while the production costs it was intended to cover remained largely unchanged. Another feature of this system is that the money revenue generated by reserving a fixed proportion of grain for these extra loaves will have been larger for wheat bread than for rye bread, since the grain is costlier. While the price ratios varied from year to year, on average a unit of wheat cost 50–60 percent more than an equal unit of rye. Thus, the revenue generated by the advantage loaves would have been 50–60 percent higher for wheat than for rye bread. As noted above, there appears to have been little if any difference in the actual production costs of the two types of bread. Thus, under the old system wheat bread was more profitable than rye bread. Still, a jump from a ratio of 1.5:1 to one of 3:1 remains dramatic. If it was an initial overcompensation for the removal of a source of old system revenue, it was not quickly corrected, nor did cities vary greatly in their incorporation of crosssubsidization to their pricing schedules. It remains possible that this new policy was intended to partially compensate for a second conspicuous feature of the new regime, the rapid increase in excise taxes on bread.

24  �������������������������������������������������������������������������� An obvious question for which I have no direct answer is how such a crosssubsidization policy could work at the level of the bakery. Bakeries must have varied in the rye-wheat bread mix purchased by their customers, which would directly affect the baker’s profit. It appears that the consumption of the two types of bread was not as class-specific as is often assumed by historians; most households purchased a mix of bread types, although household income surely affected the richness of that mix.

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Excise taxes From 1584 Holland levied an excise tax – collected at the point of milling – on all grain destined for bread production. (Lower taxes were levied on grain for brewing.) With the advent of the “new system” these taxes were incorporated in the fixed costs that helped determine final bread prices. The provincial government collected six guilders per last of milled wheat and three guilders per last of rye, which added approximately five percent to the total bread price. The excise on milled grain was raised in stages throughout the century that followed, until, in 1683, each last of milled wheat paid 105 guilders and rye paid 52.5 guilders. A 2:1 ratio was maintained throughout, but in the century after 1683 these taxes often accounted for over 25 percent of the final price of bread. The other maritime provinces levied similarly high taxes, while in the inland provinces they were much lower – about a third as much. Thus, the fixed component of bread prices in Holland developed as follows: Table 4.1 Fixed costs of bread production per last of grain in Holland: 1596–1683 (in guilders) milling fee

bakers fee

excise tax

total

% tax

4.95

N.A.

6.00

---

---

1596

Wheat Rye

4.40

19.80

3.00

27.20

11.0

1618

Wheat

7.50

81.00

38.00

126.60

30.0

Rye

5.40

24.30

19.00

48.70

39.0

Wheat

10.175

99.00

104.85

214.03

49.0

Rye

7.425

33.05

92.90

56.4

1683

52.425

The net effect of this pattern of allowable costs was to cause bread prices to rise faster than grain prices, and to set the price of wheat bread further above rye bread prices than was warranted by any differentials in the actual price of grain or costs of production. Types of wheat bread and their prices A third feature of this system, which cannot be pursued here in any detail, concerns the allocation of the fixed cost of wheat among the several grades of wheat bread. While rye bread was a standard product in almost all Dutch cities, wheat lends itself to differentiation. There were significant regional differences in the types of wheat bread produced, and the price differentials between them. Briefly, the more demand was focused on fine wheat bread made of bolted (sifted) flour, the higher the price of all wheat breads relative to rye; the more wheat bread consumers demanded coarse, brown wheat bread, the smaller that differential.

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Besides persistent regional differences, there was a tendency over time for demand everywhere to shift toward the finer grades of wheat bread, and, consequently, for the spread in price between types of bread to rise in order to compensate for the higher cost of the fine bread. This internal evidence of a shift in consumer preference is of particular interest because public policy as developed and enforced by the commissioners of the broodzetting progressively discouraged wheat bread consumption via the raising of taxes and the assigning of costs. The lines of causation are not obvious, but it is tempting to think that public officials set taxes and fixed costs in response to an increasingly price-inelastic demand for wheat bread.

The Regulatory State The broodzetting was one of several domains of municipal regulation in the Dutch Republic. By the standards of the time, the economy as a whole was endowed with competitive markets and low external tariffs. At the national and provincial levels, interference with market forces was not a pronounced feature of government policy. But at the municipal level in this nation rich in cities, matters were different. City governments did not hesitate to cultivate and exploit local monopolies. They encouraged the formation of guilds which they supported with ordinances and regulations designed to maintain an orderly local economy that offered security to the burgers.25 Their “closed city” economic model brought order and security, but this was not achieved without cost: the suppression of competition raised costs and the barriers to entry excluded outsiders, immigrants, and non-burgers generally from the benefits of the system. This model of the highly regulated urban economy met with criticism. The Republican critique of local particularism as an economic policy was most fully developed in Peter de la Court’s 1659 treatise, ’t Welvaren der stad Leiden [Prosperity of the city of Leiden]. There he espoused the advantages of an “open city” model, where economic activity could flourish in an environment of minimal

25  �������������������������������������������������������������������������������� Guilds in the Dutch Republic have not been studied extensively. Since they were generally without independent political power, being very much creatures of the city governments, their minimal role in high politics has encouraged this neglect. But their economic consequences were not thereby negligible, as is revealed by a recent revival of historical interest in the guilds. ���������������������������������������������������� See: P. Lourens and J. Lucassen, “Ambachtsgilden in Nederland: een eerste inventarisatie,” NEHA-Jaarboek voor economische-, bedrijfs- en techniekgeschiedenis 57 (1994), 34–62; C. Lis and H. Soly, eds, Werelden van vershil. Ambachtsgilden in de Lage Landen (Brussel, 1997); Sandra Bos, ‘Uyt liefde tot malcander.’ Onderlinge hulpverlening binnen de Noord-Nederlandse gilden in internationaal perspectief (1570–1820) (Amsterdam, 1998).

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regulation, low taxes, no guilds, and the free entry of immigrants.26 De la Court, a manufacturer of internationally traded textiles, could see little advantage in the creation of a high-cost environment of benefit only to local economic interests. There were other interest groups that saw merit in the “open city” model, and they were not without influence, particularly in the realm of trade. But wherever interregional and international interests could not exert a strong influence, the “closed city” model tended to prevail. In this the cities, with their interest in order and stability, were seconded by the provinces, with their interest in securing a hospitable environment for the collection of the excise taxes on which the state’s fiscal well-being relied. Thus, while grain – an internationally traded commodity – was free of restrictions and but lightly touched by tariffs,27 bread – a locally traded commodity – was caught in the all-encompassing embrace of the broodzetting. The maintenance of order and stability is, of course, more a formulaic rationalization than a useful description of the principles of regulation. The regulation of a price has obvious consequences for the welfare of consumers, and if it is the price of a major object of consumption – such as bread – the regulatory acts influence the cost of living and even the macroeconomic performance of an economy. The regulatory system also defined the types of bread to be produced, which assured consumers of the quality of the product. The commissioners inspected weight and ingredients of bread as well as the price, thereby limiting the scope for adultery, but also limiting the scope for innovation. In addition, the regulators of prices cannot avoid influencing the very structure of the industry. The costs allowed or disallowed by the regulator can pressure the industry’s firms to consolidate, adopt new technologies, and alter the product mix. Or, the regulators’ decisions can act to preserve an industry in its ancient habits, protect the value of an obsolete capital stock, cosset inefficient firms, and preserve small units of enterprise. The broodzetting necessarily affected the (short term) interests of consumers and of producers, as it also influenced the larger (long-term) issues of economic efficiency, the macroeconomic environment, and the fiscal health of the state. How

26  ������������������ Peter de la Court Het Welvaren van Leiden: Handschrift uit het jaar `1659 (The Hague, ed. F. Driessen, 1911); Maarten Prak, “Sociale geschiedschriving van Nederlands Ancien Régime,” Tijdschrift voor sociale geschiedenis 14 (1988), 133–59. 27  ��������������������������������������������������������������������������������� In times of crisis, to be sure, provincial and national governments contemplated intervening in the grain markets. But export controls and price ceilings could never be solutions in an economy that imported much of its grain and functioned as a warehouse for European distribution. ���������������������������������������������������������������������� For examples of grain policy in crisis periods, see: J.G. van Dillen, Duurtemaatregelen te Amsterdam in de 17de eeuw (Amsterdam, 1915); Jan de Vries, “The Production and Consumption of Wheat in the Netherlands, with special reference to Zeeland in 1789,” in Herman Diederiks, J. Thomas Lindblad, and Boudien de Vries, eds, Het platteland in een veranderende wereld (Hilversum, Uitgeverij Verloren, 1994), pp. 199–219.

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can we characterize the objectives of Dutch bread price regulation? I will explore the broodzetting’s impact on the interests of consumers and producers, in turn. The consumer interest is the obvious place to begin. Indeed, the historical literature on bread price regulation rarely strays far from the consumer perspective, focusing invariably on questions of “moral economy,” bread riots, and crise de subsistance.28 I have established that the “new system” broodzetting introduced in the 1590s, and persisting until the mid-nineteenth century, was not designed as an instrument to protect consumers from high prices. Nor did it introduce to the bread market any popular notions of “just price,” fairness, or distributive justice. Instead, the design of the price-setting formula was intended to discover the “true” cost of bread, under stated rules about what did and what did not constitute legitimate costs of production. Since the price of grain was unregulated, it follows that the price of bread set week after week by the municipal commissioners (if the system was not corrupted by special interests) would be that price necessary to honor the legitimate claims of all participants in the production process (plus the claim of the state). What, then, were the legitimate claims of the consumer in this regime? The consumer interest is not one thing, of course. Consumers vary in their relative concern for price, variety, quality, predictability, and availability of a commodity. By tradition, the historian focuses on the poorest consumers and their concern with price, but in a complex society this can be only the beginning of a discussion of the consumer interest. In order to simplify the discussion, I will focus here on two broad segments of Dutch urban society, what contemporaries called the schamele gemeente and the goede gemeente: the poor (especially, in the sense of economically insecure and socially marginal), and the “middling sort.”29 The broodzetting was not designed to protect the poor in times of high bread prices. Indeed, this regulatory mechanism made it administratively possible to add substantial excise taxes to the price of bread – a classic example of regressive taxation. Yet, during the entire 250 years in which this burdensome system functioned precious little in the way of riot or civil disturbance took place. This peaceable Republic was not utterly lacking in disorder and protest, but the most important incidents on the short list of urban riots were directed against the

28  ������������������������������������������������������������������������������������ Judith A Miller, “Politics and Urban Provisioning Crises:” 227–62. Miller’s article on the taxe du pain and the tarifs enforced by the police interprets the formulation and enforcement of price schedules as first and foremost a political issue. Classic works on the consumer and his bread include, E.P. Thompson, “The Moral Economy of the English Crowd,” Past and Present 50 (1971), 76–136, and Louise A. Tilly, “The Food Riot as a Form of Political Conflict in France,” Journal of Interdisciplinary History 1 (1971), 23–57. 29  ��������������������������������������������������������������������������������� For a discussion of the socio-economic strata of urban society see: De Vries and Van der Woude, First Modern Economy, pp. 561–5.

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operations of the excise tax collectors, and the protesters were rarely the very poorest inhabitants.30 Poor consumers faced bread prices that were structurally high and unprotected from the volatility of the international grain market. Their quiescence in the face of this threat to their well being can be explained, I believe, by the following factors: 1. Holland’s poor were not poor in the same manner as the poor of other countries. By this I do not mean that they did not face intense hardship, but that they had access to more options than their foreign brethren.31 To the extent that dietary substitutions could be made more easily in the Netherlands than elsewhere (because of its markets, varied diet, and differential taxation), a given income could secure a higher level of consumer welfare, and deflect rage from a single obvious source of distress. The broodzetting contributed to the maintenance of this structure of options by the policy of cross-subsidization and differential taxation: in choosing his source of carbohydrates – wheat bread, rye bread, buckwheat, gorts, potatoes – the Dutch consumer simultaneously chose his level of taxation. 2. The cities and their charitable institutions usually possessed the means to underwrite the consumption needs of the poor in periods of very high prices. This was possible not only because of the financial vigor of these institutions, but also because, until the late eighteenth century, the occasions for extraordinary intervention were few and the numbers needing support usually limited. Thus, instead of suspending market activity, blocking the movement of food supplies, requisitioning supplies for redistribution, or lowering bread prices by edict, the cities of Holland approached periods of high prices with more selective and less disruptive policies. To begin with, the cities and charities acquired grain for distribution of bread to the indigent.32 Indeed, this was an ongoing activity that was only expanded in scope during crisis periods. Many of the needy did not riot during crises for the 30  ������������� R.M. Dekker, Holland in beroering. Oproeren in de 17de en 18de eeuw (Baarn, 1982). 31  �������������������������������������������������������������������������������������� The labor markets and poor relief institutions of the Republican period are described and analyzed in De Vries and Van der Woude, First Modern Economy, Ch. 12, esp. pp. 654–64. 32  ���������������������������������������������������������������������������� For example, Amsterdam commissioned ships to the Baltic to buy grain on the city’s account in 1789 and 1795. ������������������������������������������������������� G.A. Amsterdam, P.A.5028, Archief v.d. Burgemeesteren, no. 603. In ������������������������������������������������������������������������������ the nineteenth century the needs are greater and the public means are much diminished. ��������������������������������������������������������������������������� Thus, in 1816 the hard-pressed city of Haarlem announced it would buy 3000 tons of potatoes “ten einde daarmede in de behoefte der minvermogende ingezetenen gedurende de komende winter welke zich laat vooruitzien te kunnen voorzien.” ����� R.A. Haarlem, Departementaal Bestuur, no. 461.

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simple reason that they did not then buy bread from the bakers. Alternatively, they did buy from the bakers, but did so with coupons distributed by the municipality to those with a claim to public support.33 In these examples, the bulk of the population paid the broodzetting price for bread, while a circumscribed population of welfare recipients did not. However, there were a few occasions when the official price of bread rose to such levels that it brought distress to much more than the poor schamele gemeente. In these cases the operation of the broodzetting was suspended or modified. For example, the Haarlem records reveal several periods – all very brief – when the Burgemeesters stay the hands of the commissioners, ordering them to desist from increasing the bread price even though this was justified by developments in the grain markets. They did this on 13 May 1662, but for only one week; on 19 October 1698, again for one week; and on 28 November 1740, this time for several weeks. There were several additional interventions, but these were “self financed subsidies” of the bread price. On 8 March 1699, as the rye loaf reached the very high level of 11 st., the Burgemeesters offered to sell rye to the bakers at 250 gold guilders per last (the market rate was then 260–275) in exchange for their agreement to limit the price of rye bread to 10.5 st. This public subsidization of rye bread did not last long, for later in the year, on 28 September, the marginal notes in the broodzettingsregister revealed that the magistrates had shifted the burden of subsidizing rye bread from the city treasury to the population of wheat bread consumers. On that date the bakers were allowed to raise the price of wheat bread by one-half stuiver per loaf, and to persist in this for six weeks, as compensation for having been forced to charge one-half stuiver too little for rye bread over the preceding three months.34

33

 ��������������������������������������������������������������������������������� For example: In 1789 the prospect of a grain shortage brought the Amsterdam city council together on 12 May to consider, in strictest secrecy, possible emergency measures: Dat, aangezien thans de Toevoer van Graanen niet evenreedig is aan den uitvoer, Burgemeesteren van oordeel zouden zyn, dat ahoewel er alle redenen zyn, om te verwagten dat binnen korten, een aanzienlyke Voorraad uit de Oost-Zee sal aangebragt worden, de voorzichtigheid nogthans vereischt dat, onder de hand, en met het zo noodig geheim, om geene ongerustheid onder de goede gemeente te veroorzaaken, eenige voorzieningen gedaen worden.... Verdere middelen ... dienen beraamd te worden, zo tot weering van gebrek als om de schamele gemeente, by eene styging van den Prys der Graanen, en vervolgens van ’t brood te gemoed te komen. On 15 June the members of the bakers’ guild were called together and required to reveal the size of the wheat supplies they held, and on 26 June the city distributed coupons (loodjes) to poor inhabitants, permitting them to purchase rye bread under the price determined by the broodzetting. On 15 April 1790, as prices were falling, this measure was discontinued. ������������������������������������������������������������������ G.A. Amsterdam, Archief van de Burgemeesteren, P.A. 5028, Stukken Broodzetting, Graancommissie. 34  ��������������������������������������������������������������� G.A. Haarlem, no. 1930A, Broodzettingsregister, 28 Sept. 1699.

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On 14 July 1709, in the midst of a period of very high prices, the commissioners again held the price of rye bread four penningen per loaf under the level indicated by the price schedules. The bakers were offered no immediate compensation, but promised that when grain prices began to fall, they would be allowed to continue charging higher prices (this time, for the same type of bread), thereby recouping the losses incurred at the peak of the crisis. This strategy of “price-smoothing” via inter-temporal transfers between bakers and consumers did not work as smoothly as the commissioners had hoped. Arguments arose with the bakers over just how long they should enjoy the compensatory prices. The commissioners listened to the bakers “lang en breed” and, after extending the period of compensation, wrote on 2 October 1711, not without a note of exasperation: “At this time all the arrears due the bakers definitely have been satisfied, so that there can be no further pretense [to additional compensation].”35 The Haarlem records reveal an administrative system that is attentive to the potential problem in periods of scarcity, but which prefers to avoid a suspension of the broodzetting by one or another form of financing the short-term needs of the poor. The commissioners did not compromise their pricing system in response to popular pressure, although they must at least occasionally have faced threats such as that voiced in a crudely written letter received by the Alkmaar commissioners on 13 July 1817:36 [Damnation to you], if you do not reduce the bread price and instead let it stand as it is; you can be sure that we will, within two times 24 hours, set fire to your house.

The goede gemeente, the middle classes whose large size is often regarded as the most distinctive aspect of Republican society, could usually afford to eat costlier, finer breads than the simple rye loaf we have been discussing thus far. These were the very people who by their aspirational tastes and their large number were targeted 35  ����������������������������������������������������������������������������������� “Tot nu toe syn al de agterstallen van de backery ten eenmaal voldaen soo dat daer nu geen pretentie meer [...] is.” Earlier, ���������������������������������������������������������� in 1691, another price-smoothing scheme had been attempted to placate the bakers, who then sought a higher bakloon and compensation for a rise in the stamp tax (zegel). On 5 Nov. the price of the six-pond wheat bread should have been reduced by eight p.: “...maar also backers nogh eenige pretesi hadden wegens de verhooging van’t seegel en een schelling van’t loon, soo is met deekcken en vinders by ons goet gevonden de settingh te laten also vooren,,, en zullen geen setting doen als by 2 schellingen op en af en syn hier meede de Backers van alle haer pretensy ten volle voldaen onder condisi dat het brood sal gebacken werden van de beste soorten terw...” [ 5 Nov. 1691]. 36  ������������������������������������������������������������������������������������ Slegt en Verdommelen als Gy hed brood niet aflaat slaan En Gy houd de zettings weer in, kan Gy versekert zyn Dat wy binnen den tyd van 2 maal 24 Uren Jou huis in de brand zullen stek. R.A. Haarlem, Departementaal Bestuur, no. 461. �������������������������������������� This message was included in a report to the provincial government about the situation in the city of Alkmaar.

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by the broodzetting to pay the bulk of the tax and to support disproportionately the income of the bakers. That is, they paid for the cross-subsidization strategy embedded in the structure of bread prices described above. If the poor were reconciled to the Republic’s political regime by poor relief, the middle group – which paid the bulk of the excise taxes – needed to be convinced that the elites (who they did not elect and could not join) acted in defense of their interests. The urban penchant for regulation should be seen as an expression of this implicit “social contract,” protecting the jobs of artisans and skilled workers in exchange for political loyalty. Yet, in the case of bread pricing it is hard to see how the middle groups could feel anything but alienation from the municipal governments that placed such a high price premium on the types of bread preferred by people with a modicum of discretionary income or the slightest aspiration to status and comfort.37 In short, the puzzle about Dutch bread pricing is not why the poor did not revolt, but why the middle class did not do so. The interests of the producers of both milled flour and bread were directly and intimately affected by the bread price commissioners’ calculations of allowable fixed costs. In the case of the millers, the matter is straightforward; with the bakers, it is anything but. Let us begin with the millers. For as long as the broodzetting lasted, the excise on milling remained in force; one might say they were joined at the hip. The excise (impost op het gemaal) was collected at the point where the baker (or, more rarely, the individual baking at home) acquired flour. The mill was as much a site of fiscal activity as a site of production (comparable to the distillery today), and this shaped the structure of

37

 ���������������������������������������������������������������������������������� The strong public preference for white bread was much on the minds of Rotterdam’s bread commissioners, when they protested an effort by the bakers to revise the rules governing their selection of grains in the production of wheat bread. This was intended to undo an ordinance of 1719 that had made wheat bread “whiter.” “Meest �������������������� alle bakkers [hebben] hun brood zeer blank gebakken ... waar door niet alleen de Burgerij in’t generaal veel genoegen is gegeven, maar ook zeer gefavoriseerd den impost van’t gemaal over deze stad, welke in het jaar 1711 of 1712 is aangestaan door den pagter Klinkenberg voor f. 110.000 en laatst door den pagter Van Weerzel tot f. 160.000.” Impostmeester Floris van Weersel added his own protest: “Dat in de tegenwoordige tijds omstandigheden het Brood in Blankheid en in Smaakelijkheid niet dient te worden vermindert maar op denzelven voet gebakken zooals tegenwoordig geschied, om dat zulks aan de verarmde Burgerij seer veel ongenoegen zoude kunnen verwekken, welke dog zeer genegen zijn tot Blank Brood, en het welke bij de duurte van hunne verdere levensmiddelen hun tegenwoordig nog tot eenig soulaas kan verstrekken dewijk door Gods goedheid de granen tegenwoordig op reedelijke prijzen zuin, daar ten cotrarie het Brood minder in Blankheid en hooger in zetting niet alleen veel ongenoegen zoude kunnen geven aan het gemeen, maar hun meerder aanzetten om blankbrood ter smokkel in te brengen.” G.A. Rotterdam, Oud Archief, nr. 2124. Memorie van consideratien op het nu in’t generaal zoo slegt bakken van Tarwen Brood door de bakkers binnen Rotterdam; Verzoek van Floris van Weersel, Impostmeester 1734–44.

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milling as an industry.38 The state had a direct interest in a milling industry that was stable and small. The smaller the number of grain mills, the easier would be their oversight; the more well established the miller, the less would be his temptation to engage in fraud.39 Throughout our period, the millers worked for a money payment, the maalloon, and this fee per last of milled grain was set by local governments. Until the nineteenth century these milling fees added between four and six percent to the price of a last of rye, and a bit less, three to five percent, to the price of wheat. After 1795 the milling fees rose sharply, for reasons that remain unclear. But, until the end of the eighteenth century Dutch milling appears to have been a reasonably efficient industry that provided the millers with a substantial annual income. State fiscal policy encouraged concentration, while the municipal broodzetting secured a handsome, loyalty-inducing income for the miller.40 The consequence of the state’s interest in encouraging the consolidation of milling is readily apparent in 1819, when an industrial census recorded the number of grain mills in every province of the United Kingdom of the Netherlands. The new state embraced both the former Dutch Republic and the Southern Netherlands (modern Belgium). In the former Republic, where the milling excise had been in effect for over 200 years, there were only 0.5 grain mills per 1,000 population, and there were 4.4 bread bakeries for every grain mill. In the south, where no such tax had been levied in the past, the mills were far more numerous, and operated at a much smaller scale. There were 1.3 mills per 1,000 population, and only 1.3 bread bakeries per mill (see Table 4.2).41 38  �������������������������������������������������������������������������������� Tax law in Holland forbade private possession of querns (hand-operated grinding mills). A tax official (chercher, or toeziender) was appointed to each mill, which could function only in his presence. Folkert ���������������������������� Nicholaas Sickenga, Bijdrage tot de geschiedenis der belastingen in Nederland (Leiden, 1864), pp. 394–5. 39  �������������������������������������������������������������������������������� A special concern of the tax authorities was grain milled for other than baking purposes. Brewers’ and distillers’ grains enjoyed a much lower tax (in 1750, three guilders per last for wheat and one guilder per last for barley) that was identified by special markings on the grain sacks. A similar provision covered starch makers, while grain milled for fodder, which was free of excise, was mixed with a bit of sand to discourage unauthorized use. Sickenga, Geschiedenis der belastingen, pp. 394–5. 40  ���� The maalloon was used to further the policy of concentration. Repeatedly in the eighteenth century, commissioners raised the maalloon in order to finance buying out the interest of mill owners whose mills were regarded as redundant. These mills were demolished in return for a payment that was then incorporated into the fixed costs of the broodzetting. 41  �������������������������������������������������������������������������������� In Britain milling and baking bore a family resemblance to the situation in the Southern Netherlands. Between 1830 and 1870 there were not quite two bakers for every miller. The average throughput of millers hovered around 50 lasts (500 quarters) per annum, while the average baker worked up just over 21 lasts (220 quarters) of grain. Per 1,000 population, mid-nineteenth century Britain maintained 1.6 millers and 2.8 bakers. Peterson, pp. 66, 81.

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Table 4.2

Bakers and millers in the Netherlands, 1819 Bread bakeries

Pastry bakeries

Grain mills

Bakeries per mill

Bakeries per 1000 pop.

800

102

154

5.2

2.4

Holland

1800

200

300

6.0

2.4

Zeeland

308

25

111

2.8

2.7

Utrecht

271

14

54

5.0

2.5

Friesland

494

28

82

6.0

2.8

Groningen

442

26

98

4.5

3.3

S. Holland #

97

6

41

2.4

2.1

Overijssel

Drenthe

388

42

117

3.3

2.6

Gelderland

532

42

193

2.8

2.1

N. Brabant

793

53

---

---

2.7

Northern Netherlands

5125

436

996*

4.4*

2.5

Southern*** Netherlands

4995

92

3761

1.3

1.8

**

Source: I.J. Brugmans, Statistieken van de Nederlandse nijverheid uit de eerste helft der 19e eeuw, Rijksgeschiedkundige publicatiën, grote serie, vols 98–9 (The Hague, 1956). #

  Comprehensive data are available only for the province of South Holland. The data for Holland (North and South Holland) are estimated. *   Excludes North Brabant **   Netherlands, excluding Limburg ***  Belgium plus Luxemburg plus Limburg, but excluding the province of Antwerpen, for which data are missing.

What were the objectives of public policy with respect to the bakers? On this matter the sources do not speak directly and the historical literature is all but silent. However, one historian has ventured to explain the intent of Republican bread price regulation. Jan Luiten van Zanden, in his study of the impact of bread prices on the cost of living in the Netherlands, asserted that the large difference in rye bread prices between Holland and the eastern Netherlands was only partly accountable by the difference in taxation. In his view most of the observed difference in rye bread prices reflected a policy of Holland’s broodzetting commissioners “to protect the bakers’ income! Once an instrument to protect the interests of the consumer,

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the assize thus became an instrument to effect cartel agreements between the bakers.”42 Van Zanden offers little evidence or argument in support of this claim that the broodzetting had been hijacked by the bakers (in Holland, but evidently not in the eastern provinces) and transformed into a conspiracy against the public. Still, “regulatory capture” is a common phenomenon in contemporary societies and a prominent theme in modern political economy, so it is a charge that should be taken seriously. What sort of evidence should we be looking for? All of the evidence on the costs allowed to the bakers by the commissioners is cast in terms of physical units of production, usually lasts or sacks of grain transformed into bread. But the reasonableness of the allowed costs cannot be evaluated fully except in the context of some model of the operation of the bakery as a whole. The baking trials that sought to discover the precise costs of bread production invariably confined their attention to the costs of ingredients and the bread output per last of grain; they never considered explicitly the effects of the scale of production on the capital costs of equipment and buildings or the productivity of labor. Just as the cost of a loaf of bread can be separated into variable costs and the stable costs I have been calling “fixed costs” – the key to the operation of the broodzetting – so the operation of the bakery can be separated into variable and fixed costs, in the strict economic sense of the word. In this case, all the costs examined by the baking trials were variable (varying with the output of bread) while the costs about which the sources fall silent were fixed in the sense of being indivisible (the capital stock of the bakery, the labor supply of the baker and his family). It was these latter elements that were critical to setting the bakloon. Any assessment of the reasonableness of the allowable costs requires some knowledge of the productivity of the bakers, and this, in turn, will depend to some considerable extent on their scale of operations. From the consumer’s point of view, a price schedule that supports modestly a large number of half-idle bakers is not unambiguously preferable to one that offers large profits to a smaller number of efficient producers. Bread making was a regulated industry: what objectives did the broodzetting commissioners have in mind for the bakers as they periodically revised the terms under which this industry functioned? The number of bakeries per 1,000 population can offer a first approximation of the scale of operations. No comprehensive information is available until the nineteenth century, but several mid-eighteenth century provincial and regional 42  ������������������������������������������������������������������������� Van Zanden, “Kosten van levensonderhoud,” pp. 317–18. Quote from English translation in: Rise and Decline of Holland’s Economy, p. 134. The claim is repeated in Jan Luiten van Zanden and Arthur van Riel, The Strictures of Inheritance. The Dutch Economy in the Nineteenth Century (Princeton, 2004): “Local authorities set the price of rye and wheat bread, originally to protect the public, but in the course of the seventeenth century the system to regulate the price of bread evolved into an instrument for assuring bakers’ income,” p. 145.

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tax surveys offer a glimpse of the typical size of a bakery’s potential circle of customers. The density of rural bakeries varied from 5.4 per 1,000 population in the highly commercialized region north of Amsterdam, the Noorderkwartier, to 2.0 per 1,000 in rural Overijssel. In the Republic’s numerous cities, the density of bakers varied from a remarkably high seven per 1,000 in four cities in North Holland to 3.4 per 1,000 in two Overijssel cities. Overall, the Republic supported about 2.5 bakers per 1,000, or one per 400 inhabitants.43 The 1819 industrial survey confirms this estimate. There were then 4,800 bakeries in the Netherlands (excl. Limburg) plus an additional 440 specialized pastry bakeries. One bakery per 400 population is a norm that is also approached in the cities of Holland. Haarlem’s bakers responded to the decline of the city’s population by agreeing in 1714 to let their numbers “die out” – decline by attrition – to 80. In the early eighteenth century Haarlem’s population had fallen from its seventeentcentury peak of 38,000 to 33,000. Eighty bakers would have been one per 412. The city’s downward slide did not end here. By the 1750s the population stood at 27,000, and in 1759 the bakers agreed to reduce their numbers further to 70 – one per 385. Haarlem continued to lose population, and in 1786 the bakers again resolved to reduce their numbers by attrition, this time to 50 – again, about one per 400 inhabitants at the time.44 We know that Amsterdam supported a total of about 600 bread bakers in 1789,45 while in 1742 the income tax register identified 472 taxable bakers in the city (i.e., bakers with an annual income of at least 600 guilders). The tax collectors found another 413 such bakers in 15 other cities for which the tax rolls have been preserved.46 In addition there were poorer, non-taxable bakers – just over 100 in Amsterdam, and probably a similar number in the other cities. Thus, these 16 cities with about 450,000 inhabitants in 1742, supported 885 taxable bread bakers (plus 167 pastry bakers) and about 200–250 poorer bakers – altogether, about one bread baker per 400 inhabitants.47 43  �������������������������������������������������������������� For a survey of the evidence, see De Vries and Van der Woude, First Modern Economy, pp. 516–18. 44  ��������������������������������������������������������������������������������� G.A. Haarlem, Ambachtsgilden, deel 16, no 22. ����������������������������������� Population data from Jan de Vries, European Urbanization, 1500–1800 (London, 1984), p. 271. 45  �������������������������������������������������������������������������������� G.A. Amsterdam, Archief v. d. Burgemeesteren, P.A. 5028, Stukken betreffende de broodzetting. 46  ���������������������������������� These data from: W.F.H. Oldewelt, Kohier van de personele quotisaie te Amsterdam over het jaar 1742, 2 vols, (Amsterdam, 1945). 47  ��������������������������������������������������������������������������������� The density of bakers in the Netherlands can be compared to England and Germany. In London, in 1797–98, about 1500 “assized” bakers, or about one per 682 inhabitants. In the much smaller Southampton, the number of bakeries varied irregularly between one per 400 and per 600 inhabitants in the 1783–1861 period. More generally, in London and environs, there was one bakery worker per 200 inhabitants in 1851. This density declined markedly as one moved north. The one per 200 density was reached again in the urban heartlands of Scotland. Petersen, Bread, pp. 67–72; 81–2. In the German regions

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Bakeries could vary in their scale of operation, of course. Some bakeries employed several wage workers to supplement the family labor force, while others offered only part-time employment for a family. All in all, while there was considerable variance around the mean, something like 15–16 lasts of grain per year per bakery probably represents the general scale of operation of a typical bakery. If a typical bakery was to supply bread to some 400 persons (100 households), consuming 100 kg per year, this would have required the processing of some 16 lasts of wheat and rye. Arguably, the broodzetting commissioners could have encouraged consolidation and economies of scale by reducing the allowable production costs, the bakloon. The very high density of bakers in the towns and villages of North Holland, for example, may have been nurtured by an overly generous bakloon. But, there was nothing in the operation of the broodzetting to prevent enterprising bakers from profiting from a generous bakloon by increasing the scale of operations. If such consolidation remained uncommon it was because of barriers to entry enforced by others: the guilds, municipal restrictions on the acquisition of burgher rights, the real estate market for bakeries, and the limited availability of financing to start what was a capital intensive trade.48 In this larger context, the regulatory regime functioned to reinforce the status quo. To return to the hypothesis of Van Zanden: Were Holland’s bakers the beneficiaries of a conspiracy against the public enforced by the commissioners of the broodzetting? Obviously, the bakers were sheltered from the full rigors of a competitive market. The broodzetting suppressed competition in favor of regulation, and offered the bakers a fairly dependable burgerlijk income in exchange for their cooperation in a key aspect of Republican fiscalism and social redistribution. It created an environment in which Holland, and the whole Republic, was thickly seeded with bakeries. Given the limitations of distribution of a perishable product, it was certainly in the interest of consumers to have bakers near by, but the broodzetting remains open to the charge of enabling many bakers to persist in a traditional production regime. The structure of the bread making industry – scale of enterprise, technology, and types of product offered – changed very little so long as the broodzetting lasted. In this the Netherlands was far from unique. Karl Marx said of England’s baking sector, long in the embrace of the assize of bread:49

closest to the Netherlands, the population per master baker in 1849 stood at 380 in the Prussian Rheinprovinz, and 515 in Westfalen. Few of the 10,354 bakers in these two large provinces could have operated at more than the traditional artisanal scale, for together they employed only 4,843 journeymen and apprentices. Wolfgang Köllmann, Bevölkerung in der industriellen Revolution (Gottingen, 1974), pp. 226–7. 48  ����������������������������������������������������������������������������������� For details of the difficulties facing immigrant bakers to establish themselves as master bakers in Amsterdam, see: Kuijpers, pp. 226–44. 49  ����������� Karl Marx, Capital (Original edition, 1867; London, 1967) vol. I, p. 358.

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No other branch of industry in England has preserved up to the present day [1867] a method of production as archaic, as pre-Christian (as we see from the poets of the Roman Empire) as baking has.

The regulation of bread production led to the ossification of the industry, but not to the unreasonable enrichment of the bakers. The evidence on their income level relative to other trades and crafts is consistent in showing most of them toward the lower end of the income range of traders, retailers, and craftsmen in urban Holland.50 They formed a large and socially sensitive segment of urban society, and the town regents were concerned to prevent conflict between the bakers and either the city or the public. But they did not agree – through their commissioners – to pay more than necessary to secure this social peace.

Conclusion The regulation of bread prices took place throughout Europe. But this ubiquitous and prosaic form of market intervention took on a new aspect soon after the establishment of the Dutch Republic. Consumers then faced bread prices shaped by public commissions with new tools with which to measure the precise costs of production and to distribute those costs across the several types of bread. The state quickly added a fiscal purpose to this “scientific” regulatory regime. From the outset, the excise bore most heavily on wheat bread: generally double the excise levied on rye bread. A much lower tax applied to milled buckwheat and gorts, and when potatoes emerged in the eighteenth century as an alternative source of carbohydrates, they were kept free of taxation. The more “luxurious” the food, the higher the tax; as Milton Friedman would have said: the Dutch consumer was “free to choose.” While the tax differentials by grain type were rarely altered significantly, the provincial governments raised the absolute level of these taxes frequently. With each increase they could observe the price elasticity of demand revealed by consumer behavior. There was little substitution away from wheat bread (which bore both the burdens of cross-subsidization and the highest excise tax); indeed, rising incomes may have increased wheat bread consumption in the face of these strong pressures to substitute away from it. As a consequence, the 50

 ������������������������������������������������������������������������������� The taxable income levels for a broad range of urban occupations in Holland in 1742 is analyzed in De Vries and Van der Woude, pp. 561–86. Kuijpers offers evidence of the relative position of bakers relative to other occupational groups who made voluntary contributions to the construction of the new Lutheran church of Amsterdam in 1668. The 84 bakers formed the largest single occupational category of donors, but their average contribution, 18.46 guilders, was below the average of 22.48 guilders for the 752 individuals who made contributions. Kuijpers interprets this as evidence of the bakers’ prosperity. They certainly formed a solid middle-income occupational bloc in the community, but this evidence does not show them as being more than that. Kuijpers, pp. 412–13, 233.

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113

excise on milled grain rose, in a series of steps culminating in the 1680s, to become the largest single generator of public revenue in Holland. And so it remained until the mid-nineteenth century, for even the full blast of Patriotic and Napoleonic reform could not permanently dislodge this well-entrenched regime. What, then, was the purpose of the new-style broodzetting? Clearly, it served the fiscal interest of the state, embedding a major source of public revenue into the society’s most ubiquitous item of consumption. But when the new broodzetting was first developed, this could hardly have been foreseen since the milling tax at first accounted for no more than five percent of the final price of bread. What at first was a secondary matter emerged only later to become the central feature of Dutch bread pricing. Did the commissioners set the level of fixed costs to enrich the bakers? Was the system, as it were, captured by the interest group it was intended to regulate? There is some evidence that what was originally a “severe” system of regulation became more lax. Around 1600, the price tables were predicated on the assumption that bakers could produce close to the theoretical maximum number of loaves per unit of grain. A generation later, most municipal regulators had conceded in some measure to the baker’s complaints that reality differed significantly from theory, and that wastage, years of low-weight grain, baking errors, etc., should be taken into account when determining the number of loaves that could be produced per unit of grain. A regulatory regime that might have served as a lever to press the bakers toward greater efficiency, and perhaps larger scale, became instead, a protective framework that sought to secure for the baker his long-run, fullyallocated costs of production. These costs were determined for an “average” baker – not the most productive baker – and secured for this average baker a customary standard of living – few bakers entered into the elite of guild organized craftsmen. The municipal commissioners sought to protect and stabilize this strategic industry, which always had the potential to generate civic unrest, but they did not aim to enrich the bakers. Their success in this long sheltered an industry of mediocre productivity from competitive forces – a genuine deadweight loss to the society – but it did not shower windfalls upon the bakers. Finally, in what sense can it be said that the broodzetting protected the consumer? We have established that neither the design of the bread price tables nor the weekby-week administration of the system was intended to protect consumers from the market. On the contrary, the new-style broodzetting insured that every fluctuation in the price of grain would be reflected, within the week, in the price of bread. Moreover, bakers were almost always forbidden from selling under the prices set by the commissioners. The consumer interest protected by this system is not found in price, but in quality and supply. Every type of bread sold by the bakers was regulated not only by price or weight, but also by quality standards. In return for being given a predictable, non-competitive market environment, the bakers were required to produce bread to a published standard and to abstain from holding back grain in the expectation of higher future prices. The predictable availability of a variety of unadulterated bread types is a significant consumer interest, although

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one that is valued more highly by middle-class consumers than by the poor. On the other hand, this assurance of supply, variety, and quality was underwritten by the better-off consumers, to the extent that they purchased more than their share of wheat bread. The protection of the poor consumer, especially in times of high prices, was not the mission of the broodzetting at any time in its long history. The crosssubsidization of rye bread consumers that was built into the way production costs were allocated between the two major bread grains certainly gives the impression that the broodzetting sought to favor the modest consumer, but this gesture was undone, and more, by the price impact of the excise tax of milled grain. The Dutch Republic was unique in Europe in its heavy taxation of the staff of life, or what the Classical economists called the “wage good.”51 This aspect of the political economy of bread cannot be explored fully here, but a first approximation of its impact was to raise by some 25 percent the price of a necessity (a product whose demand is inelastic with respect to price) that claimed a large part of a working family’s total income. All of this notwithstanding, we have seen that, on occasion, the commissioners set rye bread prices below the market level, compensating the bakers by raising wheat bread prices, or by allowing higher prices in the future, after they had fallen back from their famine-levels. But these were small and infrequent interventions. The responsibility for protecting the poor rested with charitable institutions and broader municipal policy, not the commissioners. To the extent that Dutch poor relief measures were effective, one could conclude that the poor were (partially) sheltered from the workings of the broodzetting but that the broader middle range of consumers, especially those aspiring to diversify their diet toward the highstatus breads, faced the full brunt of the broodzetting’s mechanisms of social engineering. Explaining their relative quiescence in the face of this long-lived regime is a research topic awaiting further study.

51  ������������ Adam Smith, Inquiry into the Causes of the Wealth of Nations ([1776] Oxford, 1976), pp. 875–6; David Ricardo, Principles of Political Economy and Taxation (R.H. Hartwell, ed., Hammondsworth, Penguin, 1971), p. 291n.

Chapter 5

Mutual Advantages: State Bankers as Brokers between the City of Amsterdam and the Dutch Republic Marjolein ’t Hart

As far as the institutional dimension of public credit is concerned, we should distinguish between states where private or public banks were the principal intermediary between capital and the state, and countries such as France, where public credit remained largely in the grip of a class of great financiers.

Trust in the credit relations between the state and investors was crucial, yet it was a highly variable asset for the early modern state. The quote above distinguishes two general ways of how those relationships were constituted: one regulated by private or public banks and one dominated by a restricted class of financiers. France, often regarded as a “model” for most of continental Europe, was characterized by the second type, which is not to say that the major French financiers were always so happy with their ‘grip’ on public credit. In February 1653 during a special meeting with Mazarin (the chief Minister of Louis XIV), they pointed with envy at the high standing of ‘la foy publique gardée’ in the Venetian and Dutch republics. There, state creditors were paid ‘à la banque ouverte’. In contrast, the French financiers suffered from the secrecy and the high-handed unilateral changes in their loan contracts to the crown. The financiers claimed not to doubt that interest rates could be as low in France as in the Netherlands, but feared that the king would maltreat the contracts or default on his debts. Likewise, across the Channel, Sir George Downing – acting as Minister of Finances – declared in 1662 that it was not the lack of money, but the lack of credit that was ruining England. According to him the authorities in Holland also lacked money, but their advantage was in having a broad loan base and a punctual reputation in financial matters.

 ��������������������������������������������������������� Martin Körner, ‘Public credit’, in Richard Bonney (ed.), Economic Systems and State Finance (Oxford, 1995), pp. 507–38, p. 528.   ���������������� Richard Bonney, The King’s debts. Finance and politics in France 1589–1661 (Oxford, 1981), pp. 249, 274.   ����������������������������������������������������������������� Following the letter of Downing to E. Nicholas; Henry Roseveare, The Treasury 1660–1870. The Foundations of Control (London, 1973), p. 23. 

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Rather exceptional within seventeenth-century Europe, indeed, was the high standing of public credit in the northern Netherlands. Yet the relationship between ‘high Dutch finance’ (war finances) and the investing public at large is still unclear. How did the (semi-) private bankers perform their duties in providing capital to the state? How did the intermediation come about? How did creditors actually find their way in the myriad of state loans? This contribution deals with the public loans of one major financial officer: Johannes Uijttenbogaert (1607–1680), the Amsterdam receiver of the Holland taxes. The institutional settings of his office will be studied, followed by an analysis of the investors. The final aim of this article is to establish to what degree his loan-arrangements differed from those in Western Europe in general, and in England and France in particular, the latter two being the main geo-political competitors of seventeenth-century Netherlands.

Holland’s public debt The wars of the late sixteenth and seventeenth centuries were a costly affair. The resilience of the newborn Republic was significant though, and was supported by an expanding economy and a careful management of the public debt. The latter relied primarily on the financial power of the province of Holland. The provincial government could build upon the tradition of the earlier ‘financial revolution’ of the sixteenth century, in which a free market for provincial bonds had already been established since the 1550s. The new excises of the 1570s provided the necessary funds for the rising debt charges. The general rate of interest declined, from c. eight per cent in 1600 to c. three per cent in 1720, despite the fact that the capital sum of Holland’s debt increased. Public credit attained such proportions,

  �������������������� Sir William Temple, Observations upon the United Provinces of the Netherlands [1673], ed. G. Clark (Oxford, 1972), p. 130; A.V. Judges, ‘Money, finance, and banking from the Renaissance to the eighteenth century’, in Edward Eyre (ed.), European Civilization. Its origin and development (London, 1937), pp. 401–99, p. 445; Geoffrey Parker, ‘The emergence of modern finance in Europe, 1500–1730’, in Carlo M. Cipolla (ed.), The Fontana Economic History of Europe. Vol. 2: The sixteenth and the seventeenth centuries (Glasgow, 1974), pp. 527–94, p. 573; Charles P. Kindleberger, A financial history of Western Europe (London, 1984), p. 159; Niall Ferguson, The Cash Nexus. Money and power in the modern world, 1700–2000 (London, 2001), p. 114.   ����������������������������������� Jan de Vries and Ad van der Woude, The first modern economy. Success, failure, and perseverance of the Dutch economy, 1500–1815 (Cambridge, 1997), pp. 669–70.   ������������� James Tracy, A financial revolution in the Habsburg Netherlands. Renten and Renteniers in the County of Holland, 1515–1565 (Berkeley, 1985), p. 110; Wantje Fritschy, ‘A financial revolution reconsidered: public finance in Holland during the Dutch Revolt’, Economic History Review, 56 (2003), 57–89.   ���������������� E.H.M. Dormans, Het tekort. Staatsschuld in de tijd der Republiek (Amsterdam, 1991), pp. 47, 81.

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that in 1655 the bonds of Holland were sold at an advance of five, six and even seven per cent. Table 5.1

Distribution of the outstanding debt over the district receivers and the Receiver General of Holland, 1667 and 1683, in percentages

District receiver

Percentage of distribution Percentage of distribution 1667 of new loans 1670–1683

Dordrecht

8.5%

Haarlem

7.9%

8.4%

Delft

8.3%

11.5%

Leiden

8.0%

9.3%

Amsterdam

7.2%

15.3%

22.3%

Gouda

4.7%

4.9%

Rotterdam

5.4%

6.3%

Gorinchem

1.9%

1.7%

Brielle

1.9%

1.9%

38.2%

26.5%

100.0% 96,114,257

100.0% 5,420,444

Receiver General, The Hague Total, Southern Quarter of Holland

Sources: 1667: R. Liesker and W. Fritschy, Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden. Deel IV, Holland (1572–1795) (The Hague, 2004), table I.4.6; 1683: NA, Financie van Holland, no. 855.

The security of Holland’s interest-payments was based on the regular income from a myriad of taxes and above all from the excises. Local tax farmers collected these taxes, their leases lasting (generally) six months or a year and the sums being paid to the district receivers. The local government, supervised by delegates of the province, sold the contracts. As for the loans, the States of Holland decided upon the amounts to be provided by each receiver, which was generally more or less in proportion to the respective tax-farm receipts. The sale of loans had to be announced publicly, specifying the time and the place (primarily at the home of the district receiver) where potential buyers of bonds could bring in their funds. The distribution of the outstanding loans in the Southern Quarter of Holland, which covered the largest part of the province, can be seen in Table 5.1. The Receiver General of Holland, residing in The Hague, managed the largest portion of all, followed by Amsterdam. Significantly, the receiver of this town came to handle more loans; these increased from 15 per cent in the period before 1667, to

  �������������������������������������������������������������������������������� Nationaal Archief, The Hague (henceforth NA), Archief Laurens Pieter vd Spiegel 511, Memorie (with thanks to W. Fritschy).

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22 per cent in 1670–1683 and points to an increased importance of the Amsterdam office. Public loans existed in three kinds: redeemable annuities (losrenten), life annuities (lijfrenten) and obligations (obligaties, or penningen op interest, henceforth referred to as bonds). The redeemable annuities and the life annuities actually consisted of periodic revenue during a certain period, to be paid annually after the Treasury had received the capital sum. In the case of the redeemable annuities, the investor received these revenues until the capital was redeemed by the investor again (gelost). But in practice many redeemable annuities were not paid back, thus becoming perpetual annuities. The life annuities were linked to the life of one (or two) person(s); the investor supplied a certain capital sum and, in return, he or she was to receive an annual payment until the nominee died (in case of a life annuity on two persons, after both had died). No capital was returned for the life annuities. The obligaties or bonds were sold as short-term loans with interest (duration: six months), yet they were often renewed year after year, thus lasting in actuality for the medium or long term as well. The annuities were always sold to a name; bonds could also be sold anonymously (payable to bearer). All these securities were transferable on the market. The receivers paid the interest twice a year and kept the registers up to date. The States of Holland controlled their accounts annually. The annuity loans were clearly linked to the well-known past of the urban debts. Holland towns had issued redeemable and life annuities since the fourteenth century, being ‘funded’ as they were by the regular income of the urban excises (notably on beer).10 The funding implied that in case of financial difficulties, the interest payments for annuities would be granted priority above all other expenses. The provincial annuities built on this tradition to a considerably degree, drawing upon the integrity from the past urban experiences. On the other hand, the bonds (obligaties), which were initially sold above the proportions for the annuities, were not directly linked to tax revenues. Yet since 1601 the short-term bonds had become a regular way of financing too. In these loans the personal credit of the officer mattered, as well as the security of his office. For his personal risk and troubles in finding investors and managing the loans, the receiver was allowed to charge a brokerage of 0.5 per cent.11 No such brokerage existed for the traditional annuities. The public received, in general, an initial rate of five (later four per cent) during most of the seventeenth century. This was somewhat higher when   ����������������������������������������������������������������������������������� See also the note of 30 May 1672: Uijttenbogaert is the only district receiver who managed to supply the sums on time; Cornelis Hop and Nicolaas Vivien, Notulen gehouden ter Staten-Vergadering van Holland (1671–1675), ed. ������������������������������ N. Japikse (Amsterdam, 1903), p. 92. 10  ���������������������������������������������������������������������������� Manon van der Heijden, ‘Stadsrekeningen, stedelijke financiën en historisch onderzoek’, Neha-Bulletin, 14 (1999), pp. 129–66, 148. 11  ��������������������������������������������������������������������������������� Since 1605; before that date, the brokerage stood at one per cent. D. �������������� Houtzager, Hollands lijfen losrenteleningen vóór 1672 (Schiedam, 1950), p. 127.

Mutual Advantages

119

compared to the returns on investments in houses and lands (three per cent). Adhoc companies for some larger drainage or peat projects could be much more rewarding, although they also carried much higher risks.12 The bonds, in fact, came to be ‘funded upon the taxes’ similar to the annuities. Probably the obligations ‘inherited’ the right of preferential interest payment from these same annuities. For some investors the advantages of the bonds lay in the possibility of a ‘payable to bearer’ construction (which was anonymous and which rendered them easier to transfer) and in the fact that they could eventually be redeemed in the short term (every six months). The bonds were also not subject to a new tax in 1653 on property (as they were still regarded as short-term loans).13 Other investors preferred the redeemable annuity, with its greater degree of security, although it was more difficult to transfer. Life annuities were often bought for children or other beloved ones, as a provision for the future. They were also quite desirable for the added reason that they allowed an annual interest that was generally twice the rate for redeemable annuities and bonds. On the other hand, they carried the disadvantage that the capital sum was never repaid.

The receivers of the Amsterdam district The first receiver of Holland taxes in the Amsterdam district was installed in 1578, after the town had joined the Revolt of the United Provinces. The principals (the provincial authorities) appointed the receivers based on the proposal of the local burgomasters.14 Nevertheless, these ‘official appointments’ did not prevent a specific family network from dominating the office.15 As Figure 5.1 shows, all receivers were in some way related to each other through kinship bonds.

 ���������������������������� De Vries and Van der Woude, The first modern economy,��� p. 116.  ������������������������������������������������� They were to become subject to the property tax (200e penning) from 1680 onwards though. 14  ������������������ Hans Bontemantel, De regeeringe van Amsterdam soo in ’t civiel als crimineel en militair, ed. G.W. Kernkamp (The Hague, 1897), vol. I, p. 124. ���������������������� Burgomasters (mayors) in Amsterdam (four per annum) were elected by the ‘Old Council’ consisting of (former) burgomasters and (former) aldermen (schepenen). 15  ��������������������������������������������������������������������������� For an analysis of the strong impact of family networks and patrimonialism on Dutch political structures, see Julia Adams, The Familial State. Ruling families and merchant capitalism in early modern Europe (Ithaca and London, 2005). 12 13

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The Amsterdam district receivers and their family-relations (the receivers are printed bold, with their period of officeholding)

The first receiver in the list, Reynier van Neck (†1581), belonged to a well-known sixteenth-century merchant family in Amsterdam. Having fled the country during Alva’s rule, he returned to Amsterdam in 1578. Soon he became receiver, and in 1581 he was also elected burgomaster.16 His daughter had married Johan Reael (1543–1621), the son of a grain merchant and goldsmith. The name Reael (a coin) came from the signboard of the house (In de gouden Reael). Upon the death of his father-in-law in 1581, Johan became the new receiver. He must have been one of the wealthiest Amsterdammers of the time, leaving his wife 170,000 guilders upon his death. He was likely to have been a merchant and/or goldsmith as well.17 Johan Reael had excellent relations with the Amsterdam government and like Reynier van Neck, he became burgomaster himself (twice over). His family numbered

 ���������������� Johan E. Elias, De vroedschap van Amsterdam 1578–1795 (Amsterdam, 1963), p. 28. The �������������������������������������������� position as burgomaster lasted one year. 17  ������������� Peter Burke, Venice and Amsterdam. A study of seventeenth-century élites (London, 1964), p. 113 gives details as to his assets at the time of his death (1621): money 46 per cent, houses 28 per cent, stocks and participation in ships 12 per cent, annuities eight per cent, land six per cent. 16

Mutual Advantages

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several financial officers, including his brother-in-law who was Rekenmeester and receiver of the Amsterdam head tax of 1599.18 Upon Johan’s death the eldest son, Pieter Reael (1569–1643), was to succeed him in 1621. Pieter was a major merchant with his own shipping company, Pieter Jansz Reael. He married Weyntge Oetgens, daughter of Frans Oetgens who was one of the most powerful and wealthy burgomasters of Amsterdam of the time. Pieter Reael did not become burgomaster himself, although he had been Schout (bailiff) in 1609, as well as a regent (regents are managers of, usually, charitable institutions) and an officer in the local militia. In the 1631 tax register of Amsterdam, Pieter appears among the wealthiest Amsterdammers with the considerable valuation of 130,000 guilders.19 In 1638, however, Pieter Reael resigned and requested the States of Holland to appoint his nephew Johannes Uijttenbogaert (1608–1680) (also spelled Wtenbogaert, but in this article I shall use Uijttenbogaert). Johannes was the son of Pieter’s sister Maria Reael and Augustijn Uijttenbogaert. The new receiver had had excellent connections with his grandfather, the former receiver Johan Reael, who had also acted as his godfather and in whose house on the Nieuwe Zijds Ooster Achterburgwal in Amsterdam he had been born. In 1642, Johannes Uijttenbogaert married Lucretia van Hoorn, daughter of a wine merchant, sister of the powerful burgomaster Simon van Hoorn, and a distant relative again to Reynier van Neck, the first receiver of Amsterdam. 20 They bought a double house on the most fashionable canal, the Herengracht no. 108, which served to demonstrate the standing of their class.21 Uijttenbogaert was the first Amsterdam receiver who studied law. Like his forerunners, he held many connections in the world of finance. His father, Augustijn, had been Paymaster of troops and clerk to the financial office of receiver Johan Reael. His grandfather, Frans Bogaert, had been administrator of the funds of Utrecht town. His nephew, Frans Uijttenbogaert, was Receiver General of the Province of Utrecht. Johannes’s son Augustijn was to become Paymaster of troops and his nephew, Pieter Reynst, became the Haarlem district receiver.

18

 ������ Elias, De vroedschap van Amsterdam, p. 260. On Laurens Jacobsz Reael, the brother-in-law of Johan Reael, see Joh. C. Breen, ‘Laurens Jacobsz Reael’, Bijdragen tot de Vaderlandse Geschiedenis en Oudheidkunde, 10 (1897), 69–124. 19  ������� Elias, De vroedschap van Amsterdam, ��������������������������������������� pp. 102, 260. Pieter’s younger brother Reynier Reael was to marry a sister of Weyntge Oetgens: Maria Oetgens, indicating an extremely close bond between the Reael and Oetgens families. Ibid., p. 262. 20  ���������� Ibid., pp. 447–9. 21  ����������������������� I.H. van Eeghen (ed.), Vier eeuwen Herengracht: geveltekeningen van alle huizen aan de gracht […] ����������������������������������������������������������������������� (Amsterdam, 1976), p. 432. After his death, the house was sold in 1681 for 281,000 guilders. He also owned In ’t Witte Paert on the Herengracht, but he did not live there. Johannes was an officer of the local militia too. See also Kees Zandvliet (et al.), De 250 rijksten van de Gouden Eeuw (Amsterdam, 2006), pp. 384–5.

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Upon the resignation of Johannes in 1676, a receiver was appointed with a more distant family connection: David de (or ‘le’) Wilhem (1628–1707). David was married to Hillegond van Beuningen, and it was due to the personal influence of her brother Coenraad van Beuningen, Amsterdam burgomaster and one of the most powerful politicians of the Dutch Republic, that his brother-in-law David obtained the office of receiver.22 Like Uijttenbogaert, David had studied law. His father, Paulo de Wilhem, had been a major merchant in the Italian and Levant trade having dealt in oxen and having acted as an agent for the Danish king.23 David’s own relations to the world of trade seemed to have involved oxen as well. The fattening of oxen was a favourite occupation for quite a few among the Amsterdam elite, especially from the 1670s.24 Because of his positions as Extraordinary Treasurer for the Amsterdam government (1673–1674) and Commissioner for the Bank of Loans (1680–1707) David was well acquainted with credit systems and finance in general. Upon closer inspection, there are even more personal connections between the Reael-Uijttenbogaert and the Van Beuningen-De Wilhem families, particularly through David’s wife Hillegond. In their youth, Hillegond and Coenraad van Beuningen had lived close to Augustijn and Johannes Uijttenbogaert. Hillegond’s father Dirck van Beuningen owned a shipping company with Reynier Reael, the brother of the receiver Pieter Reael.25 Upon the death of Maria Reael, Augustijn Uijttenbogaert had remarried Geertruid Geldsack, a sister of Maritge Geldsack, the second wife of Dirck van Beuningens’s mother. Furthermore, Dirck van Beuningen was the brother-in-law of the receiver Pieter Reael and of Maria Reael, Johannes Uijttenbogaert’s mother, through the marriage of Bartholomeus Reael with Maria van Beuningen (see also Figure 5.1).26 Undoubtedly these family relations, in addition to providing a good connection to the Amsterdam government were crucial to the appointment of a district receiver. They were a precondition to being considered in the first place. Both Uijttenbogaert and De Wilhem had studied law, which added to the qualification of these candidates. And naturally, wealth counted to a significant degree, as the 22

 ������� Elias, De vroedschap van Amsterdam, p. ������������������������������������������ 265 note l. He was assessed at 100,000 guilders in 1674. On �������������������������������� Van Beuningen, ibid., p. 512. 23  ��������������������������������� Ibid., pp. 600–603; W. Gijsbers, Kapitale ossen. De internationale handel in slachtvee in Noordwest-Europa (1300–1750) (Hilversum, 1999), p. 447 n.65; Oscar Gelderblom, Zuid-Nederlandse kooplieden en de opkomst van de Amsterdamse stapelmarkt (1578–1630) (Hilversum, 2000), p. 232. �������������������������������������������� David’s mother, Sara de Haze, belonged to a family of wealthy merchants. 24  ���������� Gijsbers, Kapitale ossen, pp. 223–53, 596. 25   Kohier van den tweehonderdsten penning voor Amsterdam en onderhoorige plaatsen over 1631, ed. ��������������������������������������������������������������� J.G. Frederiks and P.G. Frederiks (Amsterdam, 1890), p. 50. In the records of the Amsterdam bank we find the firm Reynier Reael en Dirck Geurtsz van Beuningen. 26  ������� Elias, De vroedschap van Amsterdam, ������� p. 603.

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personal wealth of this agent radiated from his office and thus supported the credit of the state. Wealth seems to have come predominantly from trade in the first decades of the existence of this office, and later mainly from office holding and finance. The receivership itself was also a possible way to increase one’s fortunes. Johannes Uijttenbogaert was already a man of considerable means, yet by the end of his term he belonged to the top of the financial elite.27 Undoubtedly, the emoluments of his office supported him, not in the least the 0.5 per cent brokerage when he was selling the numerous bonds for his principals.28 Among other things, it ensured a promising future for his daugther Weyntge who married into the famous banking family Bartolotti van den Heuvel.

Buying the bonds of Amsterdam district receivers The numerous investors in the public debt of the Republic can be traced in the records of the interest-payments, although only a minority of these account books survive. In this article, I will use the full data-set of investors in annuities from 1665 to 1675, to which I have added data relating to an earlier study concerning investors in bonds and redeemable annuities (1628 and 1648–1650), all sold by the Amsterdam district receivers.29 The size of the investments is in itself interesting as a measure of the possible range of investors (Table 5.2). Over time, the amounts they furnished appear to have increased (see Table 5.2). In the second half of the century, larger sums were provided, although the smallest category (up to 500 guilders) continued to exist. In 1628, most investors had bought securities ranging from 500 to 2,000 guilders; in 1648–50 and 1665–75 the predominant investment had increased to 1,000–5,000 guilders. Accordingly, the average sum increased from 2,300 guilders to 3,600 guilders in 1648–50 and to 4,000 in 1665–75.

27  ������� In the familiegeld of 1674, he was assessed at 200,000 guilders (in that year 259 heads of households in Amsterdam were taxed at 500 guilders or more; Burke, Venice and Amsterdam, p. 55; Zandvliet (et ��������� al.), De 250 rijksten van de Gouden Eeuw, p. 384). 28  ������������������������������������������������������������������������������������ The salary of the Amsterdam district receivers was 2,000 guilders per annum, raised to 4,000 guilders later in the century. 29  ���������������������������������������� The latter data-set consists of all the renten still existing in 1687, when the books were rearranged. The total number of individuals is 348, buying together 810 renten (redeemable annuities and life annuities) supplying a total capital of 1,404,492 guilders. ������������� NA, Financie van Holland, no. 367, rentenboeken. Life ����������������������������������������������������� annuities that had disappeared before that year were left out; the remaining life annuities had lasted already 12 to 22 years. See for 1628 and 1648–1650, Marjolein ’t Hart, ‘Public loans and lenders in the seventeenth-century Netherlands’, Economic and Social History in the Netherlands, 1 (1989), pp. 119–40.

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Table 5.2

Distribution of invested sums, Amsterdam receiver 1628–1675, in percentages across several categories, and means

Amount (guilders)

0–500

1628

1648/50

Redeemable annuities/ bonds

Redeemable annuities/ bonds

1665/75 

Redeemable and life- annuities

5.4

5.0

2.6

501–1000

32.4

16.8

12.0

1001–2000

27.0

25.1

28.7

2001–5000

24.3

34.6

33.5

5001–10000

8.1

9.5

15.8

10001 and over

2.7

8.9

7.5

100.0

100.0

100.0

74

152

348

2,300

3,600

4,000

Total N= Mean

Source: ’t Hart, ‘Public loans and lenders’, 129–130; NA, Financie van Holland, 367.

The account books also provide information regarding the identity of the buyers. Apart from the bonds sold anonymously (which was the case for 15 per cent of the Amsterdam bonds in 1628 and 1648–50) the names were provided. Sometimes titles were added as in Mr or burgomaster. In the case of life-annuities, because of the specific rules of the contracts, details as to the age of the nominees and familial connections were also noted. As for the investors of 1628 and 1648–50, around 40 per cent were female indicating a considerable degree of independence for Dutch women with regard to their funds. Whereas most buyers lived in Amsterdam proper, some 16 per cent lived in other towns or in the nearby countryside. A significant proportion of the loans came from the Amsterdam elite, however those belonging to the lower classes also bought bonds and annuities. The top-ten investors for 1628 (receiver: Pieter Reael) were the following: 16,400 guilders, Jacob Willemsz Hooft (1588–1659), merchant and regent, member of Amsterdam patriciate family30

•

30

 ������� Elias, De vroedschap van Amsterdam, ������� p. 151.

Mutual Advantages

• •

• • • •

• •

•

125

13,000 guilders, Jacob Hendricksz Servaes (1596–1664), Amsterdam cloth merchant and regent31 8,300 guilders, Leperhouse Amsterdam, administrators among others Augustijn Uijttenbogaert (brother-in-law) and Jacob Willemsz Hooft (see no. 1 in this table)32 8,000 guilders, Pieter Jan Mathijsz 7,000 guilders, Poorhouse of the Nieuwe Zijds Huiszittenden 6,000 guilders, Pieter Uyttenbogaert, younger brother of the future receiver Uijttenbogaert; Pieter Reael was his uncle 6,000 guilders, Frans Jacobsz Hinlopen (1583–1628), whose wife was the sister-in-law of receiver Pieter Reael; Frans’s widow, member of an Amsterdam patriciate family,33 was assessed at 130,000 guilders in 1631. 5,200 guilders, Stephanie Loene34 5,000 guilders, Gasthuis (Hospital) Amsterdam, regenten: among others were Jacob Hendricksz Servaes (see no. 2 of this table) and Bartholomeus Reael and Reynier Reael (both brothers of the receiver)35 4,800 guilders, Rachel Arents, married to Jacob Laurens, Schout and Councillor of Haarlem36

Jacob Hooft and Frans Hinlopen were two outstanding representatives of the Amsterdam patriciate. Hinlopen was also related to the in-laws of the receiver. Two of the most significant investors were female: a girl who had recently become orphaned, her wardens probably investing the inheritance for her; and Rachel Arents, living on the Herengracht with her husband based in the nearby town of Haarlem. Three of the top ten were institutional investors. Upon closer scrutiny, several managers of these institutions had family connections to the receiver: one of the Leperhouse-regenten was Augustijn Uijttenbogaert, his brother-in-law; and two of the Hospital-regenten were brothers to the receiver. Number 6 in the list, Pieter Uijttenbogaert, was Pieter Reael’s nephew.  ����������� Ibid., 96; Kohier 1631, 55 assessed for 4,000 guilders (which is quite modest).  ������������������������������������������������������������������������� S.A.C. Dudok van Heel, ‘Mr Johannes Wtenbogaert (1608–1680), een man uit Remonstrants milieu, en Rembrandt van Rijn’, Jaarboek Genootschap Amstelodamum, 70 (1978), 146–69, 157. 33  ������� Elias, De vroedschap van Amsterdam, ������� p. 311. 34  ���������������������������� She was an orphan; see ibid., 113–14: some individual members of the famous burgomaster family Boelens were also called Loen/Loenen, but the relationship with this Stephanie is unclear. 35  �������������� Jan Wagenaar, Amsterdam in zyne opkomst, aanwas, geschiedenissen […], (Amsterdam, 1765), vol. II, ������������ p. 129; Kohier 1631, 2: Reynier Reael was assessed for 95,000 guilders in 1631, which was a considerable sum. 36  ������� Elias, De vroedschap van Amsterdam, p. ���������������������������������������� 168; she lived on the Herengracht in 1631, and was assessed as a widow for 40,000 guilders. Kohier 1631, p. 20; Herengracht, p. 480. 31

32

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126

Twenty years later the receiver Johannes Uijtenbogaert counted three females among the top-ten investors and two institutional investors: •

• • • • • • • •

•

78,000 guilders, Pieter Trip (1597–1655), a famous Amsterdam merchant, owning several enterprises, specializing in weaponry, and member of an Amsterdam patriciate family37 25,000 guilders, Old Men’s House Amsterdam 25,000 guilders, Jacob van Eeden (?) 20,800 guilders, Cornelis Heeremans, descendant of a famous family of Catholic merchant/bankers in Amsterdam 20,000 guilders, Isaac Senior (?) 20,000 guilders, Aeltjen Trist, widow 18,400 guilders, Maria Heeremans, descendant of a famous family of Catholic merchant/bankers in Amsterdam 17,800 guilders, Leperhouse Amsterdam; one of the regenten was still Augustijn Uijttenbogaert, father of the receiver 16,250 guilders, Cathryna Lodden (Lodder) (1602–1671), married to Hillebrand Pietersz Vinck, master of equipage at the Admiralty of Amsterdam38 16,000 guilders, Nicolaes van Bambeeck (1596–1661), a major Amsterdam Spanish wool merchant39

Again, the Leperhouse was among those investing the largest sums. The receiver’s father, Augustijn, still belonged to the managing board. Yet compared to 1628, the family relations to the receiver were less direct and less obvious. This fact points to the developing market of bonds: the investors seemed to have come more often from more distant networks. In the top-ten list of investors, two wellknown Amsterdam merchants were noted: Trip and Van Bambeeck. Of special interest were Cornelis and Maria Heeremans, children of the Catholic merchant and banker Claes Heeremans (1562–1650). In the same year, other members of the Heeremans family bought bonds of Uijttenbogaert, albeit in smaller sums: Jacob, Cathryna, Elisabeth and Mattheus, probably investing (parts of) their inheritance.40

37  �������������������� Zandvliet, (et al.), De 250 rijksten van de Gouden Eeuw, p. 135: he left his wife 350,000 guilders upon his death; see also Elias, De vroedschap van Amsterdam, p. 266; P.W. Klein, De Trippen in de 17e eeuw: een studie over het ondernemersgedrag op de Hollandse stapelmarkt (Assen, 1965), pp. 35, 184. 38  ������� Elias, De vroedschap van Amsterdam, p. ����������������������������������������� 320. The family Vinck belonged to the Amsterdam patriciate. 39  ��������������� Ibid., p. 649.� 40  ������������������� J.A.M.Y. Bos-Rops, Inventaris van het archief van de familie Heereman van Zuydtwijck (The Hague, 1987), p. xxvi.

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Turning now to the top-ten investors of 1665–75, their prestige is striking: all males in the top ten were addressed as Heer, they all owned a country house, and two had even obtained a noble title. This is consistent with the oligarchic trend among the Amsterdam elite. If we were to add the information from the tax register of 1674, these investors would also be seen to belong to the wealthiest group of Amsterdammers. • •

•

•

•

•

•

•

44,950 guilders, Heer Elbert Spiegel (1600–1674), Receiver General of the Amsterdam Admiralty, member of an Amsterdam particiate family41 38,000 guilders, Orphan Chamber Amsterdam, with the Weesmeesters,42 including Heer Cornelis de Vlaming van Outshoorn (see no. 4 in this list) and Heer Cornelis Geelvinck (see no. 10 in this list) 28,900 guilders, Heer Johan Hinlopen (1626–1666), regent and member of an Amsterdam particiate family, married to Lucia Wijbrants (no. 8 in this list), left an inheritance of 230,000 guilders43 24,600 guilders, Heer Cornelis de Vlaming van Outshoorn (1613–1688), Ridder, ten times Amsterdam burgomaster, wealth assessment 169,000 in 1674, member of an Amsterdam patriciate family 44 24,300 guilders, Heer Raadpensionaris Johan de Witt (1625–1672), one of the most well-known statesmen of the Republic, based in The Hague but had married into a powerful Amsterdam patriciate family45 21,000 guilders, Heer Mr Hendrik Hooft (1641–1707), Judge Advocate General of the Amsterdam Admiralty, assessed at 135,000 guilders in 1674, member of an Amsterdam particiate family46 18,200 guilders, Heer Joachim Rendorp (1608–1678), brewer, director of the Nordic Company, assessed at 120,000 guilders in 1674, member of an Amsterdam particiate family 47 17,000 guilders, Lucia Wijbrants (1638–1719), married to Heer Johan Hinlopen, no. 3 on this list, related to the in-laws of receiver Johannes Uijttenbogaert48

41  ������� Elias, De vroedschap van Amsterdam, ����������������������������������� p. 401; he was not assessed in the Familiegeld tax register as he died in 1674. 42  ���������� Wagenaar, Amsterdam in zyne opkomst, vol. II, p. 384. 43  ������� Elias, De vroedschap van Amsterdam, p. 309; Zandvliet, (et al.), De 250 rijksten van de Gouden Eeuw, p. 345. 44  ������� Elias, De vroedschap van Amsterdam, �������������������������������������� 505. Later, he was also VOC-director; Councillor of the Admiralty; and member of the Council of State. 45  ���������������������������������� Married to Wendela Bicker, Elias, De vroedschap van Amsterdam, ������� p. 174. 46  �������������� Ibid., p. 495. 47  ������������������������� Ibid., p. 454. Wagenaar, Amsterdam in zyne opkomst, vol. II, p. 416: later, he became commissionary of the Great Excise, and issued many annuity loans for the urban government. 48  ������� Elias, De vroedschap van Amsterdam, p. 309.

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•

•

16,600 guilders, Heer Aarnout Hooft (1629–1680), Ridder, merchant and director of the Guyana Colony, member of an Amsterdam particiate family, re-married in 1665 to a niece of Lucretia, the wife of Johannes Uijttenbogaert49 16,400 guilders, Heer Cornelis Geelvinck 1621–1689), Amsterdam burgomaster for many years, one of the wealthiest subscribers: assessed for 291,000 guilders in 1674, member of an Amsterdam particiate family50

The number one investor on the list bought no less than 24 life annuities for his grandchildren. These investments cost him 32,900 guilders and were to yield him and his grandchildren together 106,250 guilders. Antonis Slicher, who lived longest of all the grandchildren (he lived to 90 years), earned some 15,300 guilders from the two annuities his grandfather had bought. In addition to these life annuities, Elbert Spiegel also bought two redeemable annuities (at a cost of 12,050 guilders). They were profitable to him and his heirs, at least until 1805, yielding 67,408 guilders in all.51 Elbert Spiegel lived, as did Uijttenbogaert, on the fashionable Herengracht in Amsterdam and acted as Receiver General of the Admiralty.52 In that position he would have issued a lot of bonds himself. The other investors also bought annuities for members of their family: the well-known statesman Johan de Witt bought life annuities for his children Anna, Agatha, Maria, Jan, and Jacob. De Witt had married into the Amsterdam patriciate (the famous and wealthy Bicker family). As in 1628 members of the patriciate families Hooft (Hendrik and Aarnout) and Hinlopen (Johan and his wife Lucia53) were on the top-ten list, as well as the De Vlaming van Outshoorn, Rendorp and Geelvinck families. This time, however, only one of the top ten was a woman (Lucia Wijbrants) and one was an institutional investor. The four annually appointed weesmeesters of the Orphan Chamber had to take care that the inheritances of the Amsterdam minors were invested in a fruitful way. This institution is known to have provided

 �������������������������������������������������������� Ibid., 148; see also his diary: Arnout Hellemans Hooft, Een naekt beeldt op een marmore matras seer schoon. Het dagboek van een grand tour (1649–1651), ed. E.M. Grabowsky and P.J. Verkruijsse (Hilversum, 2002). 50  ������� Elias, De vroedschap van Amsterdam, ������� p. 481. 51  ��������������������������������������������������������������������������������� All the sums mentioned in this section here are pre-tax. From the books it seems that the four per cent interest continued up to 1805 and that the life-annuities continued on the same footing as in the original contracts, although eighteenth-century taxation was to reduce the general interest level to 2.5 per cent. 52  ����� Ibid., pp. 400–401. 53  ������������������������������������������������������������������������������� Though not in the top ten, other members of the Hinlopen family were prominent investors as well: Adriana, Jacob, Jacob Jacobsz, Johan, Michiel, Sara and Johanna Maria Hinlopen were all noted down in the account-books. 49

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extensive loans to the urban government as well.54 Two weesmeesters also invested on their own behalf in Uijttenbogaert annuities (De Vlaming van Outshoorn and Geelvinck, see list above). Four other institutions were found among the lesser investors: the Burgerweeshuis (Amsterdam Orphanage), the Churchwardens of the Nieuwe Zijds Chapel, the Poor House of the Oude Zijde, and the Admiralty of Amsterdam.55 The Burgerweeshuis was a major player on the annuities-market.56 Next to the sums invested for the institution itself, five of its six regenten also invested in the Uijttenbogaert annuities as private individuals: Van Loon, Alewijn, Van Hellemond, Hinlopen, and Trip.57 Institutional investors furnished large sums on average (see Table 5.3). But apart from the institutional investors and members of the Amsterdam elite, many ‘ordinary’ people also bought annuities, even individuals who were not valued above 1,000 guilders in the Familiegeld of 1674. The smallest investment was 175 guilders from a certain Dirckje Jans Vaandeken (1632–1704, daughter of Trijntje Jans) for a life annuity on her own life. The occupations of the investors varied likewise: from the wife of a hat-maker to lieutenants in the army or paper merchants. Nevertheless, the political elite (the patriciate families of Amsterdam) predominated.58 If we were to leave the collective investments out (institutions and couples/ groups of individuals), we would be left with a distribution of 70 per cent male and 30 per cent female creditors. Compared to the earlier seventeenth century, the decline in the proportion of women investing is remarkable. This does not indicate that women had less to say about their funds – throughout the entire early modern period females operated freely on the financial market.59 Yet after the war with Spain ended in 1648, the expansion of the public debt stagnated and

54

 ������������������� On the role of the Weeskamer, see also Martijn van der Burg and Marjolein ’t Hart, ‘Renteniers and the recovery of Amsterdam’s credit (1578–1605)’, in M. Boone, K. Davids and P. Janssens (eds), Urban public debts. Urban government and the market for annuities in Western Europe (14th–18th centuries) (Turnhout, 2003), pp. 197–218. 55  ������������������������������������������������������������������������������������� A further 16 investments were also ‘collective’, brought in by individuals operating together or on behalf of others, as in guardians for orphans. 56  ������������������� Anne E.C. McCants, Civic charity in a Golden Age. Orphan care in early modern Amsterdam (Urbana/Chicago, 1997), pp. 154–9. 57  ������������������������������������������������������������������������������ Willem van Loon (4,500 guilders), Abraham Alewijn (12,000), Jan van Hellemond (5,000), Jacob Jacobsz Hinlopen (15,700), and Jacobus Trip (7,000). On the regenten of 1665: Wagenaar, Amsterdam in zyne opkomst, vol. ������������������������������������������� II, p. 286. Johannes Wijbrants became regent in 1667: he bought 4,000 guilders in annuities. Michiel Hinlopen was regent from 1672; he invested 3,500 guilders in the annuities of Johannes Uijttenbogaert. 58  ������������������� Marjolein ’t Hart, The Making of a Bourgeois State. War, politics and finance during the Dutch Revolt (Manchester, 1993), p. 177. 59  ���������������������������������������� Tine de Moor and Jan Luiten van Zanden, Vrouwen en de geboorte van het kapitalisme in West-Europa (Amsterdam, 2006).

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the opportunities for investments shrank. As a result women probably had more difficulties gaining entry into the male-dominated networks. Males also tended to furnish more funds (see Table 5.3). Table 5.3

Details of annuities 1665–1675, receiver Amsterdam District, in guilders Category

N

Mean

All:

348

4,000

Males

229

4,400

98

2,600

5

11,700

20

7,200

Close relatives

9

5,800

Remonstrants

34

5,800

Females Institutions Directors of major colonial companies *

Source: NA Financie van Holland 367 *

 Sisters, brothers, cousins, nephews and nieces

Uijttenbogaert’s network: relatives, Remonstrants and artists Table 5.3 also shows some specific categories of investors: relatives and Remonstrants. This leads to the question of to what degree the personal networks of the receiver counted. Naturally, close relatives were found among the investing public. Johannes’s eldest sister Hillegond Uijttenbogaert, at that time the widow of the former burgomaster Albert Pater, bought life annuities to the considerable sum of 11,500 guilders, mainly for her own grandchildren. Their younger brother, Frans Uijttenbogaert, was also among the investors with 5,000 guilders as well as a couple of Uijttenbogaert’s nephews: Frans Reael, Steven van der Hagen, Dirck de Lange, the children of Hendrik Reael, and his cousin by marriage, the merchant Nicolaas Schuyt. Cornelis Abba (brewer and clerk) and Johan ten Grotenhuis were in-laws of Johannes’s sister. Through the link of Johannes’s late wife Lucretia van Hoorn (she was deceased by the time of the issues), another set of family connections was established. Her niece and her cousin by marriage among others bought annuities. Although the overall number of close relatives was probably less in comparison with the situation in 1628 (see the list of top-ten investors of that year), their investments were nevertheless considerable, and well above the average (see Table 5.3). Of particular interest was Uijttenbogaert’s network among the Remonstrants. This religious sect had come into being after a conflict (c. 1605) between the

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Theology Professors Arminius (proposing a lenient calvinist policy) and Gomarus (favouring a more strict, dogmatic calvinism).60 The Remonstrants had lost the struggle over Church matters definitively in 1618 with the settlement of the Dordt Synod. Henceforth, the privileged church in the Netherlands was the Calvinist Church along the Gomarist/Counter-Remonstrant lines and most members of the political elite belonged to that Church. By the end of the 1630s, the hard feelings between Remonstrants and Counter-Remonstrants had petered out, although the separate factions continued to exist. Significantly, many of the members of the Remonstrant Church were wealthy and highly educated.61 In Amsterdam in particular much of the local administration was dominated by Remonstrants.62 The receiver Uijttenbogaert proved to be not only a member of the Remonstrant community , but a rather prominent one at that. His portrait hung in the Remonstrant Church of Amsterdam next to the portraits of four famous theologians.63 A family connection existed too; Arminius himself had been married to a niece of the former receiver Johan Reael. Furthermore, the clergyman following in Arminius’s footsteps was Johannes Wtenbogaert (1557–1644).64 He came from Utrecht town, like Augustijn, the father of our receiver Johannes. Furthermore, the father of Wtenbogaert had also been named Augustijn. The coincidence is strong and there is indeed a distant family relation between the two: the great-great grandfather of Johannes Wtenbogaert had been a brother to the great-great-great grandfather of the clerk Augustijn.65 Be that as it may, between the clerk Augustijn and Wtenbogaert a most cordial relationship existed.66 The clergyman even acted as the godfather of  ��������������������������������������������������������������������������������� Arminius offered a list of five starting-points to the government of the Holland province, under the name of Remonstrantie (a kind of declaration); hence the name Remonstrants. See also Jonathan Israel, The Dutch Republic. Its rise, greatness, and fall 1477–1806 (Oxford, 1995), p. 423. 61  ������������ J.L. Price, Holland and the Dutch Republic in the seventeenth century. The politics of particularism (Oxford, 1994), p. 197. 62  ����������������������������������������������������������������������������������� Jonathan I. Israel, ‘The Holland towns and the Dutch–Spanish conflict, 1621–1648’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 94 (1979), 41–69, 62. 63  ���������� Wagenaar, Amsterdam in zyne opkomst, vol. II, p. 189. �������������������������� The prominent position of his portrait in the Remonstrant Church is likely as a result of his role as a major financier of that Church. 64  ������������ H.C. Rogge, Johannes Wtenbogaert en zijn tijd (Amsterdam, 1874). ������������ His name is also sometimes spelled Uijttenbogaert, however I shall use Wtenbogaert, to avoid confusion with our receiver. 65  �������������������������������������������� According to the family tree in H.C. Rogge, Brieven en onuitgegeven stukken van Johannes Wtengobaert (Utrecht, 1868), vol. ����������������������������������������������� I, appendix. The family names alternate in the sources as Wtenbogaert and Uijttenbogaert. In the family tree of Augustijn, the father of our receveiver, the name Bogaert was also used. 66  ������������������������������������������������������������������������������������ According to one of the latter’s letters, Augustijn was friends with several famous Amsterdam Remonstrants such as Rem Bisschop and Willem Lindeman. Rem Bisschop’s house was even pillaged in 1617 by a Calvinist–Gomarist mob; the burgomasters and the 60

132

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Johannes Uijttenbogaert. The line of friendship continued: upon receiving his law degree in 1632, Johannes Uijttenbogaert dedicated his thesis to the Remonstrant minister Wtenbogaert.67 Among the investors of 1665–1675, 34 (ten per cent excluding the close relatives, who were probably Remonstrant as well) were known for their connections to the Remonstrant faction. That is to say, they were registered church members or they had their children baptised by a Remonstrant minister. Johannes Emilius, the Remonstrant minister, is known to have invested the sum of 6,000 guilders for his own children.68 In addition, the managers on the board of the aforementioned Leperhouse (see the list of the top-ten investors of 1628 and 1648–1650) were all known to have been Remonstrants.69 On average, the 34 known Remonstrants invested 5,800 guilders in the 1665–1675 annuities which was well above the average investments. Apart from the Remonstrants, another network existed, which included artists and scientists. During his studies in Leiden, Johannes developed a great interest in the world of the arts and he became well acquainted with the young Jan Lievens and Rembrandt van Rijn.70 Soon he became a collector of art and by the time he married Lucretia van Hoorn in 1642, his collection of paintings and drawings had already become famous. This yielded numerous contacts with artists. Govert Flinck (who painted a portrait of Johannes’s father Augustijn) invested 8,900 guilders in Uijttenbogaert-annuities. Ferdinand Bol (a pupil of Rembrandt, who painted the Regents of the Leperhouse, which again included Augustijn) bought these to a sum total of 2,400 guilders.71 Both were known to have been friends with the receiver. Like so many others of the top Amsterdam elite Uijttenbogaert bought a countryhouse. In his house Kommerrust (‘free of distress’) in the Gooi, near Naarden

Schout were quite reluctant to come to his support. Wagenaar, ���������� Amsterdam in zyne opkomst, vol. I, pp. 463–5. 67  ���������������������������������������������������������������������������� He was the one who had arranged the boarding of the young Johannes with his Remonstrant friend in Utrecht, and later in Leiden. Rogge, ������� Brieven en onuitgegeven stukken, brief CXC, Utrecht, 13 February 1618; Rogge, Johannes Wtenbogaert en zijn tijd, vol. III, ������������ p. 275. 68  ������������������������������������������������������������������������������� Of the list made up by G.W. Kernkamp, who noted 49 names of individual members of the Amsterdam patriciate families, 26 also appeared among the names of our investors of annuities – a significant proportion! G.W. ������������������������������������������������� Kernkamp, ‘Inleiding’, in Hans Bontemantel, De Regeeringe van Amsterdam, ed. G.W. ���������������������������������������������� Kernkamp (The Hague, 1897), pp. lxiv–lxv. 69  ������������������������������������������������������������� Dudok van Heel, ‘Mr Johannes Wtenbogaert (1608–1680)’, p. 158. 70  ������������������������������������������������������������������������������ Rembrandt even made two portraits of him and one etching. Both portraits have been lost. Ibid., pp. 149, 157. The etching has survived and has been misnamed ‘The gold weigher’; it does represent Johannes Uijttenbogaert, however the costume and the setting are ‘historical’ and wholly fictitious. 71  �������������������������������������� In 1661; NA Financie van Holland 367, Rentenboeken.

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town, he received many of his artist-friends and art lovers.72 Fellow collectors among the investors in his loans were Johan Six (burgomaster), Laurens van der Hem and Michiel Hinlopen. The latter had a country house in Oud-Bussum not far from Kommerrust.73 At a nearby country house (at Oud-Naarden and Gravenveld) we find another investor, Andreas de Graeff, an Amsterdam burgomaster and a well-known maecenas as well.74 In addition to paintings and drawings, Uijttenbogaert collected shells and minerals. His private collection, one of the most well known in the Dutch Republic, showed a strong love of natural history.75 Several of the investors of 1665–1675 were renowned in the world of medicine and sciences: the professors Nicolaas Tulp, Johannes Deijman, Jan Hellemont, Albertus Rusius, Johannes van der Waijen (a theology professor in Franeker), the headmasters (rectors) Cornelis Sladius and Matheus Sladius, and the printer Isaack les Paull. Remarkable was the high degree of medical doctors among the annuity buyers: Johannes Commesteijn, Francois de Vicq, Aarnout Tholinx, and also Willem Piso, the medical doctor to Count Johan Maurice of Nassau. Yet apart from these investors, many did not belong to Uijttenbogaert’s direct networks at all. At least seven Dutch Reformed ministers bought an annuity from the receiver, although they were probably not a regular contact for a Remonstrant. Members of competing political factions were also found to be investors; thus next to Coenraad van Beuningen (friend of the Uijttenbogaerts) was also the orangist Gillis Valckenier. The aforementioned Nicolaas Tulp was a staunch supporter of Calvinist orthodoxy and is known to have abhorred the Remonstrants; yet he too bought an Uijttenbogaert annuity. Non-Protestant investors included Manuel (or Juda) da Vega, a Jew, who bought an annuity on his own life (12,000 guilders, he died in 1713), and the atlas-maker Laurens van der Hem and the members of the wealthy Heeremans family, the latter two being Catholics. While the link with the two major colonial companies, the VOC and the WIC, was not immediately obvious, no less than 20 of the annuity buyers were directors of either the VOC or WIC with a high average investment of 7,200 guilders (see Table 5.3). Even though the creditors did not all belong to the receiver’s private networks, the sums provided by family members and Remonstrants were on average greater than the investments of other creditors. For those who had personal contacts with the receiver, this did enhance the creditworthiness of the loan contracts. For the others the receiver acted as a significant broker on the market for public loans,

 �������������������������������������������������������������� Dudok van Heel, ‘Mr Johannes Wtenbogaert (1608–1680)’, p. 164.  ���������������������������������������������� Ellinoor Bergvelt and Renée Kistemaker (eds), De wereld binnen handbereik. Nederlandse kunst-en rariteitenverzamelingen, 1585–1735 (Zwolle, 1992), p. 321. 74  �������������������������������������������������������������� Dudok van Heel, ‘Mr Johannes Wtenbogaert (1608–1680’), p. 164. 75  ������������������������������� Bergvelt and Kistemaker (eds), De wereld binnen handbereik, p. 333; G.J. Hoogewerff, De twee reizen van Cosimo de’ Medici Prins van Toscane door de Nederlanden (1667–1669) (Amsterdam, 1919), pp. 63–4. 72 73

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reinforcing the mutual trust between the state and local level, thus enlarging the credit base of the Dutch Republic.

The fruits of the investments Investors from all denominations and creeds were welcome, although those belonging to the receiver’s networks probably enjoyed the advantage of buying annuities shortly after they were announced. This was not insignificant since the life annuities were a particularly favourable kind of investment, sold at the interest rate of 7.14 per cent (tegen de penning 14, for one life) and 5.88 per cent (tegen de penning 17, for two lives), whereas only four per cent was paid for the redeemable annuities and the bonds. Though several scholars consider the issue of life-annuities ‘irrational’ and too expensive for the government,76 the question remains whether they really were so profitable for the investors and so costly for the state. The account books used in this study (with annuities sold in 1665–1675, totalling around 550,000 guilders) had been rearranged in 1687. Thus annuities that had been amortized by 1687 were excluded which seriously hampered our calculation of the profits. To find a measure of the lost sums, the mortificationrate of the life annuities that were sold by the town of Amsterdam (1673–1687) was calculated on average to be 1.9 per cent per year.77 Thus, for our 1665–1675 annuities, approximately 31 per cent had been amortized by 1687, implying that the original capital sum must have stood at around 790,000 guilders. The cost of a life annuity bought for 1,000 guilders at 7.14 per cent (sold to the penning 14) was earned back over the course of 14 years; after another 14 years one could earn another 1,000 guilders. As for the annuities that had mortified before 1687 (lasting thus between six months and 22 years), the returns of the investments were meagre, to say the least. It is therefore fair to assume that for around 31 per cent of the annuities the investments simply amounted to bad luck. For example, Joachim Rendorp lost 1,200 guilders on the life annuity he bought for his daughter Balichje; she died at the age of 20 years. Leaving out the 31 per cent that had mortified and those rentebrieven with uncertainties as to age and time of death, 471 annuities remained for further analysis (427 on one life, 44 on two). These had provided the provincial authorities with 527,070 guilders, yet they were to cost them over the years some 1,639,633 guilders. On the whole, these particular investments were fruitful to the investors. Deducting the capital invested from the returns (after all, the capital was not reimbursed), these annuities yielded on average 4.4 per cent per annum. The 76

 ��������� Dormans, Het tekort,������� p. 59.  ���������������������������������������������������������������������������������� The annual mortification rates vary between 0.7 and 3.5 per cent, but the average rate is 1.9 per cent. Calculated from: Municipal Archives, Amsterdam, Archief Thesaurieren Ordinaris 5039, no. 117 ‘Lijfrenten’. 77

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variations were considerable: the one yielding the most in absolute terms was the 500 guilders per year bought by Adriaan Waandewan in 1675 for his daughter Maritje. It yielded 27,500 on the original capital sum of 7,000 guilders which was, in fact, a 5.3 per cent per annum profit. The public often chose a young person as a nominee in the contract. Table 5.4 presents the distribution of the age of the nominees at the time of purchase. Almost 75 per cent of the annuities had been put on children under 16 years of age. The average age of the nominees at the time of the contract was calculated to be 11 or 12 years. The youngest nominee was only two months old: Johanna Catharina de Groot, daughter to the town secretary Pieter de Groot and Agatha van Rijn. Another favoured method of investment was to put an annuity upon one’s own life. In all, these annuities comprised 8.6 per cent of the nominees still living in 1687. On average, the nominees had been 30 years old at the time of the contract. For this group of investors, an alternative option was the annuity on two lives, the nominees being the investor him or herself and a younger person. In that case, the creditors were on average somewhat older: 37–38 years at the time of the contract. The annuities could last quite long time, as can be seen in Table 5.5, with some ten per cent of the annuities (still extant in 1687) drawing returns for over 70 years. Such examples of long-lasting life annuities must have attracted new investments. Still, the overall returns were not spectacular. As calculated above, the average return for the 427 life annuities was 4.4 per cent; and for a further 31 per cent (those that had been mortified prior to 1687 and were left out of these calculations) the yield had been much lower – probably many of these had yielded negative results. Perhaps for the investors, the sheer returns mattered less than the opportunity to be able to provide some future revenue for loved ones. Virtually in all cases the nominee was related to the investor in one-way or another: kinship and friendship counted first and age came second.78 For the government, these lifeannuities were not necessarily so costly, compared to the four per cent p.a. for the redeemable annuities and the bonds. However, in the short term, the debt charges were much higher compared to those arising out of redeemable annuities. On the other hand, the capital invested never had to be reimbursed either, which was not the case with the four per cent redeemable annuities and obligations.

78

 ������������������������������������������������������������������������������������� As James Riley also noted, the Dutch renteniers were well acquainted with the nature of the life annuity, but, contrary to the French investors, not as a method of speculation,. James Riley, ‘Life annuity-based loans on the Amsterdam capital market toward the end of the eighteenth century’, Economisch en Sociaal–Historisch Jaarboek, 36 (1973), 102–30, 109.

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Table 5.4

Age of nominee at time of purchase (annuities on one life), selected age categories Age category

Per cent distribution

0–5

21.9

6–10

27.9

11–15

24.6

16–20

13.7

21–30

6.7

31–52

5.2

Total

100.0

N=

427

Source: See table 5.3

Table 5.5

Years that annuities (on one life) yielded returns Years yielding rent

Per cent distribution

0–20*

7.3

21–30

15.9

31–40

22.6

41–50

56.6

51–60

19.6

61–70

12.2

Over 70 years Total N=

9.8 100.0 427

Source: See Table 5.3   To this category should be added some 31 per cent annuities mortified ante 1687, that were not included in these calculations, see text *

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The Amsterdam loans in comparative perspective Personal networks, significant advantages for some creditors, and enrichment of financiers – these are the three crucial points to come out of the study of Johannes Uijttenbogaert’s office. In this respect the Dutch Republic was not different from England or France in the seventeenth century. In all three countries family connections were crucial in financial office holding. French financiers proposed sons, in-laws or close friends as successors to their positions and their requests were often honoured.79 These arrangements were somewhat less obvious in England, where (up to the 1680s) the business of government loans was in the hands of nonofficials such as goldsmiths, merchant bankers, and their syndicates.80 Yet even among these goldsmiths, merchants and tax farmers, succession was generally reserved for sons and sons-in-law. As in Holland, the French and English financiers also acted as intermediaries, bringing together state demand and investors, for which they gained considerable profits. The public subscribed to loans from the financiers; in turn, the latter supplied the funds to the state, either as individuals or as a syndicate. The English goldsmith–banker Blackwell, for example, held deposits from 1,372 clients in 1664–1665. These funds were (partly) invested as state loans again. In this way, considerably sums were raised from the wealthy sections of society while at the same time, the investing public profited from rather high return rates.81 Yet in six respects, the arrangements of the English and French public loans differed from the Holland ones: • • • • • •

Holland loans were contracted from a broader base, with a wider range of investors The arrangements of the loans were publicly known Bureaucratic control was stronger Loans were securely funded by taxes Loans were generally voluntary; forced loans were rare Interest rates were lower

As for the loan base, the English state loans were typical examples of haute finance – only large investors participated. The small individual sums collected by the Dutch receivers paled in comparison with amounts invested by most creditors from 79  ���������������������������������������������������������������������������������� Françoise Bayard, ‘La carrière des financiers français dans la première moitié du XVIIe siècle’, in Françoise Autrand (ed.), Prosopographie et Genèse de l’État Moderne (Paris, 1986), pp. 195–208, 198; Claude Michaud, L’église et l’argent sous l’Ancien Régime. Les receveurs généraux du clergé de France aux XVIe–XVIIe siècles (Paris, 1991), pp. 552–7. 80  ����������� Roseveare, The Treasury 1660–1870, p. 31. 81  ��������������������� Michael J. Braddick, The nerves of the state. Taxation and the financing of the English state, 1558–1714 (Manchester, 1996), p. 36.

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across the Channel which ran to the thousands of pounds sterling. The investors in England and France were mostly unaware of the specific conditions of the loans. As a rule, secrecy and a myriad of private arrangements obscured the conditions and the exact rates of interest paid by the state. Another difference between French and English intermediaries and the Dutch receivers was the degree of state control over their operations. Most of the French and English tax farmers, financiers, or syndicates operated with leases of several years. Their position was usually settled through various sorts of private contracts. The noble status of the French financiers and the fact that they had often bought their way into office hindered a proper examination of their books.82 The revenue side of the Dutch offices was monitored regularly, which was crucial to the funding of the loans. In France, financiers had to operate under a much greater degree of insecurity. The king continually demanded new loans, regardless of the precise nature of the financial situation, leaving the financiers to figure out how to fund them. Bankruptcies were quite common; it is estimated that around 20 to 25 per cent of the French financiers ultimately failed83 and in England, all major government financiers went bankrupt in the 1680s.84 Bankruptcies of the Dutch receivers, on the other hand, were seldom. A well-known exception of a failing financial officer was Marten Hoefijsser, the Receiver General of the Amsterdam admiralty.85 Another case concerned the problematic accounts of Philips Doubleth, the Receiver General of the Union.86 Neither of these cases, however, hurt the Dutch public credit, not even in the short term, whereas French and English credit suffered considerably due to recurrent failures. The position of French financiers was further jeopardized by so-called chambres de justice, which could annul all earlier contracts. When a financier was accused of financial mismanagement, whether justly or not, his creditors simply lost their money. For example, the well-known case of Nicolas Fouquet, who had provided the French king with loans amounting to 30 million livres, caused the fall of many others. When Fouquet was condemned to life imprisonment in 1665, some 494 individuals, most of them financiers, were fined to a total of 156 million livres. Although these methods allowed for a significant reduction in the outstanding mass of treasury bills and rentes in circulation, they were detrimental 82  ���������������� C.B.A. Behrens, Society, government, and the enlightenment. The experiences of eighteenth-century France and Prussia (New York, 1985), p. 54. 83  ���������������� Daniel Dessert, Argent, pouvoir et société au Grand Siècle (Paris, 1984), p. 129. 84  ����������� Roseveare, The Treasury 1660–1870, p. 23. On other failures, for example, A.V. Judges, ‘Philip Burlamachi: a financier of the Thirty Years War’, Economica, 18 (1926), 185–300, 299. 85  ������������������������������������������������������� W.F.H. Oldewelt, ‘De Hoefijsserse schuld (1616–1681)’, Jaarboek Amstelodamum, 51 (1959), 37–52. 86  ����������������������������������������������������������������������������� This was not so much a failure as an accusation of fraud: Marjolein ’t Hart, ‘Staatsfinanciën als familiezaak tijdens de Republiek: de ontvangers-generaal Doubleth’, in J.Th. de Schmidt (ed.), Fiscaliteit in Nederland (Zutphen, 1987), pp. 57–66.

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to the willingness of the public to invest in state loans.87 In fact, practices of these chambres contained a system of involuntary conversions of interest rates. What the financiers hated above all was any change in the terms of their contracts, particularly after a long period of time had elapsed, when the accounts of the consortium had been finalized and the profits distributed among the partners.88 In addition to the practices of these chambres, the crown also mortgaged the goods of the receivers in 1669; thus, the latter lived under constant threat that their goods could be seized any moment.89 When the French or English kings could not find willing investors, forced loans were necessary. In England, these kinds of loans were nation wide, as in the ship-money levy of 1626, or local, as in the recurrent impositions upon the Londoners, either upon the rich Aldermen, or upon certain liveries, or in the wards. In France such forced loans were levied upon the Parisians and upon the financiers themselves. Even the strong system of the annuities of the Hôtel de Ville was corrupted in this way. In the 1520s and 1530s, these Parisian loans had been voluntary; however, soon the annuities degenerated into forced loans.90 Coercive measures were not always totally absent in the Dutch situation (i.e. during 1672– 1674), yet the vast majority of the Holland loans were subscribed to voluntarily. Even so, forced loans need not always be burdensome, as long as the bonds could be resold again.91 Indeed, all Dutch annuities and bonds could be traded on the open market, and they attracted an extremely good price there.92 Such markets were less developed in seventeenth-century England or France.93 More important than the various loan type was the irregularity of interest payments. Not only Louis XIV, but also the Stuart kings were notorious for their poor debt service. As a result, throughout the seventeenth century Londoners were

87  ������������� Julian Dent, Crown, financiers and society in seventeenth-century France (Newton Abbot, 1973), p. 107; Dessert, Argent, pouvoir et société, pp. 279–310. 88  �������� Bonney, King’s debts, p. 274. 89  ��������� Dessert, Argent, pouvoir et société, p. 221. 90  ������������������������������������������������������������������������������ Philip T. Hoffman, ‘Early modern France, 1450–1700’, in Philip T. Hoffman and Kathryn Norberg (eds), Fiscal crises, liberty, and representative government (Stanford, 1994), pp. 226–52, 233. 91  ����������������������������������� As in Venice: Reinhold C. Mueller, The Venetian money market. Banks, panics, and the public debt, 1200–1500 (Baltimore and London, 1997), p. 536. 92  ���������������������������������������������������������������������������������������� In these respects, the Holland loans reflected the situation in city-states like Venice and Genoa, where, already in the late middle ages, a thriving open market existed for public securities: Mueller, The Venetian money market, p. 542; Jacques Heers, Gênes au XVe siècle. Activité économique et problèmes sociaux (Paris, 1961), pp. 117, 166. 93  �������������������������������������������������������������������������������� See also Katia Béguin, ‘La circulation des rentes constitueés dans la France du XVIIe siècle. Une approche de l’incertitude économique’, Annales. Histoire, Sciences Sociales, 60 (2005), 1229–44.

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extremely reluctant when asked to furnish new sums.94 Interest rates shot up, which meant that debt management as a whole was a relatively costly business. In England in the 1660s, loans were sold with two or four per cent ‘reward’ above the legal rate of six per cent.95 French interest rates were on the high side too, frequently well above the official 5.5 per cent.96 The advantages of the Holland loan system, as it existed since the last decades of the sixteenth century, were therefore obvious. Yet the English and the French loan systems did improve in the later seventeenth century. With the coming of the Estates of Burgundy as a powerful intermediary for the French king in the 1660s, for example, a regular practice was established with voluntary public loans, at lower levels of interest. The funding of the debt charges was provided by local and provincial taxes, which increased the credit of these loans.97 Also, the range of investors was quite considerable, in fact, not that much different from the Amsterdam loans. Looking at the Burgundy loans of 1660–1699, the majority (67 per cent) was furnished by officers (mainly judicial and financial) with another ten per cent coming from nobles and military commanders. This left some 23 per cent for persons in the categories of trade, crafts, domestics and the clergy.98 In this way, the French loans managed to address all levels of society, not unlike the Holland loans. Bureaucratic control in the Burgundy loans was also much stronger compared to the situation of the individual financiers; provincial receivers seldom went bankrupt. Furthermore, in the course of the eighteenth century new intermediaries arose. and a network of Parisian notaries came to manage a significant part of the French public loans, enhancing state credit on the local level further. In England too, in an attempt to reach the more common investors beyond the field of established financiers (goldsmiths and merchant bankers), Sir George Downing introduced in 1668 a new system of bonds: the Treasury Orders. At the same time Downing tried to copy the Dutch system of funding the state loans by tax revenue. The contracts of the new bonds were numbered, the income from 94  ��������������� Robert Ashton, The City and the Court, 1603–1643 (Cambridge, 1979), pp. 160, 180, 184, 199; Braddick, The nerves of the state, p. 37. 95  ���������������� C.D. Chandaman, The English Public Revenue 1660–1688 (Oxford, 1975), p. 269; Roseveare, The Treasury 1660–1870, p. 17. 96  �������� Bonney, King’s debts, p. 259. For example, the loans of Fouquet carried an interest of 12.5 per cent; Colbert managed to reduce them to 7.5 per cent. 97  �������������������������������������������������������������������������������� Mark Potter and Jean-Laurent Rosenthal, ‘Politics and public finance in France: The Estates of Burgundy, 1660–1790’, Journal of Interdisciplinary History, 27 (1997), 577–612. 98  ������������������������������������������������������������������������������ Mark Potter and Jean-Laurent Rosenthal, ‘The development of intermediation in French credit markets: evidence from the Estates of Burgundy’, The Journal of Economic History, 62 (2002), 1024–49, 1033; Philip T. Hoffman, Gilles Postel-Vinay and Jean-Laurent Rosenthal, ‘Redistribution and long-term private debt in Paris’, Journal of Economic History, 55 (1995), 256–84, 274.

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certain taxes being pledged for the payment of the debt charges in numerical order. The central Treasury, not district officers, managed the issues and the payments.99 The start of the project was hopeful, and the funds of a multitude of small and private investors reached the Treasury. Yet with the so-called Stop of the Exchequer in January of 1672, a state bankruptcy caused by the expected outbreak of war, broke the whole system down. In the later 1670s, the reforms were re-introduced and the new annuities found a ready market. The securities began to appear in marriage settlements and as endowments to children, as they did in the Netherlands. Once again, in 1680s the payments faltered, as no secured tax funding had been applied, and many of the annuities were sold on the market at reduced prices. Only in the 1690s a smooth system of voluntary government loans was created in England.100 And even then the Dutch and the British state finances continued to differ in significant ways. The latter system remained dominated by large lenders. Some members of the British financial elite even felt excluded from the profitable government loans.101 In the Dutch case, more people invested in state loans. Due to the variety of the numerous local and district receivers themselves, many more opportunities existed to buy an annuity or a bond. As a result, the Dutch public debt proved to be a strong binder for the people at the local and the central state levels, much more so than in the case of the British.102

Conclusion This study shows that a great degree of security existed in the loan arrangements of the Amsterdam receiver. The general low rate of interest in Holland was an indication of the integrity of the managers of the bonds. The market for public bonds was quite mature and transparent, not unlike the situation in city-states like Venice or Genoa, but strongly at variance with countries like England and France. For most of the seventeenth century, the position of state creditors in Paris and London was poor in comparison with those in Amsterdam. The mutual trust between state and local level was strong in the latter but glaringly absent in most other seventeenth-century countries.  ����������������������������������������������������������������������������� This was only possible because of increased Parliamentary control. Braddick, The nerves of the state, p. 40; C.D. Chandaman, The English Public Revenue, p. 217; Roseveare, The Treasury 1660–1870, p. 14. 100  �������������� P.G.M. Dickson, The Financial Revolution in England: a study in the development of public credit, 1688–1756 (New York, 1967). 101  ������������� John Brewer, The sinews of power: War, money and the English state 1688–1783 (London, 1989), pp. 207–10. 102  �������������������������������������������������������������������������������������� Joanna Innes, in her article on the ‘Domestic face of the fiscal–military state’ does mention taxes but not loans to the government. Joanna Innes, ‘The domestic face of the military–fiscal state at war’, in Lawrence Stone (ed.), An imperial state at war. Britain from 1689 to 1815 (London, 1994), pp. 96–127. 99

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In Amsterdam, that trust was enhanced by the semi-public banks of the separate district receivers. Even during the stressful period of the 1670s, the creditors in Amsterdam, including the wealthy group of Remonstrants, provided a steady flow of funds. To have a decentralized structure may have had a limited effect on the formation of a strong centralized bureaucracy, but the advantages were that more funds were invested than otherwise would have been the case. Local elites would rather entrust their sums to a well-known district receiver than to a more distant Treasury in The Hague. The investors obtained, in return, a fair and safe return for their funds. As such, Johannes Uijttenbogaert acted as an excellent broker between the interests of the political economies of Amsterdam and the Republic; in fact, his management of a significant part of the state loans actually lowered transaction costs.103 No regime can survive without drawing on resources maintained by trust networks.104 Such trust between the state and the financing public was particularly crucial, of course, when war was at hand. Eventually, such mutual trust was established in England and in France too, but only in the last decades of the seventeenth century. In England, the establishment of the Bank of England (1694) was a necessary precondition. In France, in addition to the public loans managed by Parisian notaries (in the eighteenth century), the receivers of some Provincial Estates (since the 1660s), managed to create trust among their creditors. Accordingly, interest rates declined there too. Yet these developments came about almost an entire century after the Dutch public loans had been based upon a system of voluntary arrangements at relatively low rates of interest, not in the least thanks to the loan arrangements of the semi-private state bankers of the state.

103  ������������������� Douglass C. North, Institutions, transactions costs and productivity in the long run (Economic History Paper, St. Louis, 1993). 104  ��������������������������������� Charles Tilly, ‘Trust and rule’, Theory and Society, 33 (2004), 1.

Chapter 6

Tax Morale and Citizenship in the Dutch Republic Maarten Prak and Jan Luiten van Zanden

Introduction Why do people pay taxes? Listening to modern politicians, one might be forgiven for assuming that this question is vitally important to the majority of their constituents. These politicians have made it their highest priority to reduce the level of taxation, and compete in the polls with promises of the highest tax cuts; promises which they inevitably either have to break after the elections, or can only fulfil through extensive borrowing. In response to the question posed above, while most people may dislike having to pay taxes, they tend to appreciate what they get in return for doing so: public services such as education, hospital coverage, public transportation, not to mention police protection, street lighting, and so on. This paradox, that people want to enjoy the services provided by government but dislike having to pay for them, can be linked to another interesting phenomenon: economically successful societies tend to have high levels of taxation. This is counter-intuitive so that most politicians favouring tax cuts argue that this will not only satisfy voters, but also provide a boost to the economy; a double helping of happiness, in other words. However, as we will argue in this chapter, the two paradoxes are predicated on false assumptions. Before going into further detail, however, some observations about modern tax morale, or tax compliance as it is also referred to in the scholarly Literature are necessary. In modern Western societies about 40 per cent of taxpayers admit to tax evasion. At the same time, governments actually manage to collect well over 90 per cent of what they should receive from income tax. In other words, many of us do cheat, but this concerns only small amounts of money; tax morale is remarkably high when measured against the total income received by governments. Even more interesting, this high degree of compliance cannot be explained by the deterrents. The number of people caught for tax offences is remarkably low: less than four per cent of US taxpayers whose tax returns were audited in 1995 were fined for underreporting. Moreover, the penalties are not much of a deterrent; most offenders are required to pay the amount outstanding, sometimes with an   ���������������������������������������������������������������������� James Andreoni, Brian Erard and Jonathan Feinstein, ‘Tax compliance’, Journal of Economic Literature 36 (1998), 820–22.

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additional fine, which is usually small. Scholars who have investigated modern tax compliance agree that the deterrents alone cannot account for the fact that the vast majority of people are willing to pay most of what they owe to the government. It would appear that ‘a relatively small amount of enforcement has gone a fairly long way’. In fact, some research data suggest that the opposite is true: people are even less willing to pay taxes, when the penalties for failing to do so are high! Positive incentives, it turns out, are much more effective in encouraging citizens to pay their taxes. One such positive incentive is the influence citizens hold over public authorities. Democracy in general makes people more willing to pay taxes. Swiss economist Bruno Frey, one of the leading scholars in modern research on tax compliance, discovered that tax morale in the cantons (provinces) of Switzerland with direct democracy was above the national average, whilst in the other cantons it was significantly lower. Another positive incentive is fairness. Taxpayers will be more easily persuaded to part with some of their income when they see that the neighbours are doing the same. A third factor frequently cited in the literature on modern tax morale is ‘value for money’. Taxpayers object less to paying taxes when they see the money being well spent. Thus, corruption in government is bad for tax morale, while strong public services are a boost. In general, the quality of public institutions correlates strongly with the willingness of individuals to pay taxes. These various aspects, we would argue, can be subsumed under the term ‘citizenship’, with the literature on tax morale suggesting that wherever citizenship is organised transparently, tax morale will be high. In modern states, such citizenship arrangements are written down in a constitution, which spells out what the state can and cannot do, and at the same time what is expected of its citizens and what they are entitled to. Constitutions help define citizenship as, to quote Charles Tilly, the ‘continuing series of transactions between persons and   ���������������������������������������������������������������������������������������� Ibid., 822, 844, 855; see also Lars B. Feld and Bruno S. Frey, ‘Trust breeds trust: how taxpayers are treated’, Economics of Governance 3 (2002), 88; Bruno S. Frey, ‘Deterrence and tax morale in the European Union’, European Review 11 (2003), 385–406.   ������������������������������������������������������������������������������� James Alm, Roy Bahl and Matthew N. Murray, ‘Tax structure and tax compliance’, The Review of Economics and Statistics 72 (1990), 613.   �������������������� Frey, ‘Deterrence’, passim; Ahmed Riahi-Belkaoui, ‘Relationship between tax compliance internationally and selected determinants of tax morale’, Journal of International Accounting and Taxation 13 (2004), 141.   ��������������������������������������������������������������������������������� Feld and Frey, ‘Trust’; also Frey, ‘Deterrence’, p. 394; Bruno S. Frey and Benno Torgler, ‘Tax morale and conditional cooperation’, Journal of Comparative Economics 35 (2007), 149; Benno Torgler and Friedriech Schneider, ‘Attitudes towards paying taxes in Austria: an empirical analysis’, Empirica 32 (2005), 231–50.   ��������������������������������������������������������������������������������������� Torgler and Schneider, ‘Attitudes’, p. 240; p. Frey and Torgler, ‘Tax morale’, p. 138, 153.   �������������������������������������������������������������������������������� Andreoni, Erard and Feinstein, ‘Tax compliance’, p. 851; Frey and Torgler, ‘Tax morale’, 156.

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agents of a given state in which each has enforceable rights and obligations’. The problem for early modern states and their citizens was that those ‘enforceable rights and obligations’ were still very much in flux, and ‘transactions’ between states and their citizens regularly deteriorated into outright civil war. Successful fiscal regimes, therefore, were not easy to create in early modern Europe. On the contrary, states had to go to great lengths to put in place the proper measures to raise taxes and to obtain loans from their citizens. For obvious reasons, historians do not have access to the same types of data that researchers utilise to investigate contemporary tax morale. In addition to the impossibility of conducting survey interviews, it should be noted that most modern research concentrates on income taxes – that is, a type of taxation which, for a variety of reasons, was avoided by most governments before the French Revolution. Nonetheless, we can observe significant variations in the levels of per capita taxation in pre-industrial European societies. In a companion article we have tried to demonstrate that these varying levels of taxation were connected to economic performance, and that, pace the electoral promises of modern politicians, high levels of per capita taxation in fact coincided with strong economic performance. In that paper we suggested that citizenship arrangements were a key factor in creating both high tax returns and economic growth. In this chapter we investigate the ways in which the Dutch authorities in the seventeenth and eighteenth centuries contributed to tax morale. More specifically, the chapter attempts to trace if, and to what extent, Dutch public institutions employed the mechanisms identified in the ‘tax morale’ literature to boost tax compliance. Given the nature of the Dutch fiscal regime, this has to be investigated primarily at the local level, and more specifically in the towns, which produced the bulk of revenue.10 Even though the province raised more tax in tax revenues than the local authorities, they still had to do this through local, and in particular urban institutions. As we will demonstrate, the introduction of provincial taxation



 ������������������������������������������������������������ Charles Tilly, ‘Citizenship, Identity, and Social History’, International Review of Social History 40 (1995, supp. 3), 8.   ������������������������������������������������������������������������������� Jan Luiten van Zanden and Maarten Prak, ‘Towards an economic interpretation of citizenship: The Dutch Republic between medieval communes and modern nation states’, European Review of Economic History 10 (2006), 111–45; other relevant literature on this topic includes Peter H. Lindert, ‘Voice and Growth: Was Churchill Right?’, Journal of Economic History 63 (2003), 315–50; id., Growing Public: Social Spending and Economic Growth Since the Eighteenth Century (Cambridge: Cambridge University Press, 2004); Robert D. Putnam, with Robert Leonardi and Raffaella Y Nanetti, Making Democracy Work: Civic Traditions in Modern Italy (Princeton 1993), esp. pp. 152–62, and Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2000), ch. 19. 10  ����������������������� B.H. Slicher van Bath, Een samenleving onder spanning: Geschiedenis van het platteland in Overijssel (Assen: Van Gorcum, 1957), pp. 369–91.

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was handled with the utmost care by municipal councils and local officials were directly involved. For our investigation we selected the two towns of Zwolle and Leiden. Zwolle was a regional market centre, and after Maastricht and Groningen, it was the third largest town in the east of the Republic. Leiden was a centre of textile production and the Republic’s most important industrial region, as well as Holland’s second largest town after Amsterdam.11 These towns were chosen because they had two different tax regimes in place, in addition to different citizenship arrangements. Both towns distinguished between full citizens and mere inhabitants. Zwolle was probably more restrictive in its rules for access to citizen status. Non-Calvinists were excluded and the citizenship fee was four times that of Leiden.12 More importantly, the constitutional role of citizens differed between the two towns. In Leiden, all authority was vested in the town council or vroedschap, a co-optive institution dominated by a small group of local patrician families.13 In Zwolle, on the other hand, public authority was divided between an elite magistrate and a Common Council. Known as meente or gezworen gemeente, this Common Council consisted of the representatives from the four districts of Zwolle, each of which elected 12 representatives to the council. Each year on 25 January, St. Paul’s conversion, the meente in turn elected the members of the magistrate. Crucial to this study is the fact that, the Common Council also had the right to advise the magistrates on important issues, as well as the right to veto the introduction of new taxes.14

11  ����������������������������������������������������������� For population figures, see Piet Lourens and Jan Lucassen, Inwoneraantallen van Nederlandse steden ca. 1300–1800 (Amsterdam: NEHA, 1997), p. 84 (Zwolle) and p. 114 (Leiden). For ��������������������������������������������������������������� the local histories of Zwolle and Leiden, see J. ten Hove, Geschiedenis van Zwolle (Zwolle: Waanders, 2005); S. Groenveld (ed.), Leiden, de geschiedenis van een Hollandse stad, vol. 2: 1574–1795 (Leiden: Stichting geschiedschrijving Leiden, 2003). 12  ���������������������������������������������������� On citizenship in the two towns: F.C. Berkenvelder, Stedelijk burgerrecht en burgerschap in Deventer, Kampen en Zwolle 1302–1811 Werken van de Vereeniging tot beoefening van Overijsselsch Regt en Geschiedenis, vol. 45 (Zwolle: Waanders, 2005); Annie Versprille, ����������������������������� ‘Het Leidsche poorterschap’, Leidsch jaarboekje 36 (1944) 76–100; as well as Piet Lourens and Jan Lucassen, ‘“Zunftlandschaften” in den Niederlanden und im benachbarten Deutschland’, in Wilfried Reininghaus (ed.), Zunftlandschaften in Deutschland und den Niederlanden im Vergleich (Münster: Aschendorff, 2000), pp. 15–16 on admission fees, and Maarten Prak, ‘The politics of intolerance: citizenship and religion in the Dutch Republic (seventeenth and eighteenth centuries)’, in: R. Po-chia Hsia, H.F.K. van Nierop (eds), Calvinism and Religious Toleration in the Dutch Golden Age (Cambridge: Cambridge University Press), pp. 159–75, on religious exclusion. 13  ��������� M. Prak, Gezeten burgers: de elite in een Hollandse stad; Leiden 1700–1780 Hollandse Historische Reeks, vol. 6 (Amsterdam/Dieren: Stichting Hollandse Historische Reeks, 1985), ch. 2. 14  ������������� J.C. Streng, ‘Stemme in staat’. De bestuurlijke elite in de stadsrepubliek Zwolle 1579–1795 (Hilversum: Verloren 1997), ch. 3.�

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Public finances in the Dutch Republic The Republic had no national system of public finance as we understand it today. Instead its public finances were organised regionally, or even locally. During the seventeenth century less than 20 per cent of the money employed by the central institutions was raised directly by the States General.15 The rest was provided by the provinces. The Union of Utrecht had intended that uniform taxes be levied throughout the country, but these had not materialised. Their absence created serious coordination problems, for which solutions had to be found. To prevent endless negotiations about the distribution of the tax burden, the Dutch authorities introduced, in 1583, a system of fixed quotas, which attributed relative weights to each region’s contribution to the central treasury. By 1616 the quota distribution had more or less taken its final form. Only at the very end of the eighteenth century was it substantially revised.16 The quota distribution underscored Holland’s supremacy in the Republic. Holland paid a mighty 58 per cent. Only Friesland, set at 11.7 per cent, came anywhere close to this amount. The other provinces were set below (Zeeland, at nine per cent) or far below (Overijssel, at 3.6 per cent) a tenth of the total tax burden. At the end of the eighteenth century, Holland’s share actually exceeded 60 per cent. The great advantage of the quota system was the substantial freedom it gave each region to decide how to collect its taxes. Holland relied mainly on excises levied on market transactions, whilst rural provinces preferred to tax the land. The main disadvantage of the quota system was that it was open to free-riding, especially since much of the money never in fact reached the central treasury, but was paid out directly to the troops, in the service of this or that province. This enabled individual provinces to build up significant arrears in payments. When external pressures on the Republic were high, such as during times of war, the quota system seems to have functioned relatively well, but this changed in years of peace.17 For example, to reap the benefits of the peace dividend after the Westphalian peace settlements, Holland in 1650 simply discharged some of the regiments in its pay. A document 15  ���������������������� Marjolein C. ’t Hart, The making of a bourgeois state. War, politics and finance during the Dutch revolt (Manchester: Manchester University Press, 1993), p. 86. For a brief introduction, see the same author’s ‘The merits of a financial revolution: public finance, 1550– 1700’, in: Marjolein ’t Hart, Joost Jonker and Jan Luiten van Zanden (eds), A financial history of The Netherlands (Cambridge: Cambridge University Press, 1997). 16  �������������� H.L. Zwitser, ‘De militie van den staat’: het leger van de Republiek der Verenigde Nederlanden (Amsterdam: Van Soeren, 1991), ch. 4. 17  ������������ J. Aalbers, De Republiek en de vrede van Europa. De buitenlandse politiek van de Republiek der Verenigde Nederlanden na de Vrede van Utrecht (1713), voornamelijk gedurende de jaren 1720–1733 (Groningen: Wolters, 1980), chs. 1–3; id., ‘Holland’s financial problems (1713–1733) and the wars against Louis XIV’, in: A.C. Duke and A.A. Tamse (eds), Briain and the Netherlands vol. 6: War and society (The Hague: Martinus Nijhoff, 1977), pp. 79–93.

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from 1667 shows that all of the provinces were behind in their payments to the central treasury. Holland, however, had paid 88 per cent of its share, whereas Gelderland had paid only 12, Overijssel 52 per cent and Utrecht 70.18 Thus, the success of Dutch public finance in the seventeenth and eighteenth centuries was, primarily, the success of Holland. Total income of the States of Holland increased from less than one million guilders in the 1570s to about ten million in the early 1620s and nearly 18 million in the run-up to the Treaty of Munster (1648). Between 50 and 70 per cent of these sums were ‘common means’; excises on bread, peat, meat and beer were by far the most significant, though very few consumption goods escaped taxation altogether, with such diverse products as textiles, herring, wine, candles, and salt also having been taxed.19 The spectacular rise of per capita taxation during the early decades of the Republic is evident from the international comparison presented in Figure 6.1. This clearly shows the financial revolution in the Netherlands in the late sixteenth century, the similar increase of public revenue in England after 1689, and the comparatively slow development in France. The graph also shows how in Holland the state took a much larger share of income than either the English or the French governments.  

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Tax pressure in England, Holland and France (per capita, in number of daily wages of a labourer, 1500–1800)

Source: Van Zanden, Prak, `Towards an economic interpretation’, 130  ������������� W. Fritschy, Gewestelijke Financiën ten tijde van de Republiek der Verenigde Nederlanden. Deel 1 Overijssel (1604–1795). (Den Haag: Instituut ������������������ voor Nederlandse Geschiedenis������������������ , 1996), pp. 9–10. 19  ����������������������������������������������������������������������������������� Wantje Fritschy, ‘A “financial revolution” reconsidered; public finance in Holland during the Dutch Revolt, 1568–1648’, Economic History Review 56 (2003), 57–89. 18

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This enormous increase in taxation in Holland was rather ironic because resistance to ‘oppressive’ taxation had been one of the original causes of the Dutch Revolt. In particular, the Tenth Penny on trade introduced by the Duke of Alba in 1569 was perceived as harmful for the commercial, urban economies of the Low Countries.20 The oppressiveness experienced by the population, however, was less about the rates of taxation than in their imposition without the proper consent of the States General. In fact the taxes levied by the rebels after 1572 were much higher and they raised the cost of living considerably. In this respect, it is noteworthy that the Dutch tax burden not only increased during the ‘good’ years of economic growth of the seventeenth century, but continued to do so in the ‘bad’ years of the eighteenth century. What does the sharp increase in taxation after 1572, and its persistence throughout the seventeenth and eighteenth centuries, tell us about tax morale in Holland? The inhabitants of Holland certainly did not object to the many new taxes in the same way they resisted the Spanish tax collectors before 1572. Although some tax riots did occur, they were rare. A survey of public disturbances in Holland uncovered a mere 24 tax riots between 1600 and 1795; of these 22 were of a purely local character.21 In 1748 a wave of protest, originating in the northern provinces of Groningen and Friesland, caused the authorities to introduce major changes to the system of tax collection, as tax farming was abolished in Holland. Even so, the objections to these measures were directed more against the method rather than the level of taxation.22 The high tax yields and low levels of protest in the Dutch Republic are even more remarkable given the regressive fiscal system, which was based on excises on ‘basic’ consumption goods, which increased the cost of living for those least able to afford it, while many types of property remained largely untaxed. This, however, changed in Holland after about 1670. Possibilities for increasing indirect taxation had simply been exhausted. As a result, taxation in Holland began to shift towards taxes on luxury consumption and on capital (e.g. through lower interest rates on the public debt). De Vries and Van der Woude have shown how progressive taxes became increasingly important. They estimate that, whereas the taxes paid by the poorest 70 per cent of the population increased by ‘only’ 20 per cent

20

 ���������������������������������������������������������������������������� G. Janssens, ‘Brabant in verzet tegen Alva’s tiende en twintigste penning’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden 89 (1974), 16–31.� 21  ��������������� Rudolf Dekker, Holland in beroering. Oproeren in de 17de en 18de eeuw (Baarn: Ambo, 1982), pp. 28–9. 22  ��������� P. Geyl, Revolutiedagen te Amsterdam (Augustus–September 1748). Prins Willem IV en de Doelistenbeweging (Den Haag 1936); J.A.F. De Jongste, Onrust aan het Spaarne. Haarlem in de jaren 1747–1751 Hollandse Historische Reeks, vol. 2 (s.l. 1984), chapters 5– 6; Maarten Prak, ‘Burgers in beweging. Ideaal en werkelijkheid van de onlusten te Leiden in 1748’, Bijdragen en mededelingen betreffende de geschiedenis der Nederlanden 106 (1991), 365–93.

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between 1650 and 1750, the contributions by the rich more than tripled.23 The second stage of the fiscal revolution evident from Figure 6.1 – roughly a doubling of the per capita fiscal revenue between about 1670 and 1770 – was largely based on the increase of taxes paid by the middle classes and the well-off. Taxation based on the estimated level of income or levels of luxury goods consumed was one of the most important fiscal innovations of the final quarter of the seventeenth century, when they were first introduced on a limited scale in Holland in 1674.24 This income tax was progressive to the extent that only households or individuals with a certain minimum income were taxed. Other provinces, notably Zeeland, Utrecht, and Overijssel, followed this example after 1700.25 In 1715, Holland again levied a temporary income tax with a progressive rate of taxation, ranging from one per cent for incomes just above the 600 guilder threshold, to two per cent for incomes over 2,000 guilders. In 1742 this experiment was repeated and this time the degree of progression was even steeper: one per cent for 600 guilders income, 1.6 per cent for 2,000 and 2.5 per cent for 10,000 guilders and more.26 These new income taxes did not last, however. They had been introduced as emergency measures during specifically difficult financial and military crises, and were not intended as a basis for continuous taxation. Nor was Holland’s example followed by the other provinces, as the province of Overijssel demonstrates. Overijssel was a landlocked province, with a sociopolitical structure very different from Holland’s. The Overijssel countryside was dominated by a class of large, noble landowners. In 1750 an income tax similar to Holland’s was introduced, but the rate of taxation had become regressive: the poor, with incomes of less than 200 guilders, paid about three per cent of their income, the middling classes and the rich, with incomes of 3,000 guilders or more, a mere 1.8 per cent.27

23  ����������������������������������� Jan de Vries and Ad van der Woude, The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (Cambridge: Cambridge University Press), p. 112. 24  ������������������������������������������������������������������������������������ These and other income taxes are discussed in W.F.H. Oldewelt, ‘De beroepsstructuur van de bevolking der Hollandse stemhebbende steden volgens de kohieren van de familiegelden van 1674, 1715 en 1742’, Economisch–Historisch Jaarboek, 24 (1950), 80–162, and 25 (1951), 167–249. 25  ������������������������������������������������������������������������������ See for example W. Dirksen, ‘Enige opmerkingen over de belastingheffing in de Republiek der Zeven Verenigde Nederlanden in de 17de en de 18de eeuw’, in: L’impôt dans le cadre de la ville et de l’état. Colloque International Spa 1964. (Pro Civitate, 1966), pp. 235–61. 26  �������������������������������� Oldewelt, ‘De beroepsstructuur’. 27  ���������������������������������������������������������������������������������� J.L. van Zanden, ‘Industrialisatie en inkomensverdeling in Overijssel 1750–1875’, in: Cor Trompetter and Jan Luiten van Zanden (eds), Over de geschiedenis van het platteland in Overijssel (1500–1850) (Kampen: IJsselacademie, 2001), pp. 113–29.

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Progressive income taxation became an issue again in the final decade of the eighteenth century.28 It was one of the priorities of the revolutionaries who, supported by the French, took over the Dutch state in 1795, although they too soon discovered how difficult it was to impose income taxes. Neighbouring countries, such as France and Britain, experimented with progressive income taxation to finance large-scale warfare.29 As in Holland at the start of the century, this interest in progressive income taxation can be interpreted as a new attempt at raising state revenue, after earlier sources had been exhausted. By implication they were also a new challenge for the relationship between state and citizens.

Representation – creating new taxes in Overijssel and Holland In the eighteenth century the Dutch Republic was operating at the very limits of its fiscal possibilities. The financial capacities of both the Republic as a whole, and its financial mainstay Holland, were, according to contemporaries, seriously overstretched.30 This made citizen involvement in the process of raising taxes all the more urgent. In Zwolle, the Common Council was crucial in the introduction of new taxes, as became evident in 1748, when attempts were made to create a whole set of emergency taxes, such as new excises on coffee and tea, and on tobacco, as well as a new register for the Liberal Gift personal tax. The new taxes were needed to bolster the defence of the Republic against a French invasion. With much patriotic fervour the provincial authorities urged their local colleagues in mid-January to supply the cash necessary to thwart any such attack. In Zwolle the ‘friends of the Common Council’ approved some of the proposals, but refused to accept an excise on coffee and tea, which was seen as bad for trade, because the excise was to be levied as an import duty. The same tax was refused again on 22 January, and on 26 January, although the neighbouring town of Kampen was said to have approved it. On 2 and 5 February, Common Council again refused to approve the tax, despite urgent pleas from the magistrate. Only on 11 February, on the sixth attempt, did Zwolle’s Common Council finally acquiesce after an important compromise proposal was introduced. Instead of the import duty, the excise would be levied through an assessment of Zwolle’s households.31

28

 ��������������������������������������������������������� See also the contribution by Thomas Poell in this volume.  ���������������������������������������������������������������������������������� Jean-Pierre Gross, ‘Progressive Taxation and Social Justice in Eighteenth-Century France’, Past & Present, 140 (1993), 79–127. 30   Aalbers, De Republieken de vrede, pp. 3–23; R. Liesker, ‘Tot zinkens toe bezwaard: De schuldenlast van het Zuiderkwartier van Holland, 1672–1794’, in: S. Groenveld, M.E.H.N. Mout and I. Schöffer (eds), Bestuurders en geleerden (Amsterdam/Dieren: Bataafsche Leeuw, 1985), pp. 151–60. 31  ������������������������������������������������������������������������������� Historisch Centrum Overijssel (HCO), Oud Archief Zwolle (OAZ), 217: Resolution of council and common council, pp. 217–32; see also 8 April 1748 (pp. 246–7). 29

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Another new tax introduced at this time was the Liberal Gift. On 18 February, 1748, the States of Overijssel announced in a placard that the nobility and towns (this included Zwolle) had decided to raise a one-off tax, based on the example of Holland and other provinces. It was to be a two per cent property tax. To meet expected objections from inhabitants they would be allowed to assess themselves and nobody would be asked to open their account books. Instead, taxpayers would be invited to swear that they had fully declared their property. The elements to be assessed were listed in detail, and ‘to oblige the good inhabitants even more in carefully assessing their property and to remove all objections’, bonds and stock could be listed against their current (instead of nominal) value, while dubious credit could be discounted. To prevent public disclosure of an individual’s wealth, as well as future abuse of such information for tax purposes, citizens would be allowed to pay their contributions into a closed box.32 In Holland, the authorities could not rely on citizen support for, and involvement in, their tax policies because there was no proper citizen representation at the local level. Moreover, Holland’s coffers had been emptied by the long series of wars with France, fought between 1672 and 1713. By the end of the War of the Spanish Succession, Dutch public finances had been exhausted.33 Servicing the provincial debt, which was the mainstay of the Republic’s system of public finance, consumed a staggering 60 per cent of Holland’s ordinary revenue.34 In 1740, the Republic was nonetheless dragged into the War of the Austrian Succession and another new tax became necessary, the Personele Quotisatie, or Personal Levy of 1742. Like the Family Tax which had been introduced during the previous financial crisis in 1715, the Personal Levy was based on a combination of assessed income and socalled outward appearances of wealth, such as the number of servants employed by each household, the rental value of the house they inhabited, the presence of coaches, and so on.35 In 1747 the French invasion of the Dutch Republic forced the introduction of the Liberal Gift discussed above in the Zwolle context. The invasion also caused the reinstatement of the Orange dynasty as stadholders, but widespread anxiety over the predicament of the Republic and the quality of its leadership created a wave of popular protest, directed primarily against the tax system and the disparities in its application. In many towns, not least those in Holland, the offices and homes of tax collectors were attacked and destroyed. At the same time, municipal councils, perceived as representatives of a discredited

32

 ���������������������������������������������������������������������������� HCO, OAZ, 4516, no. 2: Placard concerning the Liberal Gift, 8 February 1748.  ��������� Aalbers, De Republiek en de vrede van Europa, chs 1 and 3. 34  ����������������������������������������������� R. Liesker, ‘Tot zinkens toe bezwaard’, p. 155. 35  ����������������������������������������������������������������������� See the official resolution of the States of Holland on 17 March 1742: GrootPlacaetboeck, Vervattende de Placaten, Ordonnantien ende Edicten van de Hoogh Mogende Herren Staten Generael der Verenighde Nederlanden ende Van de Ed, Groot mog. Heeren Staten van Hollandt ende West-Vrieslandt; midtsgaders van de Ed. Mog. Heeren Staten van Zeelandt, vol. 7 (1770), 1131–5. 33

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regime, were forced to resign and were replaced by councillors appointed by the stadholder.36 During the rioting, several anonymous pamphlets were circulated which discussed the tax issue at length. Their arguments can be considered a reflection of the popular mood. One pamphlet stated that tax revenues did not belong to the political authorities, but to the citizens themselves, ‘whose Revenue and Expenditures these are, as they are procured from their [the citizens’] Property, their Profits and Labour’.37 The Veritable Investigation into the Neglect of Leiden’s Ancient Privileges, as well as Proposals to improve Public Finances and Prevent Holland’s Ruin argues on historical grounds that the members of the Leiden vroedschap were the representatives of the citizens and should behave as such. They should therefore pay excises like everybody else, financial officers should be knowledgeable rather than merely relatives of men in power, justice should be meted out swiftly and even-handedly, the annual city accounts should be read out in public in the presence of four citizen representatives, and so on.38 As a concession to the rioters, the common means (so far the most important source of revenue in Holland) were abolished and replaced by a tax on income that was, moreover, to be collected by public officials instead of the tax farmers who had collected the ‘common means’. The debates in the political institutions about these and earlier tax reforms demonstrate an awareness on the part of the politicians that their citizens would have to be persuaded to contribute. In 1742, well before the tax riots, the States of Holland felt compelled to have a serious debate about how the population should be assessed. The options were self-assessment and assessment by officials. The arguments in favour of self-assessment, according to notes made by the representatives of Leiden, were that the same system had been used in 1715; it would be impossible to disclose financial secrets; outsiders were incapable of properly assessing individuals given the complexities of people’s private finances; and, finally, outside assessment would provoke a lot of complaints that, if sustained, might ultimately defeat the whole project. Arguments against self-assessment, on the other hand, were that ‘in a country of free trade and commerce’ it would be ‘extremely harsh to force anyone to open their account books’; conscientious people would be hit harder than those trying to escape taxation by deliberately providing misleading information; rentiers, whose income could be traced most easily, would be unfairly burdened; and when there was an indication of incorrect self-assessment, the rate would have to be increased, which would hurt the victim in terms of both money and reputation. In that last scenario, the representatives  ���������������������������� See the works cited in n.22.   Nasporing van de beswaarnissen, nevens de redenen der zelve, welke zeer veele van de burgers en schutters en verdere ingezeten der stadt Leyden vermeinen te hebben (s.l., s.d.; Knuttel 18088); see also Prak, ‘Burgers in beweging’, 377–9. 38   Waaragtig onderzoek wegens het verzuim in het waarnemen der oude handvesten van Leiden: als ook middelen ter verbetering der finantien; en voorkoming van Hollands dreigende val. Onder sinspreuk Veritas Odium Parit (s.l., s.d.; Knuttel 18117). 36 37

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of Haarlem argued, one would have ended up with an assessment by outsiders anyway. It was finally decided, on 23 February, not to allow the ratepayers the opportunity to declare their income, but to subject them to assessment.

Creating trust – the introduction of new taxes in Zwolle and Leiden On 7 April 1748, the Zwolle commissioners were appointed to collect the Liberal Gift. These appointments were entirely a local affair. First, eight magistrates, two for each district or ‘street’, were appointed, and they then selected two Common Councillors from the 12 representing each ‘street’. Thus a total of 16 individuals, four for each district, were commissioned to collect the tax.39 In late April the commissioners for the district of the Voorstraat met on six occasions, during which they were served coffee and biscuits. After their first meeting they also requested large money bags and red ribbon, presumably for use in securing the bags. But before collecting any money the commissioners had to draw up the registers. These ledgers contained information about taxable households, those excused because of their poverty, an indication of who had taken the oath, those who did not want their contribution (and by implication their wealth) disclosed, and those who wanted to make an extra contribution above what they owed according to the placard. It is highly significant, however, that the register never mentioned any figures. The Liberal Gift relied completely on voluntary contributions. It nonetheless produced 187,333 guilders in cash and another 60,232 guilders in precious metals contributed by the local population.40 The overall amount, raised from a population of 12,000, means that each household contributed approximately 65 guilders, or the equivalent of ten weeks in wages for a day labourer. In 1750 citizen representatives in the Common Council were again involved in the composition of a new register, the ‘Personal Quotisation or Family Tax’, which was introduced by the provincial authorities in December 1750, after it had already been announced in 1749. A commission, consisting again of four members selected from the magistrate and four Common Councillors, one each from the four districts, was asked to assess each household and place it in one of 11 classes.41 It is not exactly clear how the commissioners were supposed to conduct these assessments, but eventually all households would be served a form that stated their tax class. The second sentence of the form, however, immediately pointed out the possibility of objecting to the assessment. Those who felt they were assessed unfairly would have to go to the Town Hall, appear before the commissioners and solemnly swear that they were not as affluent as the assessment indicated. This opportunity was taken up by many. The Zwolle archives preserve several complaints from one block of houses in the Voorster Poort, where the overseers 39

 ������������������������������������������������������������������������ HCO, OAZ, 4516, no. 1: Commissioners for the Liberal Gift, 7 April 1748.  ���������������������������������������������������� HCO, OAZ, 4516, nr. 15: Revenue of the Liberal Gift. 41  ������������������������������������������ HCO, OAZ, 4529: Personal Quotisation 1750. 40

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of the poor declared that the individuals concerned were receiving assistance and should therefore be exempted from paying taxes.42 This and the previous examples suggest that the Zwolle authorities were relying on several mechanisms to boost tax morale. First of all, citizen representatives were involved in the decision to introduce (or not, as the case may be) new taxes in Zwolle. Secondly, these citizen representatives were involved in the assessment of rate payers. As they lived locally, their involvement also helped guarantee a fair distribution of the tax burden. And thirdly, procedures had been put in place to rectify mistakes made. In combination, these mechanisms provided legitimacy and a degree of transparency to the process of taxation. The Leiden municipal archives preserve extensive documentation which allows us to understand how the directives of the States of Holland were put into effect, the crucial aspect being the assessment procedure itself. In Leiden this delicate task was placed in the hands of the bonmeesters, or district officials. The bonmeesters are first mentioned in a document from 1394, at which time they were already in charge of their districts.43 There were only four back then, but as the town expanded, so did the number of districts. By the end of the seventeenth century there were 27 in all. The bonmeesters were primarily in charge of fire-fighting. To that end they maintained the equipment of their bon and ensured that there was access to open water during winter. But they were also in charge of collecting contributions for the maintenance of the town’s rampart, and were more generally employed by town hall for all kinds of chores.44 They should be distinguished from the more numerous Lords of the Neighbourhoods, who were elected by neighbours themselves; the bonmeesters appear to have been appointed by the town council.45 Already in the seventeenth century, and possibly earlier, the bonmeesters had been asked to assess their fellow-citizens for tax purposes.46  ������������������������������������������������������������������������������ HCO, OAZ, 6368, Complaints about the assessment for the Personal Quotisation. 1750. 43  ���������������� H.A. van Oerle, Leiden binnen en buiten de stadsvesten. De geschiedenis van de stedebouwkundige ontwikkelingen binnen het Leidse rechtsgebied tot het einde van de gouden eeuw (Leiden 1975), p. 81. 44  ���� Ibid. 45  ������������������������������������������ On these Lords of the Neighbourhoods: ibid., p. 84; see also Herman Roodenburg, ‘Naar een etnografie van de vroegmoderne stad: De “gebuyrten” in Leiden en Den Haag’, in: Peter te Boekhorst, Peter Burke and Willem Frijhoff (eds), Cultuur en maatschappij in Nederland 1500–1850 (Meppel/Heerlen 1992), pp. 232–43. ��������������������� A pamphlet from 1748 demands that henceforth the bonmeesters shall be elected by the inhabitants of their district ‘who have to pay for the maintenance of the fire equipment’: Waaragtig onderzoek wegens het verzuim in het waarnemen der oude handvesten van Leiden (etc) (Knuttel 18117). 46  ������������������������������������������������������������������������������ R.J.C. van Maanen, ‘De vermogensopbouw van de Leidse bevolking in het laatste kwart van de zestiende eeuw’, Bijdragen en mededelingen betreffende de geschiedenis der Nederlanden 93 (1978), 8. 42

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The bonmeesters of 1742 were solid middle-class men. They were butchers, drapers, merchants and surgeons. Only a handful of them were upper class in terms of wealth. None of them sat on the municipal council, however, nor did any appear to be related to the regents. Some bonmeesters had experience in other minor offices, like merchant Michiel Hospenjon and tanner Simon Wagtevelt, both of whom had been huiszittenmeesters, or overseers of the poor, but again this defined them as being of the ‘middling sort’ more than anything else.47 Their roots in the district provided them with intimate knowledge of its inhabitants. Of course the bonmeesters, despite the modesty of their private status, were public figures, and this was underscored by the fact that their commission as tax assessors was announced in a separately printed document dated 11 June.48 They were assisted by either a notary, or a town hall clerk, who, it seems, were commissioned to do the actual writing. The bonmeesters were expected to go from door to door in their districts and fill out a small printed form for each household, stating the ‘apparent income’, the number of servants in the household, and where appropriate also the presence of coaches and horses, as well as whether or not the family owned a country retreat. The rental value of the family home was determined by the registers of the property tax, which had been revised only ten years previously. It took nine to ten days per district to complete the work, and the bonmeesters received a small reward for their efforts, which kept them from pursuing their own businesses during that week and a half.49 The registers had to be confirmed by the bonmeesters’ signature, and where this was missing it had to be remedied in January 1743, when a special commission from the States of Holland came to Leiden to check the work. The States’ commission set out to compare the registers for the Personal Levy with other tax registers. The authorities in Leiden were less than keen to open their books, wanting to protect the financial privacy of its citizens. In the early stages of the process they advised against withholding information. However, by 1745, when another commission from the States of Holland demanded to see the ledgers of the Inheritance Tax (Collaterale Successie) containing very detailed information on the composition of numerous private capitals, the Leiden council simply refused to hand over the registers; it was only willing to provide copies of the files on specific individuals of whom the commission were suspicious.50 In the meantime, a special Leiden commission had been set up by the States of Holland although it was composed of Leiden members who had been proposed by the local council. All three members, in fact, sat on the council as well.51 By then 47  ��������������������������������������������������������������������������� Peter Pot, ‘Tussen medelijden en spaarzaamheid. De regenten van het Leidse Huiszittenhuis 1700–1795’, Holland 20 (1988), 65–85. 48  ����������������������������������������������������������������������������� GALeiden, SA II 4039: Appointment of the commissioners for the Personal Levy 1742. 49  ������������������������������������������������������������������������������ GALeiden, SA II 4038: Introduction Personal Levy 1742: report 15 January 1743. 50  ������������������������������������������������������������� Ibid., advice from the pensionary to the mayors, 9 June 1745. 51  ������������������������������������������������� GALeiden, SA II, 4070: Records of the commission.

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the tax seems to have been more or less accepted and the elites saw an opportunity to ingratiate themselves with the citizens by fending off unpopular demands from The Hague. This commission was also in charge of revisions, which, however, had to be finalised by the States of Holland itself. Individual complaints were treated very seriously by the Leiden commission, despite the significant numbers involved; in November 1745 the commission discussed no fewer than 232 separate files.52 In 1748 the political situation was much more volatile than it had been in 1742. Like many other places, Leiden became swept up in a tidal wave of riots, which were initially directed against tax farmers, but soon spilled over into the political realm. These riots were primarily directed against the method of taxation: tax farmers’ homes were plundered, and town councillors were attacked for their corruption and ineffectiveness.53 In spite of this crisis of confidence, the assessment of the population was organised in 1749 in a manner very similar to that of 1742. Once again the bonmeesters had to shoulder most of the work. To a considerable extent these were even the same individuals as in 1742. In 23 out of a total of 27 districts at least one of the assessors had already done the same job six years earlier. In nine districts two assessors had had previous experience. This degree of continuity signalled to the population that the assessment process would be as fair as it was before, though its character was to be slightly different. In 1748 a so-called Provisional Tax was introduced to replace the abolished excises. A heavy emphasis was therefore placed on consumption, instead of wealth. Shopkeepers who traded in excised products received special treatment and this had to be taken into account. At the same time, the States of Holland had made the job easier by simply assessing Leiden for the new tax the same amount that it had formerly contributed in the ‘common means’. In August 1748 the bonmeesters, again assisted by a clerk, were sent from door to door, filling out printed forms for each household as they went along.54 After their work was finished, a commission was set up, consisting of members of the town council and ‘commissioners from the citizens’.55 The latter were clearly included to add legitimacy to the procedures. There was also a printed form available for those who wanted to lodge a complaint. Interestingly, several complaints carried a declaration from the Lord of the Neighbourhood, confirming that the complaint was justified.56 The committee of the States of Holland that 52

 ������������������������������������������������������������������ GALeiden, SA II, 4072–3: Copies of letters sent by the commission.  ���������������������������� Prak, ‘Burgers in beweging’. 54  ��������������������������������������������������������������������������������� The fruits of their labour have been analysed in great detail in H.A. Diederiks, D.J. Noordam and H.D. Tjalsma (eds), Armoede en sociale spanning. �������������������� Sociaal–historische studies over Leiden in de achttiende eeuw Hollandse Studiën vol. 17 (Hilversum: Verloren, 1985). 55  ����������������������������������������������������������������������������� GALeiden, SA II, 4088: Records of the taxation commission; the quoted phrase was used on 12 February 1749. 56  ���������������������������������������������������������������������������� GALeiden, SA II, 4151: Complaints; see files of the widow of Anthony Sival, Marijtje Maas and Japick Ziera. 53

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had come to Leiden to check the assessment in 1743, was conspicuously absent, perhaps to avoid inflaming a still volatile situation. But in 1749 there was actually no need for such supervision, as Leiden, and the other towns, were simply required to collect the same amounts as they had done previously through the excises, and it was the local authorities’ problem to work out how to collect that money. The Leiden procedures of 1742 and 1749 suggest that taxation was made palatable in Holland through a coherent set of procedures. Firstly, assessment was placed in the hands of local institutions. The assessors were supposed to be familiar with the inhabitants of their district, whilst the inhabitants were informed about who was going to assess them. There was, in other words, familiarity on both sides. Secondly, assessment was essentially left to the citizens themselves. The Leiden bonmeesters were sufficiently removed from the ruling – and in 1749 discredited – regent regime to enable them to be accepted by the inhabitants as ‘one of us’, instead of ‘one of them’. Thirdly, free-riding in the community as a whole, through a collusion of the citizens and the regents, was avoided by either a detailed investigation of the assessment registers (in 1743) by the States of Holland, or a fixed target set by the States that the town had to meet in whatever way it fancied (in 1749). The similarities with the mechanisms applied in Zwolle are clear. There, too, the authorities used intermediaries, the members of the Common Council, to help create trust through transparency. Perhaps because in Zwolle the citizen community was involved in the decisions about the introduction of new taxes, as well as in their implementation, the authorities were willing to risk self-assessment. Yields suggest that this did not have a negative impact on tax morale. Table 6.1 Municipal expenditures in Zwolle, 1709 Expenditures

guilders

per cent

Payments to province

6,250

12

Interest on loans

8,232

15

Defence and security

4,429

8

Justice

4,382

8

13,760

25

7,948

15

Town Hall Urban property, infrastructure, maintenance Education, health, poor relief Economic services Church

798

1

5,561

10

nd

Tax collection

758

1

Miscellaneous

1,923

4

Total

54,041

Source: HCO, AAZ 01, inv. 1583: Treasury accounts (Cameraarsrekening), 1709

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Value for money: public expenditures in Zwolle and Leiden Financial issues were the single most recurrent topic on the Aldermen’s agenda in Zwolle. However, those discussions were mainly about taxation, and about its general principles, and hardly ever touched on the expenditures, let alone their specifics. This bias is reflected in the historical literature. The extant literature tends to look at incoming, rather than outgoing money streams.57 We must, however, assume that citizens were expecting something in return for the hard-earned cash they shared with the local authorities. To determine what ‘good’ local government actually did for the community, we must examine the accounts themselves. In 1709, the Zwolle accounts record a total expenditure of 54,041 guilders.58 If we estimate the population to have been 10,000 at the time, this suggests the availability of between five and six guilders per capita. A substantial 15 per cent of this went directly to the town’s creditors, servicing debts that had been accumulated during the seventeenth century, and particularly in the years 1672–1687, during the wars against the French. The town also had to hand over 12 per cent of its expenditures to the provincial authorities. This left 39,559 guilders to spend on whatever the community of Zwolle required for that particular year. The town provided a wide range of services for its inhabitants. These included defence and security, maintenance of infrastructure, health care and education, as well as the maintenance of public clocks. The last service mentioned was allocated 204 guilders, thus only a tiny fraction of the grand total of 23,118 guilders for these expenditures, but that was more than the extremely modest 48 guilders spent on education. This paltry sum was spent on the annual prizes for outstanding performances. The list of services immediately points to a problem with the town’s accounts: many public services were not undertaken directly by the council, but rather were outsourced to other institutions, which had their own income streams. This applies to education, but also to welfare, which is completely absent from the Zwolle accounts. That absence cannot, of course, be interpreted to mean that there were no welfare provisions available to the inhabitants of Zwolle. The fire service had to make due with a mere 40 guilders, but this again was a service that was ‘outsourced’, since the actual work was undertaken by the citizens themselves, who were called up whenever a fire broke out. The expenditures included in the account therefore refer to those services provided directly, rather than indirectly, by the local authorities. The 23,118 guilders amounted to 43 per cent of all expenditures. Or, put another way, public services to the amount of two guilders per capita were available to the inhabitants of Zwolle. Another, far from negligible source of expenditure was the local government itself. In Zwolle, a grand total of 13,760 guilders, or 25 per cent of all expenses, 57  ������������������������������������������ A recent example is Manon van der Heiden, Geldschieters van de stad: financiële relaties tussen stad, burgers en overheden, 1550–1650 (Amsterdam: Bert Bakker, 2006). 58  ������������������������������������������������������������������������������������ Unless otherwise stated, all the figures in this section are from HCO, AAZ 01, inv. 1583: Treasury accounts (Cameraarsrekening), 1709.

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went to administration. These included payments to the clerks at the town hall, their clothing allowance (235 guilders), candles and ink, travel expenses for the members of the local council, representation and meals (5,826 guilders) and meetings with the representatives of the other towns in Overijssel, as well as participation in the provincial Estates. The overhead costs of the local government, in other words, were substantial and required an annual contribution from each inhabitant of nearly 1.5 guilders. We have no identical data for Leiden, but a long-term investigation of Leiden’s financial records between 1620 and 1720 provides insights into the way in which local governments in Holland towns spent taxpayers’ money.59 Between 20 and 30 per cent of fiscal income was passed on to the provincial treasury. Of the money spent locally, most went to public works: around 20 per cent and sometimes substantially more. Salaries hovered between ten and 16 percent, but this also included those of the police, lantern lighters and so on. The costs of representation and travel expenses amounted to five per cent. It would appear that the local government in Leiden was somewhat cheaper than in Zwolle, perhaps due to economies of scale.60 A document relating to local expenditures during the decade between 1755 and 1764 provides us with additional information.61 In that year, total expenditures in Leiden came to 255,879 guilders, or 6.70 guilders per capita.62 This was slightly more than in Zwolle, but still in the same range, especially if we take into account that Leiden’s local authorities were operating at a five per cent deficit. Leiden was also paying almost a quarter of its expenses directly to the provincial treasury, a substantially higher amount than in Zwolle and possibly due to a technicality relating to the fiscal system.63 If this element is removed from the accounts of both

 �������������������������������������������������������������������������� This is based on the figures provided by P. Nagtegaal, ‘Stadsfinanciën en stedelijke economie: invloed van de conjunctuur op de Leidse stadsfinanciën 1620–1720’, Economisch– en sociaal–historisch jaarboek 52 (1989), 96–147, esp. 140–41. 60  ������������������������� Cf. Claartje Rasterhoff, ‘Res Publica: a comparison of public services in two cities in the Dutch Republic, 1612–1669’, unpublished MA-thesis Utrecht University, June 2007, pp. 76–7. 61  ������������������������������������������������������������������������������ GAL, SA II, inv. 1498: Documents relating to local finances, mid-18th century. 62  ���������������������������������������������������������� On the basis of 38,000 inhabitants: Lourens and Lucassen, Inwoneraantallen, 114. 63  ����������������������������������������������������������������������������� Because each province had its own tax system, the precise division of labour between local and provincial authorities varied from province to province. ��������������� For Overijssel and Holland, see W. Fritschy (ed.), Gewestelijke financieën ten tijde van de Republiek der Verenigde Nederlanden vol. 1: Overijssel (1604–1795), Rijks Geschiedkundige Publicatiën, Kleine Serie vol. 86 (The Hague: Instituut voor Nederlandse Geschiedenis, 1996); and W. Fritschy and R. Liesker (eds), Gewestelijke financieën ten tijde van de Republiek der Verenigde Nederlanden vol. 4: Holland (1572–1795), Rijks Geschiedkundige Publicatiën, Kleine Serie vol. 100 (The Hague: Instituut voor Nederlandse Geschiedenis, 2004). 59

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towns, the remaining expenditures on public services work out at a comparable 5.19 and 4.78 guilders per capita respectively. Table 6.2 Average municipal annual expenditures in Leiden, 1755–64 Expenditures Payments to province Interest on loans Defence and security Justice

guilders

per cent

58,800

23

7,391

3

24,681

10

nd

Town Hall

46,723

18

Urban property, infrastructure, maintenance

59,978

23

Education, health, poor relief

12,342

5

4,570

2

Church

19,624

8

Tax collection

10,068

4

Miscellaneous

11,702

5

Economic services

Total

255,879

Source: GAL, SA II, inv. 1498: Documents relating to local finances, mid-18th century

As in Zwolle, one of the most expensive aspects of Leiden’s local administration was the administration itself. In Leiden the town hall cost an average of 46,723 annually, or 18.2 per cent of total expenses, which still made it somewhat cheaper than Zwolle’s. The other even more expensive item was the maintenance of town property and infrastructure, which cost Leiden’s inhabitants 59,978 guilders (23 per cent). The Leiden authorities also spent substantial amounts on market supervision, more specifically the supervision of the textiles trade. Much more so than in Zwolle, the Leiden government was subsidising the institutions for poor relief: 10,814 guilders or slightly more than four per cent of total expenditures. Another substantial item of public spending was internal safety: 24,206 guilders or ten per cent more compared to Zwolle. However, as in Zwolle, direct expenses on services such as schools, health care, and indeed welfare, appear remarkably modest in Leiden’s town accounts. Another interesting aspect of Leiden’s local financial history are the several large budget cuts, undertaken during the eighteenth century in response to the pressures of economic decline and population contraction. What areas were considered expendable? In 1703, a lengthy report was produced that identified numerous items which could be cut from the budget.64 Some of these were what we 64  ���������������������������������������������������������������������������� GAL, SA II, inv. 1491: Reports and other documents about the improvement of local finances, 1703–1791.

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would now call ‘privatisation’: selling, or renting out town property, for instance. The number of people in the town’s pay would be reduced, as well as the salaries for those whose jobs were continued. Thus, the town’s trumpeter would lose onethird of his salary, the adjustor of the public clocks would lose 20 per cent of his, the midwives had to accept reductions, as did the schoolmaster in the town’s Latin School. All of these cuts would be put into effect when the present incumbent would retire or die. However, the most frequently mentioned items for reduction were connected in one way or another to the regents themselves. They proposed to reduce salaries for the offices that they or their relatives were serving in, the small sums awarded for attending Council meetings were to be further reduced, and compensation for staying the night in The Hague when attending provincial or national meetings was scrapped. In all, one-quarter of the proposed reductions belonged in this category. In other words, the politicians were prepared to share the burden of these financial proposals, thereby, of course, lending credibility to their plans. Something similar happened in 1753 when new budget cuts were necessary as a result of a further decrease in population, changes to the tax system, and due to the economic stagnation in Leiden’s textile industry pushing up the costs of social welfare. It was not as though cuts were applying exclusively to the upper-class offices; they were, however, clearly and prominently included in the budget cut proposals.65 The financial accounts help us to identify a number of areas where local government was presumably making a difference: the development and maintenance of public spaces, and the maintenance of public order. A third important aspect of urban finances and urban debates was the local government itself. The prominent claim by the authorities themselves to local resources has often been interpreted as proof of the self-serving character of those institutions, where oligarchy and corruption were presumably rampant. An alternative interpretation of their behaviour, however, could explain it in terms of coordination. Local councils mediated between the various local institutions and the citizens, as well as between the local and the regional, and indeed even the national levels of authority. Moreover, running the local government proved to be quite cheap. At a net cost of about five guilders per capita, it was much less of a burden on the average citizen than provincial and national taxation was. By the middle of the seventeenth century the per capita tax burden in the province of Holland had risen to ten guilders; by 1700 it had increased to more than 16 guilders.66 Most provincial taxes, moreover, were spent on debt servicing and on the military; in other words, the benefits of those expenditures were likely not to have been immediately apparent to the taxpayers. A third argument against the cynical view of the local authorities is the readiness of the officeholders to reduce their own 65

 ����������������������������������������������������������������� GAL, SA II, inv. 1497, excerpt Council Resolutions, 15 Oct. 1753.  ��������������������������������������������������������������������������������� Wantje Fritschy, ‘Financial revolution’, 71; Marjolein ’t Hart, ‘The merits of a financial revolution’, in: id, Joost Jonker and Jan Luiten van Zanden (eds), A financial history of the Netherlands (Cambridge 1997), p. 33. 66

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salaries, as is demonstrated by the financial policies put forward for Leiden. It is also important to remember that many political offices did not actually pay a regular salary.67 The elite’s readiness to subject themselves to financial policies that negatively affected their own interests is confirmed by the introduction of progressive taxation in Holland in the course of the eighteenth century. All of this seems to suggest important reasons why political protest in the Dutch Republic was aimed at malpractice in particular, rather than at the system in general.

Conclusion For historians, as well as for early modern politicians, one question is crucial: how could states mobilise as many resources as possible to survive the early modern arms race, without at the same time damaging the long-term dynamics of the economy, and thus the economic foundations of the state? Citizenship arrangements were crucially important to successfully meet this challenge. Owing to their specific form of citizenship, it was, in the aftermath of the sixteenth-century Military Revolution, still possible for the relatively small city states of medieval Europe, and by extension for the Dutch Republic, to mobilise comparatively large amounts of resources on a per capita basis. Within the relatively small confines of these polities, citizens had the right, perhaps even the duty, to monitor the actions of the (city)state. Monitoring not only forced the state to be efficient, but also encouraged the state to create and underwrite a relatively efficient institutional framework for market exchange: in their own interest, city-states and their more extensive successors like the Dutch Republic, had to protect the property rights of their citizens. This is exactly what we observed local authorities doing in Zwolle and in Leiden. Such states, in other words, produced the type of public goods that citizens desired. This was the ‘contract’ that underpinned the financial revolution in Holland in the sixteenth century, and in England after 1688. The historical evidence presented in this paper confirms the results of research on modern tax morale. As we have seen, in each stage of the ‘public finance cycle’, the state ensured the participation of its citizens, or at least people who could be perceived as representative of the citizen community. Moreover, elites made sure that they created a positive public image by taxing themselves in equal measure, and by reducing expenditures that they themselves stood to profit from. Finally, they provided a range of services to the community at a modest price. None of this was unique to the Dutch Republic, and further investigations should help clarify the comparative advantages of the Dutch in this respect, but it may well be the combination of measures, rather than their individual contribution, that enabled the Dutch state to increase taxes, as well as public borrowing, to unusual levels and at a relatively modest price if we use the interest rate as an indicator.

 ������ Prak, Gezeten burgers, pp. 47–9.

67

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Our emphasis on citizenship helps clarify a number of general issues that are relevant beyond the borders of the Dutch Republic. It offers an explanation for the paradox that inhabitants of states with ‘representative governments’68 were on the one hand paying more taxes – on a per capita basis, but probably also as a share of income – while at the same time they were much more successful economically.69 During much of the early modern period the inhabitants of the large, territorial states were confronted by the considerable disadvantages of absolutist rule. The essence of absolutist rule was that the king insisted he was not the agent of his subjects, and that he alone was able to judge what was in the best interest of the state and its inhabitants. The events from the early stages of the Dutch Revolt show that there were potentially disastrous consequences for this type of rule. It led to the introduction of taxes which were very harmful for economic development (the Spanish Alcavala, which the Duke of Alba attempted to introduce as a sales tax, the Tenth Penny, in the Low Countries was one of the most important reasons why the merchant community supported the revolt). It resulted in the supply of the public goods which were not desired by the inhabitants, such as religious policies to suppress heresy, policies contrary to commercial interests and the merchants’ preference for tolerance. Finally, because Alba’s financial policies lacked legitimacy, it led to large scale problems of free-riding, such as tax evasion. These problems were very real: the rise of Absolutism in sixteenth- and seventeenth-century Europe met with large-scale resistance, and as a result most states experienced deep social and political crises between c.1550 and c.1650.70 The costs to the economy of these civil and religious wars are impossible to calculate precisely, but must have been massive. It has been argued that the Dutch Golden Age was the result of the temporary weakness of its neighbours, and therefore more or less an accident.71 It is true that in the late sixteenth century and first half of the seventeenth, France was ravaged by religious warfare and a series of succession crises. England was divided by the struggle between the crown and the regional elites, resulting in 20 years of civil war and revolution. And Germany, too, was thrown into turmoil by the religious struggles which culminated in the devastation of the Thirty Years War. The Dutch Republic, on the other hand, went through a period of relative calm after the revolutionary regime was consolidated  ��������������������������������������������� Philip T. Hoffman and Kathryn Norberg (eds), Fiscal crises, liberty, and representative government 1450–1789 (Stanford: Stanford University Press, 1994). 69  �������������������������������������������������������������������������������� J. Bradford de Long, ‘Overstrong against thyself: war, the state, and growth in Europe on the eve of the Industrial Revolution’, in: M. Olson and S. Kähkönen (eds), A Not-so-Dismal Science: A Broader View of Economies and Societies (Oxford: Oxford University Press, 2000), pp. 138–67. 70  ��������������������������������������������������������������������������������� Cf. Niels Steensgaard, ‘The Seventeenth-Century Crisis’, in: Geoffrey Parker and Lesley M. Smith (eds), The General Crisis of the Seventeenth Century (London: Routledge & Kegan Paul, 1978), pp. 26–56. 71  ��������������������������������������������������������������������������������������� Ivo Schöffer, ‘Did Holland’s Golden Age Coincide with a Period of Crisis?’, in: Parker and Smith (eds), General Crisis, pp. 83–109. 68

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during the 1590s. The problem with the ‘accident’ argument, however, is that it portrays the problems of the other countries as bad luck, rather than expressions of systemic developments, related particularly to the process of state formation itself. As states were placing progressively larger demands on their populations, both financially in the form of taxes, and ideologically in the wake of the Reformation, significant segments of these populations began to resent such demands and the agents sent by the government to impose them.72 After about 1590, the Dutch Republic’s elites were able to manage these problems by combining considerable ideological restraint with a relatively transparent fiscal policy. Citizenship was crucial in both areas. Ideologically it provided an over-arching, non-denominational concept of community;73 financially it forced the authorities to think about popular participation in each stage of the financial process. There is no denying, though, that there was a tension between the local autonomy on which the Dutch concept of citizenship hinged, and the need for ever-increasing resources to maintain Great Power status. Ultimately, that tension caused the Dutch Republic to lose its competitive edge in international relations, as well as its economic edge. But this merely illustrates how the two processes of state formation and the creation of capitalist markets were moving from one stage to another. These transitions, we would claim, initially faced very high transaction costs, related to agency problems. Between the era of the feudal state and that of the modern, national state, therefore, city states and, in the seventeenth century, coalitions of quasi-independent towns, were well placed to address those costs, due to their efficient citizenship arrangements.

72  �������������������� Cf. Wayne te Brake, Shaping History. Ordinary People in European Politics 1500– 1700 (Berkeley: University of California Press, 1998). 73  ����������������� See Joke Spaans, Haarlem na de Reformatie. Stedelijke cultuur en kerkelijk leven, 1577–1620. Hollandse Historische Reeks vol. 11 (The Hague: Stichting Hollands Historische Reeks, 1989), p. 233; Gabrielle Dorren, ‘De eerzamen. Zeventiende-eeuws burgerschap in Haarlem’, in: Remieg Aerts and Henk te Velde (eds), De stijl van de burger. Over Nederlandse burgerlijke cultuur vanaf de middeleeuwen (Kampen: Kok Agora, 1998), pp. 76–8, and the same authors’ Eenheid en verscheidenheid. ���������������������������������������� De burgers van Haarlem in de Gouden Eeuw (Amsterdam: Bert Bakker, 2001); Aart Vos, Burgers, boeren en bazen: Het maatschappelijk middenveld van ’s-Hertogenbosch in de zeventiende en achttiende eeuw (Hilversum: Verloren, 2007)..

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Chapter 7

Rural Development and Landownership in Holland, c.1400–1650 Bas van Bavel

Introduction Holland was a front-runner in the rural development of early modern Europe. From the middle of the sixteenth century onwards, agriculture was characterized by a high degree of commercialization and specialization, for instance, in livestock farming, horticulture and industrial crops. It also became much more capital intensive with considerable investments in equipment, larger farmsteads, improved water management and drainage and fertilizers. At the same time the sector witnessed a rise in short-term leasing, the consolidation of tenant farms, wage labour, and a growth in the scale of operations. All these changes resulted in an increase in agricultural outputs and, even more importantly, in a rise in labour productivity. Agricultural development in turn had a strong effect on the growth of the economy as a whole. The supply of food to the non-agricultural population grew, as did the supply of raw materials to industries. Towns benefited from the expulsion of labour from the countryside, and the increased rural demand for consumption goods and other products. In brief, the transformation of the rural economy was one of the pillars of Holland’s Golden Age. Two centuries earlier, at the beginning of the fifteenth century, there was little to foreshadow such a development. In the late Middle Ages, Holland was to a large extent a peasant economy, characterized by small holdings and unspecialized agriculture, with peasants engaged in all kinds of activities, some related to the market and some to subsistence. Landownership was mainly small-scale and to a large extent in the hands of the peasants themselves. This situation was the legacy of the specific reclamation history of a region that consisted mainly of extensive peatlands. Most of the land had been reclaimed between the eleventh and thirteenth  ������������������������������������������������������������������������������� The author would like to thank Jean-Laurent Rosenthal for valuable comments on an earlier draft of this chapter.   ������������� J. de Vries, Dutch rural economy in the Golden Age, 1500–1700 (New Haven/ London,1974), pp. 136–55, and J. Bieleman, ‘Dutch agriculture in the Golden Age, 1570–1660’, in: K. Davids and L. Noordegraaf (eds), The Dutch economy in the Golden Age (Amsterdam, 1993) pp. 159–82, esp. pp. 162–70.   ������������� J. de Vries, Dutch rural economy, pp. 49–56 and 62–73. 

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centuries in large-scale campaigns, organized and promoted by the count of Holland. In order to attract settlers for the difficult clearing work in this labourscarce region, the sovereign lord had to offer favourable conditions. As a reward for their work, peasant-colonizers not only received their personal freedom, but also ownership rights to the land. Each family obtained a farm of a standard size, 13.5 hectares, which was suitable to feed and maintain a family. There was little in the social property relations of the late medieval period that pointed to imminent economic change. Large landownership of noblemen and religious institutions was almost completely absent, since almost all land was divided among peasant-colonizers. Population growth and the concomitant inheritance partitions had the effect of fragmenting farms, but this did not structurally undermine the society of free, land-owning peasants. Furthermore, short-term leasing was long in coming as a result of the lack of clarity and security for tenants and landowners in the arrangement of leasing in Holland. And yet, somewhere between the fifteenth and seventeenth centuries, Holland shook off the unspecialized peasant character of her rural economy to become the single most advanced agricultural region of Europe, with large, capital-intensive and specialized tenant farms. The relative swiftness and profoundness of this change makes the region a particularly interesting case. However, despite all literature devoted to Holland’s Golden Age, little is known about the trajectory of this change and the causes underlying it. This chapter analyses the changes in landownership and lease arrangements to explain Holland’s swift and profound transformation from a peasant economy to a highly specialized commercial one. The first section compares agricultural changes in Holland with similar and different trajectories of rural development elsewhere in Europe. This comparison reveals the importance of landownership structures and the institutional arrangement of leasing, which are two elements we lack clarity about for sixteenth-century Holland. The section ‘Ownership and lease rights to land in Holland before the sixteenth century’ establishes the nature of property rights to land in Holland in the period before 1500, while the following section describes changes in these rights in the course of the sixteenth century. The parts on distribution of land in Holland and in the new polders explore the social distribution of landownership in the sixteenth and early seventeenth century, while the next section looks at the exploitation of the land that changed hands. ‘Explaining the growth in burgher landownership’ discusses why burghers bought land belonging to peasants. The final section compares the development of social property relations in Holland with other parts of Europe.

  ������������������� H. van der Linden, De cope. Bijdrage tot de rechtsgeschiedenis van de openlegging der Hollands-Utrechtse laagvlakte (Assen,1956) pp. 20–36 and 247–8.   ������������������������������ Cf. below, Section 3, pp. x–x.

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Agricultural change in early modern Europe The rapid development of the rural economy of Holland between the fifteenth and seventeenth centuries was certainly not the norm in Western Europe. There were many regions that retained a peasant structure, such as inland Flanders, Brabant and most parts of Germany and France. Here, the rural economy was either stagnating or following a trajectory of involution, with the fragmentation of farms, the dominance of subsistence farming and low and stagnating labour productivity often well into the nineteenth century. But other parts of North-Western Europe did witness rapid change, sometimes even predating that which took place in Holland. This was the case from the fifteenth century onwards in Dutch regions such as the Guelders river area, Salland, the Frisian sea clay area and also in coastal Flanders, and it occurred somewhat later, from the middle of the sixteenth century onwards, in parts of England and around Paris as well. At an early date, these regions had already become characterized by a strong commercialization of agriculture, increasing capital investment in agriculture, larger farms, and the growth of wage labour. Historians have put forward various explanations for the early rural transitions in these regions. One explanation can be labelled ‘peasant growth’, with the peasants seen as active investors, who benefited from the growth of urban demand, and paved the way for rural development. An example of this is found in Phil Hoffman’s work on the region around Paris in the early modern period. According to Hoffman, total factor productivity in agriculture rose here, not as the result of the consolidation of large farms or enclosure, but mainly as a result of ordinary peasants having specialized for the market. A similar view is expressed by Robert Allen in his analysis of developments in seventeenth- and early eighteenth-century England. According to him, it was not the large-scale tenant farmers but the yeomen, or small-scale, owner-occupying family farmers, that were responsible for a large part of the productivity growth in English agriculture.

  ��������������������������������������������������������������������������������� E. Thoen, ‘A “commercial survival economy” in evolution. The Flemish countryside and the transition to capitalism (Middle Ages–19th century)’, in: P. Hoppenbrouwers and J.L. van Zanden (eds), Peasants into farmers? The transformation of rural economy and society in the Low Countries (Middle Ages–19th century) in the light of the Brenner debate. CORN Publication series 4 (Turnhout, 2001) pp. 102–57, esp. pp. 111–19, and R. Brenner, ‘The agrarian roots of European capitalism’, Past & present 97 (1982), 16–113, esp. pp. 29–36 (general) and 41–5, 76–83 and 96–7 (France).   ��������������������������������������������������������������������������������������� B.J.P. van Bavel, ‘Land, lease and agriculture. The transition of the rural economy in the Dutch river area from the fourteenth to the sixteenth century’, Past & Present 172 (2001), 3–43.   ��������������� Ph.T. Hofmann, Growth in a traditional society. The French countryside, 1450– 1815 (Princeton,1996), esp. pp. 132–3, 162–70 and 190–92.   ������������ R.C. Allen, Enclosure and the yeoman (Oxford, 1992) pp. 14, 56–7, 137–49, 170 and 204–10. Cf. also a similar view expressed by P. Croot and D. Parker, ‘Agrarian class structure

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Both Hoffman and Allen advocate re-evaluating the contribution of peasants to agricultural development, and they oppose the views of most other rural historians, be they Malthusian, neo-Smithian or Marxist.10 These other historians, such as Emmanuel Le Roy Ladurie and Robert Brenner, differ sharply in their view on the driving forces in the rural economy, but they agree that peasant economies are not capable of self-induced economic growth.11 Some argue that small, land-owning peasants choose self-sufficiency and security over specialization for the market, either because of traditional beliefs or a rational avoidance of unfavourable market conditions. Others, such as Brenner, would argue that the combination of peasant landownership with lords extracting surpluses through non-economic means reduces the possibilities and/or incentives for peasants to invest and to develop agriculture. Still other historians, such as Le Roy Ladurie, emphasize Malthusian tendencies that lead to fragmentation and impoverishment among peasants. Whatever the differences, these authors agree that peasant society was, at least in economic terms, a société immobile. Thus, according to this view, only the expropriation of the peasantry, and the subsequent rise in larger landownership could pave the way for economic development in the countryside. Recent research on the Guelders river area to the east of Holland offers a third potential explanation. In this area the rapid development of agriculture was linked not to the activities of large landowners, nor to those of the peasants, but rather to the rise in short-term leasing and the growth of large tenant farms. Here tenant farmers geared their production almost entirely to the market in what became a highly competitive environment. In order to be successful in the continuous struggle for land in the lease market, they had to commercialize, to specialize and to reduce labour-inputs.12 The tenant farmers were not the only parties forced to invest, however. Landlords also tried to attract able tenants by offering to participate in capital investments. Their combined efforts resulted in a significant rise in labour productivity.

and the development of capitalism: France and England compared’, in: T.H. Aston and C.H. E. Philpin (eds), The Brenner Debate: Agrarian class structure and economic development in pre-industrial Europe (Cambridge, 1985) pp. 79–90. 10  ���������������������������������������������������������������������������������� There is, however, a problem with the terminology, in that Allen’s yeoman farmers and Hofmann’s French farmers are portrayed as peasants, but their farms are rather large and operate in regions dominated by large landownership and lease land. They are therefore not a typical example of small, land-owning peasants. Cf. also Section 9. 11  ������������������������������������������ E. Le Roy Ladurie, ‘L’histoire immobile’, Annales 29 (1974), 673–692, and R. Brenner, ‘The agrarian roots’, pp. 30–36, and E. Le Roy Ladurie, ‘The social basis of economic development’, in J. Roemer (ed.), Analytical marxism (Cambridge,1986) pp. 23–53, esp. pp. 27–32 and 51–3. 12  ���������������������������������������������������������������������������� B.J.P. van Bavel, ‘Elements in the transition of the rural economy: Factors contributing to the emergence of large farms in the Dutch river area (15th–16th centuries)’, in: P. Hoppenbrouwers and J.L. van Zanden (eds), Peasants into farmers?, pp.179–201, and B.J.P. van Bavel, ‘Land, lease and agriculture’.

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In this third scenario the large tenant farmers, not the landowners, were the main advocates of rural change. There was no breach in landownership structures, and no expropriation of the peasantry, since no landowning peasants had ever been dominant here. Rather, the Guelders river area was a region which had been dominated by large landownership for centuries, but in the thirteenth and fourteenth centuries, it had already switched over to short-term leasing, thereby clearing the way for the increase in the number of large tenant farms. Decisive factors in this transformation were, in addition to the presence of market demand, regional elements such as the emergence of exclusive and absolute property rights to land, security of landownership, a well-established, secure and competitive lease system, and in particular the social property structures – i.e. the availability of large landownership to be leased out on a short-term basis. In combination, these factors appear to have been conducive to a strong development in the rural economy in the Guelders river area as evidenced by the open competition and high turnover on land markets, the flexibility of the lease market, the security offered to both owner and tenant, the unconstrained use of the land and the stimulus for investments the system offered. The ‘tenant-farmer’ explanation is applicable to many other regions where a rural transformation took place early, such as coastal Frisia, coastal Flanders, and various parts of England. In these areas three-quarters or more of the land was in the hands of large landowners from the high Middle Ages onwards. This ownership structure never fundamentally changed; however the rise in short-term leasing did enable the emergence of large tenant farms. It is with respect to this crucial point that Holland is exceptional. In the late Middle Ages the economy still was largely characterized by small peasant holdings and unspecialized agriculture. What then was the driving force behind the substantial changes in the late sixteenth and seventeenth centuries? Two approaches to the explanation of the rural development in Holland are possible which correspond to the differing historiographical views. One could hypothesize that it was possible for peasant areas to develop strongly and to avoid subsistence farming and economic stagnation. In this scenario, a relatively large segment of the peasant population achieved upward social mobility, with the peasants themselves increasingly specializing for the market. This would in turn have resulted in the gradual expansion of the larger farms within this peasant structure, and thus the gradual evaporation of the peasant character of the region. Alternatively, one could hypothesize that at some point in time, between the fifteenth and the late-sixteenth centuries, the peasant character of the Holland countryside had been fundamentally altered by a breach in landownership structures, making Holland more similar to the other Dutch regions dominated by large landownership, and that this alteration was one of the main reasons for the rapid development. Peter Hoppenbrouwers favours an explanation along the lines of Hoffman and Allen. He stresses the importance of peasant freedom and the persistence of peasant landownership in Holland. In the mid-sixteenth century, peasants

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still held a prominent position in landownership, and only at a relatively later date did peasant landownership give way to urban capital and the burgher’s desire for buying land. In Hoppenbrouwers’s view this peasant structure, with small farms often consisting of both owned and leased land, did not stand in the way of commercialization, specialization, or a growth of labour productivity. Growing urban demand, together with extensive collective investments made in infrastructure, the wide availability of capital and the possibilities for developing alternative sources of income, were enough to set agricultural change in motion, despite the predominance of peasant farms.13 Another hypothesis, proposed by Jan de Vries, explains the development of the Holland countryside mainly in terms of strong and successful occupational specialization. In the course of the sixteenth and seventeenth centuries, farm households were increasingly concentrating on specialized agricultural production and shedding all kinds of non-agricultural activities. In the course of this process, unspecialized and self-contained peasant households were developing into commercial farms, leading to increasing investment, specialization and occupational differentiation, but also to the proletarianization among the rural population.14 Thus, according to De Vries, it would appear that these large farmers emerged from within the peasantry, and their specialized agriculture grew out of a peasant structure. Jan Luiten van Zanden also looks at the process of specialization in the countryside, but he views the exceptional development of the rural economy largely as a result of early and thorough proto-industrialization. The peasants’ decision to tap other, non-agricultural sources of income resulted from ecological problems with subsiding peat soils, combined with the possibilities offered by the presence of strong market demand in the southern parts of the Low Countries.15 De Vries considered Holland’s proto-industries as part of the unspecialized peasant economy, but Van Zanden insists it was a main path to specialization, commercialization and a growing importance of wage labour. After 1580 in particular, proto-industry resulted in a growing concentration of capital in the hands of entrepreneurs and a proletarianization of the rural producers, with the peasants gradually losing ownership of their land.  ���������������������������������������������������������������������������� P. Hoppenbrouwers, ‘Mapping an unexplored field. The Brenner debate and the case of Holland’, in: P. Hoppenbrouwers and J.L. van Zanden (eds.), Peasants into farmers?, pp. 41–66. 14  ������������� J. de Vries, Dutch rural economy, pp. 119–21, and J. de Vries, ‘The transition to capitalism in a land without feudalism’, in: P. Hoppenbrouwers and J.L. van Zanden (eds.), Peasants into farmers?, pp. 67–84, esp. pp. 77–80. 15  ����������������� J.L. van Zanden, The rise and decline of Holland’s economy: merchant capitalism and the labour market (Manchester, 1993) pp. 29–41. Cf. also J.L. van Zanden., ‘A third road to capitalism? Proto-industrialisation and the moderate nature of the late medieval crisis in Flanders and Holland, 1350–1550’, in: P. Hoppenbrouwers and J.L. van Zanden (eds.), Peasants into farmers?, pp. 85–101. 13

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Elsewhere I have demonstrated how proto-industrial activities in Holland had already begun in the fourteenth century, and had radically changed the character of the rural economy and society over the subsequent two centuries. The scale of nonagricultural activities increased, and peasant producers lost their semi-independent position when they lost control over the means of production and became subjected to urban capital as wage-labourers.16 Thus, the successful proto-industrialization in Holland contributed significantly to a rapid transition to capitalism and the disappearance of peasant landownership. Robert Brenner, on the other hand, sees the peasants in Holland as having preserved their landownership. He accounts for the strong development of the rural economy in Holland to a large extent by the fact that peasants, despite continued ownership of the land, lost their means of subsistence due to the ecological degradation and subsidence of the peat soils in Holland. This eliminated the possibility of subsistence farming and forced farmers into other agricultural and non-agricultural sectors, making them dependent upon the market for their inputs and for the marketing of their products.17 This transformed them into marketdependent, capitalist farmers, forced to invest more capital and to reduce costs. The loss of a means of subsistence and that of continued peasant landownership thus went hand in hand according to Brenner. What is clear is that the development of Holland’s rural economy critically depended on who owned the land, and who decided how to exploit it. The highly divergent views on these key points discussed above lend weight to the claim that surprisingly little is known about the actual changes in landownership and tenurial relations that occurred between the fourteenth and seventeenth centuries. The remainder of this chapter, therefore, is an attempt to shed much-needed light on the link between landownership and land use.

Ownership and lease rights to land in Holland before the sixteenth century In the late medieval and early modern period in several regions in Western Europe, the emergence of more absolute and exclusive property rights occurred in conjunction with the creation of a clearly defined system of lease rights.18 In 16

 ��������������������������������������������������������������������������� B.J.P. van Bavel, ‘Early proto-industrialization in the Low Countries? The importance and nature of market-oriented non-agricultural activities on the countryside in Flanders and Holland’, BTFG (2003). Cf. also B.J.P. van Bavel and J.L. van Zanden, ‘The jump-start of the Holland economy during the late medieval crisis, c.1350–c.1500’, Economic History Review 57 (2004), 503–32. 17  ���������������������������������������������������������������������������������������� R. Brenner, ‘The Low Countries in the transition to capitalism’, in: P. Hoppenbrouwers and J.L. van Zanden (eds.), Peasants into farmers?, pp. 275–338, esp. pp. 310–15. Cf. also J.L. van Zanden, The rise, pp. 30–31. 18  ��������������������������������������������������������������������������������������� B.J.P. van Bavel, ‘The land market in the North Sea area in a comparative perspective, 13th–18th centuries’, in: S. Cavaciocchi (ed.), Il mercato della terra secc. ����������������� XIII–XVIII. Atti

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Holland, however, clear rules for landownership and leasing did not develop in tandem. Instead, modern ownership rights date back to the large-scale reclamation campaigns of the eleventh to thirteenth centuries. As a reward for their clearing activities, peasant-colonizers not only received their personal freedom, but also ownership rights to the land. The settlers had only to pay a small fixed fee for the possession of the newly reclaimed land, and as such, were not subjected to the influence of the feudal system.19 Thus, the settlers of the land held absolute and near exclusive rights to the land from the period of occupation onwards, and could therefore easily buy and sell the land. Holland’s land market compared favourably with several other parts of Western Europe, where the transfer of land was often far more complicated, and where relatives, neighbours, fellow villagers or manorial lords all had certain rights or claims to the land. They could therefore slow down or even prevent the buying or selling of land, and this effectively blocked the emergence of an open, flexible land market. In Holland, by contrast, these overlapping claims and restrictions on the sale of land were virtually non-existent. The land market was transparent and open to all, and from no later than the fifteenth century onwards, land was often sold in public, with most auctions being announced clearly and properly after Sunday mass.20 The public auctions created ample possibilities for wealthowners to purchase land. The lack of a strong feudal tradition in Holland also favoured the easy transfer of land.21 In other parts of Northwestern Europe, including Flanders, Brabant and several English regions, lords often levied a tax on sales of ‘their’ feudal or manorial land.22 The local lords registering land transfers also levied taxes on transactions. For example, in the southern parts of the Low Countries lords exacted a sum for each sale of land under their jurisdiction. They sometimes did this for all sales of land within their seigneurie, which in inland Flanders amounting to some eight to 16 per cent of the sale price.23 This prerogative of the lords was even stronger with the customary land in England. There the seller of land had to pay a delle ‘Settimane di Studi’ e altri convegni 35 (Prato, 2003) pp. 119–45. 19  ������������������� H. van der Linden, De cope. ���������������������������������� Cf. also above section 1, pp. x–x. 20  ����������������������� O. Moorman van Kappen, Met open buydel ende in baren gelde, pp. 8 and 10, for instance in West-Friesland. 21  ������������������������������������ J. de Vries and A.M. van der Woude, The first modern economy. Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (Cambridge,1997) pp. 159–65. 22  ������������������������������ Cf. for instance R. Opsommer, ‘Omme dat leengoed es thoochste dinc van der weerelt’. Het leenrecht in Vlaanderen in de 14de en 15de eeuw (Brussel,1995) pp. 427 and 533–53. 23  ���������� E. Thoen, Landbouwekonomie en bevolking in Vlaanderen gedurende de late middeleeuwen en het begin van de moderne tijden. Testregio: de kasselrijen van Oudenaarde en Aalst (eind 13de–eerste helft 16de eeuw) (Gent, 1988) pp. 779–880, and E. Scholliers and F. Daelemans, De conjunctuur van een domein: Herzele, 1444–1752 (Brussels, 1981) pp. 59–62. ������������������������������������������������������������������� Cf. also B.J.P. van Bavel, ‘The land market in the North Sea Area’.

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fine and a heriot to the lord, and the buyer an entry fine. Such onerous manorial or lordly exactions did not exist in Holland. In short, rights to land in this free peasant society had been clearly established in the high Middle Ages and had been in use since this period without overlapping claims to the land or its produce, a situation differing markedly from that in most other parts of Western Europe. Lease rights in Holland, on the other hand, were less clearly established. Outgoing tenants could claim all kinds of customary rights to the land they had leased, which disrupted the smooth completion of a lease agreement. Termination of a lease relationship required several steps, starting with the timely notification of the lease termination, then a formal termination notice issued by an usher, and often even a judicial procedure, i.e. the procedure of ontruyming or ontwaringe (= clearing or discontinue of the use).24 These steps were time-consuming in and of themselves, but tenants in Holland also claimed the right to silent sub-letting (tacita reconductio) of the tenancy on the same conditions, without the consent of the lessor.25 In some cases, tenants even sold the right to subletting to third parties or made it a condition of marriage or inheritance settlements. To remain in possession of the lease, former tenants often threatened or even attacked the new tenants, detroyed their crops and hurt or drove off their cattle.26 Under such conditions leasing was not very attractive for landowners. They could not set prices in accordance with the market value of the land, and they could even lose control over their own property. In Holland the rights of tenants were firmly rooted in customs and common law.27 In some cases such rights were even explicitly stated in the local laws, as was the case in the by-law of the village of Langerak (1502), in which the right of preference for the sitting tenant is addressed.28 Underlying these customs and laws was the belief in an enduring right to land which is likely related to the dominant peasant structure in Holland. Those who used the land, whether owners or tenants, valued highly securing control over their land, and Holland was not the only area where peasants challenged the finality of lease arrangements; similar situations can be found in elsewhere in the north of the Low Countries, for example, in parts 24

 ���������������� J.Th. de Smidt, Rechtsgewoonten: de gebruiken en plaatselijke gebruiken waarnaar het Burgerlijk Wetboek verwijst (Leiden,1954) pp. 92–6. 25  ���������������� J.Th. de Smidt, Rechtsgewoonten, pp. 104–6 and 126–33, and J. Kuys and J.T. Schoenmakers, Landpachten in Holland, 1500–1650 (Amsterdam,1981) pp. 23–5. 26  ������������������������������������� C. Cau, S. van Leeuwen et al. (eds), Groot placaet-boeck, vervattende de placaten, ordonnantien ende edicten van de doorluchtige, hoogh mog. heeren Staten Generael etc,. part I (1658), kol. 329–42 (1580) and 363–4 (1515), part II, kol. 2515–20 (1658) and part III, p. 586 (1452). 27  �������������� C. Cau (ed.), Groot placaet-boeck, part I (1658), kol. 363–4 (1515): Rechten die men hier van ghewoonlijcken is ten landt-rechte te houden, te verwachten of te verbeyden. 28  ���������������������������������������������������������������������� B.J.L. de Geer (ed.), ‘De heerlijkheid van Langerak en hare rechten’, VMOVR 3 (1898) pp. 163–81, esp. 173–5: Voort of yemand lant gehuurt hadde ende die huur uytgink, soo soude die bruyker een voorceur hebben van dat landt dat sy gebruykt hadden.

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of Overijssel and Groningen.29 In the latter region, tenants had strong rights to the land they leased, lease prices were almost frozen and leases normally were renewed or transmitted by inheritance, despite the fact that in theory the lease was only granted for a limited term. In practice, this system of leasing, labelled here beklemrecht (= the right of clenching), led to a kind of hereditary lease or even outright ownership for the tenant. A tendency towards this sort of continuation or hereditary transmission of the lease can also be observed in parts of England and France, such as in Picardy and Lorraine.30 Peasants in many parts of Northwestern Europe were clearly reluctant to accept a strict limit in the terms of their leases. The insecurity that these elements created reduced for landowners the attractiveness of leasing their land out, since they ran the risk of losing control of their land. However, there is a further reason why leasing in Holland remained of limited importance in this period: the social distribution of landownership, or more specifically, the dominance of small peasant landownership. Due to the unique occupation and reclamation history of most parts of late medieval Holland, some two-thirds to three-quarters of the land was owned by peasants, and this land was rarely if ever leased out. The information we have on leasing in Holland suggests that among the peasants, only the widows and orphans chose to lease their lands, but peasant families did so rarely.31 Even at the end of the sixteenth century, peasant landowners still used as much as four-fifths of their lands themselves.32 As a result, the rise to dominance of short-term leasing occurred relatively late in Holland compared to the surrounding regions. Fiscal registers reveal that around 1550 no more than a third of the land in Holland was given out in lease. This was the case, for example, in West-Friesland, in the peatlands of Delfland and Schieland (27 per cent), and in the district of Rijnland (38 per cent).33 This share 29  �������������������������������������������������������������������������������� W.J. Formsma, ‘Beklemrecht en landbouw. Een agronomisch-historische studie over het beklemrecht in Groningen, in vergelijking met ontwikkelingen elders’, Historia agriculturae 13 (1981) pp. 7–135. 30  ���������� M. Bloch, French rural history. An essay on its basic characteristics (London,1966) pp. 179–80, and R.W. Hoyle, ‘Tenure and the land market in early modern England, or a late contribution to the Brenner debate’, Economic history review 43 (1990), 1–20, esp. p. 9, and more extensive R.W. Hoyle, ‘Long-term trends in tenure in the British Isles, 1300–2000: a comparative survey’, unpublished paper for the ESSHC conference in The Hague (2002). 31  ����������������������� P.C.M. Hoppenbrouwers, Een middeleeuwse samenleving. Het Land van Heusden, ca.1360–ca.���� 1515 (Wageningen,1992), p. 437. 32  ������������������������������������������������������������������������� B.J.P. van Bavel, ‘The emergence and growth of short-term leasing in the Netherlands and other parts of Northwestern Europe (11th–16th centuries). A preliminary investigation into its chronology and causes’, to be published in B.J.P. van Bavel and Ph. Schofield (eds), The emergence of leasing, and B.J.P. van Bavel, Transitie en continuïteit. De bezitsverhoudingen en de plattelands-economie in het westelijke gedeelte van het Gelderse rivierengebied, ca.1300–ca.1570 (Hilversum,1999) pp. 525–6. 33  ������������������� H.A.E. van Gelder, Nederlandse dorpen in de 16e eeuw (Amsterdam,1953) p. 18; W.J. Diepeveen, De vervening in Delfland en Schieland (Leiden, 1950) pp. 57–63, and E.F. van Dissel, ‘Grond in eigendom en in huur in de ambachten van Rijnland omstreeks

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was quite low compared to other parts of the Netherlands, such as coastal Frisia, Salland and the Guelders river area, where some 80–90 per cent of the land was leased out for short periods of time.34 Here, in contrast to Holland, the expiration of the lease was strictly upheld, and this was likely to have been the case from the earliest period of short-term leasing around 1300. This is apparent from the high incidence of leases; only rarely was a parcel of land leased again by the same tenant after the expiration of the lease term.35 Renewal of the lease in these regions was only possible if the lessee held a strong economic position in the lease market. It is precisely in these regions that leasing had already become the dominant form of land tenure in the course of the fourteenth century. In Holland, on the other hand, lease holding stagnated due to the insecurity involved in leasing land and the dominance of peasant landownership. This prevented the emergence of large tenant farms and probably also of a large-scale, commercial agriculture in Holland until well into the sixteenth century.

Changes in property rights to land in the sixteenth century The situation in Holland changed over the course of the sixteenth century. In 1600 leasing had become the dominant mode of exploiting landownership. Two factors contributed to this transformation: the growth of burgher landownership and the increased clarity in the specification of leasing arrangements. Beginning with the latter, in the first half of the sixteenth century, authorities in Holland started to take action against claims of sub-letting or inheritance of leases. Edicts were promulgated stipulating high fines in the case of infringements or even corporal punishment.36 Authorities also required written lease contracts to state the termination date of the lease.37 This requirement gave landlords the necessary security to enter into lease contracts. The new edicts were effective. They were increasingly enforced as is demonstrated by the verdicts of courts and councils. In the sixteenth century, the Hof van Holland (the Court of Holland) and the Grote Raad (the Great Council) were active in many cases concerning leases of land. Around 1550 the Great Council, the supreme court in the Low Countries, pronounced judgement on several cases 1545’, Handelingen en mededeelingen van de maatschappij der Nederlandsche letterkunde (1896/1897) pp. 152–4. 34  ���������������������������������������������������������� B.J.P. van Bavel, ‘Land, lease and agriculture’, pp. 27–8. 35  ������������������ B.J.P. van Bavel, Goederenverwerving en goederenbeheer van de abdij Mariënweerd, 1129–1592 (Hilversum,1993) pp. 354–5. Cf. also H.P.H. Jansen, Landbouwpacht in Brabant in de veertiende en vijftiende eeuw (Assen,1955) pp. 77–84. 36  �������������� C. Cau (ed.), Groot placaet-boeck, part I (1658) kolommen 363–4 (1515). Strengelijck daeraf gecorrigeert te werden in heur lijf ende goederen. 37  �������������� C. Cau (ed.), Groot placaet-boeck, part I (1658) kolommen 363–4 (1515): Ende dat sij daeraf hebben huyr-cedullen bij geschrifte.

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against tenants who had leased a piece of land, or had sublet land to another tenant, against the will of the landlord.38 Even when the lease was transferred to a son or daughter, or when the tenant possessed a right similar to hereditary tenure, the central courts ruled against this, thereby placing the consent of the landlord clearly above the tenant’s freedom to act.39 With greater clarity concerning the rights of tenants and owners, leasing became a more interesting option for landowners in Holland. Yet the question remains as to why authorities and courts began to apply this policy in the sixteenth century. One factor contributing to this change was the growing reception of Roman law.40 Medieval property rights, with their intermediate and overlapping claims to land and its produce, were increasingly forced by jurists into two categories: either full property (only if the user/possessor was able to show clear title deeds) or lease (the Roman locatio-conductio). Changes in jurisdiction meant that these new rules were put into effect in Holland. Whereas local courts often invoked local customs to back the claims of tenants, the central Habsburg courts began to apply the doctrines of Roman law.41 This changed tenurial relations in Holland because from the late fifteenth century onwards, litigants could appeal against local rulings, first in the court of Holland, which was also influenced by Roman law, and then before the Great Council. Another factor that may have changed attitudes towards leasing was the soaring inflation of the sixteenth century.42 Landowners wanted to adjust existing lease prices to prevent a decrease in real income. This would have led them to try to ban existing tenant practices, and to adjust lease prices. The increase in population and the growing demand for land must have made it easier to pressure both the users of the land, and indirectly also the courts, in order to succeed. However, whereas inflation and the reception of Roman law occurred throughout Europe, the rapid change in leasing arrangements was unique to Holland. Thus, there must have been other factors at play.

38  ����������������������� J.Th. de Smidt et al., Chronologische lijsten van de geëxtendeerde sententiën en procesbundels (dossiers) berustende in het archief van de Grote Raad van Mechelen, part III (1979) sentences of 1537 April 21, 1539 September 6 and 1541 July 30; part IV (1985) 1549 January 26, 1550 December 24, etc. 39  �������������� For instance: Sententiën en gewezen zaken van den hoogen en provincialen raad in Holland, Zeeland en West-Vriesland, (Rotterdam,1662) pp. 242–4 (1529) and 409–12 (1540), the latter case went explicitly against the local custom. 40  ����������������������������������������������������������������������������������� An element highlighted particularly in the older literature on the history of law, e.g. A.S. de Blecourt, Beklemrecht en stadsmeierrecht (Groningen/Dan Haag,1920) part I, pp. 27–32. 41  ������������� R. Feenstra, Verkenningen op het gebied der receptie van het Romeinse recht (Zwolle,1950) pp. 34–46. 42  �������������� D.H. Fischer, The great wave. Price revolutions and the rhythm of history (New York,1996) esp. pp. 70–91.

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One of these other factors would seem to have been the registration and protection of landownership. Authorities began to register rights to land for fiscal reasons, so that, for example, it would be possible to check tax declarations or to tax transfers of land. For similar reasons, authorities were also demanding that the land sales and leases be registered by aldermen’s courts.43 Holland, along with a few other regions in the northern parts of the Low Countries, were the forerunners in this development. Yet the increased security this offered for landowners was in itself not enough to encourage more leasing. In Germany and France, for example, the combination of increasing taxation and improved registration did not lead to more regular sales of land or to an increase in the number of leases. On the contrary, it led to a Bauernschutzpolitik and the strengthening of peasant landownership, thus restricting the number of leases. In many parts of Germany, territorial states began to support the peasantry and its right to landownership against other claims and the greed of noblemen and burghers for land from the early sixteenth century onwards.44 They did so in order to protect public revenue, which increasingly depended on the taxation of peasant landownership. This development in Germany and Holland seems to be related to the differences in social structure and in the fiscal regime. In Holland, one of the most urbanized areas of Europe, cities and urban elites played an important part in both areas. They worked to remove any obstacles against an increase in urban landownership in the countryside. At the same time, however, their land was not exempt from taxation, in contrast to many other parts of Western Europe. From the late fourteenth century onwards, the count of Holland had already secured the levying of taxes on burgher-owned land, sometimes in open conflict with the cities.45 Hence there was no fiscal reason for the central government to limit the growth of urban landownership. And since the cities and burghers paid an ever increasing share of taxes and beden (taxes levied by consent of the estates),46 there was no need to protect peasant landownership; rather it was in the interest of authorities to offer possibilities for urban growth.

43  �������������� C. Cau (ed.), Groot placaet-boeck, part I (1658), kol. 363–4 (1515): Ende dat sij daeraf hebben huyr-cedullen bij geschrifte als ’t behoort. Cf. �������������������������������� B.J.P. van Bavel, ‘The land market in the North Sea Area’. 44  ������������� W. Achilles, Landwirtschaft in der frühen Neuzeit (München,1991) pp. 35–41, and W. Achilles, Deutsche Agrargeschichte im Zeitalter der Reformen und der Industrialisierung (Stuttgart,1993) pp. 25, 47 and 73–6. 45  ������������������� J.A.M.Y. Bos-Rops, Graven op zoek naar geld. De inkomsten van de graven van Holland en Zeeland, 1389–1433 (Haarlem,1993), pp. 76, 96 and 225–6: Gouda (1390), Medemblik (1397) and Schoonhoven (1401). Cf. ���������������������������������������������� also P. Hoppenbrouwers, ‘Town and country in Holland, 1300–1550’, in S.R. Epstein (ed.), Town and country in Europe, 1300–1800 (Cambridge, 2001) pp. 54–79, esp. p. 73, who shows that burghers contributed by way of the urban taxes they paid. 46  ������������������� J.A.M.Y. Bos-Rops, Graven op zoek naar geld, pp. 225–6, 240 and 253–4.

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The final and perhaps most fundamental factor in the changing attitude towards leasing in Holland is the distribution of land among social groups. Across Western Europe the landownership structure displayed a strong continuity from the Middle Ages until well into the modern period.47 In Holland, however, a fundamental break in the social distribution of landownership occurred. At the turn of the sixteenth century, Holland was still a peasant economy of small-scale holdings exploited by the owners. The land of burghers was fragmented and limited in size. This began to change in the middle of the sixteenth century, and accelerated in the decades after 1580. It has often been argued, that in these years, the acquisition and accumulation of land by wealthy town dwellers took on enormous proportions. Surprisingly enough, no attempt has been made to document this development.

The distribution of land in Holland in 1560 We do not know when Holland’s burghers first began to buy land from peasants.48 The process is likely to have begun in the thirteenth or early fourteenth century, when the first small cities began to emerge in Holland, and it must have gained some momentum with the first real wave of urbanization in Holland in the second half of the fourteenth century, when the urbanization rate rose from 23 to 33 per cent.49 This is the scenario borne out, for example, by estimates available for the city of Leiden. Landownership of the Leiden patricians rose from about 850 hectares in the first half of the fourteenth century to roughly 1,400 hectares around 1400.50 However, in the absence of more detailed investigations, and given the paucity of sources, the exact chronology of early urban expansion in Holland’s countryside remains unclear. 47

 ���������������������������������������������������������������� B.J.P. van Bavel, ‘Land, lease and agriculture’, esp. pp. 10–19.  ������������������������������������������������������������������������������������� In all likelihood, burghers rarely bought land from owners other than peasants (Pace P.C.M. Hoppenbrouwers, ‘Mapping an unexplored field’, p. 46). Due to Holland’s specific occupational history, nobles did not possess more than five to ten per cent of the land. Burghers did not buy land from religious institutions either; the proportion of rural property owned by religious institutions grew rather than declined in the course of the sixteenth century (cf. infra). For noble landownership in the late Middle Ages, see the impressionistic overview by A. Janse, Ridderschap in Holland. Portret �������������������������������������������������������� van een adellijke elite in de late Middeleeuwen (Hilversum,2001) pp. 129–39. For ����������������������������������������� the 16th century: H.F.K. van Nierop, Van ridders tot regenten. De Hollandse adel in de zestiende en de eerste helft van de zeventiende eeuw, (Dieren, 1984), pp. 111–15. For a very rough estimate of the property of urban religious institutions before 1500, see: J. de Vries, Dutch rural economy, p. 42. 49  ������������������������������������������������������� B.J.P. van Bavel and J.L. van Zanden, ‘The jump-start’. 50  ���������������� F.J.W. van Kan, Sleutels tot de macht. De ontwikkeling van het Leidse patriciaat tot 1420 (Hilversum,1988) pp. 61–9 and appendix 2, pp. 282–8. Unfortunately, ������������������������ attempts to quantify urban or patrician landownership for the later period are virtually absent in H. Brand, Over macht en overwicht. Stedelijke elites in Leiden, 1420–1520 (Leuven, 1996) esp. pp. 211–17. 48

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By the mid-sixteenth century a large proportion of the land in Holland had come into the possession of burghers. This, at least, represents the consensus view found in the relevant literature.51 Actual figures to support this assertion, though, are lacking. In order to fill this lacuna, we have reconstructed the distribution of land in Holland for the year 1560, for which considerable detailed and reliable fiscal records exist.52 The figures below are calculated from the transcriptions of records that were made for each village. In total, we consulted the records for some 50 villages, covering 33,020 hectares of land, or roughly 13 per cent of the total land in Holland. We calculated the percentages of urban landownership owned by burghers and by urban institutions (i.e. charitable institutions, hospitals, chapters and monasteries). The exact figures per village are found in the appendix; in the table below the results are summarized for the three regions of Holland: the northern region of Holland (north of the IJ), the central region, and the southern region (south of the river Lek):

51  ��������������������������������������������������������������������������������� Some estimates have been put forward which are themselves often based on unsound estimates. H.F.K. van Nierop, Van ridders tot regenten, pp. 111–12, speculates that 20–30 per cent of the land was already in the hands of burghers at the beginning of the 16th century. B.J.P. van Bavel, Transitie en continuïteit, pp. 386–9, arrives at an estimate of 20–30 per cent of the land for the first half of the 16th century, which rose to 30–35 per cent around 1570. P. Hoppenbrouwers, ‘Van waterland tot stedenland: de Hollandse economie, ca.975–ca.1570’, in: T. de Nijs and E. Beukers (eds.), Geschiedenis van Holland part I (Hilversum, 2002) pp. 103–48, p. 146, estimates that a quarter of the land was owned by burghers and an additional ten per cent by urban institutions in the mid-sixteenth century. 52  ���������������������������������������������������������������������������������� On these records: J.A.M.Y. Bos-Rops, ‘De kohieren van de gewestelijke belastingen in Holland, 1543–1579’, Holland 29 (1997), 18–36.

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Table 7.1

Percentages of land owned by burghers and urban institutions in various villages in Holland (mid-sixteenth century) Burghers

north

13%

south central

Urban institutions

Total

1%

14%

19%

9%

28%

25%

16%

41%

The data shows that by 1560 ownership of land by burghers and urban institutions in the Holland countryside was already considerable, especially in the southern and central parts of the province. Allowing for the differences in size between the three regions distinguished here, some 30–35 per cent of the land in Holland was owned by the burghers and urban institutions. In the north, an area with very few towns, their share remained low, but in the southern part of Holland more than a quarter of the land was owned by urban dwellers. In the central part of Holland – by far the largest region, and the most urbanized of the three areas – burghers and urban institutions owned more than 40 per cent of the land. The urbanization rate in this region was very high too, with more than half of the population living in the cities, which meant that burghers on average owned almost as much land as country folk did. This points to a clear desire for land by the burghers in sixteenthcentury Holland. Most of the land was owned by burghers and institutions from nearby cities. In the central part of the county 83 per cent of the burghers who owned land there also resided in that area (most notably in Delft, The Hague, and Rotterdam). By far the majority of this land was owned by burghers from the nearest city.53 An additional 11 per cent of the burgher owners lived in cities in other parts of Holland, mainly Dordrecht and Haarlem. Only four per cent lived elsewhere, for example, in Utrecht, Antwerp, Malines, or Brussels. In other words, investment in land by merchants or entrepreneurs from the commercial centres of the southern Netherlands was quite limited. It was Holland’s capital, not ‘foreign’ capital that was being invested in land.

The distribution of land in the new polders, c. 1600 The desire for land by Holland’s burghers was not satisfied in 1560, and the growing scarcity of available plots began to push up land and lease prices. Although the most violent and disruptive phase of the Dutch Revolt was over by the mid-1570s, the rise in land and lease prices continued. From 1580 to 1650 nominal lease prices

53  ��������������������������������������������������������������������������� Cf. for similar results in the northern parts of Holland also J. de Vries, Dutch rural economy, pp. 45–6.

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in Holland rose on an average of 23 per cent per decade.54 At the same time the net return on investments in land, after taxes and levies had been deducted, stood at more than five per cent around 1600, dropping to a more modest but still robust three per cent in the middle of the seventeenth century. The continued interest among burghers for land brought about another option for obtaining landownership, i.e. reclamation of land by way of embankments, polders, and/or draining of inland lakes or land outside the sea dikes. Reclamation was a costly operation, but one which had become increasingly attractive due to the scarcity of land for sale. In 1531, the first attempts were made in Holland to reclaim new land. These attempts gained in momentum after 1550, halted for two decades during the Revolt, and then accelerated rapidly from the 1590s onwards. Most of the money invested in the new polders came from wealthy town dwellers – not just from merchants and entrepreneurs but also from civil officers and noblemen living in the cities. One such example is that of the Beijerlanden in the southern part of Holland. Here, some 5,000 hectares were enclosed by dikes in the decades following 1557, costing several hundreds of thousands of guilders. The land in this polder was purchased primarily by noblemen and rich burghers from the Holland cities.55 Farmers owned virtually no land. The dominance of urban landownership was even more striking in the case of the Wieringerwaard, which had been reclaimed between 1597 and 1610.56 Out of 55 investors in this project, 54 were burghers acquiring some 30 hectares of land on average. Onethird of the Wieringerwaard was owned by citizens of The Hague; another third by citizens of Amsterdam; and a quarter by citizens of Alkmaar. A similar picture emerges when we look at the holdings in the Beemster, which began to be reclaimed in 1607 and ultimately covered some 7,500 hectares.57 Investments in this polder were made chiefly by public servants from The Hague and wealthy merchants from Amsterdam. The two largest investors were the Amsterdam brothers Dirk and Hendrik van Os, buying 950 and 210 hectares respectively. These two merchants were among the biggest investors in the pioneering voyages to Asia and the VOC (the Dutch East India Company) 54  ������������������������������� J. Kuys and J.T. Schoenmakers, Landpachten in Holland, pp. 35–40 and 58, A.M. van der Woude, ‘The long-term movement of rent for pasture land in North Holland and the problem of profitability in agriculture (1570–1800)’, in: H. van der Wee and E. van Cauwenberghe (eds), Productivity of land and agricultural innovation in the Low Countries (1250–1800) (Leuven,1978) pp. 171–82, esp. p. 179, and C. Baars, De geschiedenis van de landbouw in de Beijerlanden (Wageningen, 1973), pp. 111–17. 55  ���������� C. Baars, De geschiedenis, pp. 74, 78, 81, 83, 87 and 106–11. 56  ������������������������������������� Cf. the short passages by H. Jonker, Hoofdstukken uit de geschiedenis van de polder Wieringerwaard 1610–1960 (Amsterdam, 1960) pp. 1–3 and T. Stol, ‘De leeuw en zijn longen. Waterbeheersing, landaanwinning en landverlies’, in: T. de Nijs and E. Beukers (eds), Geschiedenis van Holland, part II (Hilversum,2002) pp. 108–34, esp. p. 111. 57  ����������� H. Danner, Van water tot land, van land tot water. Verwikkelingen bij de indijking van de Beemster, (Edam,1987) pp. 6–18.

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established in 1602.58 The money of several other early investors in Dutch East India trade was also invested in the Beemster after 1607. At this point it is important to note that this kind of investment in landownership did not immobilize capital, for thriving capital and land markets facilitated the mortgaging or resale of one’s property. The sheer scale of land reclamation in Holland was impressive. In the northern region alone some 10,000 hectares were reclaimed during the period 1540–1600, and a further 10,000 hectares in the period 1600–1620.59 In the province as a whole, as much as 45,000 to 50,000 hectares of land were reclaimed between 1540 and 1620, increasing the total area of agricultural land by some 20 per cent. Furthermore, in the new polders large-scale landownership dominated. The smallest investor in the Beemster, for instance, still purchased approximately 95 hectares of land. Thus, these new properties contributed the sixteenth-century changes in the landownership structure in Holland. To sum up, in Holland there were two distinct periods of sharp increases in burgher landownership. The exact details of the first period are not known but it is clear that it was well underway by the middle of the sixteenth century, particularly in the central and southern parts of Holland. The second period, which primarily concerned the northern parts of the province, and the newly reclaimed polders, can be dated to between 1580 and 1650. By 1620 it is likely that 50 per cent or more of the ‘old’ land was owned by burghers, whereas this share was closer to 80 to 90 per cent in the new polders. In all likelihood, the total share of burgher landownership in Holland had reached about 60 per cent by 1620.

The exploitation of the holdings of Holland’s burghers The growth of large-scale landownership by urban residents at the expense of small-scale rural peasant landownership was but one factor in Holland’s transition to rural capitalism. Equally important were changes in the use of land. At the turn of the fifteenth century no more than about one-sixth to one-quarter of all land in Holland was leased out and in the peat regions this was likely to have been even less. In the course of the fifteenth and sixteenth centuries this proportion may have risen to a third, or even half of the land, particularly in the heavily urbanized areas such as the southern part of Holland, as the calculations below will show. Between 1550 and 1620 the number of leaseholds further increased, with short-term leasing becoming the dominant mode of land utilization in Holland. This shift was directly related to the changing social property relations. In sharp contrast to the time when most land was owned and used by peasants, the overwhelming majority of the land owned by burghers was not utilized by the actual owners. 58  �������������������������������������������� Cf. for the brothers Van Os: O. Gelderblom, Zuid-Nederlandse kooplieden en de opkomst van de Amsterdamse stapelmarkt (1578–1630) (Hilversum, 2000) pp. 160–63. 59  �������������������� A.M. van der Woude, Noorderkwartier, pp. 46–51.

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Fiscal records from around 1560 show that a substantial part (15 to 25 per cent) of the land belonging to burghers was used for their own purposes in only a few villages. This, for instance, was the case in some peat villages, where urban brewers used their lands to harvest turf. Apart from these few exceptions, however, burgherowned land in Holland was primarily used for short-term leasing. Indeed by 1650 no less than 94 per cent of burgher lands was leased out.60 The profoundness of this change was even greater since the lease arrangements in sixteenth-century Holland had shed their peasant characteristics, and had increasingly taken on features of modern, competitive leases, which forced the land users to compete continuously for the use of the land (cf. infra). The new, highly competitive situation was undoubtedly more exaggerated in the newly reclaimed polders. Nearly all of the land here was given out in shortterm leases to large tenant farmers. The farms in the polders were generally quite sizeable; much more so than in the older lands. The average size of the 1,400 new farms created by draining the lakes in the north of Holland, for instance, was 16.5 hectares.61 In the Beijerlanden, in the south, 60–65 per cent of the land in the polder was taken up by farms larger than 30 hectares, and most of these were tenant farms.62 Most of the land in the polders created after 1600 were leased out on short-term arrangements. The effects of the transition described above on the Dutch rural economy are relatively well known. In addition to the disappearance of the original peasant character of the countryside, the changes in landownership and lease arrangements resulted in an increase in competition for land, a higher turnover on land markets, the rise in the number of large tenant farms, an increase in the specialization and commercialization of agriculture, and a further rise in wage labour in the Holland countryside. One could argue that these changes alone led to an increase in surpluses, benefiting the large farmers and landowners, and perhaps also stimulating trade and thus increasing public revenue from excises. At the same time, however, the basis for proto-industrial development, formed by peasant households combining various activities, had disappeared, and the reduction of labour inputs by largescale farmers also led to a decrease in employment possibilities and an expulsion of countrymen to the towns, which resulted in stagnation and an actual decline in rural population numbers.63

60

 ������������������ B.J.P. van Bavel, Transitie en continuïteit, pp. 509–25.  ������������������������������������ J. de Vries and A.M. van der Woude, The first modern economy, p. 202. 62  ���������� C. Baars, De geschiedenis, pp. 88–105. 63  ������������������������������������������������������������������������������� B.J.P. van Bavel, ‘People and land. Rural population developments and property structures in the Low Countries, c.1300–c.1600’, Continuity and Change 17 (2002), 9–37. 61

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Explaining the growth in burgher landownership Why did the burghers of Holland purchase so much land, and why did peasants sell their holdings during the course of the sixteenth and early seventeenth centuries? One obvious factor is the high urbanization level in Holland, which rose to about 45 per cent in the sixteenth century.64 But additional factors must have also played an important role, and this is supported by the fact that such changes in landownership structures did not occur in all of the urbanized regions of Western Europe.65 The more precise definition of landownership and the increased adherence to the terms of leasing arrangements made it easier for landowners to buy farms while leaving decisions about land use to others. Leasing under these improved conditions therefore offered the landowner firm control of the land while at the same time the possibility of earning a substantial and adjustable income. There was the further bonus of a favourable institutional framework and a flexible the land market. Since the high Middle Ages the land market in Holland was relatively open and was not hindered by all kinds of restrictions, as discussed above. Taxes on the sale of land did not exist in Holland. There were some attempts to introduce such a tax in the second half of the sixteenth century, such as the so-called Twentieth Penny, a tax of five per cent on the transfer of immovable goods introduced in 1569 by the duke of Alva, but this tax was highly contentious and was abolished after three years.66 The absence of this type of taxation in Holland facilitated the repeated buying, selling and leasing of land and kept the costs of these transactions to a minimum. Still, the question remains as to what may have motivated the urban dwellers to invest their money in land in the first place. Profitability would be the obvious answer. The case of the Guelders river area suggests that competition for leases among tenant farmers may have led to more capital investment, greater efficiency, and higher returns on investment. The fairly steady rise in the price of agricultural products, exceeding the rise in wages and industrial prices after 1500, added to the incentives for burghers to buy land.67 The rise in agricultural prices translated into higher land and lease prices between 1500 and 1570. Nominal lease prices in Holland rose on average 28 per cent per decade.68 But then the rise in agricultural prices and land prices was not exceptional in sixteenth-century Western Europe. Why did it alter social property relations in Holland? A more pressing question remains of why peasants themselves did not take advantage of the profitable opportunities to expand their operations and successfully 64

 ��������������������������������������������������������������� B.J.P. van Bavel and J.L. van Zanden, ‘The jump-start’, p. 505.  �������������������������������� Cf. the comparison in Section 9. 66  ������������������� F.H.M. Grapperhaus, Belasting, vrijheid en eigendom. Hoe belastingheffing leidde tot meer zeggenschap voor burgers en meer eenheid tussen staten, 511–1787 (Amsterdam, 1989) pp. 146–91. 67  ������������� J. de Vries, Dutch rural economy, pp. 176–86 and 189, and N.W. Posthumus, Nederlandse prijsgeschiedenis, part II (Leiden,1964) esp. pp. LXX–CXIV. 68  ������������������������������� J. Kuys and J.T. Schoenmakers, Landpachten in Holland, pp. 35–40 and 58. 65

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market their products. Was it because small rural landholders faced obstacles in obtaining credit or marketing their products? Elsewhere in Europe, for instance in the north of Italy, market structures were indeed designed to serve the aims of the cities and the urban elites. They placed peasants in a disadvantageous position and increased the possibility for urban landowners to exploit their landownership. In Tuscany, for example, this contributed significantly to the growth in burgher landownership at the peasants’ expense.69 Yet market structures in Holland offered easy access for burghers and peasants alike.70 In the sixteenth century peasants could obtain loans at rates similar to those obtained by burghers,71 helping them to make investments in their holdings and to deal with economic crises without having to resort to selling their land. Many small rural landowners did, however, face serious financial problems. Around 1500 the level of taxation in Holland was already quite high, and after 1540 the authorities opted to shift the tax burden from the towns to the countryside.72 In addition to this, water management boards levied high taxes to pay for the embankment and drainage of this water-logged region. As water management works expanded and costs increased during the course of the sixteenth century, and as water management and tax collection became centralized, the tax burden on land increased and could no longer be met by supplying labour services but rather required monetary payments.73 Between the years 1585 to 1605 alone, taxes levied

69  �������������������������������������������������������������� S.R. Epstein, ‘The peasantries of Italy’, in: T. Scott (ed.), The peasantries of Europe from the fourteenth to the eighteenth centuries (London, 1998) pp. 75–110, and B.J.P. van Bavel, ‘Markets for land, labour and capital between town and countryside, 12th–16th centuries. Northern Italy and the Low Countries compared’ (paper for Vienna conference, 2007). 70  ����������������������������������������������������������������������������������� A general note of this is made for the 16th/17th centuries by J. de Vries and A.M. van der Woude, The first modern economy, pp. 159–65. The late medieval emergence of this favourable market structure is the topic of a current research project at Utrecht University: ‘Power, Markets and Economic Deve­lopment: The Rise, Organization, and Institutional Framework of Markets in Holland, 11th–16th Centuries’. 71  ����������������� J. Zuijderduijn, Medieval capital markets. �������������������������������� Markets for rents between state formation and private investment in Holland (1300–1550) (unpublished PhD thesis, Utrecht University, 2007) pp. 171–80, and J. Zuijderduijn, ‘Assessing the rural economy. Household wealth, economic traffic and the domestic market in Holland and Tuscany, 15th and 16th centuries’, unpublished paper (Florence/Utrecht, 2007). 72  ����������������������������������������������������������������������������������������� J.D. Tracy, ‘The taxation system of the county of Holland during the reigns of Charles V and Philip II, 1519–1566’, Economisch en sociaal-historisch jaarboek 48 (1985), 71–117, esp. 78, 81 and 88–90, and P. Hoppenbrouwers, ‘Mapping an unexplored field’, pp. 59–61. 73  �������������������������������������������������������������� P.J.E.M. van Dam, ‘Digging for a dike. Holland’s labor market ca.1510’, in P. Hoppenbrouwers and J.L. van Zanden (eds), Peasants into farmers?, pp. 220–55, esp. p. 226, and P.J.E.M. van Dam, ‘Ecological challenges, technological innovations. The modernization of sluice building in Holland, 1300–1600’, Technology and culture 43 (2002), 500–520.

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by the water boards rose four- or fivefold.74 In the long run investments in water management were profitable because they improved the possibilities for farming, but in the short run the tax rates were so onerous that small peasants had to sell their land. It is likely that the boards responsible for water management may have even favoured large landowners. This was certainly the case in coastal Flanders,75 where large landowners increasingly took control over the decision-making on investments, the type of works to be carried out and the methods of taxation to be implemented, clearly with a view to protecting their own interests. This became an important factor in the decline of peasant landownership there. The Dutch Revolt exacerbated the financial problems of the peasants. In the early years of the Revolt landowners were hit hard by the pillaging and destruction of war. In Holland, the presence of the military caused massive damage to the land rising into the millions of guilders. Small-scale peasant farmers without capital reserves were hit particularly hard by the destruction; the loss of their buildings, cattle and crops meant the loss of all they had, and left them without the prospect of re-building their enterprises.76 Finally, the process of proto-industrialization had undermined their position and had accelerated the expropriation or their lands. By 1500, no less than about a third of the rural labour input in Holland was being channelled into proto-industrial activities.77 The peasants engaged in these activities increasingly lost control over the means of production and of their land, while the largely town-based proto-industrial entrepreneurs amassed more wealth. Thus, while peasants in Holland may have had easy access to capital markets, they simply lacked sufficient property to use as collateral in obtaining loans that could help them improve the operational capacity of their farms. In particular, this applies to the numerous peasants that were hit hard by the social polarization of the Holland countryside, which occurred as a result of the developments discussed above. In the end it was their greater wealth that enabled urban dwellers to seize the opportunities that a more commercialized and specialized agriculture had to offer. In the towns of Holland the development of trade and industry led to the

74  ������������� J. de Vries, Dutch rural economy, pp. 190–91 and 198–9, and on the taxes levied by the High Dike Reeve of Rijnland, which rose steeply after c.1550: M.H.V. van AmstelHorak and R.W.G. Lombarts, Regestenboek van het hoogheemraadschap van Rijnland (Leiden,1992) pp. 313–17. 75  ��������������������������������������������������������������������������� T. Soens, ‘Het waterschap en de mythe van democratie in het Ancien Régime. Het voorbeeld van de Vlaamse Kustvlakte in de Late Middeleeuwen’, Jaarboek voor Ecologische Geschiedenis (2001), 39–55. ������������������������������������������� A similar development may have occurred in Holland but awaits investigation. 76  ��������������������������������������������������������������������������������� E. Thoen, ‘Oorlogen en platteland. Sociale en ekonomische aspekten van militaire destruktie in Vlaanderen tijdens de late Middeleeuwen en de vroege moderne tijden’, Tijdschrift voor geschiedenis 91 (1978), 363–76, esp. 370–74. ������������������������� For the damage caused by the military, see J.D. Tracy’s chapter in this volume. 77  ����������������� J.L. van Zanden, The rise and decline, pp. 32–5, and B.J.P. van Bavel, ‘Early protoindustrialization in the Low Countries?’, pp. 1143–4 and 1151–61.

Rural Development and Landownership in Holland, c.1400–1650

189

accumulation of capital in the hands of wealthy burghers to a degree exceeding that in all other parts of Western Europe. The estimated wealth of the province increased from 10 to 12 million guilders in 1500 to as much as 500, or even 550, million guilders in 1650. In real terms the wealth per capita increased threefold during this period,78 and was concentrated in the cities. Although much of the urban capital originated in trade and industry, there were nevertheless direct links to landownership. For one, the conditions of war in the early phases of the Dutch Revolt, and the insecurity these conditions created, caused a withdrawal of capital from trade. The simultaneous plunge in land prices led urbanites to put their money into land. Investment in land, however, did not lose its attraction when trading conditions improved at the end of the sixteenth century. For example, a substantial amount of the massive dividends from the pioneering trading voyages to East Asia was invested in land. A case in point is that of the aforementioned brothers Van Os, who were among to the largest investors in the early voyages and in the VOC. They invested in every single voyage from 1595 onwards, and in 1602 invested 47,000 guilders in the VOC.79 At the same time, however, the brothers invested heavily in landownership. In the reclamation project of the Beemster alone, which began in 1607, they purchased 1,160 hectares of land for the sum of 37,800 guilders.80 These figures suggest that even top merchants like the Van Os brothers invested as heavily in land as they did in trade. This raises the more general issue of the investment portfolios of Holland’s merchants in the Golden Age, a topic for future investigation. Here we simply note that by 1600 the clearly defined property rights pertaining to land, in combination with well-developed capital and land markets, had the effect of turning land into a highly liquid asset which was easily sold or mortgaged. Landownership is often considered a means for merchants to gain respect, and perhaps even enables them to retreat from active commerce. But land can also enhance creditworthiness, and hence be a useful investment for active merchants.81

78

 ���������������������������������������������������������������������������� J.L. van Zanden, ‘Economic growth in the Golden Age. The development of the economy of Holland, 1500–1650’, The Dutch economy in the Golden Age. Nine studies (Amsterdam, 1993) pp. 5–26, esp. pp. 13–16 and 21–3, and J.L. van Zanden, ‘Tracing the beginning of the Kuznets curve. Western Europe during the early modern period’, Economic History Review 48 (1995), 643–64. 79  ��������������� O. Gelderblom, Zuid-Nederlandse kooplieden, pp. 160–63, and O. Gelderblom and J. Jonker, ‘Completing a financial revolution: The finance of the Dutch East India trade and the rise of the Amsterdam capital market, 1595–1612’, The Journal of Economic History 64 (2004) pp. 641–72, Figure 1. �������������������������� Cf. also J.G. van Dillen, Het oudste aandeelhoudersregister van de kamer Amsterdam der Oost-Indische Compagnie (’s-Gravenhage,1958) pp. 61, 110–11, 127, 219–22, 249 and 252. 80  ����������� H. Danner, Van water tot land, van land tot water. Verwikkelingen bij de indijking van de Beemster (Edam,1987) pp. 8–10. 81  ���������������������������������������������������������������� H. Soly, ‘The “betrayal” of the sixteenth-century bourgeoisie’, Acta historiae 8 (1975). 31–49, esp. 36–39.

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In the central part of Holland, rural property may have been particularly important in this respect, since in the fifteenth century several towns had prohibited the collateralization of land or houses within the city walls. This meant that only rural landownership could function as possible security for annuities or mortgages.82 The well-functioning capital market in Holland made it easy and safe for the landowner to create rents on the newly acquired land,83 enabling him to invest the principal sum again in trade or industry. Thus, rural property offered burghers all the advantages of landownership elsewhere (safety, secure revenues, prestige) with the additional advantage of easy collateralization. In sum, during a period when rising agricultural prices boosted the profitability of agriculture, and financial problems prevented most peasants from benefiting from these rising prices, the wealthy burghers of Holland seized the opportunity to make lucrative investments in rural property. As a result, the bulk of the remaining peasant lands passed into the hands of wealthy urban investors.

Holland’s rural economy in a European perspective One final point to consider is whether Holland’s rural transition was truly exceptional. Historians from other parts of Europe have also examined this shift in rural landownership from peasants to burghers between the fourteenth and sixteenth centuries. Yet when reliable means of quantifying this development exists at all, in most cases, burgher landownership seems to have been fairly limited. One of the few cases for which we do have estimates of urban landownership concerns the countryside around Lyon in 1518. Lyon at the time was one of the biggest cities in Western Europe, having between 60,000 and 75,000 inhabitants – a population equivalent to the three or four largest cities in Holland in the early sixteenth century. Despite the claim that landownership of Lyonnese burghers was impressive (‘une véritable conquête terrienne’), our calculations suggest otherwise.84 In only ten parishes around Lyon did the burghers possess more than ten per cent of the area, all within a radius of some 12 km from the town. In total, Lyonnese burghers owned some 2,160 hectares of land in the countryside. Although this land consisted primarily of valuable vineyards, the size of the burgher holdings was small in comparison with Holland. Around the middle of the sixteenth century, the 180,000 inhabitants of Holland’s towns owned 90–100,000 hectares of land. In terms of land per capita this was 15 times higher than that 82

 ����������������� J. Zuijderduijn, Medieval capital markets, [pp. ����� X–X].  ������������ J.D. Tracy, A financial revolution in the Habsburg Netherlands: Renten and renteniers in the County of Holland, 1515–1565 (Berkeley,1985), stressing sixteenth century developments. More emphasis is put on the earlier period by J. Zuijderduijn, Medieval capital markets. 84  ����������� R. Gascon, Grand commerce et vie urbaine au XVIe siècle. Lyon et ses marchands (Paris,1971) pp. 814–23 and 826–30. 83

Rural Development and Landownership in Holland, c.1400–1650

191

owned by the citizens of Lyon. Only much later, in the course of the seventeenth and eighteenth centuries, did burgher landownership in France reach considerably high levels, as evidenced by the late eighteenth-century figures for Toulouse and Chartres.85 Differences between Holland and other parts of the Low Countries were smaller, but nonetheless substantial. In the area surrounding Antwerp, one of the most important cities of Europe in the sixteenth century, burgher landownership seems to have been relatively limited. Only in a small area north of the Brabantine city did the burghers own sizable amounts of land.86 A similar situation can be found in the surroundings of Ghent, the biggest town in Flanders. Already in the thirteenth century, burgher landownership was on the rise here, but the process came to a halt in the fifteenth century87 and urban landownership never dominated the countryside around Ghent. In addition to the differences in the scale of burgher landownership, there are also differences in the uses to which the land was put. In contrast to Holland, where almost all burgher-owned lands in the late sixteenth century were leased out for short terms in a competitive lease market, in other parts of Western Europe other arrangements prevailed. The difference is most striking when comparing Holland with two regions where burgher landownership had actually reached impressive levels in the sixteenth century: the south of Germany and the north of Italy. The Fugger family from Augsburg, for example, owned property in more than 100 villages in Swabia. However, the Fuggers did not buy separate plots of land; rather they bought completed seigneuries, and simply took over the role of the traditional lords, exacting from the peasants the same taxes, labour services and jurisdictional fines.88 There was no attempt to profit from the land by means of short-term leasing. A clear difference in land use can also be observed in the north-Italian citystates, where burghers often owned more than half of the property in the surrounding countryside. Here, and particularly in Tuscany and Umbria, burgher-owned lands were mainly utilized in mezzadria-sharecropping, often in combination with closely-monitored deliveries, restricted market structures, and a strict control  ���������������� Cf. M. Vovelle, Ville et campagne au 18e siècle: Chartres et la Beauce (Paris,1980) pp. 216–26, and the overview by T. Brennan, ‘Town and country in France, 1550–1750’, in: S.R. Epstein (ed.), Town and country in Europe, 1300–1800 (Cambridge, 2001) pp. 253–5. 86  ����������������������������������������������������������������������������������� M. Limberger, ‘Merchant capitalism and the countryside in the West of the duchy of Brabant (15th–16th centuries)’, in: P. Hoppenbrouwers and J.L. van Zanden (eds), Peasants into farmers?, pp 158–78, esp. pp. 170–72. 87  ���������� E. Thoen, Landbouwekonomie en bevolking in Vlaanderen gedurende de late middeleeuwen en het begin van de moderne tijden, pp. 512–27. 88  ������������ R. Mandrou, Les Fugger, propriétaires fonciers en Souabe, 1560–1618. Etude de comportements socio-économiques à la fin du XVIe siècle (Paris, 1969) pp. 37–41 and 102–10. 85

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by the town over the countryside, all of which was aimed at safeguarding urban interests. The urban landowners also enjoyed substantial privileges and fiscal exemptions.89 In brief, neither in the south of Germany nor in the north of Italy did urban landownership lead to a competitive and dynamic situation such as that found in Holland, demonstrating that the growth in burgher landownership in itself was not the key to economic development. A combination of three elements set Holland apart from the rest of Europe: the considerable proportion of land owned by urban citizens; the utilization of this land by means of short-term leases; and the concomitant decline in small peasant landownership. The social and economic impact of the growth in large-scale burgher landownership in Holland was thus greater than elsewhere in Europe, since this growth occurred at the expense of small peasant landownership, not at the expense of other large landowners. The only case comparable to Holland in terms of burgher landownership, the utilization of the land, and its social and economic outcomes, is perhaps the Paris basin. Here too, large burgher ownership grew enormously, most likely at the expense of peasant ownership, and here too the land was leased out on short-term contracts.90 However, this process may not have reached the same scale as it did in Holland. It also seems to have taken place later than in Holland, with burgher landownership growing considerably in the course of the seventeenth and eighteenth centuries. This represents therefore a fourth way in which Holland would seem to have been unique in Europe. The findings presented here are also of relevance to the debate on the trajectories of rural development. In several recently published studies, it is argued that large farms in regions dominated by large landownership were not the only means which could lead to agricultural development and economic growth; there also were regions where peasant-induced growth occurred. Examples cited are England, the Paris Basin, inland Flanders and Holland. The first two examples, however, are not convincing in this respect, since it is questionable to what extent it is appropriate to label these regions as peasant regions or the agrarian entrepreneurs as peasants. Inland Flanders, sometimes mentioned as an example of rural growth due to its high land productivity, is not convincing either since here, high agricultural yields went hand in hand with enormous labour inputs, low and further declining labour productivity, a high degree of subsistence farming and stagnation well into the eighteenth and nineteenth centuries. Finally, there is the potential example of Holland. Until now, it has not been clear whether the Holland countryside in the 89  ������������������������������������������������������������������������������� B.J.P. van Bavel, ‘Markets for land, labour and capital’, and literature cited therein. 90  ������������� J. Jacquart, La crise rurale en Ile-de-France, 1550–1670 (Paris, 1974) pp. 104–7 and 114–17, M. Venard, Bourgeois et paysans au 17e siècle (Paris,1957) pp. 21–9 and 70–73, and J.M. Moriceau and G. Postel-Vinay, Ferme, entreprise, famille. Grande exploitation et changements agricoles: les Chartier, XVIIe–XIXe siècles (Paris, 1992) pp. 25–34 and 177–89. Note �������������������������������������������������������������������������������� that this is precisely the region which Hofmann uses to demonstrate that a traditional or peasant society is capable of economic growth.

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193

sixteenth century was still a peasant society. This study shows it was not, and this was due to a large extent to the growth in burgher landownership and the concomitant changes in the exploitation of landownership. Holland, therefore, cannot be considered an example of a peasant region witnessing agricultural growth and transformation, if such a situation ever really existed, since the peasant character of the Holland countryside had already become diminished prior to and during this transformation. The preceding account shows that the fundamental change in tenurial relations and landownership structures in Holland occurred in the sixteenth century. Unclear in this development, there was a clear interaction between institutional and social phenomena, mutually reinforcing each other. Practices such as short-term leasing cannot be viewed in isolation from social property systems. The extent to which land was leased out, the actual terms of the lease contracts, and the related efficiency of the farm operations depended on the distribution of power and property between different social groups. In isolation, the elements highlighted above would probably have had a limited effect, but because they were combined and served to mutually reinforce each other, they had a profound effect on economy and society in the Holland countryside, and made possible its transition to rural capitalism.

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Table 7.2

Percentages of land owned by burghers and urban institutions in various villages in Holland (mid-sixteenth century)91

village

surface (hectare)

year

percentage burghers

percentage urban inst92

total

North of Holland Assendelft

2,360

1561

Beets

364

1558

24 %

???

Opmeer

477

1561

20 %

0%

20 %

Twisk

436

1561

4%

0%

4%

13%

1%

14 %

Total north

3,637

11 %

1%

12 %

South of Holland Abbenbroek

660

1561

11 %

15 %

26 %

Baardwijk

503

1553

10 %

8%

18 %

Bleskensgraaf

814

1558

20 %

???

Doeveren

204

1545

16 %

10 %

26 %

Eethen

655

1553

14 %

2%

16 %

Engelen

446

1543

5%

0%

5%

Genderen

435

1544

26 %

7%

33 %

Heesbeen

310

1556

24 %

7%

31 %

Hendrik Ido Ambacht

295

1561

33 %

12 %

45 %

Herpt

558

1542

29 %

13 %

42 %

Kijfhoek Meerkerk

300

1561

37 %

8%

45 %

1,212

1569

12 %

7%

19 %

Oudheusden

935

1556

19 %

15 %

34 %

Rijsoord

294

1561

28 %

28 %

56 %

Veen

547

1544

22 %

1%

23 %

19 %

9%

28%

Total south

8,168

91  ���������������������������������������������������������������������������������� Note that the percentages calculated are minimums. Only landowners whose place of residence is mentioned can be identified with certainty. It would appear that all burghers and their place of residence are consistently stated, but this is virtually impossible to verify. 92   The records that do not state the landownership of urban institutions have been left out of the calculation of totals.

Rural Development and Landownership in Holland, c.1400–1650 surface (hectare) Central part of Holland Akkersdijk/ 326 Vrouwenrecht Alphen Babberspolder 83 Capelle Dorp 299 Elfhoeven 677 Harnasch 571 Hodenpijl 475 Hogenban 260 Hogenveen 218 Ketel 1,298 Kralingen 1,248 Krimpen a/d 422 Lek 892 Nieuwerkerk a/d IJssel Nieuw 91 Mathenesse Nieuwkoop Nieuwveen 234 Nootdorp 261 Oud 150 Mathenesse Ouderkerk Oudshoorn Overschie 1,442 Ruiven 192 Schoonderloo 242 Sint 140 Maartensrecht Spaland 166 Tekkop 408 Ter Aar 1,745 1,805 Vlaardinger Ambacht Voorburg 538 Wassenaar 255 Zouteveen 425 Total central 21,215 village

195

year

percentage burghers

percentage urban inst

total

1569

21 %

13 %

34 %

2,298 1561 1561 1569 1561 1561 1561 1561 1562 1561 1561 1561

1562 45 % 18 % 35 % 10 % 24 % 10 % 40 % 49 % 26 % 19 % 3%

24 % 8% ??? 16 % 3% 24 % 19 % 17 % ??? 23 % 6% 0%

??? 53 %

1561

8%

2%

10 %

1557

21 %

38 %

59 %

1,234 1569 1569 1558

1562 16 % 29 % 16 %

15 % 0% 9% 47 %

??? 16 % 38 % 63 %

1,397 1,423 1561 1562 1561 1561

1562 1541 36 % 51 % 61 % 26 %

43 % 39 % 30 % 1% 13 % 1%

??? ??? 66 % 52 % 74 % 27 %

1562 1562 1543 1561

31 % 3% 4% 29 %

22 % ??? ??? 22 %

53 %

1565 1543 1561

18 % 28% 49 % 25 %

6% 8% 19 % 16 %

24 % 36 % 68 % 41 %

51 % 13 % 48 % 29 % 57 % 49 % 25 % 3%

51 %

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Sources: G.P Alders, ‘Het kohier van de Tiende Penning (1561) van Hendrik Ido Ambacht’, Ons voorgeslacht (=OV) 34 (1979) pp. 299–305; Id., ‘Het kohier van de Tiende Penning (1561) van Rijsoord en Strevelshoek’, OV 36 (1981) pp. 97–108; S.M. Auwerda-Berghout, ‘Kohier morgengelden Meerkerk 1569’, OV 54 (1999) pp. 231–41; B.J.P. van Bavel, Transitie en continuïteit, pp. 403–4; S.J. Fockema Andreae, ‘Grondeigenaars en grondgebruikers in een hoekje van Holland’, Ceres & clio. Zeven variaties op het thema landbouwgeschiedenis (Wageningen,1964) pp. 55–78; A. Gordijn, ‘Het cohier van de tiende penning van het ambacht Spaland over het jaar 1562’, Ons voorgeslacht 36 (1981) pp. 57–61, Id., ‘10e penning Nieuw-Mathenesse 1557’, OV 45 (1990) pp. 542–5; Id., ‘10e penning Babberspolder 1561’, OV 45 (1990) pp. 539–42; Id., ‘10e penning Oud-Mathenesse 1558’, OV 45 (1990) pp. 536–9; Id., ‘Kohier van de 10e penning van 1565 in het ambacht Voorburg’, OV 49 (1994) pp. 414–21; Id., ‘Kohier van de 10e penning van Schoonderloo 1561’, OV 49 (1994) pp. 435–43; J. Ham, ‘Het kohier van de Tiende Penning (1561) van Zouteveen’, Holland 9 (1977) pp. 141–51; C.C.J. Lans, ‘Lijst van mergentalen (1560) in de Elffhouven etc.’, OV 36 (1981) pp. 383–90; P.C.M. Hoppenbrouwers, Een middeleeuwse samenleving, pp. 819–34; C.F. Kwakkelstein and I. Vellekoop, ‘10e penning van Woud- en Hoogharnasch’, OV 51 (1996) pp. 197–212; Id., ‘10e penning van Hodenpijl 1561’, OV 51 (1996) pp. 159–72; C.F. Kwakkelstein, ‘De honderdste penning van Vrouwenrecht of Akkersdijk 1569’, OV 49 (1994) pp. 361–72; Id., ‘De honderdste penning van Nootdorp (Delfland) 1569’, OV 49 (1994) pp. 129–38; Id., ‘De honderdste penning van Nieuwveen (Delfland) 1569’, OV 49 (1994) pp. 26–34; Id., ‘De honderdste penning van Dorp (Delfland) 1569’, OV 49 (1994) pp. 309–18; Id., ‘Tiende penning van Sint Maartensrecht 1561’, OV 51 (1996) pp. 436–40; K.J. Slijkerman, ‘De tiende penningkohieren van Kijfhoek over 1542 en 1561’, OV 52 (1997) pp. 404–8; A.M. Verbeek, ‘Kohier van de 10e penning van Vlaardinger Ambacht over het jaar 1561’, OV 41 (1986) pp. 460–507; Id, ‘Tiende Penning over Kralingen’, OV 25 (1970) pp. 163–71; Id., ‘Tiende penning over Nieuwerkerk op de IJssel’, OV 25 (1970) pp. 137–46,’ Id., ‘Kohier van de 10e penning over Krimpen aan de Lek’, OV 25 (1970) pp. 211–15; H.A.E. van Gelder, Nederlandse dorpen. pp. 14–36; J.J. Voskuil, Kohieren van de tiende penning van Overschie 1561 en Twisk 1561 (Amsterdam,1982); J. de Vries, Dutch rural economy, pp. 43–7.

Chapter 8

Financing Water Management in Rijnland, 1500–1800 Milja van Tielhof

Introduction Without the protection of dunes and dikes about 65 per cent of the present-day Netherlands would run the risk of being inundated either by the sea during storm surges or by the great rivers when considerable amounts of water are discharged. This area corresponds roughly to the western half of the country and the surface level varies between several metres below to one metre above mean sea level. The landscape is unstable and it has been that way for centuries. Due to a combination of natural processes and human interference, ground levels drop at a rate of about one metre per century. Around the year 1000 the majority of the country, including the western half, was still situated above mean sea level. One or two centuries later, however, it was becoming difficult to get rid of excess water by natural drainage and defence against outside water was also causing problems. The need arose for sea and river dikes to protect larger regions, and for hydraulic works like canals, dams, and sluices to regulate internal water level on a regional scale. To organize water management, regional water boards were established in the twelfth century and have functioned continuously since this time. Some of the boards focused on drainage, others on defence against the sea or rivers, and still others on both matters. To finance their activities, the water boards levied a water tax on the landowners in their territory. Strictly speaking it was not a tax, but rather an apportionment of the costs of water management. The apportionment ensured that the expenses for water management were not weighted against expenses for other potential goals, such as schools, warfare or other things general governmental bodies might wish to spend public money on.   I would like to thank Petra van Dam for her valuable comments on an earlier draft of this article. ���������������������������������������������������������������������� For a general history of Dutch water management, see: G.P. van de Ven (ed.), Man-made lowlands. History of water management and land reclamation in the Netherlands (Utrecht, 2005), here especially pp. 15–18.   ������������������������������������������������������������������������������� Arne Kaijser, ‘System building from below. Institutional change in Dutch water control systems’, Technology and Culture 43 (2002) 521–48. 

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This chapter analyses the financial organization of the water board of Rijnland (Hoogheemraadschap van Rijnland). The Rijnland is a large area in the central part of the province Holland, roughly situated between four big cities: Haarlem, Amsterdam, The Hague and Gouda. The region has one of the oldest water boards in the Netherlands, tracing its history back to around 1200. Unlike the many thousands of water boards that once existed in the Netherlands, this particular one still operates today within almost the same boundaries as in the early modern period. How did the Regional Water Board of Rijnland raise funds? Did the board have to deal with free riders, that is to say was it possible for landowners to profit from common facilities without contributing proportionately towards the costs? Was expenditure carefully monitored or was it possible for administrators of the board to benefit financially at the public’s expense? Before answering these questions, we will first consider briefly the main types of maintenance systems which operated in the history of Dutch water management.

Dutch Water Boards and Maintenance Systems The earliest water works in Holland were constructed and maintained by farmers who contributed their labour to a system called verhoefslaging. Small works like polder dikes were divided into parts which were allotted to individual landowners. Larger works, like sea and river dikes, were divided into sections allotted to villages or groups of villages. Within the villages the sections were subdivided into parts, which were in turn allotted to individuals. The individual landowners had to ensure that their part met certain standards set by the water boards. Dredging out canals and cleaning up ditches was organized in the same way, by dividing the tasks among those benefiting from the work. When verhoefslaging prevailed the most important tasks of the water boards involved inspecting the quality of maintenance work and judging people who had been negligent or had transgressed the rules in some way. The function of the water boards was essentially judicial in this situation. In the course of time the water boards changed from verhoefslaging to a more modern system, which was called gemeenmaking: communalization. Under this system the work was centrally administered and treated as indivisible, its creation or maintenance was leased out by the water board to contractors, and the costs were shared among those benefiting from the work. This is where   ���������������������������������������������������������������������������������� There were more than 1,300 water boards in the province of Holland alone in 1900. Due to consolidation this number has fallen to seven in 2007. Rijnland and Delfland are the only water boards in the province that retain the same boundaries as in the early modern period. Willem ��������������������������������������������������������������������������� van der Ham, ‘Van nat boerenland tot droog stedenland. De Hollandse waterbeheersing en de nationale staat, 1800–2000’, in: Eelco Beukers (ed.), Hollanders en het water. Twintig eeuwen strijd en profijt (Hilversum, 2007) vol. I, pp. 99–168, p. 162, p. 164.   ������������ Van de Ven, Man-made lowlands, pp. 57–8.

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the water tax or apportionment comes in; the function of the water boards was extended from merely judicial to mostly administrative in nature. The switch from verhoefslaging to communalization did not happen everywhere at the same time. Even as late as the nineteenth century many dikes and canals in the Netherlands were still maintained in the old way by verhoefslaging. Some works like sluice complexes in Holland, on the other hand, were already being built and maintained by contractors around 1500. The decisive factor here would seem to have been the need for skilled workers. The upkeep of wooden sluices and, even more so, stone sluices which had begun to be built from the middle of the sixteenth century, required specialized labour. Contractors could also rely on local labour markets to recruit unskilled workers for large-scale works on dike breaches. For instance, more than 800 labourers were working on a dike breach near Haarlem in 1510 and they had been hired by the Regional Water Board of Rijnland. The water board of Rijnland was named after the river Oude Rijn (the Old Rhine). Around 1200 at the latest, some form of water management functioned in the region relating to this river. From the core of about 15 villages which lay mainly alongside the river, the board later extended its territory to the north and to the southeast. Rijnland’s main responsibility was the maintenance of a number of hydraulic works situated near its northern boundaries, which were crucial to the water management of the whole district. Foremost among these works was the long dike between Spaarndam (just north of Haarlem) and Amsterdam known as the Spaarndammerdijk. This dike required constant maintenance as a breach would flood a large part of Rijnland. Initially, verhoefslaging was used to recruit farmers for this task, but during the second half of the sixteenth century, communalization was introduced in two stages with the first for the eastern half



 ��������������������������������������������������������������������� As analysed by Petra van Dam in Milja van Tielhof and Petra van Dam, Waterstaat in stedenland. Het hoogheemraadschap van Rijnland voor 1857 (Utrecht, 2006) chapter 3.   ��������������������������������������������������������������������������������� Examples concerning polder dikes: Siger Zeischka, ‘Dealing with diversity: smallscale dikes in early modern Rijnland, 17th–early 19th century’, Jaarboek voor Ecologische Geschiedenis (2005–2006): 181–5.   ������������������������������������������������������������������� Petra J.E.M. van Dam, ‘Digging for a dike. Holland’s labour market ca.1510’, in Peter Hoppenbrouwers and Jan Luiten van Zanden (eds), Peasants into farmers? The transformation of rural economy and society in the Low Countries (middle ages–19th century) in light of the Brenner debate (Turnhout, 2001), pp. 220–55.   ������������������������������������������������������������������������������������� To the south of Rijnland, also in Holland, the Regional Water Boards of Delfland and Schieland were in operation from the thirteenth century onwards. For the earliest history of water management in the Netherlands see: William TeBrake, ‘Hydraulic engineering in the Netherlands during the Middle Ages’, in Paolo Squatriti (ed.), Working with water in medieval Europe. Technology and land-use (Leiden/Boston/Köln, 2000), pp. 101–27.   ������������������������������������������������������������������������������������� Other responsibilities included the supervision of the dikes along the Old Rhine and of those rivers, canals and lakes which were part of the reservoir. Those works, however, were not managed directly by Rijnland, but by local authorities.

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of the dike and the second for the remaining section.10 In addition, Rijnland maintained two sluice complexes on the dike, one near Spaarndam and the other at Halfweg, a site ‘half way’ between Spaarndam and Amsterdam. Via these sluices excess water was drained from Rijnland into the IJ. Although Rijnland possessed another outlet situated near Gouda in the south, in the period under discussion the two sluice complexes on the Spaarndammerdijk were the major outlets. Only in the nineteenth century was a canal dug from the Old Rhine to Katwijk, creating the possibility to discharge water into the North Sea. Prior to this, most excess water, including that from regions south of the Rhine, had to be routed through the Rhine and other waterways northward to be drained into the IJ.

The Revenues of the Rijnland Water Board In the early modern period the main source of revenue for the Rijnland water broad was a tax on farmland, the so-called morgengeld, the morgen being a square measure of 8515.8 m2. In addition to morgengeld Rijnland had several other sources of income, such as income from real estate which the Regional Water Authorities acquired over the course of time. These acquisitions were not investments, but rather were dictated by necessity. In the sixteenth century, for example, plots of land along the Spaarndammerdijk were bought with a view to maintaining the dike. In the eighteenth century land was bought near the Wierikkerdijk (a dike near the south-eastern boundary of Rijnland that was built and maintained in conjunction with the adjoining districts Schieland and Delfland) to supply clay to raise and reinforce the dike. The lands were leased to tenant farmers. Furthermore, Rijnland farmed out the fishing rights near its own sluices and in several lakes along the Spaarndammerdijk. The board also had the right to levy dues at several bridges and at the locks at Spaarndam and the Gouwesluis, where the river Gouwe flows into the Old Rhine.11 Fines collected from those who violated the by-laws generated some income too. An exceptional form of income was generated by the subsidy provided by the States of Holland between 1766 and 1793 to protect the shores of the Haarlemmermeer. This large lake in the north of Rijnland had expanded steadily  ���������������������������������������������������������������������������������� Milja van Tielhof, ‘Betrokken bij de waterstaat. Boeren, burgers en overheden ten zuiden van het IJ tot 1800’, in Eelco Beukers (ed.), Hollanders en het water. Twintig ��������������� eeuwen strijd en profijt (Hilversum, 2007), vol. 1, pp. 82–5. Problems of free riding were often the cause of the switch from verhoefslaging to communalization, but this issue falls outside the scope of this article. 11  �������������������������������������������������������������������������������� In 1820 a register was drawn up of the assets of Rijnland and their provenance: Hoogheemraadschap van Rijnland (Leiden), Oud Archief Rijnland (further: OAR) 10322. There are also sixteenth- and seventeenth-century surveys but these are incomplete; they only include the territories along the Spaarndammerdijk and the IJ, OAR 10318, 10319 and 10320. 10

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over the centuries due to its shores, for various reasons, crumbling away.12 As a result of this erosion, farm land was lost and complete villages had to be vacated. Plans to reclaim the lake partially or completely did not take shape until the nineteenth century, and the only other way to prevent flooding was to reinforce the shores.13 This project was deemed crucial for all inhabitants of Holland and since it was clear that Rijnland alone could not bear the high costs, the States of Holland contributed a total amount of 1.8 million guilders to install continuous shore protection along the northern and eastern sides of the lake.14 A sample survey of the annual accounts of the Regional Water Board of Rijnland shows that revenues from morgengelden exceeded those from all other sources between 1550 and 1750 (see Table 8.1). Only in 1800 did morgengelden amount to less than 90 per cent of total revenue, as a result of increased payments of lock and bridge dues. But even then the ‘water tax’ comprised 81 per cent of total income. The tax on farmland was levied by apportionment (omslag) so that the landholders paid in proportion to the land they owned. This ensured that the general guiding principle of water management was applied: those who benefited from common water management facilities also shared the financial burden of operating these facilities. The apportionment was set every year by the dike reeve and the seven trustees ( = hoogheemraden), and formally determined during the annual meeting with the main landholders. The amount to be levied per morgen was established on the basis of the accounts of the previous year, and the budget for the coming year. A delegate of the Court of Holland (Hof van Holland) was present at the reading of the accounts and the Court had to give permission to levy the annual apportionment.15

12  ������������������ P.J.E.M. van Dam, Vissen in veenmeren. De sluisvisserij op aal tussen Haarlem en Amsterdam en de ecologische transformatie in Rijnland 1440–1530 (Hilversum, 1997), pp. 64–70. 13  ������������������������������������������������������������������������ C. Glaudemans, ‘De oude plannen tot droogmaking van het Haarlemmermeer’ (unpublished, Leiden, 1985). 14  ������������������������������������������������������������ F.W. Conrad, ‘Oeverwerken van het Haarlemmermeer’ in: idem, Verspreide Bijdragen (The Hague, 1849), pp. 186–7. 15  �������������������������������������������������������������������������������� Cf. the documents pertaining to the levy of the apportionment in 1641 and 1643. OAR 10294.

Table 8.1 Sources of revenue of the regional water board of Rijnland source of revenue

1550

%

1600

%

1650

%

1700

12,164

96

27,627

90

69,475

90

98,953

land-rent

149

1

587

2

1,182

2

lock dues

405

3

2,008

7

4,316

200

1

1,136

Morgengeld

fines fishing dues other Total

1750

%

1800

93

105,516

90

99,800

81

1,670

2

1,910

2

5,701

5

6

3,652

3

3,453

3

5,857

5

1

848

1

178

624

1

560

1

3,912

3

3,367

3

143 120 12,718

100

30,542

100

%

%

856

1

1,049

1

2,681

2

8,040

7

77,108

100

106,732

100

117,650

100

123,389

100

Source: These figures are derived from the ordinary annual accounts of Rijnland: OAR 9572, 9634, 9684, 9734, 9784, 9834. For 1750 there is also a special account (OAR 9939). For that year the revenues of both accounts have been totalled.

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An unusual aspect of the Rijnland morgengeld was that the quality of the land was taken into account which could vary considerably. It was widely recognized that the clay soils along the Old Rhine, for example, yielded much higher returns than the poor peat soils found in large parts of Rijnland. The tax burden would be unevenly shared if landowners contributed exactly the same amount for each square morgen. For tax purposes therefore the poor soils were reduced in size by, for example, changing every three actual morgen into two fiscal morgen, or every seven into six, the precise conversion depending on the quality of the soil. In extreme cases a village would have to pay only morgengeld on about half of its actual agricultural land. This refined method of taxation had most likely been developed in the Middle Ages, and it had been in use officially since the middle of the sixteenth century.16 Variations on this method are reported for other parts of the Netherlands as well.17 It ensured an evenly distributed tax burden among the landowners in various parts of the territory. The Rijnland landscape was not only varied but also dynamic. Eroding shorelines along large interior lakes slowly destroyed land that had once been useful. The sand dunes along the coast were another source of change, and shifting sands ruined lands once used for agriculture. Town development caused fields and meadows around Leiden to disappear in the seventeenth century. On the other hand, new land was created by people draining lakes and ponds in the seventeenth and eighteenth centuries.18 The morgengeld system took into account all of these changes. Once every seven years it was possible for villages to ask for a reduction in the surface of land for which they were required to pay morgengeld.19 Those who reclaimed land were entitled to prolonged tax exemptions but only initially. After that, they had to contribute to the costs of water management like other landowners. Thus, the distribution of the tax burden was not only differentiated but also highly adaptive to the dynamic environmental changes. This enhanced the legitimacy of Rijnland’s main source of revenue. 16

 ��������������������������������������������������������������� The system is more fully explained in Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 106–11 and p. 261. 17  ����������������������������������������������������������������������������������� Examples in Schieland: B. Ibelings, ‘Economie: veel consumptie, weinig productie’, in J.G. Smit (ed.), Den Haag. Geschiedenis van de stad. Vroegste tijd tot 1574 (The Hague, 2004), pp. 151–80, p. 153; and Flanders: A. de Kraker, ‘Het dijkgeschot als belasting op de grond door de eeuwen heen. De casus van het Vlaamse en Zeeuw-Vlaamse kustgebied tussen 1350 en circa 1990’, in T. Pfeil et al. (eds)., Steden en dorpen in last. ������������ Historische aspecten van lokale belastingen en financiën (Amsterdam, 1999), 41–58, 43. The standard work on the history of Dutch water management, however, places the introduction of this kind of differentiated taxes in the twentieth century. ������������ Van de Ven, Man-made lowlands, p. 81. 18  ��������������������������������������������������������������������� The changes are described in more detail in Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 256–60. 19  ����������������������������������������������������������������������� M.H.V. van Amstel-Horàk, ‘De morgenboeken van Rijnland’, in G.A.M. van Synghel (ed.), Broncommentaren 4. Bronnen betreffende de registratie van onroerend goed in Middeleeuwen en Ancien Regime (The Hague, 2001), pp. 235–74, p. 248.

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Benefits for the Neighbouring District of Woerden The partitioning of the lowlands between Holland and Utrecht created opportunities for free riding and hence many landowners managed to profit from Rijnland’s facilities without paying their fair share of the costs. One such group was found in the Grootwaterschap van Woerden, a neighbouring regional water board located in the province of Utrecht that discharged its excess water into Rijnland’s reservoir. Woerden lay on the southeastern boundary of Rijnland and measured about 17,000 morgen. In the Middle Ages the Regional Water Board of Woerden received permission to drain its water into Rijnland’s reservoir on the condition that Woerden maintain several sluices in Spaarndam and take partial responsibility for the maintenance of several bridges. At the time this amounted to a more or less proportional contribution to the common facilities. Over the course of centuries, however, the drainage system changed though the agreements with Woerden were not adjusted accordingly. At the end of the fifteenth century, Rijnland built the sluice complex at Halfweg, and Woerden refused to contribute towards the costs. From then on drainage took place mainly in Halfweg, and the sluices at Spaarndam partly lost their function. In 1571 Woerden bought off its obligation to maintain one of the two now redundant sluices with a lump sum of 7,000 guilders.20 The management of the Spaarndammerdijk, too, underwent considerable change in the sixteenth century. In the past this dike had been maintained by the villages lying alongside it, but in the course of the sixteenth century they proved unable to maintain the dike properly and breaches occurred. The regional water board was forced to take the dike under direct management, as a consequence of which the annual costs rose considerably, but here, again, there were no contributions from the Regional Water Board of Woerden. For centuries Woerden discharged its excess water into Rijnland’s reservoir, with the sole duty of maintaining one sluice and part of two bridges in return.21 A region just south of Woerden, between the rivers Old Rhine and IJssel, had a somewhat different relationship with Rijnland. For some time during the Middle Ages this region had discharged its water towards the south, into the IJssel.22 When conditions deteriorated and drainage into the IJssel was no longer possible, the individual villages had to ask permission to revert back to the old situation and to drain its water into the Old Rhine and hence into Rijnland’s reservoir. One by one, the villages concerned received permission to do so, but on different conditions. In many cases their territory was measured by the surveyor of Rijnland and it was  ���������������������������������������������������������������������������������� S.J. Fockema Andreae, ‘Memorie over de uitwatering op Rijnland en de geschiedenis der daarop gemaakte bepalingen’, included as a supplement in Notulen van het verhandelde in de Vereenigde Vergadering van Rijnland gedurende het jaar 1930. 21  ����� Ibid. 22  ��������������������������������������������������������������������������������� G.P. van de Ven, ‘De uitwatering van de landstreek tussen Oude Rijn en Hollandse IJssel tot 1850’ in Ludy Giebels (ed.), Waterbeweging rond Gouda van ca. 1100 tot heden. Geschiedenis van Rijnlands waterstaat tussen IJssel en Gouwe (Leiden, 1988), p. 14. 20

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stipulated that an annual morgengeld be paid, similar to the villages in Rijnland. Between 1544 and 1612 about 6,000 morgen land was incorporated into the reservoir community of Rijnland on this condition. Other areas were obliged to pay half of the usual morgengeld, presumably because drainage took place only partially through Rijnland’s reservoir.23 These contracts adhered to the principle of proportional division of the costs. However, there were also contracts in which the annual contribution was set at a fixed amount, leading over time to a growing discrepancy between the contribution of the farmers from the areas concerned and those in Rijnland itself. In 1532, for example, an area measuring 784 morgen just to the south of the town of Woerden was admitted on payment of one stuiver per morgen,24 and later in the sixteenth century, large areas were also accepted on the same condition.25 At the beginning of the seventeenth century a few smaller plots of land were accepted at three, four or five stuivers per morgen.26 In the long run these contracts were detrimental to the financial position of Rijnland, because these territories kept on paying the same rates, whereas due to inflation and real cost increases the tax in Rijnland rose from a few stuivers in the middle of the sixteenth century to over 40 stuivers by the end of the eighteenth century. Only in the nineteenth century, when the central land registry was introduced, did Rijnland question the acceptability of these agreements.27 Up until then these territories did not contribute proportionally towards the costs of water management. This patchwork of agreements and contracts lead to a situation in which the Regional Water Authorities of Woerden and the region between Old Rhine and IJssel contributed unevenly towards the maintenance cost of the hydraulic works in Rijnland, from which they benefited. Furthermore, this imbalance continued to grow with time. Why was this situation never remedied? First of all, the excess water clearly was not such a burden on Rijnland’s drainage system that it required large investments of money, otherwise we would have expected a more intense struggle to modify the arrangements. More importantly, though, to settle matters with Woerden, Rijnland had to negotiate with a water board which was based in another province, Utrecht. Support from the central government was needed to annul outdated contracts and agreements and this became increasingly unrealistic 23  ��������������������������������������������������������������������������� Quite large areas were involved: e.g. the polder Langeweide and the polder Ruigeweide, measuring 1,050 morgen in total, were accepted at half price in 1612. This meant that in fact they only payed morgengeld for 525 morgen. ���������� OAR 11503. 24  ������������������������������������������������������������������� Barrewoudswaarder, Kromwijk, Bulwijk and Bakenesse. OAR 11503, OAR 9211a. 25  ���������������������������������������������������������������������������� ‘Het Oosteinde van Waarder’ and ‘ Het Westeinde van Waarder’, in 1571 resp. 1597, measuring 1,196 morgen in total. OAR 11503, OAR 9211a. 26  ���������������������������������������������������������������������������������� ‘Negenviertel’, ‘Uiterdijk omtrent Oudewater’, ‘Leendert Hagensz land’, ‘Oucoop’. OAR 11503. 27  �������������� Ludy Giebels, Hollands water. Het hoogheemraadschap van Rijnland na 1857 (Utrecht, 2002), p. 78.

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as decentralization tendencies in the Dutch Republic had been gaining momentum from the second half of the sixteenth century. A comparable situation existed further to the north in which Holland did not succeed in making villages in Utrecht pay their fair share of the maintenance costs of the dike along the Zuiderzee, which ran along Holland territory but protected many Utrecht villages as well.28 The result in both cases was that the main principle of water management was not enforced: proportional contribution towards the costs of common hydraulic works. In the case of Woerden, only in the nineteenth century did Rijnland successfully obtain a larger contribution towards the rising costs from the Regional Water Board of Woerden. Up until 1960, however, financial relations between Rijnland and Woerden had been strained.29 It is obvious, then, that the water works of Rijnland benefited landowners in neighbouring areas who did not have to pay for them. Yet these free riders did not cause the system to collapse. The financial arrangements with the neighbouring districts created an uneven and some would say unfair distribution of costs, but they did not harm the efficiency of Rijnland’s water management. The landowners of Rijnland continued to share the financial burden among themselves. The classic free-rider problem, defined as a situation in which free-riding behaviour is exhibited by more and more people thus undermining the legitimacy and efficiency of prevailing arrangements, did not occur as the contracts with the neighbouring districts did not affect the willingness of the villages in Rijnland proper to pay their morgengeld.

Collecting Dues from the Landowners The morgengelden were collected in a decentralized manner. The steward (rentmeester) of Rijnland did not collect them himself, but relied on the village communities. Each year he notified the local water authorities (ambachtsbewaarders) in writing, specifying the amount they had to pay. The local officials kept registers of all landowners in their territory thus allowing them to make sure that everyone paid the proper amount. The ambachtsbewaarders deposited the collected money at the steward’s office in Leiden.30 To monitor their operations, every four years the local water authorities were expected to hand over up-to-date copies of their books to the dike reeve and trustees of Rijnland. From the seventeenth century onwards 28  ���������������������������������������������������������������������������������� Alfons Fransen, ‘Sharing the responsibility of ecological change. The ���������������� case of the Diemerdijk, 1670–1770’, Jaarboek voor Ecologische Geschiedenis, (2005/2006): 143–73, 151. 29  ���������������������������������������������������������������������� Ludy Giebels, ‘Het Hoogheemraadschap van Rijnland en zijn buren in de negentiende en twintigste eeuw’, Tijdschrift voor Waterstaatsgeschiedenis, 11/2 (2002): 30–32. 30   Register op de keuren en ordonnantien van het hoogheemraadschap van Rijnland (Leiden, 1769–1823), by-law nr. 166.

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printed forms were used, indicating the quantity of morgen land on which tax was due, the amount per morgen, and the total assessment a village had to pay.31 In the Middle Ages the ambachtsbewaarders collected the morgengeld for their territory in person; however, from the middle of the fifteenth century professional morgengeld collectors were also contracted out by the ambachtsbewaarders. The introduction of this type of official suggests a certain professionalization. The books of a sixteenth-century collector, Gerrit Jansz Abbenbrouck, morgengeld collector in the districts of Oudshoorn, Rijnsaterwoude, Esselijkerwoude, Katwijk, Valkenburg, and Oegstgeest, shed valuable light on the working methods of these officials.32 Abbenbrouck lived in Leiden and also served as a messenger for the Regional Water Board of Rijnland.33 He travelled extensively and it is likely that he was able to combine his activities as a collector with his work as a messenger. Abbenbrouck handed over the morgengeld collected to the respective village authorities. It is not known why some ambachtsbewaarders contracted their work out to collectors, while others did not. It so happened that the old system of collection by ambachtsbewaarders survived alongside the new system which used professional collectors. According to the by-laws of Rijnland, both groups had the right to a wage of ‘the fortieth penny’ (2.5 per cent). One explanation for the use of professional collectors is that they worked in districts where landowners lived at considerable distances from one another. Another possibility is that professional collectors were hired by the ambachtsbewaarders of villages where a large amount of land was owned by townspeople and urban institutions. Here they collected the morgengeld via the leaseholders of the urban owners. In Rijnland this seems to have been the usual practice.34 In the vicinity of Haarlem a special provision was made: here morgengeld was always procured by professional collectors, who, instead of the usual fortieth penny, received a twentieth on account of the vast area which they had to cover.35 Regrettably, due primarily to a lack of source material, too little is known about the actual collection of the apportionment in Rijnland to obtain a clear  ������������������������������������������������������������������������������ Assessent notices of 1668 for Hillegom and for Zoeterwoude-Stompwijk-Wilsveen are extant in OAR 10417. An eighteenth-century specimen in OAR 10869. 32  ������������������������������������������������������������������������������ OAR Div. 5, 2 (1534). These books originally come from a private archive, but were transferred to Rijnland’s archives in the nineteenth century. I am indebted to Petra van Dam who shared with me the results of her research on sixteenth-century collectors in this and other archives, and for discussing the meaning of professional collectors. 33  ������������������������������������������������������������������������������ Petra J.E.M. van Dam, ‘Feestvissen en vastenvissen. Culturele, ecologische en economische aspecten van de visconsumptie in de Nederlanden in de Late Middeleeuwen’, Tijdschrift voor Sociale Geschiedenis 29/4 (2003): 467–96, 491. 34  ���������������� Siger Zeischka, Minerva in de polder. Waterstaat en techniek in het hoogheemraadschap van Rijnland (1500–1856) (PhD thesis, Vrije Universiteit 2007), p. 136. 35  ��������������������������������������� Cf., for example, OAR 9580, fol. 170 v. 31

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picture of rent-seeking behaviour by professional and non-professional collectors. Professional collectors like Abbenbrouck may have worked more efficiently than the ambachtsbewaarders, but it may also have been easier for them to embezzle the collected funds. On the other hand, a scandal at the end of the seventeenth century in one of Rijnland’s villages (Zoetermeer) suggests that even when the local authorities collected the morgengeld and other taxes themselves, they also had ample opportunity to embezzle these funds as well.36

Peat Winning to the Detriment of the Public Good Large areas in Rijnland were covered with peat, and the steadily growing demand for fuel in Holland in the late Middle Ages and the early modern period made peat mining an attractive option for landowners, even if it lowered the surface of the land and considerably reduced its quality. For the Rijnland water board peat mining in their territory was a real concern because it progressively reduced the taxable land area. Considering the overwhelming importance of the apportionment in total revenues, destroying taxable land potentially undermined the whole financial system. A description of the peat mining method practised since the first half of the sixteenth century makes clear the justification for this fear. The complete layer of peat, often several metres thick, was dredged up from below the water, until the underlying clay or sandy soil was reached.37 Whole sections of land were thus replaced by pools of water. The peat lakes could be used for fishing, fowling and reed cutting, but there was a considerable risk that yields from these activities would not cover the expenses of the apportionment and other land taxes thus forcing owners to abandon their lands. To prevent large scale land destruction both the regional water authorities and the provincial government issued regulations in response to the introduction of the peat dredging method; these were mainly extensions of the policies that had been instated during the Middle Ages when peat mining methods had been less invasive but still damaging to the landscape. The regulations aimed at confining peat mining to small sections of land, and stipulated the improvement of the remaining strips of land in between. Peat miners were also asked to provide fiscal security, and permission to dredge peat was only given when real estate was pledged as security. Extant licences reveal that peat miners often pledged a small plot of their own land as security, referring to it as their house and land (‘huis en erf’). Such farmers carefully chose the wettest and poorest parts for mining, usually those farthest from the farmhouse. The land closer to the farmhouse was maintained in as good condition as possible through building up the soil and increasing its fertility. Farmers went to great lengths to maintain their land because it was their 36  ��������������������������������������������������������������� S.J. Fockema Andreae, ‘Een bestuursschandaal in de 17de eeuw’, Leidsch Jaarboekje (1932): 66–85. 37  ������������������������� Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 122–3.

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most important or even sole asset. Mining was therefore not carried out in large blocks, but rather gradually beginning with the sections of the long strip fields furthest removed from the farmhouse. This also explains why land loss remained a fairly slow process.38 Until the mid-seventeenth century this fiscal security system seems to have worked well due to extensive regulation, supervision by the water boards, and the desire of peasants to maintain some part of their land in good condition for as long as possible.39 Signs of growing financial difficulties, however, did begin to emerge. Stewards were increasingly confronted with the problem of the villages’ arrears in morgengelden, as they did not succeed in paying their share on time. For instance, when steward Pieter van Wouw died in 1643 his heirs inherited the right to collect his restanten, the label given to the overdue morgengelden.40 The dike reeve (dijkgraaf), chief administrator of Rijnland and representative of the central government, officially played an important role here. He was required to pay the steward the amount of morgengelden owing; via legal proceedings, he then had to attempt to recover the money from the various debtors.41 In practice, however, the system may have worked differently, as the steward and not the dike reeve, frequently had to resort to legal action to collect on the debts.42 In the second half of the seventeenth century the problem of payment arrears of morgengeld grew more acute. By 1696, for example, steward Johan Sylvius had still not succeeded in cashing in on all restanten dating from the era of his predecessor Adriaen Van der Laen who had died 15 years earlier in 1681.43 Particularly the villages in the peat districts were in considerable debt. In 1704 Benthuizen, for example, still owed part of the morgengeld for 1683 and 1684.44 The fiscal security system finally broke down at the end of the seventeenth century. As a result of successive generations of farmers taking part in peat excavation, most of the soil had been removed and the remaining plots had deteriorated to such a degree that agriculture was no longer possible.45 Seventeenth38

 ��������������������������������������������������������������������������� Milja van Tielhof, ‘Turfwinning en proletarisering in Rijnland 1530–1670’, Tijdschrift voor Sociale en Economische Geschiedenis, 2/4 (2005): 95–121, 112. 39  ������������������������������������������������������������������������������������ Most historians paint a rather negative picture of the way the water boards carried out their supervisory tasks concerning peat winning, but this viewpoint has been called into question. Milja ������������������������������������������������������������������������� van Tielhof and Petra J.E.M. van Dam, ‘Losing land, gaining water. Ecological and financial aspects of regional water management in Rijnland, 1200–1800’, Jaarboek voor Ecologische Geschiedenis (2005/2006): 63–93, 75–81. 40  ���������� OAR 10295. 41   Register op de keuren, by-laws nrs. 167–71 and 222–3. 42  ������������������������������������ OAR 10295 (1644) and OAR 815 (1704). 43  �������������� OAR 815, 1696. 44  ������������������� OAR 815, year 1704. 45  ���������������������������������������������������������������������������������� Deterioration of the environmental and economic conditions in a group of Rijnland peat villages during the second half of the seventeenth and the first half of the eighteenth centuries is described in A.J.J. van ’t Riet, ‘Meeten, boren ende besien’. Turfwinning ������������������ in de

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century maps reveal that peat pools were steadily increasing in size while plots of land were steadily decreasing. Between the years of 1670 and 1700 in particular, many plots of land in peat land villages were abandoned by their owners, and villages were therefore no longer able to pay their share of land tax. Various other factors in addition to the deterioration of the landscape contributed to the rather sudden breakdown of the fiscal security system.46 In the third quarter of the seventeenth century the price of peat stopped rising, making it more difficult to earn sufficient income from small plots of land to pay morgengeld and other taxes and levies. The disasters of 1672–1675 initially played an important role. Parts of Rijnland were flooded during the French invasion in 1672, and dikes and windmills were destroyed. Failure to carry out routine repairs undoubtedly contributed to two successive dike breaches of the Spaarndammerdijk in 1675. Massive across-the-board tax increases were needed to pay for the damage. Not only Rijnland but also polder boards and village authorities levied special taxes in the 1670s and many landowners found themselves unable to cope with the additional financial burden.47 In the last decades of the seventeenth century, the States of Holland exempted many districts from a portion of the land tax they owed and Rijnland did the same for the water tax. In 1685, 1686 and again in 1714, many of the peat villages were partially relieved of their obligation to pay overdue morgengelden.48 Peat winning is not a classic form of rent seeking, self enrichment or free riding, but it is clear that landowners who dredged out their entire land destroyed not only their own property, but also that of others. Payment for regional and local water systems, as well as other public facilities, was based on landownership, and when a portion of land disappeared, the owners of the remaining plots had to pay a larger share of total costs. One could therefore argue that peat dredging was indeed a form of self enrichment for some at the public’s expense. In the last quarter of the seventeenth century, when the negative fiscal consequences of extensive peat dredging became clear, the fiscal system was reformed. This was in direct response to the financial catastrophes which took place at this time.49 Rijnland urged the States of Holland to replace the system of security based on real estate with one based on the payment of one stuiver (1/20th guilder) per square rod of peat produced. The so-called stuivergelden could be paid into a fund managed by Rijnland’s secretary. If landowners abandoned their land there would be a stock of capital from which the morgengeld could be paid. A buitenrijnse ambachten van het Hoogheemraadschap van Rijnland 1680–1800 (Hilversum, 2005), chapter 7. 46  ������������������������� Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 217–20. 47  �������������������� OAR 25, fols 217–22. 48  �������������������������������� OAR 815, years 1685, 1686, 1714. 49  ���������������������������������������������������������������������������� L.A.M. Giebels, ‘Het waarborgfonds van het hoogheemraadschap van Rijnland’, Holland 21 (1989): 160–80, 167–8; Van Tielhof en Van Dam, Waterstaat in stedenland, p. 220.

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system of this type was actually introduced in Rijnland in 1680, although at first it was only voluntary. In 1700 the States of Holland made the stuivergelden system compulsory for the entire province. The money which accrued from this source was invested in the public debt, in bonds issued by the provincial government. The new system was clearly implemented too late to save land that had already been destroyed and abandoned, but in areas where peat mining had not yet ceased it continued to operate into the twentieth century.50 In sum, from the Middle Ages onward peat winning had become a potential threat to the entire financial system of the water board by destroying its tax base (fertile land). A refined regulatory framework, including the obligation of peat winners to pledge real estate as a form of security, worked well for a long time. When it finally failed in the late seventeenth century, the system was reformed. It is true that under the new system a considerable number of villages initially did not pay their dues, or did so only in part, but further damage to fertile land had been halted. The ‘damage control’ practised in relation to peat winning is a sign of the institutional strength of the water board.51

Self Enrichment by the Steward of Rijnland? In the 1660s, the financial administration of the steward of Rijnland, Adriaen van der Laen, gave rise to an enormous scandal. The town magistrate of Leiden suspected him of systematic and gross embezzlement and started legal proceedings against him. The whole affair caused a sensation, particularly because Leiden’s magistrates discredited Van der Laen by publishing two books containing incriminating evidence, based, among other things, on a thorough investigation of the books kept by Van der Laen.52 Leiden, as a representative of its citizens 50  �������������������������������������������������������������������������������� In the second half of the eighteenth century and in the nineteenth century, the collected funds were used to help reclaim lands that had previously been destroyed by peat mining. Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 245, 247. 51  ���������������������������������������������������������� Van Tielhof and Van Dam, ‘Losing land, gaining water’, 89. 52  ������������������������� These publications were: Kort vertoogh van de redenen ende motiven, die eerst den burgemeester der stad Leyden, alsmede hooft-ingelanden van Rijnlandt, ende daernaer den schout derselver stad, bewogen hebben om respectivelijck, soo in cas civijl voor den hove van Holland, als in cas crimineel voor schepenen der voorsz. stede, te procederen, tegens den heer Adriaen van der Laen, rentmeester van Rijnlandt. Dienende tot justificatie van der selver sincere ende goede intentie voor het interest, ende den welstandt van den lande van Rijnlandt (1668); Klaer bericht van de poincten en articulen daer op Adriaen vander Laen rentmeester van het Hooge-heemraetschap van Rijnland, den Heer Advocaet Fiscael en Procureur Generael van Holland, ten overstaen van twee Heeren Raden ordinaris in den Hogen Rade, als Commissarissen, is geexamineert, mitsgaders van de Antwoorden by den gemelten Rentemeester daer op gegeven, met byvoeginge van eenige remarques die op de voorsz Vraegh-poincten en antwoorden respectivelijck souden konnen werden geappliceert (1668).

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and institutions that owned land in Rijnland, was an important and permanent member of the College van hoofdingelanden, representing the main landowners in Rijnland. This board enjoyed certain privileges of financial management, for example, the privilege to hear and balance Rijnland’s annual accounts and to make decisions about the negotiation of loans.53 The Van der Laen scandal can largely be attributed to the financial problems of Rijnland at a time of economic depression and ecological deterioration due to peat dredging. It is therefore more than a minor incident.54 Officially, as we have seen, the steward was not responsible for solving the liquidity problems stemming from arrears in morgengeld, as this was the responsibility of the dike reeve. In practice however, the steward was supposed to pay up front and wait for the morgengelden to trickle in, sometimes having to resort to legal action to recover the debts. Therefore the stewards of Rijnland had to be wealthy individuals who could afford to pay large sums out of their own reserves – a financial service for which they were not compensated. Normally they also made up the shortfall when an apportionment turned out to be too low due to unforeseen expenses. In contrast to overdue morgengelden, which the steward had to pay for out of his own pocket and without compensation, in this case he was paid interest amounting to a few per cent. In such circumstances, he also had the option of contracting a loan, but to do so he needed the permission of the Board of Main Landholders; their permission was not needed if he opted to make up the shortfall of an apportionment payment with his own money. In 1665 the Board of Main Landholders discovered that Rijnland was deeply in debt, partly because of the large sums of money the steward had advanced. The main landholders raised objections to the fact that Rijnland’s burden of debts had increased without their notification and without their consent. In this respect the steward was in the right, however. He needed their consent for the negotiation of loans but not for any advances he decided to make. However, when the main landholders checked the steward’s administration to get to the root of the burden of debts, suspicions of fraud, misuse and embezzlement arose. Systematic swindling was what they concluded from their meticulous investigation of the annual accounts of Rijnland.55 For a number of reasons, however, these suspicions could not be confirmed and Van der Laen was not convicted of any wrongdoing.

53  ������������������������������������������������������������������������������������� From the middle of the sixteenth century the main landholders reserved the privilege to negotiate loans. ������������ B. Dolfing, Waterbeheer Geregeld? Een historisch bestuurskundige analyse van de institutionele ontwikkeling van de hoogheemraadschappen van Delfland en Rijnland 1600–1800 (np, nd (2000)), p. 185. 54  ����������������������������������������������������������������������������������� An earlier interpretation of the scandal as a minor incident is discussed in: S.J. Fockema Andreae, Het hoogheemraadschap van Rijnland. ������������������������������� Zijn recht en zijn bestuur van den vroegsten tijd tot 1857 (Leiden, 1934), p. 188. 55  ���������������������������������������������������� Leiden, Municipal Archives, SA II, inv.nrs. 5449–50.

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Here is not the place to go into this sensational affair at length,56 but with respect to the revenues of Rijnland one accusation against Van der Laen is of particular interest. The accusation was that he unjustly charged interest on the sums of money he advanced. Van der Laen allegedly used to wait for years before he paid suppliers of timber and stone, while he led the trustees and main landholders of Rijnland to believe that he had advanced money to these suppliers. This way he earned four to five per cent interest on large sums that he in fact – according to the criminal accusation – never advanced at all. Van der Laen defended himself by explaining how the system worked and why, in his view, he had not taken advantage of the system at the expense of Rijnland. In the month of May he would draw up the annual accounts, and in case of a deficit, he was granted a few per cent interest because he either had to advance this sum or had to borrow it at his own expense. But there was yet another deficit, which the system did not take into account: the outstanding morgengelden. The annual accounts suggested that all morgengelden were paid before the end of May, while in truth many people were in arrears with their payments. In order not to lose out, the steward only pretended to advance money on the bills of timber merchants, bricklayers and so on, while in fact he simply waited to pay until he received the overdue morgengelden. Van der Laen emphasized that this practice was not detrimental but rather beneficial to the finances of Rijnland, since the alternative of negotiating a loan every time there was a deficit, was more expensive. The reason for this was that in the case of a loan, Rijnland not only had to pay interest but also the remuneration of 2.5 per cent to which the steward himself was entitled. In short, the steward reasoned that he was actually saving money for the water board!57 This line of reasoning is not absurd. It is true that the annual accounts do not give any information about outstanding morgengelden. On the contrary, they make it appear as if the levies were paid in full in May. Recording expected revenues alongside revenues that had been actually paid was normal practice among bookkeepers in early modern times.58 As a result of the fictitious recording of the total amount of morgengelden, the steward was saddled with the problem of the arrears. It is likely that this problem became more pressing as the economic situation in the countryside of Rijnland began to deteriorate in the course of the seventeenth century. At the time agriculture had been hit by a severe depression. The land yielded so little that it was often sold or simply abandoned.59 From about 1660 onwards, revenues everywhere in Rijnland began to fall.60 Van der Laen seems 56

 ������������������������������������������������������������������� The affair is more generally described in Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 226–34. 57   Kort vertoogh, supplement LL. 58  ���������������������������������������������������������������������������� Manon van der Heijden, ‘Stadsrekeningen, stedelijke financiën en historisch onderzoek’, NEHA-bulletin, 14/2 (1999): 129–66, 136. 59  ���������������������������������� J. de Vries and A. van der Woude, Nederland 1500–1815. De eerste ronde van moderne economische groei (Amsterdam, 1995), p. 262. 60  ���������� Zeischka, Minerva in de polder, p. 137.

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to have sought compensation for the slow receipt of morgengelden by fabricating advance payments to tradesmen etc. on which he could charge interest. It follows that Van der Laen’s tampering with the books, falsely recording advances, did not constitute, or only partly constituted, an attempt to embezzle public money. It is very likely that Van der Laen in fact tried to indemnify himself against losses originating from overdue and incomplete payments of morgengeld. This scandal illuminates the problems Rijnland encountered in the collection of its main source of revenue during the seventeenth century. The old system, in which the steward advanced the outstanding morgengelden without interest, began to fail because of the increasing number of debts in arrears. To limit his losses the steward had begun to record fictitious advances. This is certainly not a straightforward case of fraud or embezzlement. The financial scandal around Adriaen van der Laen illustrates particularly well the specific function of stewards and other financial agents of public institutions in the Dutch Republic. They were a kind of financial entrepreneur and must not be seen (solely) as holders of an honorary office.61 Other public bodies like cities also resorted to office holders who were prepared to use their private resources if need be, and the prompt payment of soldiers was heavily dependent on them.62 This kind of financial agent took considerable personal responsibility for the management of finances. Even if there weren’t enough revenues coming in, they were expected to supply money so that necessary expenses could be met. Between Van der Laen and the regional water board a personal relationship existed of lender and borrower. When revenues were high and expenses minimal, the steward was debtor, but most of the time he was creditor. The way the system was set up meant that public and private money were always mixed. It also demonstrates that the accounts of Rijnland must not be interpreted as the financial administration of the water board itself, but as of the personal administration of the steward, who needed the books to justify himself vis-à-vis the trustees and the main landholders. In exchange for the financial risks he ran, the steward was granted considerable room to manoeuvre. He decided on which arrangements were to be made with

61  �������������������������������������������������������������������������������� Van Buyten analysed the role of stewards in the Southern Netherlands during the early modern period, but his analysis seems to apply equally well to the Republic. L. ������� van Buyten, ‘Theorie en praktijk voor de financiële instellingen van het Ancien Régime: de verborgen facetten van het rentmeesterschap’, Recht en instellingen in de oude Nederlanden tijdens de Middeleeuwen en de Nieuwe Tijd. Liber amicorum Jan Buntinx (Leuven, 1981), p. 555. 62  ���������������������������������������������������������������������������� Van der Heijden, ‘Stadsrekeningen’, 133–4; W. Fritschy and R. Liesker,‘Overheidsfinanciën, kapitaalmarkt en “institutionele context” in Holland en Overijssel tijdens en na de Spaanse Successie-oorlog’, in C.A. Davids, W. Fritschy and L.A. van der Valk (eds), Kapitaalmarkt, ondernemerschap en beleid. Studies over economie en politiek in Nederland, Europa en Azië van 1500 tot heden. Afscheidsbundel voor prof.dr. P.W. Klein (Amsterdam, 1996), pp. 179–83.

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suppliers of timber and stone, how the books were to be kept, and – in the case of liquidity problems – whether money would be advanced or payments postponed.

The Creditors of Rijnland In principle, the annual contributions of landholders covered Rijnland’s annual expenses. Each year the total amount of morgengelden needed was calculated on the basis of the accounts of previous years. Rijnland did not build up financial reserves and therefore had to borrow money when unforeseen circumstances, such as breaches in a dike, arose. The extra money spent on repairs was then divided among landowners in the next apportionment. When repairs were too costly to allow immediate apportionment, the water board took out long term loans. For instance, in the sixteenth century it sold redeemable annuities on several occasions to raise money for the repairs on and the reinforcement of the Spaarndammerdijk.63 The amounts involved in this case were quite modest, however, and the loans could be repaid relatively quickly. More serious cash flow problems occurred in the decades around the midseventeenth century, and again in the first decades of the eighteenth century. It is to these periods of financial trouble which we now turn to determine if there were opportunities for rent seeking by creditors. In both periods Rijnland contracted huge loans, as revenues from morgengeld and other sources fell well short of that which was needed to cover expenditures. In the first case the stewards tried to solve this problem by contracting loans either in their own name or in the name of the Regional Water Board of Rijnland. In the beginning of the eighteenth century, however, another method was introduced: the issuing of life annuities. While water boards of other regions also contracted loans to spread high costs over a longer period, the sales of life annuities seems to have been uncommon. 64 From the 1640s onward the number of loans increased substantially. In 1646, for example, 12,000 and 15,000 guilders were borrowed for repairs on the Spaarndammerdijk.65 In the years between 1643 and 1647 66,000 guilders were borrowed.66 Redemption was not feasible and in 1656 the total debt amounted to 127,520 guilders and in 1658 this increased to 139,681 guilders.67 In 1666 the burden of debt had been reduced to about 105,000 guilders, 40 per cent of which represented loans that the steward had taken out personally and the remainder

63  ����������������������������������������������������������������������������� OAR 9634. A ������������������������������������������������������������������� sample survey of the accounts shows high redemption and interest charges for the years 1550 and 1600. OAR ������������������ 9572 and 9634. 64  ��������������������������������������� De Kraker, ‘Het dijkgeschot’, pp. 48–9. 65  ��������������������������� J.T. Gevers van Endegeest, Het hoogheemraadschap van Rijnland (The Hague, 1871), vol. II, ������������������ supplement 29. 66  ���������� OAR 10345. 67  ���������������������� OAR 9690 and OAR 9692.

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stemmed from obligations in the name of Rijnland.68 During this period the total debt roughly equalled the total annual revenue of the regional water boards. Among the creditors of Rijnland we find the steward himself, the widow of the former dike reeve, family members of the steward, landed gentry and merchants.69 This does not mean that the loans were a favour bestowed upon the inner circle of the governors of the water board. The terms of the seventeenth-century loans do not deviate from the usual terms of the capital market at this time. The interest varied from six per cent at the beginning of the seventeenth century to four per cent in 1655.70 Sometimes loans were redeemed and continued at a lower rate, in which case a messenger of Rijnland would call on creditors to ask whether they wished to have their money back or to accept the lower rate.71 Thus, there is no reason to suspect rent seeking. The situation at the beginning of the eighteenth century was slightly different however. Large sums were borrowed through the issuing of life annuities in 1702, 1705 and 1718. In 1702 50,000 guilders, in 1705, 75,000 guilders, and again in 1715 18,000 guilders were borrowed. The life annuities of 1702 and 1705 were put out at ten per cent interest, the annuities of 1715 at nine per cent.72 Depending on the number of years the nominees lived, these could be very expensive loans. In 1705 the motivation given for entering into such potentially very costly contracts was that the regional water board was heavily in debt, the dikes had needed considerable maintenance over the years, and without these new financial means Rijnland was in danger of being put ‘buyten credyt’: it would no longer be in a position to find creditors.73 This explanation is, in fact, quite credible. Storm surges indicate that costly maintenance works on the dikes were needed to counter potential further attacks by the sea.74 The severe agrarian depression made it unrealistic to raise the apportionment to any substantial degree. The dramatic increase in the tax burden on the whole of Dutch society, a consequence of the outbreak of the War of the

68

 ���������� OAR 10345.  ������������������������ OAR 10343 and OAR 10347. 70  ������������������������������������������������������������������������������ Loans in 1601 against the 16th penny (circa six per cent), OAR 10342; in 1613 and 1614 loans against the 16th penny were converted into loans against the 20th penny (five per cent), OAR 10343, loans taken out in the years 1640 and 1650 at five per cent were often continued at four per cent in 1655, OAR 10345, loans after the collapse of the dike in 1675 at 6 per cent, were continued at five per cent in 1676 or 1677, OAR 10347. Supplement 29 of Gevers van Endegeest, Het hoogheemraadschap van Rijnland, includes many loans at a rate of five per cent interest, but does not mention that many loans were continued at a lower rate after a certain time. 71  ������������������������������������������������������������������������� The report of such a call on creditors in 1613 can be found in OAR 10343. 72  ������������������������������������������������������������������������������� Resolutions to issue life annuities: OAR 815. Interest payments in the special extraordinaris accounts, for example OAR 9939 (the year 1750). 73  ���������� OAR 10348. 74  ������������������������� Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 235–6. 69

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Spanish Succession in 1702, made such an option even more unrealistic during the first years of the eighteenth century.75 The question still remains of why Rijnland issued life annuities instead of loans or redeemable annuities. One might suspect rent seeking: the life annuities were purchased by at least two of the trustees, by the steward and secretary of Rijnland, and by others in administrative circles, and were very profitable investments.76 In this period good opportunities for investment were rare. The States of Holland issued life annuities at a somewhat lower rate (at nine per cent in 1701–1709 and only 7.1 per cent in the period 1713–1727)77 and the generous interest rates on the life annuities issued by Rijnland must have made a windfall for anyone able to get hold of them. Still, the differences between the interest rates on the life annuities of Rijnland and those issued by the States of Holland remained small. This suggests that the precarious financial position of Rijnland was the root cause of their largescale borrowing. Such a conclusion is supported by the involvement of outsiders. Among the buyers were, for instance, merchants of Amsterdam who dealt in Baltic grain.78 The favourable tariffs persuaded such individuals to put their money in water management instead of trade or in government bonds. Given the pressing need to improve the dikes, and the impossibility of raising the apportionment, there was simply no other means for the water board to find the necessary money. To cover the expenses of the life annuities, a small separate apportionment was levied from 1702, the so-called extraordinaris omslag. The revenues of this special apportionment were administered separately and used solely to pay for the life annuities. Annuities were often taken out on the life of small children and it was not until the 1780s that the last of them had died and Rijnland was freed of these liabilities.79 One could argue that this innovation in the finances of Rijnland was no improvement, for the issuing of life annuities turned out to be an expensive form of borrowing and on the whole, the costs for the landowners were higher  ��������������������������������������������������������� W. Fritschy and R. Liesker, ‘Overheidsfinanciën’, 167–73.  ��������������������������������������������������������������������������������� The names of those who purchased life annuities in 1702 and 1705 can be found in OAR 10348 and OAR 10349. 77  ����������������������������������������������������������������������������������� Fritschy and Liesker, ‘Overheidsfinanciën’, 173 (interest rates in the period 1701– 1709); R. Liesker and W. Fritschy, Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden 4: Holland (1572–1795) (The Hague, 2004), p. 382 (interest rates in 1713–1727). 78  �������������������������������������������������������������������������������� Purchasers are noted by name only, but Pieter de Clercq and Pieter Pietersz van Beek were merchants of Amsterdam active in the Baltic trade. Milja van Tielhof, The ‘mother of all trades’. The Baltic grain trade in Amsterdam from the late 16th to the early 19th century (Leiden/Boston/Köln, 2002), p. 208; I.H. van Eeghen, Inventarissen van de archieven van de Directie van de Moscovische Handel, Directie van de Oostersche Handel en Reederijen, Commissarissen tot de Graanhandel en Commissie voor de Graanhandel (Amsterdam, 1961), p. 35. 79  ���������������������������������������������������������������������������������� Cf. the series of accounts of the ‘extraordinaris’ apportionment, OAR 9891 (1702) et seq. 75 76

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than they would have been in the case of a more direct link between expenses and apportionment. On the other hand, the issuing of life annuities may have prevented more serious problems given the difficult circumstances of the early eighteenth century, when agriculture probably yielded far too little to finance the real costs of water management. Life annuities at least offered the possibility to attract capital from other sectors like overseas trade in an attempt to maintain the expensive system of water management, and transfer the costs to later generations of landowners.

Supervision over Rijnland’s Financial Management Officially, Rijnland’s financial management was partly under the control of the government. In the beginning of the sixteenth century, as part of the centralization policies of the Habsburg government, the Court of Holland (Hof van Holland) had gained the privilege to approve the levying of morgengeld.80 Since then the Court had given its approval to the apportionment each year, but when the scandal mentioned above arose, remarkably the Court’s power turned out to be of no importance. Due to objections to the annual account of 1666, the Court understandably refused to approve the levy of morgengeld. The dike reeve and the trustees reacted with dismay, but finally they decided that, if need be, they would levy morgengeld without the Court’s approval, and this is precisely what happened.81 Under the circumstances the Court had no other option than to approve the next year’s apportionment, but the Court’s delegate added an official protest to his signature on the annual account of 1667. Since then, this written protest was repeated each year, although in the end nobody remembered what the exact objections of the Court were.82 This incident shows clearly that by the second half of the seventeenth century the Court’s role in supervising the finances of the Regional Water Board of Rijnland had become meaningless. The monitoring of Rijnland’s financial management by the Board of Main Landholders was also problematic. The questionable practices of steward Van der Laen had gone unnoticed for about 20 years. Throughout this period the board must not have taken careful note of the annual audits. No one, in fact, appeared interested in the financial details as long as the apportionment was not much higher than usual, and as long as no problems arose. Thus, in a way, all those concerned with the financial management of the Rijnland were to blame for its difficulties; either they had neglected their responsibility to scrutinize accounts, or else they

80   Approvals by the Court have been documented from 1514. M.H.V. van AmstelHoràk and R.W.G. Lombarts, Regestenboek van het hoogheemraadschap van Rijnland. April 1253–oktober 1814 (Leiden, 1992), supplement. 81  ������������������������ OAR 25, 28 January 1668. 82  ����������������� Fockema Andreae, Het hoogheemraadschap van Rijnland, p. 185.

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had turned a blind eye to the practices of Van der Laen, and in doing so in effect tolerated them or perhaps even profited personally from them. The quality of the control of Rijnland’s books by the Court of Holland and the Board of Main Landholders was not unusually low when judged by contemporary standards. It was comparable to the equally inadequate control of the finances by the province of Holland. The accounts, once created, were controlled by one of the two institutions called Rekenkamer ter Auditie (one for the northern and one for the southern part of Holland). The work of these institutions, however, was not taken seriously.83 The supervision over financial affairs was complicated even further by the bookkeeping methods of the time, which made it possible to conceal fraud and mistakes. In this respect, Rijnland did not differ from most other public institutions in the seventeenth century. The bookkeeping for the city of Leiden, for example, suffered from the same shortcomings.84 The absence of a strict monitoring of expenses may have contributed to the permanent rise in the costs of management and personnel. Until the middle of the seventeenth century, the Regional Water Board of Rijnland’s primary expenses concerned the Spaarndammerdijk and the sluices at Spaarndam and Halfweg, but in the course of the seventeenth century different kinds of remunerations, indemnifications and allowances began to predominate. These included: travel expenses and fees for trustees, main landholders, steward and secretary; food and wine during meetings and inspections; salaries for staff and servants (messengers, lock-keepers, overseers and so on) and remunerations for all those performing tasks for Rijnland, for example, notaries, lawyers, and collectors of morgengeld. In 1600 such costs made up 30 per cent of the total expenses, but from the middle of the seventeenth century until the end of the eighteenth century they typically constituted up to 40 to 50 per cent of total annual expenditure.85 There are several explanations for the continuous rise in these costs. One is the fact that the regional water board gradually extended its activities and, for example, started to inspect ever larger parts of the dunes. Thus travel expenses and costs of administration and meetings inevitably rose for legitimate reasons. Another explanation, however, was the apparent desire of the water authorities to live up to their rank and therefore profit from their position by demanding high fees and organizing expensive dinners. Annual accounts of the eighteenth century regularly show considerable expenditures for food and wine consumed in  ���������������������� Liesker and Fritschy, Gewestelijke Financiën 4: Holland 1572–1795, p. 75.  ��������������������������������������������������������������������������������� P. Nagtegaal, ‘Stadsfinanciën en stedelijke economie. Invloed van de conjunctuur op de Leidse stadsfinanciën’, Economisch en Sociaal–Historisch Jaarboek, 52 (1989): 110. 85  ���������������������������������������������������������������������������������� This can be seen from an analysis of a selection of the annual accounts: OAR 9634 (1600), 9659 (1625), 9684 (1650), 9709 (1675), 9734 (1700), 9759 and 9914 (1725), 9784 and 9939 (1750), 9809 and 9964 (1775). The structural development of Rijnland’s expenses in the period 1550–1850 is treated in more detail in Van Tielhof and Van Dam, Waterstaat in stedenland, pp. 224–5 and 327 (appendix 4). 83

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the houses of Rijnland in Leiden, Spaarndam and Halfweg: for example, 12,522 guilders (1700), 11,671 guilders (1725), 9,206 guilders (1750) and 8,361 guilders (1775) were recorded.86 Dike reeve and trustees often met with local and central authorities. These costly dinners can therefore also be viewed as a consequence of the need to remain on good terms with the urban officials of Leiden and Haarlem, the Court of Holland and the provincial government.

Conclusion In principle, landowners in Holland were charged proportionally for the costs of water management but in reality, this was not always the case. Rijnland did not succeed in making the landowners in the neighbouring districts, who drained their water into Rijnland’s reservoir, share proportionally in the costs. The Regional Water Board of Woerden refused to modify the old arrangements in response to changes in water management, and Rijnland apparently did not have enough political power to force Woerden to do so. Some parts of the lands to the south of Woerden, between the Rhine and the IJssel, were incorporated into the drainage system of Rijnland on the same financial conditions as the districts of Rijnland. Other parts were not included and here landowners paid little or nothing for the facilities they used. But although the proportional division of costs was compromised in several ways, the main means of financing water management, the levying of morgengeld, worked rather well. There was no real free riding problem as most of the landowners in Rijnland itself did not question the validity of the levy or try to avoid paying it. This undoubtedly had much to do with the flexibility built into the morgengeld system. Owners of poor quality lands were charged less than owners of fertile lands and in this way the differences in land quality across Rijnland were taken into account. The levy was also adapted to take into account the deterioration or improvement of the soils, changes which were common in the peat districts in Rijnland, where land eroded along the shores of the huge Haarlemmermeer and the other, smaller lakes, and where lakes were reclaimed in the seventeenth and eighteenth centuries. Nevertheless, some people were able to reap private benefits from the public resources that were collected for the purpose of water management. To begin with, the collection of morgengelden was not organized centrally, but rather carried out by local water authorities, who in turn sometimes contracted professional collectors. This decentralized collection of money may have left room for corruption and embezzlement at a local level though we do not have hard evidence of this. At the central level, an analysis of the costs suggests that it was relatively easy for authorities to drive up remunerations and fees; the costs of management and personnel show a substantial increase in the course of the seventeenth century, 86

 ��������������������������� OAR 9734, 9759, 9784, 9809.

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and by the end it constituted a large proportion of the total expenses, often even exceeding the maintenance costs of the Spaarndammerdijk and its sluices. The monitoring of expenses, in fact, was not very strict. As a legacy of the Habsburg period, the Court of Holland officially enjoyed the privilege to approve the annual apportionment. During the time of the Republic this privilege proved to amount to very little as the Court was ignored as soon as it raised objections. The main landholders, who heard and balanced the accounts each year, were not interested in their comments. Only in 1666 did the trustees realize that for over 20 years the steward Van der Laen had managed his affairs in a way they did not approve of. But what seemed, on the face of it, to be simple case of fraud and embezzlement, turned out to be more or less standard practice for stewards and other financial agents in the Dutch Republic. They were responsible for managing the financial matters of public institutions and in doing so they were expected, if necessary, to use their private resources and to take substantial financial risks. On the other hand, they had considerable freedom to make decisions about the way in which they solved practical and administrative problems. Where central state institutions were weak, as was the case in the Dutch Republic, relying on individuals such as Van der Laen was logical and probably the only way for water boards and other government institutions to manage their financial affairs. By the end of the seventeenth century and the beginning of the eighteenth century Rijnland’s revenues had become deeply affected by the economic and political developments in the Republic. Agriculture had been hit by a severe depression and it became difficult for many landowners to pay morgengeld. In the peat districts the economic and financial problems were the most severe. The stagnation or fall in prices of peat and agricultural products and the huge increases in several kinds of taxes occurred at a time when the quality of land in most of the peat villages had deteriorated due to centuries of cutting and dredging peat. The security system aimed at guaranteeing payment of morgengeld failed after having functioned reasonably well since the Middle Ages. Many villages were unable to pay their share of morgengeld to Rijnland because of landowners abandoning their land. Although we shouldn’t underestimate the environmental and economic disasters that struck several villages in the decades around 1700, it is also important to note that on a regional scale the damage was relatively restricted. The fact that Rijnland and the States of Holland acted together and carried out a reform of the fiscal security system, which in the long run effectively solved their financial problems, is crucial. The practice of dredging out peat and leaving behind destroyed land or pools of water, thereby reducing the amount of land which could be taxed under the morgengeld system (which can be interpreted as a kind of self enrichment at the public’s expense), had been eradicated. Under the new regime peat winning had to be accompanied by the payment of a sufficient sum of money to guarantee the regular payment of morgengeld into the future. Rijnland’s financial situation was aggravated during the War of the Spanish Succession (1702–1713), when money and capital was tight as a result of the

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enormous funds needed by the States of Holland and other government bodies to finance the war. It was difficult for the water board to obtain loans on the capital market and the governors had to resort to selling life annuities in order to have funds at their disposal to maintain the dikes and other works. These annuities were purchased by people from different groups of society, including some who belonged to the circles of the trustees of Rijnland themselves, as well as others, such as Amsterdam merchants, who were able to take advantage of what must have been an attractive investment. As such, the costs of water management were not borne by the landowners benefiting from it, but were passed on to the subsequent generations. The annuities were paid off only around 1780. This was again a deviation from the ideal situation in which the costs of water management would be shared by the people benefiting from it. Although selling life annuities was an expensive way of borrowing money and could therefore be justly criticized as an inefficient way of raising funds, in fact, it was likely to have been the only way to keep the essential infrastructure of the water board in good condition during the economic and financial crisis of the early eighteenth century.87

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  This article is one of the fruits of a research project on the history of the Rijnland Regional Water Board, executed by the Vrije Universiteit in Amsterdam and financed by the Regional Water Board of Rijnland during the period 2002–2005. Milja van Tielhof and Petra J.E.M. van Dam, Waterstaat in stedenland was published as a result of this project in 2006.

Chapter 9

The Organization of Long-Distance Trade in England and the Dutch Republic, 1550–1650 Oscar Gelderblom

Introduction Early modern states benefited from long-distance trade in a variety of ways. First, commerce was a major source of income, either directly through the levying of monopoly fees or customs, or indirectly through excises on consumer goods or impositions on the income and wealth of merchants. Second, the mercantile community was a principal source of credit for early modern states. Europe’s rulers borrowed from their own subjects, but also relied on foreign financiers to which the success of international money markets in Antwerp, Genoa, or Amsterdam clearly attests. Third, merchants were instruments of state policy. Privateers, suppliers of ships, weapons and ammunition, and the great colonial companies were major players in the inter-state rivalries that divided Europe. Finally, foolishly or not, early modern rulers attached great value to the role of trade in supplementing the state’s stock of gold and silver.  ������������������������������������������������������������������������������ The author is grateful to Bas van Bavel, Maartje van Gelder, Pierre Jeannin†, Sheilagh Ogilvie, and participants in the economic history seminar of the University Carlos III for helpful comments and suggestions.   ����������������������������������������������������� Richard Bonney, ‘Revenues’, in Richard Bonney (ed.), Economic Systems and State Finance, (Oxford, 1995).   �������������������������������� On Antwerp: Herman Van der Wee, The Growth of the Antwerp Market and the European Economy (14th–16th Centuries), 3 vols (Leuven, ������������������������������������� 1963), vol. 2, pp. 199–207; 220–22; On Genoa: Jacques Heers, Gênes au XVe Siècle. Activité Économique et Problèmes Sociaux (Paris, 1961), pp. 96–154; Fernand Braudel, Civilisation Matérielle, Économie Et Capitalisme, XVe–XVIIIe Siècles, 3 vols (Paris, ������������������������������������������������� 1979). vol. 3, pp. 130–44; On Amsterdam: J.C. Riley, International Government Finance and the Amsterdam Capital Market 1740– 1815 (Cambridge, 1980), pp. 101–249.   ��������������������������������������������������������������� M.N. Pearson, ‘Merchants and States’, in James D. Tracy (ed.), The Political Economy of Merchant Empires (Cambridge, 1991), pp. 41–116.   ������������������������������������������������������ Charles H. Wilson, ‘Trade, Society and the State’, in Cambridge Economic History of Europe, IV. The Economy of Expanding Europe in the Sixteenth and Seventeenth Century, ed. E.E. Rich and C.H. Wilson (Cambridge, 1967), pp. 508–10; R.W.K. Hinton, 

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The benefits of trade, however, did not automatically accrue to the state. In return, merchants expected the government to protect their person and goods against theft and robbery, and to refrain from arbitrary confiscation and imprisonment. Furthermore, for the organization of their commercial and financial transactions merchants needed vending locations, storage facilities, clear rules for payment and delivery, and legal provisions to enforce these rules. Early modern rulers who withstood the temptation to prey on merchants in their territory still had to find the money to pay for the protective measures, commercial infrastructure and administration of justice requested by resident or visiting traders. According to their political power and financial means, the rulers of preindustrial Europe organized trade in their territories in a variety of ways. In the late medieval period transactions were often confined to regional or international fairs. For a few weeks or months per year the fairs of Champagne, Flanders, or South-East England provided protection, contract enforcement, and a host of other services to visiting traders. Other rulers tried to limit long-distance traders to one or just a few places, as, for example, in the major ports of the Ottoman, Polish, and Russian empires. In the new monarchies of France, Burgundy, Spain, and England in the fifteenth and sixteenth centuries, the crown favoured specific groups of merchants who, in return for their financial support, obtained patents of monopoly, waivers of taxes and tariffs, and other material benefits. Few rulers were able to break this longstanding tradition of bargaining with privileged groups of traders. It was only in the commercial heartland of Europe, notably in the Italian city states, the Low Countries, and (after 1650) in England, ‘The Mercantile System in the Time of Thomas Mun’, The Economic History Review, New Series 7/3 (1955). 280–81.   ������������������������������������������������������������������������������������� One could imagine a situation in which a ruler consistently confiscated the property of merchants. However, unless a merchant community was completely atomized, such a regime would be very short-lived, for these merchants would simply avoid markets where arbitrary confiscation occurred. See Avner Greif, Paul Milgrom, and Barry R. Weingast, ‘Coordination, Commitment and Enforcement: The Case of the Merchant Guild’, Journal of Political Economy 102 (1994). 747–8.   ������������������������������������������������������������������������ Avner Greif, ‘The Fundamental Problem of Exchange: A Research Agenda in Historical Institutional Analysis’, European Review of Economic History 4 (2000). 251–6.   �������������������������������������������������������������������������������������� Particularly in late-medieval Europe, rulers set temporal limits to the services they provided. For example, they provided protection and contract enforcement only for the duration of periodical fairs Paul R. Milgrom, Douglass C. North, and Barry R. Weingast, ‘The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges and the Champagne Fairs’, Economics and Politics 2/1 (1990); John H. Munro, ‘The “New Institutional Economics” and the Changing Fortunes of Fairs in Medieval and Early Modern Europe: The Textile Trades, Warfare, and Transaction Costs’, Vierteljahrschrift fuer Sozial- und Wirtschaftsgeschichte 88/1 (2001); For the continuation of fairs in various parts of early modern Europe: Stephan.R. Epstein, ‘Regional Fairs, Institutional Innovation and Economic Growth in Late Medieval Europe’, Economic History Review, 2nd ser. 47 (1994); and Braudel, Civilisation, vol. 2, pp. 63–75.

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that governments relinquished the financial support of a trusted body of privileged merchants in favour of securing numerous small loans contracted on the market from a much larger pool of lenders. The rulers were able to do this because they levied indirect taxes on consumption. The excise revenues were earmarked for public debt service. At the same time, customs duties were kept low so as not to harm trade. This solution earned the rulers of the Italian city states, the Dutch Republic, and England enough money to create the domestic monopoly of violence and the commercial, financial, and legal infrastructure desired by the merchant community. Both economists and historians agree that this kind of inclusive commercial regime generated the highest payoffs for both merchants and rulers alike, yet we know very little about its actual costs and benefits. Historians typically limit themselves to descriptions of the fortuitous combination of capable entrepreneurs and benevolent rulers, without trying to measure the effects of the political, legal, fiscal, and commercial arrangements that were in place. At the same time, the most sophisticated models used by economists estimating the effects of property rights institutions and contracting institutions on economic performance equate urbanization with commercial success.10 The robustness of their findings notwithstanding, the actual channels through which institutional design influenced the growth of trade remain hidden in these models. This chapter compares the organization of foreign trade in England with that of the Dutch Republic between 1550 and 1650 to evaluate the effects that different commercial regimes had on the growth of trade. In this period both countries strengthened their position in long-distance trade both within as well as outside of Europe. In the 1550s English merchants were the first northern Europeans to reach Russia and the Mediterranean by sea. The Dutch followed suit after 1580. Around the same time traders from both countries also successfully broke the hegemony that Portugal and Spain had held in trade with Africa, Asia, and America. Despite the similarity of their endeavours, the organization of trade differed markedly   ��������� Braudel, Civilisation, vol. 3, pp. 95–330; Pearson, ‘Merchants’, pp. 41–116; F. Mauro, ‘Merchant Communities, 1350–1750’, in James D. Tracy (ed.), The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350–1750 (Cambridge: 1990); Pierre Jeannin, Les Marchands au XVIe Siècle (Paris, 1957); Daron Acemoglu, Simon Johnson, and James Robinson, ‘The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth’, The American Economic Review 95/3 (2005); On public finance in Venice, see Frederic C. Lane and Reinhold C Mueller, Money and Banking in Medieval and Renaissance Venice (Baltimore and London, 1985); for Genoa: Heers, Gênes; for the Dutch Republic: E.H.M. Dormans, Het Tekort. Staatsschuld in De Tijd Der Republiek, Neha Series III (Amsterdam, 1991); and for England: P.G.M. Dickson, The Financial Revolution in England : A Study in the Development of Public Credit, 1688– 1756 (London, 1967). 10  ����������������������������������������������������������������������������� Acemoglu, ‘The Rise of Europe’; Brad deLong and Andrei Shleifer, ‘Princes or Merchants. European City Growth before the Industrial Revolution’, Journal of Law and Economics 36 (1983).

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between the two countries. In England a string of chartered companies was set up to allow a limited group of London-based merchants, several of whom had very close ties to the English crown, to reap the benefits of this new trade. In the Dutch Republic all foreign markets were open to merchants big and small from various parts of the country. Fierce competition between towns, however, led to only the East India trade being reorganized into one company, the VOC. A similar initiative for the Atlantic trade, the West India company (founded in 1621), was effectively undermined in the 1630s by interlopers from Amsterdam. Although England had been the first to attempt to conquer new markets in the mid-sixteenth century, it was the Dutch Republic, with its much more inclusive commercial regime, that prevailed a century later. The chapter documents the different ways in which the Dutch and English organized long-distance trade between 1550 and 1650 First we establish the extent to which the chartering of companies in England led to the exclusion of capable entrepreneurs and possibly to under-investment in long-distance trade. We then consider the attempts by the respective governments to extract revenue from long-distance trade. In particular we look at the effect of customs duties on the profitability of trade. Finally we compare the development of capital markets in the two countries and in doing so, seek to answer the following questions: Were merchants in the Low Countries able to borrow at lower rates than their counterparts in England; was this in any way due to differences in institutional arrangements; and did the available financial institutions influence the quest for funds by the Dutch and English government? The paper concludes by examining the attempts of the English to emulate the approach taken by the Dutch in the course of the seventeenth century.

The organization of trade in England and the Dutch Republic In the first half of the sixteenth century Antwerp was the principal market of northwestern Europe, where hundreds of foreign merchants gathered to exchange their goods.11 The English Merchant Adventurers exchanged broadcloths for copper, silver, and metal wares, imported by merchants from Southern Germany. Merchants from Portugal, Italy, and Spain sold spices, textiles, precious stones, and a multitude of manufactured goods from the Mediterranean basin. Tradesmen of the German Hansa marketed grain and naval stores in the Netherlands and returned home with commodities purchased from other foreigners. From the 1530s onwards a growing number of traders from the Low Countries also participated in international exchange. Merchants from Flanders and Brabant specialized in the export of textiles, metal wares, tapestries, and luxury wares. Shipmasters from Holland and Zeeland emerged as their principal transporters, while merchants from

11

 ������������� Van der Wee, Growth, vol. 2.

The Organization of Long-Distance Trade in England and the Dutch Republic 227

Amsterdam and other northern ports supplied Antwerp with increasing quantities of grain, salt, fish, and dairy products. Antwerp lost its leading role in international trade in the second half of the sixteenth century. Bankruptcies of the Spanish and French crown in the 1550s and the Dutch revolt against the Habsburg rulers after 1568 drove off many of the resident foreign traders. English merchants were the first to leave the Scheldt port, albeit not for purely political reasons. In the turmoil of the mid-sixteenth century they recognized the opportunity to bypass Antwerp and establish direct trading links with the Baltic area, Russia, Germany, and the Mediterranean.12 The departure of most of the English, German, Italian, and Spanish merchants from Antwerp created new opportunities for entrepreneurs born and raised in the Low Countries. In the 1570s these new merchants extended their trade with Spain and Italy and explored new outlets in Russia and West Africa. Initially, Amsterdam failed to take advantage of Antwerp’s decline; instead the city’s support for the Spanish king induced a naval blockade by the Sea Beggars who led the Dutch Revolt. However, as soon as Amsterdam had changed sides in 1578, its merchants re-established their lead in the Baltic trade. The commercial prospects of the nascent Dutch Republic further improved when Spanish troops seized Antwerp in 1585 – a victory that was followed by a complete naval blockade of the Scheldt port and the Flemish coast. The fall of Antwerp marked the beginning of direct trade with Russia, the Mediterranean, Africa, Asia, and America by merchants in Amsterdam, Middelburg, and other Dutch ports. However similar their exploration of new markets was, the organization of foreign trade in England and the Dutch Republic differed markedly. In England, chartered companies monopolized foreign trade from the 1550s onwards. In most European markets these were regulated companies with members who traded for themselves. In addition to the Company of Merchant Adventurers, established in the fifteenth century and fully chartered in 1564, other companies included the Spanish Company (1577), the Eastland Company (1578), the Levant Company (1592), and the French Company (1609).13 Merchants formed these companies to coordinate the collective action deemed necessary to force foreign rulers to protect them and their goods, waive customs duties, and provide material benefits such as storage facilities.14 Regulation was also thought to stimulate the opening up of new 12

 ����������������������������������������������������������������������������� George Unwin, ‘The Merchant Adventurers’ Company in the Reign of Elizabeth’, The Economic History Review 1/1 (1927). 50, 59; F. J. Fisher, ‘Commercial Trends and Policy in Sixteenth-Century England’, The Economic History Review 10/2 (1940). 101–2, 108–9, 113–14; Lawrence Stone, ‘State Control in Sixteenth-Century England’, The Economic History Review 17/2 (1947). 109, 117. 13  ����������������������������������������������������������������������� The merchants of the regulated Venice Company (founded in 1578) became members of the Levant Company when the latter was turned into a regulated company in 1592: A.C. Wood, A History of the Levant Company (Oxford, 1935). 14  ������������ W.R. Scott, The Constitution and Finance of English, Scottish, and Irish JointStock Companies to 1720, 3 vols, (Cambridge, 1912; reprint, Gloucester, 1968), I, p. 182;

228

The Political Economy of the Dutch Republic

markets. The merchants felt that membership in the companies should be limited, ‘otherwise it will not only discourage us and others in like respect hereafter to attempt and go on with like charges and discoveries, but be utterly discouraged to enter into any new charge…’.15 The alleged damage competition could do to England’s commercial interests was also invoked to justify the establishment of joint-stock companies for trade with more distant markets. These included the Russia or Muscovy Company (founded 1553, chartered 1555), the Guinea Company (1561), the Turkey Company (1581), and the East India Company (1600).16 Besides curtailing competition, the jointstock format was also chosen to raise sufficient capital for the establishment of fixed trading posts and for the creation of a military apparatus to protect trade against foreign competitors and pirates. A final argument for the joint-stock format, implicit in the discourse of company directors, but expounded by economic historians, was that a hierarchical organization, such as these companies were, would facilitate the supply of information and the monitoring of agents in longdistance trade.17 The chartered companies restricted their membership in a variety of ways, including imposing prohibitive entry fees,18 placing a cap on the number of shareholders,19 and making apprenticeships with a company merchant compulsory Robert Ashton, ‘The Parliamentary Agitation for Free Trade in the Opening Years of the Reign of James I’, Past and present: a journal of historical studies 38, December (1967), 49–50. 15  ������������������������������������������������������������������������������ Petition of Venice and Levant merchants in 1588 cited in Robert Brenner, ‘The Social Basis of English Commercial Expansion, 1550–1650’, The Journal of Economic History 32/1 (1972), 370; See also: Ashton, ‘Parliamentary Agitation’, 43. 16  ��������������������������������������������������������������������������������� In addition to these large companies, there were a dozen or so smaller companies set up for trade with North and West Africa, the Canaries, as well as several colonial companies focusing on trade with North America (Ron Harris, Industrializing English Law. Entrepreneurship and Business Organization, 1720–1844 (Cambridge/New York, 2000), p. 43. 17  ������������������� Douglass C. North, Structure and Change in Economic History, 1st edn (New York, 1981), pp. 37, 45–58; Niels Steensgaard, ‘The Dutch East India Company as an Institutional Innovation’, in Maurice Aymard (ed.), Dutch Captialism and World Capitalism (London, 1982); K.N. Chaudhuri, The English East India Company: The Study of an Early JointStock Company 1600–1640 (London, 1965), pp. 16–18; A.M. Carlos and S. Nicholas, ‘Theory and History: Seventeenth-Century Joint-Stock Chartered Companies’, The Journal of Economic History, 56/4 (1996), 916–24. 18  ������� Scott, Constitution, I, p. 125; Fisher, ‘Commercial Trends’, 113; Ashton, ‘Parliamentary Agitation’, 51–2; Wood, ‘English trade’, 407. 19  ������� Scott, Constitution, I, p. 152; P. Ramsey, ‘The Tudor State and Economic Problems’, in: S. Groenveld and M. Wintle, State and Trade. Government and the Economy in Britain and the Netherlands since the Middle Ages (Zutphen 1992), pp. 28–38, at 34; In 1586 the membership of the Russia Company was limited to 12 shareholders (Scott, Constitution, II, p. 48). In 1581 the Levant Company had set a maximum of 20 members. After its merger in

The Organization of Long-Distance Trade in England and the Dutch Republic 229

for young merchants who wanted to become a member.20 The merchants in London also opposed the commercial ventures of businessmen in the outports, and the participation of “retailers, innholders, farmers, mariners, and handicraftsmen”.21 Finally, the government acted against foreign merchants. By 1590 Flemish, Italian and Hanseatic merchants had lost all their trade privileges.22 In 1613 extra customs duties were levied on goods traded by alien merchants.23 Dutch merchants complained that in addition to the higher customs duties, they were not given the right to trade with each other, to import whale oil or goods from the Levant, and did not have access to London’s cloth halls.24 The necessity of regulation and exclusive membership to protect the property of merchants, govern their transactions, and reward pioneers for the exploration of new markets, as advocated by English company directors, is contradicted by the organization of foreign exchange in the Dutch Republic. In the fifteenth century the Dutch entry into the Baltic trade, the one time monopoly of the German Hansa, was achieved without recourse to any formal association of merchants.25 Likewise, in France, Spain, and Portugal both the purchases of salt, wool, and wine and the sales of grain and naval stores were in the hands of private merchants.26 It is true that the cities of Dordrecht and Middelburg initially enjoyed staple rights in the trade with Germany and France, but in the final quarter of the sixteenth century both outlets were opened to merchants from other parts of the Low Countries. Nor was the exploration of new markets in Russia, Spain, Italy, and the Ottoman Empire left solely to chartered companies. Dutch trade in these countries 1588 with various companies trading with Venice, membership was set at 41. In 1592 the company numbered 53 members (Brenner, ‘Social basis’, 370). 20  ���������������������������������������� Scott, Constitution, I, p. 181; Harris, Industrializing, p. 45. 21  ������������������������������������������������������������� Unwin, ‘Merchant Adventurers’, 39–40, 46, 58–9; R.H. Tawney, Business and Politics under James I: Lionel Cranfield as Merchant and Minister (Cambridge, 1958); p. 78; Stone, ‘State Control; Brenner, ‘Social basis’, 379–80. 22  ���������������������������������������������������������������������������������� Unwin, ‘Merchant Adventurers’, 50, 59; Fisher, ‘Commercial Trends’, 101–2, 108–9, 113–14; Stone, ‘State Control’, 109, 117. 23  ������������ F.C. Dietz, English Public Finance, 1558–1641, 2nd edn (London, ������������������������� 1964), pp. 155, 176n, 178, 195, 373. 24  ���������������� N.W. Posthumus, De nationale organisatie der lakenkoopers tijdens de Republiek (Utrecht, 1927), pp. xxiii, 238–45. 25  ���������������������� Aksel E. Christensen, Dutch Trade to the Baltic About 1600: Studies in the Sound Toll Register and Dutch Shipping Records (1941); Milja van Tielhof, De Hollandse graanhandel, 1470–1570. Koren ����������������������������� op de Amsterdamse molen (Den Haag, 1995); Milja van Tielhof, The ‘Mother of All Trades’. �������������������������������������������������� The Baltic Grain Trade in Amsterdam from the Late 16th to the Early 19th Century (Leiden, 2002). 26  ������������������������ J. Nanninga Uitterdijk, Een Kamper Handelshuis te Lissabon 1772–1594. Handelscorrespondentie, rekeningen en bescheiden (Zwolle, 1904); J.W. IJzerman, ‘Amsterdamsche bevrachtingscontracten 1591–1602. I, De vaart op Spanje en Portugal’, Economisch-historisch Jaarboek 17 (1931), 163–291. ������������ Gelderblom, Zuid-Nederlandse, 163–85, 228–38.

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was typically organized by private merchants working alone or in association with their kinsmen. To overcome commercial risks, asymmetric information, and capital constraints they opted for commission selling, freight contracts, and shared ownership of ships and merchandise.27 Admittedly, Amsterdam’s Muscovy trade was initially dominated by a limited number of Antwerp immigrants who received permits from the Russian Tsar allowing them to extract monopoly rents. However, attempts to obtain a formal monopoly from the States General to import Russian grain foundered in 1608 and again in 1628.28 Furthermore, after 1600 a growing number of Russia traders acted as commission agents for Amsterdam merchants who did not have direct access to Archangel and Moscow, thereby effectively opening the Russian market to others.29 The Dutch government did contribute to the protection of merchants abroad. To this end the States General appointed consuls and embassies, while the Admiralties – responsible for Dutch naval defence – issued regulations for armament, organized convoys, and occasionally supplied soldiers and arms.30 In 1625 the coordination of protection in the Mediterranean was delegated to leading Levant traders, who took turns as Directors of the Levant Trade.31 From 1631 to 1656 27  ��������������������������������������������������������������������������� Jan-Willem Veluwenkamp, ‘Merchant colonies in the Dutch Trade System (1550– 1750)’, in Karel Davids et al. (eds), Kapitaal, ondernemerschap en beleid. Studies over economie en politiek in Nederland, Europe en Azië van 1500 tot heden (Amsterdam, 1996), pp. 141–64.; Oscar Gelderblom, ‘The Governance of Early Modern Trade: the Case of Hans Thijs (1556–1611)’, Enterprise & Society 4/4 (2003), 606–39; For Italy; MarieChristine Engels, Merchants, Interlopers, Seamen and Corsairs. The ‘Flemish’ Community in Livorno and Genoa (1615–1635) (Hilversum, 1997); For Russia Jan-Willem Veluwenkamp, Archangel. Nederlandse ondernemers in Rusland 1550–1785 (Amsterdam 2000) and Eric H. Wijnroks, Handel tussen Rusland en de Nederlanden 1560–16540 (Hilversum 2003); For the Ottoman Empire: Mechmet Bulut, Ottoman–Dutch Economic Relations in the Early Modern Period 1571–1699 (Hilversum 2001). 28  ������������������������������������������������������������������������������� Eric H. Wijnroks, ‘“Nationale” en religieuze tegenstellingen in de Nederlandse Ruslandhandel, 1600–1630’, in: C.M. Lesger and L. Noordegraaf (eds), Entrepreneurs and Entrepreneurship in Early Modern Times. Merchants and Industrialists within the Orbit of the Duch Staple Market (Den Haag 1995), pp. 621–32; E.J.J. van der Heijden, De ontwikkeling van de naamlooze vennootschap in Nederland vóór de codificatie (Amsterdam 1908), pp. 108–10. 29  ���������� Wijnroks, Handel, pp. 239–79. 30  �������������������������������������������������������������������������������� The first diplomatic missions of the Dutch Republic to Russia were organized in 1614, 1618 and 1630: Wijnroks, Handel, pp. 229–38; The States General appointed their first consul in the Ottoman Empire in 1614, and agreed to the establishment of a Direction for the Levant Trade in 1625 (Bulut, Ottoman–Dutch Economic Relations); In Seville Dutch traders adhered to a Flemish nation that acted only when confiscation or imprisonment threatened: David Baute and Robert Kuiper (eds), Cort relaas sedert den jare 1609: de avonturen van een Zeeuws koopman in Spanje tijdens de Tachtigjarige oorlog (Hilversum 2000). 31  ���������� R. Davis, English Overseas Trade 1500–1700 (London 1973), pp. 126–32.

The Organization of Long-Distance Trade in England and the Dutch Republic 231

several cities appointed similar directors to supervise convoying and armament in the Baltic trade.32 However, unlike the directors of regulated companies in England, these officials were in no position to bar merchants from their markets.33 On the contrary, in 1630 Amsterdam merchants successfully opposed plans for an Assurantiecompagnie which promised to maintain a fully armed fleet of 60 ships in the Mediterranean, in exchange for a monopoly on trade from the west coast of Africa to the Levant.34 Initially the Dutch government did not incorporate the companies exploring markets outside Europe. From 1595 dozens of private companies, based in Amsterdam, Middelburg, and various other cities in Holland, financed voyages to West Africa, America and Asia.35 Building on the partenrederijen that had shaped European shipping since the fifteenth century, these companies raised capital by selling shares to a gradually expanding circle of investors, including local merchants and immigrants from the southern provinces and from Germany. Once one voyage was completed, the company was dissolved and directors began raising money for the next one. The internal organization resembled that of the shipping companies operating in European waters. The shipmasters were responsible for all matters relating to the actual sailing of the vessels, while one or more merchants conducted trade on behalf of the company directors. Occasionally the government provided military protection for these voyages, but in most cases armament and convoying were dealt with by the private companies. It was only after trading links with Asia, Africa, and America had been firmly established that the Dutch Republic switched to a system of monopolistic charters for colonial companies. In 1602 the States General forced the directors of the first Asia companies to set up the Verenigde Oost-Indische Compagnie (VOC) in order to stem the growing competition between the cities and their companies. Within years of its creation, the VOC began to act as a true monopolist, using all political and legal means at its disposal to keep private competitors out of Asian waters. In 1607 similar plans were made for the incorporation of trade with Africa and America. The chartering of the West-Indische Compagnie (WIC) was postponed, however, as part of the conditions of the Twelve Years Truce 32

 ������������� Van Tielhof, Mother of All Trades, pp. 232–3.  ������� Scott, Constitution, II, pp. 123–4; Wilson, ‘Trade’, p. 502. 34  ��������������������������������������������������������������������� P.J. Blok, ‘Het plan tot oprichting eener compagnie van assurantie’, Bijdragen voor Vaderlandsche Geschiedenis en Oudheidkunde (1900), 1–41. P.J. Blok, ‘Koopmansadviezen aangaande het plan tot oprichting eener compagnie van assurantie (1629–1635)’, Bijdragen en Mededelingen van het Historisch Genootschap, 21 (1900), 1–160; Van Tielhof, Mother of All Trades, pp. 233–242; Jaap R. Bruijn, ‘In een veranderend maritiem perspectief. Het onstaan van directies voor de vaart op de Oostzee, Noorwegen en Rusland’, Tijdschrift voor zeegeschiedenis, vol. 9 (1990), 15–26. 35  ������������������������������������������������������������������������� W.S. Unger, ‘Nieuwe gegevens betreffende het begin der vaart op Guinea’, Economisch-historisch jaarboek 21 (1940), 194–217; H. den Heijer, De geschiedenins van de W.I.C. (Zutphen, 1994). 33

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(1609–1621) with Spain. Not until 1621 was the company granted a monopoly on trade with Africa, North and South America.36 However, merchants were unwilling to invest in the WIC because of its explicit military purposes. Indeed, so much money was channelled into the naval operations against Spain and Portugal that a regular flow of sugar, dyestuffs, tobacco, and other colonial commodities could only be maintained by allowing private traders back into the trade with America after 1634.37

Investment in long-distance trade In 1604 the English Parliament reviewed the organization of the country’s foreign trade. The advocates of free trade argued that the limited and often overlapping membership of the chartered companies enabled London’s business elite to extract monopoly rents.38 To stimulate investment in foreign trade, entry fees needed to be reduced and markets opened up: ‘When trade is free, it is likely that many young men will seek out new places.’39 The Agitation for Free Trade movement was successful to the extent that trade with Spain and Portugal was opened up to new competitors in 1604. However, chartered companies continued to dominate trade in more distant markets, and small businessmen remained excluded.40 The different organizational choices made in the United Provinces, and the concomitant rapid growth in Dutch trade suggest that restrictive regulation may have undermined English investments in international trade. There is ample evidence that Dutch trade expanded beyond that of England between the years 1580 to 1650. Imports of grain, metals, and naval stores from Poland, Lithuania, Russia, and Scandinavia into the Dutch Republic dwarfed 36  ���������������������������������������������������������������������������� A third Dutch company receiving monopoly rights in the first decades of the seventeenth century was the whaling company Noordsche Compagnie in 1614: S. Muller Fz. Geschiedenis der Noordsche Compagnie (Utrecht, 1874). 37  ����������������� P.J. van Winter, De Westindische Compagnie ter kamer Stad en Lande (Nijhoff: ’s-Gravenhage 1978), 123–38. 38  ������� Scott, Constitution, I, pp. 107–10, 120–27; II, p. 50; Tawney, Business, pp. 78–81; J. Boulton, ‘London 1540–1700’, in: Peter Clark (ed.), The Cambridge Urban History of Britain. Vol. II 1540–1840 (Cambridge, 2000), 322; Brenner, ‘Social basis’, 365–8; R. Ashton, The City and the Court: 1603–1643 (Cambridge, 1979), pp. 25–6; Ashton, ‘Parliamentary Agitation’; M.J. Braddick, The Nerves of State: Taxation and the Financing of the English State, 1558–1714 (Manchester, 1996), pp. 206–8. 39   Commons Journal I, 219, cited in: Unwin, ‘Merchant Adventurers’, 37. 40  �������������������������������������������������������������������������������� In 1622 the Standing Committee on Trade in the English Parliament asserted that commercial regulations allowed ‘two third parts of all the commodities of the kingdom [to be] borne and managed by fifty hands only.’ S.P.D. Jas. I, 133/35; Cited in: Tawney, Business, p. 78; Compare F.J. Fisher, ‘London’s Export Trade in the Early Seventeenth Century’, The Economic History Review, vol. 3 (1950) 151–61, 159, and Ashton, ‘Parliamentary Agitation’, 43.

The Organization of Long-Distance Trade in England and the Dutch Republic 233

those of England (Table 9.1). The same was true for the export of foodstuffs and manufactured goods to the Baltic. For example, the Dutch share in cloth sales in the Baltic rose from less than five per cent to 50 per cent between 1580 and 1640, while English exports decreased from 90 per cent to slightly over 40 per cent.41 Even more impressive was the lead held by the Dutch in the imports of spices, sugar, dyestuffs and other products from Asia, South America and West Africa, which may have been as much as ten times the value of English imports of these goods. The only market in which the Dutch seem to have lagged behind the English was the Mediterranean. However, even though English overseas imports of currants, silk, and cotton exceeded shipments from Dutch merchants, the latter were also engaged in extensive continental trade with Italy, which may have put the Dutch in an overall stronger position.42 Table 9.1

Estimated overseas imports in England (1621) and the Dutch Republic (1636), in guilders Area

England

Northern Europe

9,840,000

27,400,000

Southern Europe (a)

4,930,000

3,000,000

Rest of the world

1,010,000

18,000,000

15,780,000

48,400,000

Total imports

Dutch Republic

Sources: (a) including the Ottoman Empire. Davis, English Overseas Trade, 55; Jonker and Sluyterman, At home, 62.

It is not immediately clear that English foreign trade fell behind that of the Dutch as a result of the exclusion of foreigners, small businessmen, and merchants from the outports. At first glance, this may in fact seem unlikely, as an exhaustive 41  ����������������� Jonathan Israel, Dutch Primacy in World Trade (Oxford, 1989), Table 5.8; Israel estimated that English exports to the Netherlands in 1618 consisted of 360,000 pieces of cloth, worth 22 million guilders (Israel, Dutch Primacy, Table 5.21). This is likely to be an overestimate. Not only has Scott suggested a much lower price for English cloth (£10 in 1613 compared to 200 guilders estimated by Israel), he has also estimated total exports for a good year such as 1613, at £2 million, while for a bad year such as 1620, they would be at least 25 per cent lower (Scott, Constitution, I, 142n, p. 169). Note also that F.J. Fisher estimated the total number of (notional) shortcloth exported from London at 144,000 pieces in 1614 and only 95,000 pieces in 1620 (Fisher, ‘London’s export trade’). It turns out that Israel has based his figures for 1618 on a pamphlet published in 1672! ������������������� (see H.C. Diferee, Ons glanstijdperk. Bladzijden uit onze geschiedenis als handelsnatie tijdens de zeventiende eeuw (Amsterdam 1910) pp. 94–5). 42  ��������������������������������������������������������������������������������� Cf. on Dutch-Anglo rivalry in the Mediterranean: Jonathan I. Israel, ‘The Phases of the Dutch “Straatvaart” (1590–1713). A chapter in the Economic History of the Mediterranean’, Tijdschrift voor Geschiedenis 99 (1986), 1–30; and Bulut, Ottoman–Dutch Economic Relations.

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234

survey of the investors in the country’s major companies between 1550 and 1630 suggests that at least 3,500 merchants were involved in foreign trade in London.43 Furthermore, the outports were not entirely excluded either. For example, 25 per cent of English broadcloth was exported from cities outside London.44 However, data collected on Amsterdam’s merchant community suggests that an even larger pool of potential investors in long distance trade existed here compared to that which existed in England. Between 1580 and 1630 – a period of only 50 years – no less than 5,000 merchants were active in wholesale trade. Among them were merchants born and raised in Amsterdam as well as newcomers from other towns in Holland, Friesland, Zeeland, the Spanish Netherlands, Portugal, Germany, and even England.45 Furthermore, other cities in Holland and Zeeland controlled up to 40 per cent of Dutch imports and exports – a far larger share than that commanded by the English outports.46 As a result, the number of active merchants in the Dutch Republic may have been double that of England in the period under investigation. A greater number of merchants, however, does not necessarily mean that investments in the Dutch Republic outpaced those in England. In fact, the growth  ������������������������������������������������������������������������������� Th. Rabb has identified a total number of 3,900 merchants and merchant-knights who invested in England’s chartered companies between 1550 and 1630. Unfortunately Rabb did not specify for which part of this group investment was limited to privateering, mining, and other non-commercial ventures. Since the companies numbered some 900 non-merchants among their shareholders (who may or may not have invested in foreign trade), it seems appropriate to estimate the number of foreign traders at 3,500. Th. K Rabb. Enterprise and Empire: Merchant and Gentry Investment in the Expansion of England, 1575–1630 (Cambridge,1967). 44  ������������������������������������������������������������������������������������� The English outports handled no more than 20 to 25 per cent of English foreign trade (Fisher, ‘London’s export trade’; B. Supple, Commercial Crisis and Change in England, 1600–1642. A study in the instability of a mercantile economy (Cambridge 1959). 45  ���������������������������������������������������������������������������� Oscar Gelderblom, ‘From Antwerp to Amsterdam: The Contribution of Merchants from the Southern Netherlands to the Rise of the Amsterdam Market’, Review. A Journal of the Fernand Braudel Center, 2003–3. 46  ����������������������������������������������������������������������������� Amsterdam’s share in total customs revenues never exceeded 60 per cent. (see http://www.le.ac.uk/hi/bon/ESFDB/hart/, for data collected by Dr Marjolein ’t Hart, and used in the preparation of her chapter on ‘The United Provinces, 1579–1806’ in: Richard Bonney (ed.), The rise of the fiscal state in Europe, c. 1200–1815 (Oxford, 1999), pp. 309–26); The share of the Amsterdam chamber in the total capital of the Dutch East India Company stood at 56 per cent, although some additional investments made by Amsterdam merchants in other chambers should be added to this: J.G. van Dillen, Het oudste aandeelhoudersregister van de Kamer Amsterdam der Oost-Indische Compagnie (’s-Gravenhage 1958); W.S. Unger, ‘Het inschrijvingsregister van de Kamer Zeeland der Verenigde Oost-Indische Compagnie’, Economisch-historisch jaarboek 24, (1950), 1–33; R. Th. W. Willemsen, ‘Beleggers in een nieuwe compagnie. ������������������������������� Het aandeelhoudersregister van de Kamer Enkhuizen der VOC, in Roelof van Gelder and Jan Parmentier en Vibeke Roeper, Souffrir pour parvenir. De wereled van Jan Huygen van Linschoten (Haarlem, 1998). 43

The Organization of Long-Distance Trade in England and the Dutch Republic 235

of early modern trade is often associated with magnates like the Fuggers of Augsburg, the Hooftmans of Antwerp, or the Trips of Amsterdam.47 Since there is no evidence to suggest that such extremely wealthy merchants were more numerous in the Dutch Republic than in England, commercial investments in both countries may have been on a par with one another. Yet, the size of merchant communities does become an issue when institutions exist that also allow merchants with limited financial resources to participate in foreign trade, and this is precisely what set the Dutch Republic apart from England. The United Provinces boasted a number of financial institutions, including the partenrederij, freight contracts, bottomry loans, IOUs, and maritime insurance, which improved risk management, and hence enabled even the smallest of merchants to invest in trade. Commercial institutions like price currents, bourses, and specialized brokers quickly spread beyond Amsterdam and in doing so, lowered information costs for traders in several other ports, including Middelburg and Rotterdam. The absence of similar institutions in England, however, does not automatically imply that the country’s foreign trade suffered from capital shortage. Before 1580 chartered companies were able to mobilize sufficient funds through contributions by their shareholders, as well as the support of Queen Elizabeth, who lent ships to the Russia and Africa companies, and money to the Levant Company.48 However, after 1580 funding became increasingly problematic. In 1586 the Russia Company was liquidated and re-established to attract new investors.49 In 1592 the Levant Company merged with the Venice Company and increased its membership to boost investments. Several attempts to set up regular trade with Africa around 1600 failed for lack of capital to establish fortified trading posts.50 By 1620 the Russia Company had become virtually bankrupt as a result of both massive fraud by factors and directors, and Dutch attacks on warehouses in Archangel.51 The company was then liquidated and its privileges transferred to two new companies – one for whaling and one for trade with Russia.52

47

 �������������� R. Ehrenberg, Das Zeitalter der Fugger. Geldkapital und Creditverkehr im 16. Jahrhundert, 3rd edition (Jena, 1922); Jeannin, Marchands; Peter W. Klein, De Trippen in de 17e eeuw; een studie over het ondernemersgedrag op de Hollandse stapelmarkt (Assen, 1965). 48  ������� Scott, Constitution, I, pp. 31, 70, 82; II, pp. 5–7, 10–11; Between 1550 and 1650 the English organized at least 50 voyages to Guinea: P.E.H. Hair, ‘The experience of the sixteenth-century English voyages to Guinea’, The mariner’s mirror: the Journal of the Society for Nautical Research 83 (1997), 3–13. 49  ������� Scott, Constitution, I, p. 34; Harris, Industrializing, p. 44; who refers to T.S. Willan, The Early History of the Russia Company 1553–1603 (Manchester 1956), pp. 41–7, 211–16. 50  ������� Scott, Constitution, I, p. 130; II, pp. 10–15. 51  ������� Scott, Constitution, I, pp. 46–7; II, pp. 53–5. 52  ������� Scott, Constitution, I, pp. 179–80.

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Funding problems were most acute in England’s trade with Asia. Military protection and the build-up of trading posts required large-scale investments, but English merchants refused to pledge their capital for more than one voyage at a time. Many waited for dividends to be paid before making any new investments, while others shunned colonial trade altogether in favour of more secure operations in Europe.53 Structural solutions for these financial problems were difficult to find. Intra-company borrowing was insufficient since other companies also suffered from capital shortage.54 Government support was not an option as the crown itself was also desperately seeking new sources of funding . Even the claim of London’s business elite that the establishment of joint-stock companies expanded the circle of investors in foreign trade proved misleading.55 The available evidence suggests that aristocrats and other outsiders made up no more than ten per cent of the membership of companies trading with Russia, the Baltic, Spain, Portugal, the Levant, and East India.56 The net effect of these problems was a long series of investments in separate voyages. It took approximately 30 years and 20-odd such initiatives before a permanent joint-stock company was created. The narrow margins that the East India Company and its predecessors operated within are depicted in Figure 9.1. The reported balance of cumulative investments in the East India trade shows that it took nearly 15 years for the Asian trade to be financed entirely from retained earnings. At the same time the total capital pledged in excess of dividend payments never exceeded one million guilders during this period. The financial difficulties experienced by the East India Company are clearly visible when compared to the funding of the VOC. While English merchants invested only four million guilders between 1601 and 1611, the Dutch spent an estimated 12 million guilders in their first decade on trade with Asia.57 Furthermore, Dutch investors sustained a much larger negative cash flow—as much as 2.5 million guilders—in the early years of expansion. The exceptional reward for this spate of investments in the VOC and its predecessors was a positive balance of cumulative investments and returns of no less than 17.5 million guilders in 1611, and this occurred at a time when English voyages merely broke even. By 1630 the capital accumulated by Dutch investors in the Asian trade – 25 million guilders – was five times the amount of their English counterparts.  ������� Scott, Constitution, I, p. 129; Chaudhuri, English East India Company, pp. 10–11.  ������� Scott, Constitution, II, pp. 55–6. 55  ������� Scott, Constitution, I, pp. 442–3; Chaudhuri, English East India Company, pp. 35–6, 58–60. 56  ������ Rabb, Enterprise. 57  ������� Scott, Constitution, I, pp. 193–7; Chaudhuri, English East India Company, pp. 57, 66, 209–20; For VOC: Oscar Gelderblom and Joost Jonker, ‘Completing a Financial Revolution. The Finance of The Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595–1612’, The Journal of Economic History, 64/3, September 2004, 641–72. 53

54

The Organization of Long-Distance Trade in England and the Dutch Republic 237  'XWFK5HSXEOLF



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Figure 9.1



































The balance of cumulative investments and returns in Dutch and English East India trade (1595–1630), in guilders. Cash ���������� flow calculated as the difference between cumulative investments and cumulative returns

Sources: The annual cash flow is calculated as the difference between cumulative investments and cumulative returns. The English series is based on the reconstruction of capital investments and dividend payments by Scott, Constitution, 89–128 and Chaudhuri, English East India Company, 207–23. Since we do not have information on annual dividend payments in the 1st, 2nd, 3rd, 5th, 6th, 11th and 12th Voyages, the annual distribution of dividends for these voyages (which are provided by Scott and Chaudhuri) is calculated on the basis of the annual distribution of dividend payments in the 7th–10th Voyages and the First Joint-Stock Company. These are, after three years: 17.5 per cent; after four years: 37.5 per cent; after five years: 5.0 per cent; after six years: 15.0 per cent; after seven years: 10.0 per cent; and after eight years: 15.0 per cent. Calculations of Dutch investments are from Gelderblom and Jonker, ‘Completing’ for the Amsterdam chamber. Adjustments for investments and returns of early companies in other Dutch cities are made on the basis of the shipping figures provided by Jaap R. Bruijn, Femme S. Gaastra, and I. Schöffer (eds), Dutch-Asiatic Shipping in the 17th and 18th Centuries, vol. II. Outward-Bound Voyages from the Netherlands to Asia and the Cape (1595–1794) (The Hague, 1979), pp. 3–17: These are: Extra investments and returns for 1598 (+ 65.2 per cent), 1601 (+ 45 per cent) and 1602 (+56.7 per cent), and extra investment for 1602 (VOC): +42,8 per cent.

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The auspicious commencement of Dutch colonial trade did not result from wealthier investors. Rather, simultaneous initiatives in different towns had the effect of broadening the circle of investors to include businessmen outside the principal port of Amsterdam. In addition, competition between companies within the same cities stimulated directors to look for funds beyond their relatively closed circles of family and friends. In 1602 the VOC to some extent internalized this competition, by dividing its operations among six different ‘chambers’. As a result, the Dutch company numbered roughly 1,900 shareholders, against 1,300 investors in 16 separate voyages and three joint-stocks of the English East India Company between 1601 and 1632.58 Moreover, up to 30 per cent of the capital stock of the VOC was provided by non-merchants.59 However, the success of the Dutch East India trade did not come about only because it had a larger number of shareholders. Equally important were the huge profits made by the first companies sailing to Asia. Between 1598 and 1608 the ventures of Amsterdam’s companies alone yielded an annual average return of 27.4 per cent.60 The net return amounted to nine million guilders in 1608, or twoand-a-half times the capital subscribed to the Amsterdam chamber of the VOC in 1602. It did, however, take a long time for the early ventures to be liquidated and for their returns to be available for re-investment in subsequent voyages, hence the negative cash flow of up to 2.5 million guilders sustained by investors between 1600 and 1602 (Figure 9.1). The ability and willingness of Dutch investors to invest profits from previous voyages even before the ships had returned to the United Provinces was enhanced by the emergence of a money market in Amsterdam after 1595. In order to share in the prospective profits of the East India trade, investors raised money by selling IOUs to various fellow merchants and widows who preferred a safe eight per cent return on these loans to the high risk investments in the Asiatic trade. A further means of easing the liquidity constraints of individual investors was the decision by the VOC to allow shareholders to pay for their shares in four annual instalments between 1603 and 1607 – enough time for earlier dividends to provide them with the requisite capital. The company charter additionally provided for the transferability of its shares, allowing those who were unable or unwilling to pay up their shares to sell their stock. The unintended consequence of this provision was the emergence of a 58

 ������ Rabb, Enterprise, 104.  ������������������������������������������������������������������������������� The estimate of the total number of VOC shareholders is based on subscriptions to the shareholders’ registers of Amsterdam (1,143), Zeeland (264) and Enkhuizen (358). Since these 1,756 shareholders subscribed 85 per cent of the total capital, the total number of shareholders may have been as high as 2,000. Allowing for double entries in different chambers, a total of 1,900 shareholders seems plausible. The Figures ������������������������ for the VOC are calculated from: Van Dillen, Aandeelhoudersregister; Unger, ‘Inschrijvingsregister’; Willemsen, ‘Beleggers’. 60  ��������������������������������������������� Gelderblom, ‘From Antwerp to Amsterdam’, 268. 59

The Organization of Long-Distance Trade in England and the Dutch Republic 239

secondary market for VOC shares within months of the company’s establishment. High liquidity then turned these shares into a very convenient collateral for shortterm loans (IOUs).61 Both this new financial technique and the several millions guilders in surplus capital gained from earlier voyages increased the supply of loanable funds on the Amsterdam money market. Consequently the interest merchants paid on their IOUs dropped from eight per cent in the late 1590s to seven per cent in 1610, 5.5 per cent in 1620, and four per cent in 1650. The contrast with England was stark. Although the English East India Company occasionally auctioned off its shares to ascertain their market value, regular stock trading did not develop in England until after 1650.62 Since loanable funds were scarce, interest rates in London were higher than in Amsterdam. Even the most reputable merchants could not borrow below ten per cent in 1610, eight per cent in 1620, and six per cent from the 1650s onwards.63 Interest rates in the outports must have been even higher.64 Meanwhile these differential rates on private IOUs also applied to loans contracted by both the Dutch and the English East India

 �������������������������������������������������������������� The argument is based on: Gelderblom and Jonker, ‘Completing’.  ������� Scott, Constitution, II, pp. 284–5, 326–52; Dickson, Financial revolution, 486–9; Larry Neal, The Rise of Financial Capitalism, International Capital Markets in the Age of Reason (Cambridge, 1990), pp. 14–16. 63  ����������������������������������������������������������������������������������� Greg Clark has convincingly shown that returns on private annuities (rent charges) ranged between four per cent and eight per cent in England between 1550 and 1650. Unfortunately, Clark does not provide interest rates on what he terms ‘mortgages and bonds’ – the latter credit instrument being similar to the IOUs sold on the Amsterdam money market. Greg Clark, ‘The Political Foundations of Modern Economic Growth: England, 1540–1800’, Journal of Interdisciplinary History, 26/4 (1996), 563–88. The official maximum interest rate was set at ten per cent in 1571, eight per cent in 1624, and six per cent in 1651 (H. Roseveare, The Financial Revolution 1660–1760 (London, 1991), pp. 9, 11). Various references suggest interest rates for private borrowing by individual merchants and chartered companies in London at 12 per cent around 1560 (Scott, Constitution, I, p. 37), at ten per cent in 1610 (F.J. Fisher (ed.), Calendar of the manuscripts of the Right Honourable Lord Sackville of Knole Sevenoaks, Kent, vol. II. Letters relating to Lionel Cranfield’s business overseas, 1597–1612 (London, 1966), pp. 346–50; Tawney, Business, 102n, p. 110); nine per cent around 1615 (Scott, Constitution, I, p. 141); eight per cent (for the Russia Company) and ten per cent (for the crown and the EIC) in 1618 (Scott, Constitution, I, p. 146). In 1664 loans were made by the London merchant Charles Marescoe at six per cent (H. Roseveare (ed.), Markets and merchants of the late seventeenth century. The Marescoe–David letters 1668–1680 (Oxford, 1987), p. 17. 64  ������������������������������������������������������������������������������������� Merchants in the outports realized that information and credit were easier to obtain in London, witness the following remark by Lord Chief Justice Popham in September 1605: ‘…the young merchants of those parts [West England] begin with very small stocks, and cannot deal here upon credit as young merchants may do in London…’; The passage is cited in: Ashton, ‘Parliamentary Agitation’, 46. 61 62

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companies, thus putting the former in a much more favourable position when temporary cash shortages had to be bridged.65

Taxing trade Although the chartered companies failed to maximize investment in England’s foreign trade, they may have been very efficient from the point of view of state finance. Both England and the Dutch Republic were heavily involved in European politics throughout the period under investigation. The Dutch state needed money to finance the ongoing war with Spain. The English crown supported the Dutch in their struggle against Spain, and waged their own war against France. Taxing foreign trade and borrowing from merchants were time-honoured practices used to finance such military operations.66 But the use of such expedients differed markedly between England and the Dutch Republic in the period under investigation. The simplest way for a ruler to exact revenue from trade was to ask merchants for financial compensation for charters granted to them. Thus, the Levant Company lent, and eventually donated 50,000 guilders to the crown for its charter in 1581.67 In 1600 the company agreed to pay an annual fee of 40,000 guilders for the renewal of its charter.68 In 1635 the Merchant Adventurers agreed to pay 60,000 guilders to prevent any further infringements on their privileges. The money was paid by the city of Rotterdam, their new host in the Low Countries.69 However, not all the money paid to secure charters ended up in the treasury. The Merchant Adventurers paid bribes of up to 700,000 guilders in 1617 to ensure that the Crown abandoned Alderman Cockayne’s project, and re-established the company’s monopoly.70 Various courtiers are estimated to have received at least 400,000 guilders from the renewal of the charter of the Staplers Company in 1621.71 In the Dutch Republic payments for the extension of charters were a different matter altogether. The VOC reserved only 25,000 guilders in shares for Prince  ������������������������������������������������������������������������������ The interest paid on VOC bonds in the first decade of the seventeenth century was comparable to that of private IOUs:eight per cent in 1602, seven per cent from 1604 onwards, and 6.5 per cent in 1608 (Dutch National Archives, 1.04.02 Inv. Nr. 7142); In the late 1630s the EIC was able to borrow at the market rate of eight per cent ( Scott, Constitution, I, p. 199). 66  ��������������� Charles Tilly, Coercion, capital, and European states, AD 990–1990 (Cambridge, 1990); See also various contributions to: Bonney, Economic Systems; and Bonney, The rise. 67  ������������������������������ Brenner, ‘Social basis’, 369. 68  ����������� R. Ashton, The Crown and the Money Market: 1603–1640 (Oxford, 1960), p. 91. 69  �������������� David Ormrod, The Rise of Commercial Empires. England and the Netherlands in the Age of Mercantilism, 1650–1770 (Cambridge 2003), p. 36. 70  ������� Scott, Constitution, I, pp. 145, 169. 71  ������� Scott, Constitution, I, p. 149. 65

The Organization of Long-Distance Trade in England and the Dutch Republic 241

Maurice in 1602 in return for granting their charter. Furthermore, between 1609 and 1617 the government made a net contribution of 1.7 million guilders to the armament of VOC ships.72 The Noordse Compagnie, established in 1614 to coordinate the protection of Dutch whaling in the Northern Sea, was not charged at all for its charter, nor was the Nieuwe Nederlandsche Compagnie, the short-lived (1614–1617) predecessor of the West-India Company.73 When the latter company was founded in 1621, the state held a much larger share of the initial capital, but this was not considered compensation for chartering the WIC. Rather, it was a necessary supplement to the otherwise meagre investments made by Dutch merchants. Even after successful calls for people to invest in the 1630s, the state continued to finance the company’s costly military operations.74 Another means of extracting revenue from trade was through the sales of import and export licences. From the 1590s onwards the Dutch Republic required merchants exporting weapons and ammunition to purchase a passport,75 though the Dutch government used this instrument to regulate trade rather than to appropriate the profits made by arms dealers. The passports sold between 1620 and 1648 yielded only 50,000 guilders on average.76 In England, similar regulation damaged commercial interests because the crown granted import and export licences to courtiers who had no intention of using them. The ensuing trade in licences reduced the profits of merchants who eventually did use them.77 For example, the prominent merchant Lionel Cranfield made 28.5 per cent profit on the buying and reselling of (a share in) an export licence for 17,500 pieces of unfinished cloth initially owned by two courtiers of James I.78 Although company charters and export licences brought in considerable sums of money for the English crown, these were far too small and erratic to fund

72

 ����������������������������������������������������������������������������������� Michiel A.G. de Jong, ‘‘‘Staet van Oorlog”. Wapenbedrijf en militaire hervormingen in de Republiek der Verenigde Nederlanden (1585–1621)’, Unpublished PhD thesis Leiden University (2002), 82. 73  ��������������������������������������������������������������� In 1642 the States General refused to renew the charter of the Noordse Compagnie: Muller, Geschiedenis, 87–91, 95–102. 74  ������������ Den Heijer, De Geschiedenis. 75  ���������������������������������������������������������������������������������� Michiel A.G. de Jong, ‘Dutch public finance during the Eighty Years War: The case of the province of Zeeland, 1585–1621’, in M. van der Hoeven (ed.), Exercise of Arms. Warfare in the Netherlands (1568–1648) (Leiden 1998), pp. 133–52. 76  ���������������������� Marjolein C. ’t Hart, The making of a bourgeois state (Manchester, 1993), p. 94; Between 1586 and 1621 a total of 484 passports were sold by the Dutch admiralties: Resoluties Admiraliteit 1586–161, Inv. Nr. 1334–1366 (personal communication by Michiel de Jong). 77  ������������������������������������������������������������������������������������ In actual fact, most patents of monopoly Charles I granted to his courtiers did not harm foreign trade for they involved domestic trade and industry (Scott, Constitution, I, pp. 108–18, 219–25; Ashton, City, pp. 17–20, 30). 78  �������� Tawney, Business, p. 89, also pp. 81, 85; See also the sales of a licence for cloth exports by a lender to the crown (Ashton, City, p. 19).

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public expenditure.79 To create a more regular stream of income from trade, rulers could try to tax the personal wealth and income of merchants. In England three parliamentary taxes served this purpose: the fifteenth, the tenth, and the subsidy. However, since the first two taxes were based on fixed quota pre-dating commercial expansion, they did not allow the crown to appropriate much of the profits made by merchants after 1550.80 Moreover, the preferential treatment of London’s business elite backfired on the Crown. Abatements granted by the collectors of the subsidy, an assessed tax first levied under Elizabeth, allowed London merchants to escape the taxation of their increased wealth.81 Indeed, the yield of the subsidy tax fell by 50 per cent between 1558 and 1590 and again by 70 per cent between 1590 and 1630.82 In Holland, where most foreign traders simply lacked the political connections to obtain tax reductions, impositions on their personal wealth were far more successful. Between 1600 and 1620 incidental levies on burghers’ wealth yielded 7.2 million guilders. With the introduction of a more regular system of impositions in 1620, revenue rose to a total of 12.3 million guilders between 1620 and 1640.83 The contribution of merchants to these taxes was considerable. For example, in Amsterdam in 1631, the local merchant community contributed 56 per cent to a tax on movable and immovable goods.84 This should not be taken to imply that Dutch merchants suffered from an excessive tax burden. For example, less than three per cent of the estimated 25 million guilders earned during the

79

 ����������������������������������������������������������������������������������� Yet another means to extract resources from foreign trade was direct participation in the chartered companies. The first English voyages to Russia, Africa, and the Levant yielded only moderate profits for Elizabeth but her share of 2.6 million guilders in the Spanish silver captured by Francis Drake in 1580 at once solved all her financial problems (Scott, Constitution, I, pp. 81–2, 98–101) Whether this participation set England apart from the United Provinces is questionable, however. Both the Dutch admiralties and the colonial companies were actively – and successfully – involved in the marauding of Spanish and Portuguese ships: Victor Enthoven, Zeeland en de opkomst van de Republiek. ���������� Handel en strijd in de Scheldedelta, c. 1550–1621 (1996); Den Heijer, De Geschiedenis. 80  ������� Scott, Constitution, I, pp. 93–5. 81  ��������������������������������������������������������������������������������� Compare also the failed attempt by Lionel Cranfield to impose a tax comprised of one year’s income for all those who benefited from grants, offices, pensions, and other gifts from the crown: Tawney, Business, pp. 146, 202–3. 82  ���������� Braddick, Nerves, 91–8, 165. 83  ��������������������������������������� Fritschy, ‘Financial Revolution’, 83–5. 84  ���� The Tweehonderdsten penning of 1631 yielded 316,545 guilders in Amsterdam – 177,291 guilders of which was paid by merchants. ������������������ Oscar Gelderblom, Zuid-Nederlandse kooplieden en de opkomst van de Amsterdamse stapelmarkt 1578–1630 (Hilversum 2000), 227; The register of a forced loan in Leiden in 1600 also suggests considerable resources were tapped from the merchant community: R.C.J. van Maanen, ‘De vermogensopbouw van de Leidse bevolking in het laatste kwart van de zestiende eeuw’, Bijdragen en Mededelingen tot de Geschiedenis der Nederlanden, 93 (1978), 1–42, ����� 22–5.

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first three decades of Dutch East India trade was taxed away through various impositions on wealth.85 The failure to tax the wealth of the mercantile community, left the English crown with but one option to extract revenue from trade: the levying of import and export duties.86 This could be done without parliamentary approval for customs belonged to the Royal Prerogative. With the exception of a few years of direct administration in the 1590s, the crown farmed out these customs to syndicates of London merchants.87 In exchange for an annual rent these farmers, often leading members of the chartered companies, collected the general customs (the Great Farm) and additional duties on silk, wine, currants, tobacco, and a few smaller levies (the Petty Farm).88 From the Crown’s point of view, this was an extremely successful expedient. Between 1580 and 1640 customs revenues more than tripled from 0.75 million guilders to 2.5 million guilders (Figure 9.2), while their average share in public revenue rose from 15 to 30 per cent.89 At least a quarter of the rising revenues can be attributed to various new impositions on French and sweet wines (1558, 1573), currants (c.1594), silk (1605) and tobacco (1605).90 A revision of customs rates in 1604 added another 13 per cent to total revenues.91 Further attempts to revise the rate structure failed, however the crown was able to boost revenues by playing off syndicates competing for the customs farms against one another.92

 ��������������������������������������������������������������������������������� Fritschy and Liesker have calculated that eight consecutive wealth taxes between 1621 and 1631 amounted to a total levy of 2.8 per cent on the capital owned by burghers in Holland (Wantje Fritschy and René Liesker (eds), Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden. Deel IV Holland (1572–1795) (The Hague, 2004). 86  ��������������������������������������������������������������������������� Hinton, ‘Mercantile System’, 278; One could also argue that the levying of customs duties was relatively easy because most trade was in the hands of well-organized companies. This would make large scale tax evasion difficult (P. Ramsey, ‘The Tudor State and Economic Problems’, pp. 28–38, at 31). However, it should be noted that collusion of tax farmers and company merchants could also lead to tax evasion (see below). 87  ������� Dietz, English Public Finance, pp. 305–27. 88  �������� Ashton, City, pp. 20–23; Ashton, Crown; Tawney, Business, 96n; Not included here is the farm for the collection of duties on the domestic reselling of wines at £3,000 in 1604 (Tawney, Business, pp. 118–19). 89  ������������������������������������������������������������������������������ These shares are based on the customs revenues presented in Figure 2, and the total revenue as provided by P. O’Brien and P.A. Hunt (http://www.le.ac.uk/hi/bon/ESFDB/ obrien/ for their article ‘English revenues, 1485–1815’, in Richard Bonney (ed.), The rise. 90  ���������������������������������������������������������������������������������� In the 1630s the Petty Farm of Customs yielded £60,000 pounds as against £150,000 for the Great Farm: Scott, Constitution, I, pp. 180–81; Dietz, English Public Finance, pp. 345–50; Ashton, Crown, pp. 88, 95, 97. 91  ���������� Braddick, Nerves, 54. 92  ��������������������������������������������������������������������������������� The additional tax on the imports and exports of alien merchants which Cranfield succeeded in securing only yielded an extra £2,000 per year: Tawney, Business, pp. 130–36, 213. 85

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Figure 9.2 Customs revenues in England and the Dutch Republic (1566– 1640) Sources: For English customs: Scott, Constitution, III, 514, 516–19; Dietz, Public Finance, 15, 44, 74–5, 88, 90–91, 119, 154n, 177, 314–16, 328–30, 345–57; Tawney, Business, 93n; Ashton, Crown, 88, 95, 97; Data on Dutch customs collected by M. ’t Hart (http://www.le.ac.uk/hi/bon/ESFDB/) and used in the preparation of the chapter on ‘The United Provinces, 1579–1806’ in R. J. Bonney (ed.), The Rise of the Fiscal State in Europe, c. 1200–1815 (Oxford, 1999), pp. 309–26; Note that data for all five admiralties is only available for the years 1621–1631 and 1633–1634. To enhance comparability between the English and the Dutch series, extrapolations have been made for consecutive years in which data from at least three admiralties is available (1614–1618; 1632; 1635; 1639–1640), on the basis of the average relative weight of the ‘missing’ admiralties in the ‘complete’ years. For the 1590s customs revenues are available for the three principal admiralties (Amsterdam, Middelburg, and Rotterdam). Since these three admiralties consistently supplied 90 per cent of customs revenues in the 1620s and 1630s, an extra ten per cent was added to their revenues in the 1590s. (Frits ���������������� Snapper, Oorlogsinvloeden op de overzeese handel van Holland, 1551–1719 (Amsterdam 1959).

While competition between farmers filled the state’s coffers, it harmed the interests of the mercantile community. Obviously, tax farmers had a strong incentive to maximize customs revenues in order to recover their costs and make a profit. Numerous references suggest that the rate of return on capital invested in the various farms ranged from 17 per cent to 90 per cent, and occasionally even higher.93 Furthermore, members of the Levant Company who had a share in   Dietz, English Public Finance, pp. 359–61; R. Ashton, ‘Revenue Farming under the Early Stuarts’, The Economic History Review, 8–3 (1956), 310–22, at 318–19; Note that the high returns for the customs farmers reveal that the crown often failed to play off syndicates against one other in order to augment the rent they paid for the Great and Petty Farms: Scott, Constitution, I, pp. 204–15. 93

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the customs farms, abused their position when they instructed London’s customs officials to prevent interlopers from importing currants and other southern products into the country. The flaws in England’s manner of customs farming are all too clear when compared with the Dutch Republic. Starting in the 1570s, the Dutch government also required merchants to pay ad valorem duties on imports and exports. However, unlike the English customs, which were considered the personal income of the King, the States General had to commit to spending customs revenues on the protection of the merchant fleet.94 Admittedly, customs rates were revised on several occasions, but the average burden on imports and exports did not change much over time.95 In reality, the tax burden was even lower than the tariffs indicated, since local admiralties turned a blind eye to tax evasion to prevent the diversion of trade to another Dutch port.96 Furthermore, the VOC and WIC were allowed to pay a lump sum that was a trifle compared to the true value of their trade. Nevertheless, total customs revenues in Holland, Zeeland and Friesland rose from one million guilders in 1590 to 2.5 million guilders in 1640 – a figure similar to that of England (Figure 9.2). If Dutch foreign trade was indeed two or three times the size of that of England, the burden of customs was two or three times less. With an estimated average rate of 2.5 to 3.5 per cent on English imports and exports, transaction costs for Dutch merchants may have been as much as two per cent lower.97 Admittedly, merchants in the United Provinces sometimes faced additional levies to finance protection, for example, against pirates in the Mediterranean. However, the lastgeld raised for the convoying of Mediterranean fleets since 1625 was a very minor tax in comparison with regular customs duties. The annual revenue never exceeded 9,000 guilders before 1650.98 Any further attempts by Dutch merchants to deal with the perils

 ������������ H.E. Becht, Statistische gegevens betreffende den handelsomzet van de Republiek der Vereenigde Nederlanden gedurende de XVIIe eeuw, 1579–1715 (’s-Gravenhage, 1908). The rule of thumb seems to have been that evasions below a sixth of total customs payable were not pursued: A.J. Veenendaal, Jr., ‘Fiscal Crises and Constitutional Freedom in the Netherlands, 1450–1795’, in Philip T. Hoffman, and Karin Norberg (eds), Fiscal Crises, Liberty, and Representative Government 1450–1789 (Stanford, 1994). 95  ������� Becht, Statistische gegevens, 78–105; ’t Hart, The making, 103. 96  ��������� ’t Hart, The making, 101–2, 109–10; Dormans, Het Tekort, p. 34; On the competition between the Admiralties, also De Jong, ‘Staet van Oorlog’, 37. 97  �������������������������������������������������������������������������������� Unfortunately, we only have very rough and sometimes contradictory estimates of the average taxation of imports and exports in both countries. Without going into further detail, Braddick has suggested that an average levy of between 2.5 and 3.5 per cent was in use in early Stuart England (Braddick, Nerves, 92–3). Braddick’s figure seems irreconcilable with ’t Hart’s estimate of a tax burden of three to five per cent for the Dutch Republic (’t Hart, The making, 103, 113). 98  ����������������� W.F.H. Oldewelt, De oudste lastgeldrekeningen van Directeuren van de Levantse handel (1625–1631) (Amsterdam 1958). 94

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of seafaring took the form of private arrangements, notably maritime insurance which was known for its competitive rates throughout the seventeenth century.99 Government borrowing The Dutch government was able to forego the heavy taxation of foreign trade between 1550 and 1650 because it had alternative sources of income. Already in the second quarter of the sixteenth century, the province of Holland had pioneered a new system of public finance: the voluntary sales of annuities (renten) on the security of excise duties levied on foodstuffs and fuel.100 Earmarking the revenue from these indirect taxes for interest payments greatly enhanced the government’s ability to borrow. In the 1550s the States of Holland could sell annuities worth 1.2 million guilders to urban officeholders, charitable institutions, widows, and merchants in all major towns of Holland, Zeeland, Brabant, and Flanders.101 The voluntary nature of these loans contrasted sharply with the forced loans that characterized English public finance throughout the period under investigation. In the mid-sixteenth century the English crown relied on the Antwerp money market to finance its ongoing war efforts. In the 1540s and 1550s the rulers of England regularly borrowed large sums of money from Italian, German and Flemish bankers in the Scheldt port.102 The support of English merchants was indispensable for these credit transactions. For example, Thomas Gresham, an agent to the crown, pledged bonds of the Merchant Adventurers, and later also the Corporation of London, as collateral for loans.103 In addition, he obliged For a similar measure taken in England in 1619: Dietz, English Public Finance, pp. 175–6. 99  ��������������� F. C. Spooner, Risks at Sea. Amsterdam Insurance and Maritime Europe, 1766– 1780 (Cambridge, 1983), pp. 15–46. 100  ���������������� James D. Tracy, A Financial Revolution in the Habsburg Netherlands. Renten and Renteniers in the County of Holland, 1515–1565 (Berkeley, 1985), p. 221. 101  ������� Tracy, Financial Revolution, pp. 108–38. 102  ���������������������������������������������������������������������������� H. Lonchay, ‘Etude sur les emprunts des souverains belges au XVI et au XVII siècle’, Bulletin de la Classe des Lettres et des Sciences Morales et Politiques et de la Classe des Beaux-Arts, Académie Royale de Belgique 1907, 923–1013; Fernand Braudel, ‘Les emprunts de Charles-Quint sur la place d’Anvers’, in Charles-Quint et sons temps (Paris 1959), pp. 191–200; J.A. van Houtte, ‘Anvers aux XVe et XVIe siècles. Expansion ���������� et Apogeé’, Annales ESC 16 (1961), 248–78, at 273–6; Raymond de Roover, Gresham on Foreign Exchange. An Essay on Early English Mercantilism, with the Text of Sir Thomas Gresham’s Memorandum for the Understanding of the Exchange (Cambridge/London 1949); R.B. Outhwaite, ‘The trials of foreign borrowing: the English crown and the Antwerp money market in the mid-sixteenth century’, The Economic History Review 19 (1966), 289–305. 103  ������� Scott, Constitution, I, p.25; Outhwaite, ‘Trials’, 292, 295; R.B. Outhwaite, ‘Royal Borrowing in the Reign of Elizabeth I: The Aftermath of Antwerp’, The English Historical Review 86 (1971), 251–63.

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the Merchant Adventurers to pay interest, extinguish debts, and remit money to England.104 The company’s cooperation was secured by the granting of privileges as well as threats to withhold licenses for the export of cloth.105 In the second half of the 1560s, Queen Elizabeth withdrew from the Antwerp money market. The immediate reason for this was a political conflict resulting from the English seizure of Genoese ships carrying silver for Philip II in 1567.106 However, there were more fundamental problems like export bans on English bullion, fluctuations of the exchange rate, and failed attempts to force foreign lenders to prolong their credit which lay behind this decision to withdraw.107 Moreover, in addition to interest rates of 12 per cent, brokerage, commission fees, and occasional presents to sooth creditors proved costly.108 Gresham therefore advised the Queen to rely only on domestic lenders in the future.109 Elizabeth, though, went one step further by working towards a surplus in the state’s budget. In the 1570s she borrowed only occasionally from private merchants or the city of London.110 Eventually, profits from Francis Drake’s privateering enabled her to extinguish the public debt in 1581.111 After 1588 warfare with Spain made it impossible to maintain a budget surplus. On more than one occasion, Elizabeth was forced to borrow money from merchants in the city of London to finance military expenditure. Nevertheless, public debt never exceeded three million guilders, and direct loans from merchants remained limited.112 It was only under the early Stuarts that public debt rose to unprecedented heights.113 In addition to several forced loans contracted from the population at large – including one for 2.4 million guilders in 1627–1628 – the crown relied on lenders in the city of London.114 Under James I credit from the Corporation of London was of paramount importance. The Corporation raised money from the Livery Companies and city wards; its aldermen and commoners  ������������������������������������������������������������ Unwin, ‘Merchant Adventurers’, 37; Outhwaite, ‘Trials’, 299.  ���������������������������� Outhwaite, ‘Antwerp’, 298–9. 106  ���������������������������������������������������������������������� C. Read, ‘Queen Elizabeth’s seizure of the Duke of Alva’s pay-ships’, The Journal of Modern History, 5/4 (1933), 443–64. 107  ����������������������������������� Outhwaite, ‘Antwerp’, 292–3, 296–7. 108  ������������������������������������������������������������������������������ In 1563 Gresham had already decided to reduce outstanding debt on the Antwerp market. By 1574 all English debts had been repaid: Outhwaite, ‘Trials’, 294, 301–4. 109  ������� Dietz, English Public Finance, p. 27. 110  ������� Scott, Constitution, I, p. 58; III, p. 511; Outhwaite, ‘Trials’. 111  ������� Scott, Constitution, I, p. 92. 112  ��������������������������������������������������������������������������������� In 1596 the Crown’s debt to the Russia Company for the provision of naval stores amounted to 140,000 guilders: Scott, Constitution, I, p. 30; II, p. 50. In the 1550s the Russia Company had already extended loans to Elizabeth for the purchase of gunpowder and the company also sold her naval stores on credit: Scott, Constitution, I, pp. 29–31. 113  ������� Scott, Constitution, I, pp. 139, 205. 114  ������� Scott, Constitution, I, pp. 137, 171,187–8, 190; R. Cust, The forced loan and English politics 1626–8 (Oxford, 1987). 104 105

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contracted loans on their own account; and the city’s treasury borrowed from wealthy inhabitants.115 Local merchants were involved in these loans as members of the Livery Companies, as aldermen and commoners, or simply because they were among the wealthiest citizens.116 A small number of merchant bankers of English, Flemish and Italian origin also lent money directly to the crown.117 In addition to incidental loans or advances on military expenditure by men like Peter van Lore, Philip Burlamachi, or William Russell, the crown devised a more structural solution to its perennial shortage of money.118 The syndicates of customs farmers were made to pay the rent for their farms in advance, and were sometimes even expected to estimate future customs revenues.119 Thus, merchants, such as William Cockayne, Lionel Cranfield, Nicholas Crispe, Baptist Hicks, and Paul Pindar, combined their participation in the customs farms with their membership in various chartered companies and a diversified wholesale trade.120 The reconstruction of new loans contracted by the crown between 1604 and 1639 demonstrates the growing importance of these tax farmers to Charles I (Figure 9.3).121 The crown’s reliance upon the customs farmers followed its failure to meet previous obligations to the Corporation of London.122 Since forced loans had not been repaid either, the circle of financiers willing to lend their credit to the crown became ever smaller.123 The members of the customs syndicates were, however, able to transfer part of their risk to others. They resold shares in the Great and Petty farms to other merchants. At the same time, they discounted tallies for future revenues, and relent their money once customs revenues began to accrue. The result of these actions led to the growth of an embryonic money market, largely based on the personal relations of the leading farmers.

115

 �������� Ashton, Crown, pp. 113–53.  ������������������������������������������������������������������������������ A few merchants also advanced money to the Livery Companies to enable them to meet their obligations to the Corporation of London: Ashton, Crown, pp. 162–3. 117  ������������������������������������������������������������������������������� Between 1620 and 1628 the total expenses of Burlamachi on account of the crown were £713,364. In 1629 the crown still owed him £128,573. In 1630 he held a monopoly on the transportation of iron ordnance: A.V. Judges, ‘Philip Burlamachi: A Financier of the Thirty Years War’, Economica VI (1926), 285–300, at 293, 297. See also: Van Dillen, Aandeelhoudersregister, 87–90. 118  �������� Ashton, City, pp. 20–23. 119  �������� Ashton, Crown, passim. 120  �������� Ashton, City, p. 26; Brenner, ‘Social basis’, 373. 121  �������� Ashton, Crown; Idem, ‘Revenue’, 316–318; Tawney, Business, pp. 107–13. 122  �������������� Ibid., 132–40. 123  ������������� Ibid., 154–5. 116

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Figure 9.3 New loans contracted by the English crown from customs farmers and other lenders (1604–1639) Sources: Ashton, ‘Revenue farming’, 314, 316; Ashton, ‘Deficit Finance’, 21n, 23–27; Ashton, Crown, 109, 113–30, 158–61, 167–8; Judges, ‘Philip Burlamachi’, 288n, 293, 293, 296; Outhwaite, ‘Trials’, 304–5; Scott, Constitution, I, 23–5, 58, 92, 136–7, 139, 140, 142, 149, 171,187–8, 190, 205; Scott, Constitution, III, 510–11.

However ingenious this may seem, it was rather makeshift compared to the extensive sales of government bonds on the security of excise taxes in the United Provinces – even if took until after 1600 for the Dutch system of public finance to reach its potential. In the 1570s and 1580s increased spending on the military and difficulties with the collection of taxes created an acute shortage of funds in Holland. Currency debasement and the postponement of interest payments further undermined the creditworthiness of the States of Holland. It was only through a combination of personal loans contracted by the Nassau family, subsidies and loans from England (!) and France, revenues from sales of ecclesiastical property, prizes from privateering, and obligations sold to military commanders, that the provinces in revolt managed to pull through in the first decades of the Eighty Years War.124 It was not until 1595 that Dutch creditworthiness was restored at which point first the individual cities, and then the States of Holland, resumed the sales of

 ����������������������������������������������������������������������������������� Wantje Fritschy, ‘A “financial revolution” reconsidered; public finance in Holland during the Dutch Revolt, 1568–1648’, The Economic History Review, 56/1 (February 2003), 57–89. James D. Tracy, ‘Keeping the wheels of war turning. Revenues of the province of Holland 1572–1619’, in: G. Darby, The origins and development of the Dutch Revolt (London/New York 2001), pp. 133–50. 124

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annuities to officeholders, charitable institutions, widows and merchants.125 However, even though the immediate threat of a Spanish invasion had disappeared once Philip II turned against France in 1595, neither annuities nor the continued loans from France and England sufficed to finance the Republic’s defence. In order to raise additional funds, the States of Holland began to contract short-term loans from the merchant community in various cities. Unlike in England, where such loans were typically sought from a trusted merchant elite, the rulers of Holland chose to sell IOUs or obligaties on the money market in Amsterdam and a few other towns.126 The success of these obligations was immediate. Growing revenues from excise taxes allowed the receivers of Holland from about 1594 onwards to supplement the sales of annuities with the sales of obligations.127 By 1609 the value of the obligations sold had already reached 4.3 million guilders.128 In following decades they became ever more popular, comprising 60 per cent of Holland’s debt of 130 million guilders in 1650.129 Interest rates on state obligations dropped from eight per cent in 1595 to four per cent in 1655.130 The efficiency of the Dutch market for obligations is even more telling when compared with the eight per cent to ten per cent interest the English crown continued to pay on bonds before 1650.131

125

 ���������������������������������������������������������������������������� Martijn van der Burg and Marjolein ’t Hart, ‘Renteniers and the Recovery of Amsterdam’s Credit (1578–1605),’ in Marc Boone, Karel Davids, and Paul Janssens (eds), Urban public debts: urban government and the market for annuities in Western Europe (14th–18th centuries) (Turnhout, 2003) 197–218. 126  ������������������������������������������������������������������������������� Fritschy, ‘Financial Revolution’, 206–8. The States of Holland and Zeeland did occasionally use the services of a small group of elite merchants to transfer money from abroad, to act as guarantors for loans, and to make advance payments on military spending. However, the loans involved were typically very short-term and never reached the amounts raised through the sales of annuities and obligations: ’t Hart, ‘Public loans’, 122; De Jong, ‘Dutch public finance’, 147–50; De Jong, ‘Staet van Oorlog’, 232–43. 127  ������������������������������������������������������������������������������������ Note that the States of Holland was not the only organization that used this credit instrument. The VOC and Amsterdam admiralty also drew funds from Amsterdam’s money market. On borrowing by the VOC: Gelderblom and Jonker, ‘Completing’; On borrowing by the Dutch admiralties: De Jong, ‘Staet van Oorlog’, 59; ’t Hart, The making, 54. 128  ������������������������������������� Gelderblom and Jonker, ‘Completing’. 129  ��������� Dormans, Het Tekort, pp. 58, 66. 130  ������������������������������������� Fritschy, ‘Financial Revolution’, 64. 131  ������������������������������������ Clark, ‘Political Foundations’, 567.

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Figure 9.4 Interest rates on government bonds in England and the Dutch Republic, and on private IOUs in the Dutch Republic (1596–1620) Sources: For England: Ashton, Money Market, 113–30.

The successful introduction of obligations as a principal source of credit for the Dutch government was closely linked to the Republic’s commercial expansion after 1580. Foreign trade created a growing number of wealthy merchants – and their heirs – with excess funds in need of profitable investment.132 The effect this had on financial markets must have been considerable given that capital accumulation in the East India trade alone amounted to 25 million guilders by 1630. At the same time the government turned to Amsterdam’s emerging money market to issue new loans. The tax receivers of the States of Holland could sell their obligations easily because they were able to tap into a pre-existing market for IOUs created by merchants lending their surplus funds to fellow traders. This close relation between public and private finance in Amsterdam in the early seventeenth century is confirmed by the interest rates on state obligations and private IOUs which moved in tandem between 1596 and 1620 (Figure 9.4).

Conclusion In 1673 the English diplomat William Temple celebrated the achievements of Dutch commercial organization in his Observations upon the United Provinces of the Netherlands: ‘Low interest … the use of their banks … the severity of justice 132  ��������������������������������������������������������������������������������� Research by Marjolein ’t Hart suggests that merchants and their heirs were among the buyers of annuities and bonds: Marjolein C. ’t Hart, ‘Public Loans and Money Lenders’, Economic and Social History in the Netherlands 1 (1989), 119–39, at 123–35.

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… the convoys of merchant fleets … the lowness of their customs … order and exactness in managing their trade …the vastness of the Stock that has been turn’d wholly to [East Indian] trade.’133 The praise of England’s former ambassador for the Dutch Republic was not intended for Dutch ears. Temple tried to set an example for his fellow countrymen as various other critics of England’s polity had done before him.134 He believed England should emulate the Dutch commercial regime: “And whoever pretends to equal their growth in Trade and Riches, by other ways than such as are already enumerated, will prove, I doubt, either to deceive, or to be deceived.” The present analysis supports Temple’s observations about the cost efficiency of the Dutch commercial regime. Restraint in the chartering of trading companies limited the extraction of monopoly rents and maximized investment of small businessmen and merchants from the outports. The ability of the States of Holland to tax trade indirectly through excise duties and impositions on wealth put the burden of customs at one-half, or perhaps as little as one-third of that in England. Meanwhile, growing tax revenues stimulated the government sales of annuities and bonds on the open market. Finally, throughout the first half of the seventeenth century, interest rates on both public and private debt were consistently two to three per cent lower in Holland than in England. At least part of the explanation for this difference was an increase in the availability of loanable funds brought about by both the advancements in foreign trade, and (in the private market) by the use of VOC shares as collateral for loans. This is not to say that the growth of long-distance trade in the United Provinces can be fully explained by the inclusiveness of their commercial regime. The Dutch conquest of new markets can hardly be dissociated from the country’s large merchant fleet, its commercialized agriculture, high quality manufactures, and bustling domestic markets.135 Furthermore, the struggle for independence from Spain created windfalls for the Dutch Republic in the form of direct access to colonial markets, and the influx of large numbers of merchants and artisans from

133

 ���������������� William Temple, Observations upon the United Provinces of the Netherlands (1668), 3rd edn (London, 1676), pp. 209–46. 134  ������������������������������������������������ Ashton, ‘Parliamentary Agitation’, 48; Dickson, The Financial Revolution in England, pp. 4, 20; Roseveare, Financial revolution, 16; H. Roseveare, ‘Prejudice and policy: Sir George Downing as parliamentary entrepreneur’, in D.C. Coleman and Peter Mathias (eds), Enterprise and History. Essays in honour of Charles Wilson (Cambridge, 1984), pp. 135–50. 135  �������������������������������������� Jan de Vries and Ad M. van der Woude, The First Modern Economy. Success, Failure and Perseverance of the Dutch Economy, 1500–1815 (Cambridge, 1997); See also the more recent contributions to the debate by Van Tielhof, Mother of All Trades; Jan Lucassen, and Richard W. Unger, ‘Labour Productivity in Ocean Shipping, 1450–1875’, International Journal of Maritime History, 12/2 (December 2000), 127–41; and Jan Luiten van Zanden, ‘The “revolt of the early modernists” and the “first modern economy”. An assessment’, The Economic History Review, 55/4 (2002), 619–41.

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Antwerp and its hinterland.136 Indeed, in the long run, the very openness of their commercial regime prevented the Dutch from preserving these cost advantages. In theory, without any means of artificially inflating profit margins, lower costs for merchants in Holland should be reflected in lower prices paid by buyers at home and abroad. Unfortunately, we cannot test this assumption for lack of sufficient price data.137 However, there is ample evidence to suggest that Dutch institutions were copied in other parts of Europe, most notably to England.138 The emulation of the Dutch commercial regime in England began in the second quarter of the seventeenth century, when the relaxation of entry barriers to foreign markets created investment opportunities for merchants who did not belong to London’s business elite.139 Thus, in the early 1620s the Spanish and French markets were opened up, and the Company of Merchant Adventurers was forced to accept the participation of outsiders in the export of English broadcloth.140 Although this situation proved to be short-lived – the Company’s monopoly was restored in 1634141 – the idea of a single, state-sponsored monopoly was abandoned in the Atlantic trade. After the dissolution of the first Virginia Company in 1624 the colonization of North America was left in the hands of half a dozen companies, as was trade with South America and Africa.142 Changes in  ������������ Gelderblom, Zuid-Nederlandse kooplieden; Clé Lesger, The Rise of the Amsterdam Market and Information Exchange: Merchants, Commercial Expansion and Change in the Spatial Economy of the Low Countries, c.1550–1630 (Burlington, 2006); Wijnroks, Handel. 137  ������������������������������������������������������������������������������ At the moment the most reliable data on prices for a large number of European markets are those on grain, collected by Allen and Unger: http://www.history.ubc.ca/unger/ htm_files/new_grain.htm. However, there are so many factors that cause long-term and short-term fluctuations in grain prices (e.g. transportation costs, exchange rates, stockpiling, crop failure) that a gradually narrowing price gap between Amsterdam and its principal trading partners is easily obscured. 138  ������������������������������������ Joost Jonker and Keetie Sluyterman, At home on the world markets. Dutch international trading companies from the 16th century until the present (The Hague 2000), pp. 73–115; For the introduction of Dutch institutions in Danzig, see M. Bogucka, ‘Danzig an der Wende zur Neuzeit: Von der Aktiven Handelsstadt zum Stapel und Produktionszentrum’, Hansische Geschichtsblätter 102 (1984), 91–103; M. Bogucka, ‘Dutch Merchants’ Activities in Gdansk in the First Half of the 17th Century’, in J. Ph.S. Lemmink and J.S.A.M. van Koningsbrugge (eds), Baltic Affairs; Relations between the Netherlands and North-eastern Europe, 1500–1800 (Nijmegen 1990), 19–32; Gelderblom, ‘Governance’. 139  ����������������������������������������������������������������������������� Brenner, ‘Social basis’, 375, 381; Regina Grafe, ‘Northern Spain between the Iberian and the Atlantic worlds: Trade and regional specialisation, 1550–1650’, European Review of Economic History, 6–2 (2002), 269–75. 140  �������� Supple, Commercial Crisis, 65–70. 141  �������� Ormrod, Rise, 36. 142  ������� Scott, Constitution, I, pp. 121, 151, 153, 183–5; II, pp. 246–337; For the political consequences of this shifting policy: Acemoglu, ‘The Rise of Europe’. 136

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England’s government finance began with the levying of excise duties in 1642 and ended with the establishment of what was very similar to the Dutch system of public debt management after the Glorious Revolution (1688).143 This decision to emulate the organization of Dutch trade and public finance enhanced England’s competitive strength in the second half of the seventeenth century. The United Provinces may not have been at a disadvantage at this point, but its merchants and rulers did gradually lose the cost advantages they had enjoyed during the Dutch Golden Age.

143  ������������������������������������������������������������������������������� See for the imitation of Dutch practices in public finance before the Glorious Revolution: Roseveare, Financial revolution, 7–8; J. Scott, ‘‘‘Good Night Amsterdam”: Sir George Downing and Anglo-Dutch Statebuilding’, The English Historical Review, 118/476 (April 2003), 334–56; See for the changes after 1688: Dickson, The Financial Revolution in England. The principal difference that remained between the two countries was the much higher customs duties levied in England up until the early nineteenth century: Ormrod, Rise, 26.

Chapter 10

The Union of Utrecht, Tariff Barriers, and the Interprovincial Beer Trade in the Dutch Republic Richard Yntema

This essay examines the effects of provincial trade policies on the growth and decline of Holland’s export brewing centers during the Dutch Republic. Beer brewing was an important commercial industry in this market economy. While most brewers across the Republic supplied the local market, several towns in the province of Holland became major export brewing centers with markets in Holland and other provinces, including Zealand, Friesland, and Overijssel. As these export markets developed, brewers in these centers became increasingly vulnerable to various tariffs and trade barriers that the provinces created. These taxes on beers imported from Holland aimed to redistributed income to local brewers and provincial governments. Tariffs on beer, of course, also did much more. They influenced the integration of the beer market, the gains from trade, total output, and regional specialization.

 ������������������������������������������������������������������������������������ I would like to thank the commentators and participants at The Political Economy of the Dutch Republic Workshop, University of Utrecht, The Netherlands, 11–12 April 2003 and at the Business History Conference held in Toronto in 2006 for their comments on earlier versions of this paper. I especially would like to thank Oscar Gelderblom, Clé Lesger and Kyriacos Aristotelous for their helpful suggestions on how to improve this paper.   ����������������������������������������������������������������������������������� The definition of “exports” in this paper follows the common usage employed in the medieval and early modern eras. Whether a beer was “domestic” or “foreign” depended on the level of the governing authority. From the perspective of a town, a beer was “domestic” (“binnen gebrouwen” or “inheems”) when it had been brewed in the city, but a “foreign beer” or (“buiten gebrouwen bieren”) even if it was brewed in another city in the same province. For the States of Holland and other provinces, similar distinctions were made. In regulations governing the collection of the excise taxes levied by the States of Holland, all beers brewed outside of the United Provinces were considered foreign (“buiten-lands”).   ��������������������������������������������������������������������������������� In Canada, a variety of interprovincial trade barriers including restrictions on marketing beer and tariffs have had an important effect on the size and structure of the brewing industry. See I.J. Irvine, W.A. Sims, and A. Anastasopoulos, “Interprovincial Versus International Free Trade: The Brewing Industry,” Canadian Journal of Economics, 23, no. 2, (May 1990): 332–47. 

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Although the provinces and areas that made up the Dutch Republic were linked together by trade and commerce, the extent to which they were economically and politically integrated is debated in the literature. The tension between provincial unity and provincial particularism is evident in, and an outgrowth of, the Union of Utrecht (1579). This treaty between different provinces and areas served as a founding constitutional document for the Dutch Republic. While the Union called for the towns and provinces to act as a single government in their struggle against the Spanish, the Union also guaranteed individual towns and provinces the rights and privileges they had traditionally held. The tension between unity and provincial particularism during the Republic was evident in the many political conflicts between the provinces. It was also clear in internal trade policies. The eighteenth article of the Union envisioned the creation of a free trade area within the Republic. If carried out, this article would have had important consequences for the Republic’s economy. It would have promoted regional specialization and the realization of the static and dynamic gains from trade. Historians, however, have claimed that this article was a dead letter because provinces and towns implemented tariffs and trade barriers on goods produced in other provinces and going elsewhere to advance their own well-being. In their book on the early modern Dutch economy, Jan de Vries and Ad van der Woude specifically ask: “Did the Dutch Republic form a single economy?” Although they argue it was a single economy, they also show that within the Republic towns and provinces enacted regulations and economic policies, including tariffs that hindered internal trade. They too argue that the eighteenth article of the Union that forbade trade barriers “soon was ignored universally.” Despite internal trade barriers, differing provincial policies, and the lack of political centralization, they find that the Republic was in effect, to a large extent economically integrated. For example, in contrast to other regions in Europe, commodity prices for grains were highly correlated across the Republic. Factor markets, including capital and   ���������������������������������� For a discussion, see J.L. Price, Holland and the Dutch Republic in the Seventeenth Century: The Politics of Particularism (Oxford: Clarendon Press, 1994).   �������������������������������������������������������������������������������������� For an introduction to the historical context in which the Union was established, see Jonathan Israel, The Dutch Republic: Its Rise, Greatness and Fall, 1477–1806 (Oxford: Clarendon Press, 1998).   ��������������� F.N. Sickenga, Bijdrage tot de Geschiedenis der Belastingen in Nederland (Leiden: Academische Boekhandel van P. Engels, 1864), p. 373. A.G.C. de Vranckrijker, Geschiedenis van de Belastingen (Bussum: Fibula-Van Dishoeck, 1969), p. 34.   ����������������������������������� Jan de Vries and Ad van der Woude, The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (Cambridge: Cambridge University Press, 1997), p. 172.   ���������������������������������������������������������������������������������� De Vries and Van der Woude, p. 173. ���������������������������������������������� They continue by noting that “[t]he provinces habitually taxed ‘foreign’ goods differently from home-produced goods, and restricted the export of some commodities to other provinces.” ������������������������������ Also see pp. 96, 102, and 340.   ����������������������������������� De Vries and Van der Woude, p. 175.

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labor markets, were also integrated.10 As they sum it up, “From the perspective of policy, the economic life of the northern Netherlands appears fragmented: The relevant units are smaller than the Republic as a whole. But from the perspective of market integration –as reflected in prices, flows of labor, capital, raw materials, and information – the Dutch economy seems quite tangibly integrated.”11 As Noordegraaf and De Vries and Van der Woude have noted, little is known about the Republic’s domestic trade.12 Despite the importance it had for the Republic’s economy, it has been little studied by scholars. The consequences of internal tariffs for the growth and development of the early modern Dutch economy are also largely unexplored. Important questions about the incidence, height, and effects of domestic tariffs are unanswered. Was the eighteenth article of the Union of Utrecht that called for free trade between the provinces immediately and universally ignored, or was there a period in which the provinces followed the spirit of this article? What motivated policy makers to implement tariffs and what were their aims? How did internal tariffs affect specific industries and the cost and flow of goods across municipal and provincial borders? When implemented, how did domestic tariffs affect regional specialization and economic productivity? This essay shows that provincial trade policies indeed affected market integration and regional specialization in the brewing industry. In contrast to what has been claimed in the literature, for a generation following the signing of the Union of Utrecht the observance of the free trade principles of the treaty facilitated the growth of Holland’s export brewing industry and, in fact, allowed the Dutch economy to benefit from regional specialization and the gains from trade. In the 1620s and 1630s, however, one province after another shifted from free trade to protectionism. Under political pressure to raise taxes to pay their quota to the Generality and to protect local brewers from Holland’s more efficient industry, provincial governments levied tariffs on beer. Holland’s brewers and the States of Holland protested the shift in policy, but to no avail. The market share of Holland’s brewers in provincial export markets declined as the demand for imported beers dropped. By the early eighteenth century, tariff barriers protected less efficient local brewers and the interprovincial beer trade largely dried up. Thus, provincial protectionist trade policies fragmented the beer market and reduced the gains from trade and regional specialization.

10

 ������������������������������������� De Vries and Van der Woude, p. 176–7.  ���������������������������������������������������������������������������������� De Vries and Van der Woude, p. 177. In ���������������������������������������������� discussing industrial decline later in the book, they indicate that public policy became more restrictive, especially guild restrictions. See pp. 339–41. 12  ������������������������������������������������������������������������������ Leo Noordegraaf, “Internal Trade and Internal Trade Conflicts in the Northern Netherlands: Autonomy, Centralism, and State Formation in the Pre-Industrial Era,” in Simon Groenveld and Michael Wintle, eds, Government and the Economy in Britain and the Netherlands since the Middle Ages (Zutphen: Walburg Pers, 1992), pp. 12–27. De Vries and Van der Woude, p. 179. 11

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The lack of research on domestic trade policies in the Dutch Republic stands in contrast to other early modern European economies. In most areas where internal trade barriers were widespread and high, they have been argued to have retarded economic growth. This is the case, for instance, with internal trade barriers and tolls that separated the provinces and towns in France.13 The rights and privileges of the various towns and political authorities in many areas of modern-day Germany to erect trade barriers are also argued to have diminished the gains of trade and impeded economic growth.14 In short, if these economies had not been hampered by trade barriers but had functioned more as unified economies, they would have grown more rapidly. In contrast to these regions, Britain’s economy is typically argued to have benefited from the emergence of a national market in the eighteenth century that was comparatively free from internal trade barriers.15

The Union of Utrecht, Tariffs, and Political Economy of Protection As in the present day, economic trade policies involving free trade and trade barriers were intensely debated in the Low Countries both before and after the Union of Utrecht was signed on 23 January 1579. The debates on trade policies revolved around several issues, including which individuals or groups would benefit or lose from free trade or trade barriers. Later, provinces and towns also debated if trade barriers could be implemented at all since they violated the Union of Utrecht. Brewers and public officials recognized that trade policies had important consequences for consumer welfare, the distribution of income, and the location and concentration of the brewing industry. Since provinces often counted on custom duties for a share of their revenues, the choice of policy also impacted provincial finances.

13  ������������������ See Jan de Vries, The Economy of Europe in an Age of Crisis, 1600–1750 (Cambridge: Cambridge University Press, 1976), pp. 172–3; Rondo Cameron and Larry Neal, A Concise Economic History of the World, 4th edn (Oxford: Oxford University Press, 2003), pp. 146–50, 218 and 238–9; also see Robert S. DuPlessis, Transitions to Capitalism in Early Modern Europe (Cambridge: Cambridge University Press, 1997), p. 106. 14  ��������������������������������������������������������������������������������� See Peter Kriedte, “Domestic Commerce and Foreign Trade: General Preconditions,” in Sheilagh Ogilvie (ed.), Germany: A New Social and Economic History, 1630–1800, vol. II (London: Arnold, 1996), pp. 101–33, see p. 81 and Sheilagh Ogilvie, “The Beginnings of Industrialization,” in Sheilagh Ogilvie (ed.), Germany: A New Social and Economic History, 1630–1800, vol II (London: Arnold, 1996), pp. 263–308, see p. 275. 15  ��������������������������������������������������������� See for example, Joel Mokyr, “Editor’s Introduction,” to The British Industrial Revolution: An Economic Perspective, (ed.), Joel Mokyr, 2nd edn (Boulder: Westview Press, 1999), pp. 49–52 and DuPlessis, pp. 202–6. For opposing views on the role of government in the British economy, see Ron Harris, “Government and the Economy, 1688–1850,” in Roderick Floud and Paul Johnson, (eds), The Cambridge Economic History of Modern Britain, (3 vols, Cambridge: Cambridge University Press, 2004), vol. 1, pp. 204–37.

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In 1579, regional and municipal governing authorities in the Low Countries joined together in signing the Union of Utrecht.16 Historians often view the Union as a defensive alliance in which the governments of Holland, Utrecht, Friesland and other areas in the Low Countries sought to bolster their ability to stand up against the armies of their ruler, Philip II. As the first article of the Union indicated, its overarching aim was that all regions would be joined together, while simultaneously each region would maintain its rights and privileges. The Union’s framers clearly foresaw potential problems with these contradictory aims: the remainder of the first article stipulated that differences between different areas be settled by negotiation and arbitration. As the Revolt continued and the Northern provinces achieved de facto independence by the late 1580s, the Union came to function as a part of “the constitution” of the Dutch Republic until it ended in 1795. The Union of Utrecht was more than a defense pact, however. It was also a visionary document which included a broad range of provisions, including a monetary union, a unified tax system, and freedom of religion. The eighteenth article of the treaty established, in principle, a free trade area among its members and later for the provinces that made up the Dutch Republic. As stated in the eighteenth article, … none of the United Provinces, or cities or members thereof, shall impose any taxes, convoy fees, or similar burdens, which shall be detrimental to other Provinces, except by common agreement, and none of the allies may be taxed more highly than the inhabitants of a province itself.17

While the origins of the idea of creating a free trade area are unknown, the eighteenth article demonstrates the economic insight of the framers of the Union. The establishment, even in principle, of a free trade area was exceptional at this date, since barriers to trade were the norm within and across most areas in Europe. The creation of a free trade area would have widened the market and permitted industries with cost advantages to enter new markets, and overcome many of the disadvantages of small-scale, local production. In brewing and other industries with economies of scale, firms would have been concentrated where it was economically efficient and smaller, relatively inefficient plants would have closed their doors. As a free trade area, the Republic’s economy would have benefited from regional specialization and the static and dynamic gains from trade.18  ������������������������������������������������������������������ For the text of the Union of Utrecht see Herbert H. Rowen, (ed.), The Low Countries in Early Modern Times (London: Macmillan, 1972). For the history of the Union of Utrecht, see S. Groenveld and H.L.Ph. Leeuwenberg (eds), De Unie van Utrecht. ������������������� Wording en werking van een verbond en een verbondsacte (Den Haag: Nijhoff, 1979). 17  ��������������������������� Translated in Rowen, p. 74. 18  ������������������������������������������������������������������������������� While the New Trade Theory argues that under certain circumstances nations can improve their welfare through employing trade barriers to promote industrial development, 16

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Tariff Barriers Even though the Union of Utrecht envisioned a free trade area in the United Provinces, provinces and towns nonetheless instituted tariffs and trade barriers on goods produced elsewhere in the Republic, including on beer. Municipal and provincial governments had a variety of intertwining motives in levying tariffs on imported beers. Since “foreign” beers often were different in strength and taste from locally produced beers, governments could raise additional tax revenue by taxing these beers. Tariffs were also enacted to protect the local industry and increase the demand for locally brewed beers, often with an eye to promoting supplying industries and tax revenues. Tariffs, in other words, had important welfare effects since they redistributed income. A standard neo-classical economic analysis of tariffs shows how a tariff redistributes income. Figure 10.1 illustrates the welfare effects of a provincial tariff on imported beer brewed in Holland, called Holland beer. To simplify the exposition, Holland beer is assumed to be similar to the province’s “premium” beer. In this partial-equilibrium analysis, the price of imported Holland beer is reflected in the line labeled Holland supply, or PHS.19 The prices at which domestic premium beer can be supplied are reflected by the local supply curve, Ls. With trade, Holland beer imports will equal the quantity Q1–Q2, while local producers supply Q2–0. When a tariff is levied on Holland beers—to increase tax revenues and promote the local industry—the price of Holland beer rises by the amount of the tariff. In Figure 10.1 this is shown by the supply line labeled PHS + T. At this new higher price, the quantity of Holland beer consumed will decline from Q1 to Q3, while the amount of domestic beer supplied will increase from Q2–Q4. Assuming that the supply and demand schedules in Figure 10.1 accurately represent both private and social costs, the tariff has several welfare effects on domestic consumers, domestic producers, the government instituting the tariff, and foreign producers. The welfare effects of the tariff can be estimated by examining the changes in consumer surplus, in other words, the value consumers receive in excess of their actual monetary payments. Since the tariff raises the price of beer, consumers demand less of it and they suffer a welfare loss. Prior to the introduction of the tariff, the consumer surplus on Holland beer was equal to the triangle BCG. With the introduction of the tariff, less Holland beer is consumed. Consequently, consumer surplus now equals the triangle BDH. This loss in consumer welfare is measured by the reduction in the area under the demand curve, which is equal to the area HDCG (or includes areas II, III, I, and IV). many economists and economic historians are skeptical of the benefits of such protection in practice. See Paul Krugman, “Is Free Trade Passé?” The Journal of Economic Perspectives, 1, no. 2, (autumn, 1987): 131–44. 19  ��������������������������������������������������������������������������������� The analysis ignores trade creation and trade diversion. Tariffs on beers brewed outside the Dutch Republic, including German beers, were typically higher than those brewed elsewhere in the Republic.

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The loss in consumer welfare brought about by the tariff is typically broken down into four parts. Area II represents the redistribution effect, or the amount of consumer surplus transferred to local producers who benefit as a result of the tariff levied on imported Holland beers. In other words, producers enjoy an increase in producer surplus. Area III represents the production effect, or the amount of value that is lost due to the increased production costs incurred by the local producers who are less efficient than Holland’s brewers. From the point of view of the local economy, it represents a transfer from consumers to local producers, including supply industries. From the point of view of the Republic’s economy as a whole and Holland’s brewing industry, it represents a loss in welfare. Areas I represent the revenue effect, or the value of revenue that is transferred from consumers to the government as a result of the tariff. The revenue from the tariff is equal to the quantity of imported Holland beer times the tariff rate, where total revenue equals (PHS +T-PHS)*Q3–Q4. Area IV represents the consumption effect, or the amount of welfare that is lost by consumers because they are no longer consuming Q1–Q3 Holland beer. This area also represents a loss to the entire economy. In addition to reducing consumer welfare, the tariff also reduces the welfare of producers and their suppliers in the region from which the exports originated. The loss of exports for Holland’s brewers due to the tariff is equal to (Q1–Q3) + (Q4–Q2).

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Figure 10.1 The welfare effect of a tariff on Holland beer

The Political Economy of Tariffs Studies of political economy have shown that trade barriers are often established to redistribute income. As suggested by areas II and I of Figure 10.1, local brewers had incentives to lobby for tariffs and government officials had incentives to implement them, even though tariffs reduced consumer welfare. The arguments presented in Mancur Olson’s book, The Logic of Collective Action, provide a framework to understand why tariffs were legislated, even though they reduced consumers’ welfare.20 Olson suggests that a small number of producers will tend to be better organized than large groups, including consumers, since the expected financial gains of organization are greater and the costs of organization are lower. Even if members of a large group are well-informed about the costs of policies that adversely affect them, the costs to each individual member are so small that an individual consumer will typically choose not to bear the costs of organization, possibly in the hope that these will be borne by other consumers. Once organized, a producer association, like a brewers’ guild, is more effective in shaping governmental policies, including tariff policies that redistribute income to

20  �������������� Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, MA: Harvard University Press, 1971).

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themselves and the government, than consumers are in preventing this since they are typically not organized and, therefore, cannot lobby as effectively. Olson’s model suggests that when “local” brewers were high cost producers, they had powerful incentives to lobby or, in seventeenth-century terms, to petition for tariffs since this increased their income. In fact, this process took place time and again in the Dutch Republic.21 When brewers were organized as an interest group, they were well positioned to successfully lobby authorities to obtain tariffs that transferred income to them from consumers and “foreign” brewers. While the costs to consumers were real, there is little evidence that they were organized. Brewers were quick to point out that tariffs also benefited other occupational groups involved in supplying domestic beer (who benefited from area III in Figure 10.1). In effect, a tariff transferred a part of the consumers’ surplus to stimulate local employment. As scholars of institutional economics have argued, government officials play a critical role in legislating and enforcing the legal rules under which firms operate in the market.22 In the case of a tariff, governing officials enact laws that tax foreign goods at a higher rate than domestically produced goods. The impulse to enact tariffs was often rooted in the need to raise tax revenue for public expenses and in cries for protection by local producers. As the provinces’ need for revenue increased in the 1620s and 1630s,23 a tariff on beers brewed in other parts of the Republic accomplished two goals at once: it raised revenue and it helped stimulate local employment. The amount of revenue governing officials could raise depended on the elasticity of demand for these beers and on the efficiency of tax collection. As shown below, the provincial revenue from tariffs could be substantial. Rather than assuming that government officials or bureaucrats were neutral with respect to tariff policies, a tariff provided them a number of advantages. In addition to the revenue, it allowed them to align themselves politically with those who stood to gain from the production of locally brewed beers, including brewers, grain merchants, millers, and other suppliers of raw materials and intermediate goods.

21  ����������������������������������������������������������������������������� In Holland’s towns the same process took place, leading to the fragmentation of the provincial market for beer and a decline in the intra-provincial beer trade. see ���� R.J. Yntema, “Een kapitale nering: De brouwindustrie in Holland tussen 1500 en 1800,” in R.E. Kistemaker and V.T. van Vilsteren ( eds), Bier! Geschiedenis van een volksdrank (Amsterdam: De Bataafsche Leeuw, 1994), pp. 82–94, especially pp. 78–9. Also see R.J. Yntema, “Allerhande bieren. Over biersoorten en hun distributie tussen de 14de en de 19de eeuw,” in R.E. Kistemaker and V.T. van Vilsteren (eds) Bier! Geschiedenis van een volksdrank (Amsterdam: De Bataafsche Leeuw, 1994), pp. 82–95, pp. 93–4. 22  �������������������������������������� See, for instance, Douglass C. North, Institutions, Institutional Change, and Economic Performance (Cambridge: Cambridge University Press, 1990). 23  �������������������������������������������������������������������������������������� For the need to raise tax revenue in Friesland and resulting conflicts, see Marjolein C.’t Hart, The Making of a Bourgeois State: War, Politics and Finance during the Dutch Revolt (Manchester: Manchester University Press, 1993), pp. 146–8.

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Given the dynamics of provincial politics in which tariffs were argued to raise local employment and tax revenue as shown in Figure 10.1, the appeals of “foreign producers” like Holland’s brewers to lift the tariffs were politically less effective. Since provinces in the Dutch Republic often emphasized their sovereignty, by which they meant that they were autonomous and that other provinces did not have a right to interfere in their internal affairs, there was little that could be done. As in the case of Holland’s brewers described below, they could appeal directly to these governments, but foreign producers who were harmed by provincial tariffs had limited opportunities to find redress. While the Union of Utrecht included a system by which differences between the provinces were to be worked out, conflicts between provinces could be long-lasting since there was no mechanism to force a resolution or enforce it. The history of Holland’s brewing industry shows that trade policies and the political economy of protection was pivotal in shaping the growth and decline of Holland’s interprovincial export brewing industry.

The Growth of Holland’s Brewing Industry Holland’s brewing industry grew rapidly as the Dutch Republic’s economy prospered in the early seventeenth century. Several factors contributed to the Dutch Republic’s remarkable growth. Before the Dutch Revolt, basic institutions, markets, and business practices were well developed in what would become the economic core of the Dutch Republic – Holland, Zealand, Friesland, and Utrecht. The collapse of Antwerp, the economic center of Northern Europe, during the Dutch Revolt was an important stimulus to the growth of Amsterdam’s and Holland’s economy. Large numbers of enterprising, skilled and wealthy Southern Netherlanders migrated to the North, stimulating the growth of Holland’s towns, industries and trade, while regions in the South declined. Amsterdam eventually emerged as the most important trading center in Northern Europe in the seventeenth century as the scope of Holland’s trade networks grew. In the eyes of some scholars it became the center of European trade, and for other scholars, world trade. Holland’s brewing industry is commonly argued to have declined during the early Republic as it suffered from the loss of its traditional markets in the South due to trade barriers,24 even as Amsterdam’s and Holland’s economy as a whole 24

 ������������������������������������������������������������������������������ The view that Holland’s brewing industry was in a state of decline during the Republic in comparison to the fifteenth or sixteenth century has long been a standard of Dutch historiography. This ����������������������������������������������� interpretation is found in E.M.A. Timmer, De generale brouwers van Holland: een bijdrage tot de geschiedenis der brouwnering in Holland in de 17de, 18de en 19de eeuw (Haarlem: Kleynenberg & Co., 1918). The argument is also made by Florike Egmond, “De strijd om het dagelijks bier: Brouwerijen, groothandel in bier en economische politiek in de Noordelijke Nederlanden tijdens de zestiende eeuw,” in Clé Lesger and Leo Noordegraaf, (eds), Ondernemers en Bestuurders: Economie en politiek in de Noordelijke Nederlanden in de late Middeleeuwen en vroegmoderne tijd (Amsterdam: NEHA, 1993),

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are argued to have grown due to the decline of Antwerp, the influx of migrants, and the trade barriers between the Northern and Southern Netherlands. This view of the brewing industry’s decline sees it as beginning in the mid- to late sixteenth century with the loss of markets in the Southern Netherlands due to protective tariffs on Holland beer. With the Dutch Revolt, Holland’s brewers permanently lost their markets in the South as a result of prohibitive trade barriers. Despite the growth of Holland’s population in the early seventeenth century, Holland’s brewing industry is claimed not to have achieved the output levels it had attained in the fifteenth and sixteenth centuries. This view of decline does not stand up to scrutiny.25 The first half of the seventeenth century marked an era of prosperity for Holland’s brewing industry. Holland’s brewing industry rapidly recovered from the economic dislocations of the Dutch Revolt and production levels outstripped those of the mid-sixteenth century. Increasing per capita incomes and the growth of Holland’s domestic population, commercial fleet, and marine all stimulated an increase in aggregate demand for beer. Further, Holland’s brewers developed important export markets elsewhere in the Republic—an important fact that has often been overlooked in the literature. Brewers in Haarlem and Rotterdam, in particular, benefited from export markets elsewhere in the Republic, including in Friesland, Utrecht, Overijssel and Zealand. One way of showing the growth in the output of Holland’s brewing industry is to estimate the industry’s total output based on estimates of changes in Holland’s population combined with estimates of per capita beer consumption. Since beers brewed outside of the Dutch Republic, including English beers, and beers brewed elsewhere in the Republic made up a minimal share of the beers consumed in Holland, such estimates indicate changes in the amount of beer brewed.26 pp. 153–91, especially p. 161. Jan ��������������������������������������������������������� Luiten van Zanden presents detailed estimates of the number of barrels of beer brewed in Holland that illustrate the industry’s decline. See his article “Economic Growth in the Golden Age. The Development of the Economy of Holland, 1500–1650,” in Karel Davids and Leo Noordegraaf, (eds), The Dutch Economy in the Golden Age (Amsterdam: NEHA, 1993), pp. 4–26, especially p. 10. De Vries and Van der Woude argue that the loss of markets in the Southern Netherlands were important causes of the industry’s decline. See the First Modern Economy, pp. 320–21. 25  ����������������������������������������������������������������������������������� In contrast to the arguments for decline, I have argued that the Holland’s brewing industry reached its zenith in terms of output in the first half of the seventeenth century. See R.J. Yntema, “Een kapitale nering,” p. 76. Subsequently Richard Unger has argued that the industry’s output was stable from about 1500 to the first decades of the seventeenth century. In his view, the industry’s decline “began some time in the first half of the seventeenth century and continued through into the nineteenth.” Richard W. Unger, A History of Brewing in Holland 900–1900: Economy, Technology and the State (Leiden: Brill, 2001), p. 263. 26  ������������������������������������������������������������������������������� Most of the beer consumed in Holland was brewed in the province. Although some beer was imported from England and from Hamburg, Bremen, Brunswick, and towns in the Baltic, the volume was severely limited by the tariffs levied on beers brewed outside of the United Provinces. As was the case in the sixteenth century, Holland’s brewers also benefited

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Estimates of the aggregate demand for beer in Holland show that in the first half of the seventeenth century the growth in the demand in Holland due to population growth more than compensated the “loss” of sixteenth-century export markets in the Southern Netherlands—markets that, in fact, were largely lost prior to the Revolt. As shown in Table 10.1, population estimates for Holland, Brabant, and Flanders suggest the loss of Holland’s brewers’ market share in the South was fully offset by the growth of Holland’s population by 1600. Assuming Holland’s export brewers (in Gouda, Delft, and Haarlem) supplied 15 percent of the market in the Southern Netherlands in 1550 (a generous upper bound),27 they would have supplied beer to roughly 156,000 individuals in Southern markets. If imports into Holland were negligible and exports to other areas in the Republic supplied the needs of 50,000 people (including markets in Friesland and Zealand), Holland’s brewers would have supplied a total population of 556,000 in 1550. By 1600, Holland’s population had grown by 65 percent over the levels of 1550, reaching about 575,000 inhabitants. Holland’s domestic population numbered 19,000 more people than the estimated 556,000 people Holland’s brewers supplied in 1550 in Holland and export markets. Assuming stable levels of per capita beer consumption, the growth of Holland’s population alone was sufficient to offset the loss of Southern markets by 1600. Production in Holland was even greater, since Holland’s brewers also marketed beers elsewhere in the Republic.

from protective tariffs on beers brewed outside of the Dutch Republic aimed to curb the consumption of beers from England, Hamburg, and the Baltic. So too, beer imported from other provinces in the Dutch Republic seems, as a whole, to have been limited. 27  ��������������������������������������������������������������������������������� While reliable estimates for the amount of Holland beer exported to the Southern Netherlands cannot be readily made, it seems unlikely that Holland’s brewers would have supplied 15 percent of the beer market in Flanders and Brabant during the mid-sixteenth century. Haarlem’s markets were primarily oriented toward the Noorder Quartier and Friesland. Although Delft’s brewers also sold beer in Brabant and Flanders, their main markets appear to have been in Holland and Zealand. Gouda’s brewers, in contrast, targeted markets in the South. Evidence for Ghent and Antwerp suggests that imports from Holland only made up a small percentage of beer consumption in the South. In Ghent, beer imports before 1550 accounted for an average of 15 percent of the beer consumed in the town and most of this beer came from Gouda. After 1550, however, the surviving evidence indicates the percentage was much lower. ������������������������������������������ See Paul de Commer, “De Brouwindustrie te Gent, 1505–1622,” Handelingen der Maatschappij voor Geschiedenis en Oudheidkunde te Gent, Nieuwe Reeks, XXXV (1981): 81–114 and XXXVII (1983) 113–71, see 1981: 106, 109, and 113 and 1983: 128–34. ���������������������������������������������������� While considerable quantities of beer were imported into Antwerp in the mid-sixteenth century, the amount of beer imported from Holland was minimal. ��������������������������������������������������������������������� See Hugo Soly, “De brouwerijenonderneming van Gilbert van Schoonbeke (1552–1562),” Revue Belge de Philologie et d’Histoire 46 (1968): 337–92 and 1166–1204, pp. 347–8, 1176, and 1186–8.

The Union of Utrecht, Tariff Barriers, and the Interprovincial Beer Trade

Table 10.1

Population in Flanders, Brabant, and Holland, 1550–1650 (in 1000s) 1550

1600

1650

Holland

350

575

800

Flanders

620

530

620

Brabant Total

267

420

340

440

1390

1445

1860

Source: Figures ������������������������������������������������������������������������������ from P.M.M. Klep, “Urban decline in Brabant,” as cited in Clé Lesger, Handel in Amsterdam ten tijde van de Opstand: kooplieden, commerciële expansie en verandering in de ruimtelijke economie van de Nederlanden, ca. 1550–ca. 1630 (Hilversum: Verloren, 2001), p. 134.

The output of Holland’s brewing industry continued to increase in the first half of the seventeenth century as Holland’s population grew.28 By 1625, Holland’s population had grown to about 690,000 individuals. The demand for beer in Holland alone outstripped the estimated total number of people supplied by Holland’s brewers in 1550 by more than 130,000 people. By 1650, Holland’s population had increased to about 800,000 individuals, and assuming that per capita beer consumption declined somewhat, aggregate demand was roughly similar to what it had been in 1625. As shown in Table 10.2, allowing for a decline in per capita beer consumption around 1650, the aggregate demand for beer in Holland roughly doubled in the period between 1550 and 1650. The calculations in Table 10.2 show that the growth in output of Holland’s brewing industry brought about by the increase in Holland’s population was sustained through the mid-seventeenth century.29 Two different estimates for the aggregate demand for beer are shown in Table 10.2. The lower bound estimate reflect estimates of per capita consumption calculated based on the excise taxes collected on beer in Leiden. Since small beer, that is beer that was too weak to be taxed, is not included in the estimates and since fraud in the payment of taxes was widespread, actual per capita consumption was obviously higher in Leiden than these estimates suggest. The upper bound estimate of 670 liters is based on the estimate made by De Vries and Van der Woude in their calculations of the cost of living in Holland.30 Precisely when and by how much per capita beer consumption changed in Holland cannot be readily calculated given current knowledge about  ������������������������������������� Yntema, “Een kapitale nering,” p. 76.  ������������������������������������������������������������������������������� De Vries and Van der Woude note that the growth in Holland’s population in the early seventeenth century increased the demand for beer and the amount supplied by Holland’s brewers. They question, however, if this increase in demand was long lasting and suggest decline may have taken place “well before 1650.” ������������������������� See De Vries and Van der Woude, p. 335. 30  ����������������������������������� De Vries and Van der Woude, p. 628. 28 29

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consumption trends. Taking into account the decline in per capita beer consumption in Leiden to 240 liters around mid-century, a decline that was undoubtedly linked to the growing consumption of distilled liquor,31 the upper bound estimate of per capita beer consumption for 1650 has been estimated at 540 liters. It is important to note that the estimates of beer demanded presented in Table 10.2 underestimate the growth in demand for Holland beer since they do not take into account the growing size of Holland’s commercial fleet and military, exports to markets in neighboring provinces, and exports to the East and West Indies. Since imports made up a small percentage of the market in Holland and per capita beer consumption appears to have remained relatively high, the output of beer in Holland increased substantially to meet the growth in domestic demand between 1550 and 1650.

31  ���������������� N.W. Posthumus, De geschiedenis van de leidsche lakenindustrie, (3 vols, ’s-Gravenhage: M. Nijhoff, 1908–1939).

Table 10.2 Estimates of aggregate demand for beer in Holland, 1550–1650 Lower Bound Estimate

*

Upper Bound Estimate

Year

Population

Per Capita Consumption*

Liters Demanded

Barrels Demanded

Per Capita Consumption*

Liters Demanded

Barrels Demanded

1550

350,000

270

94,500,000

607,717

670

234,500,000

1,508,039

1600

575,000

300

172,500,000

1,109,325

670

385,250,000

2,477,492

1625

690,000

300

207,000,000

1,331,190

670

462,300,000

2,972,990

1650

800,000

240

192,000,000

1,234,727

540

432,000,000

2,778,135

 For estimates of per capita beer consumption in Leiden, see R.J. Yntema, “The Brewing Industry in Holland, 1300–1800: A Study in Industrial Development,” Ph.D. dissertation, University of Chicago, 1992. The estimates for the amount of beer brewed with the lower bound estimate in Table 10.2 are roughly the same as the 1.3 million barrels brewed per year in the 1470s that I estimated in my dissertation (p. 59) and the estimates for 1515 and the mid-1540s (p. 62). There I also argued that the output levels of the fifteenth and sixteenth centuries were surpassed in the first half of the seventeenth century and that the industry began to decline roughly at mid-century (p. 74). A detailed analysis of long-term production trends is beyond the scope of this paper.

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The Development of Export Brewing in Rotterdam and Haarlem In the early seventeenth century, beer brewing emerged as the principal industry in the towns of Haarlem and Rotterdam, with markets throughout Holland and neighboring provinces, including Friesland, Utrecht, Overijssel, and Zealand. The size and scale of Haarlem’s brewing industry in the first half of the seventeenth century has long been overlooked in the literature. While Haarlem is typically depicted as a town that specialized in the bleaching of linens, brewing was arguably the town’s most important industry in the first half of the seventeenth century. Between 1590 and 1610, Haarlem rapidly emerged as one of Holland’s main brewing centers. In the 1590s, Haarlem numbered 19 brewers who produced about 2,000 brews per year. Between 1600 and 1620, the number of brewers increased from 20 to 52. For the next 35 years, the number of brewers in Haarlem fluctuated between 50 and 55, while the number of times per year the town’s brewers brewed fluctuated between 5,000 and 7,000 times per year.32 Unfortunately, little is known about how much beer Haarlem’s brewers brewed at one time or about the variation in output across firms, and estimates of the amount of beer brewed in the town depend on the underlying assumptions. If as a lower bound estimate Haarlem’s brewers are assumed to have brewed 60 barrels of export quality beer each time they brewed between 1620 and 1655, the town’s output would have fluctuated between 300,000 and 420,000 barrels. This figure must understate the actual number of barrels produced in the town since Haarlem’s brewers also sold many types of weaker beer, including table beer and ship’s beer that was marketed in Hoorn and Enkhuizen. Rotterdam’s brewing industry also began to expand in the late sixteenth century. By the time of the Truce there were 15 breweries, which rapidly increased to 28 breweries by 1623. In 1637 and 1638, 28 breweries were still in operation. The number of breweries expanded especially rapidly in the harbor district, where the town’s brewers benefited from ready access to the water from the Meuse. In the second quarter of the seventeenth century, Rotterdam’s breweries appear to have produced some 8,000 brews per annum.33 While Rotterdam beer was consumed within the town and loaded aboard the ships that set sail there, Rotterdam beer was also shipped throughout Holland and to nearby provinces. As Bijlsma put it: In her golden era, Rotterdam’s brewing industry included markets in nearby provinces that could be easily supplied via internal waterways and rivers. Large amounts of Rotterdam beer were drunk especially in Zealand, including in States Flanders, but Rotterdam beer was also widely consumed in Holland.34

 ���������������������������������������������������������������� Yntema, “Een kapitale nering,” p. 77. Unger, �������������������������� pp. 223 and 240–42.  ������������������������������������� Yntema, “Een kapitale nering,” p. 78. 34  ���������������� See R. Bijlsma, Rotterdams Welvaren, 1550–1650 (’s-Gravenhage: Martinus Nijhoff, 1918), p. 106. 32 33

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The emergence of Haarlem and Rotterdam as brewing centers with markets in Holland and other provinces hinged not only on the growth in the demand for beer, but also on the brewers’ ability to brew at a price and quality combination that permitted them to compete with local brewers, despite the transport and distribution costs involved.35 Economies of scale (both internal and external to the firm), superior technology, and the production of high quality beers permitted Haarlem’s and Rotterdam’s brewers to compete in export markets both inside and outside of Holland. Brewers in these towns also benefited from the good reputation of their beers and pricing strategies that reflected product differentiation. As the volume of exports to a particular area increased, brewers were also able to cut costs in distributing and marketing their beers. Finally, municipal and provincial trade barriers were not prohibitive. The volume of raw materials and intermediate products shipped to supply brewers in Haarlem and Rotterdam also must have given brewers in these towns economic advantages. Grains, hops, turf, and wood for beer barrels were transported to these towns from regions inside and outside of the Republic, and the beers brewed in these towns were marketed in large parts of the Republic. Although it is not possible to calculate precisely how much beer brewed in Rotterdam and Haarlem was destined for markets outside of Holland, evidence from the town records of Haarlem and Rotterdam indicate it was an important part of the output. One indication of this is, as shown below, the substantial lengths to which the town governments of Haarlem and Rotterdam went to preserve the town’s markets in the face of rising trade barriers. The number of barrels of beer sold in Friesland was so large that Haarlem’s brewers contracted with individuals in Friesland to recover and return the empty barrels to Haarlem so that they could be reused. The numerous contracts in the notarial archives of Rotterdam and Haarlem establishing a tied trade between brewers in these towns and wholesalers or tavern keepers in other provinces are concrete evidence of the extensive distribution systems that were built up. The probate inventory for the estate of Neeltgen Hendricx and Jan van Brienen, a couple who owned a brewery in Haarlem, illustrates the importance of the tied trade to neighboring provinces for Haarlem’s brewers.36 When the inventory for their estate was drawn up in 1627, the total amount of capital invested in this slightly larger than average plant amounted to 36,800 guilders. The brewery and all the equipment was valued at 17,000 guilders (46 percent of the total) while the grain and cash on hand totaled 3,800 guilders (10.5 percent of the total). The collectable book debts amounted to 16,000 guilders (43.5 percent of the capital), not including 8,867 guilders in bad debt that had been written off. Of the 18 distributors listed in the probate inventory, nine were located in Holland, six in Friesland, one in Utrecht, and one in Overijssel (and one location 35  �������������������������������������������������������������������������������� Brewers in Delft, Weesp, and Dordrecht also shipped beers to markets, primarily elsewhere in Holland. 36  ����������������������� Noord-Hollands Archief, Notarieel Haarlem, 153, folios 511–14v.

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was not listed). While in the case of this brewery the credit to distributors in Holland dominated, wholesalers in other provinces owed substantial sums. Allert Ephens in Makkum (Friesland) owed the estate 4,100 guilders, Vrederick Davidts in Staveren owed 1,963 guilders, and Bogten Abels in Bolsward owed 1,000 guilders. The wholesaler in Overijssel owed 585 guilders, while the one in Utrecht owed 1,050 guilders. As this probate record and additional notarial records illustrate, distribution networks in other provinces, including Friesland, Zealand and Overijssel, were important to the industry’s growth.

The Union of Utrecht and the Free Trade in Beer, 1579–1630 Given the incidence of tariffs in the Republic, it is perhaps not surprising that historians have long claimed that the eighteenth article of the Union of Utrecht was ignored.37 While the provisions of the eighteenth article may typically have been a dead letter, this was not the case in provincial policies regarding beer brewed elsewhere in the Republic early on in the Union’s history. In accordance with the Union of Utrecht, in 1579, a number of governmental authorities signed an agreement regarding the excise on beer for the Gemeene Land (Common Land), including the Furstendom of Geldre, the County of Zutphen, the County and States of Holland, Zealand, and Utrecht, the Frisian Ommelanden, and the City of Ghent.38 As shown in the following table, all the beers brewed in the United Provinces were taxed at the same rate, while foreign beers were taxed at a higher rate.

37  ���������������������������������������������������������������������������� See Sickenga, p. 373; De Vrankrijker, p. 34; and DeVries and Van der Woude, p. 96. 38  ��������������������������������� For a copy of the ordinance, see Groot placaatboek vervattende alle de placaten, ordonnantien en edicten der Edele Mogende Heeren Staten ’s Lands van Utrecht; tot het jaar 1728 ingesloten .... (3 vols, Utrecht: J. van Poolum, 1729), vol. III, ������������������������� pp. 661–4. In 1583, this agreement was upheld for the city of Wijk bij Duurstede by the States of Utrecht, see vol. III, p. 664.

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273

Table 10.3 Excise taxes on beer in the Gemeene land, 1579 Beer Brewed Within the Union: Price of Beer

Burghers

Tavern-Keepers*

20 stuivers or less

2 stuivers

4 stuivers

20 to 30 stuivers

3 stuivers

10 stuivers

†

30 to 40 stuivers

4 stuivers

10 stuivers††

40 to 50 stuivers

6 stuivers

20 stuivers

50 stuivers and up

10 stuivers

20 stuivers†††

Beer Vinegar

2 stuivers

12 stuivers

Foreign Beers

Burghers

Tavern-Keepers

Eastern Jopen Beer

9 guilders

12 guilders

English, Lubeck, Hamburg Beers

2 guilders

3 guilders

Other Eastern and Foreign Beers

2 guilders 10 stuivers

2 guilders 10 stuivers

 ���������������������������������������� This includes the meeting of companies (geselschappen) including militias, guilds, or common houses like guild houses and shooting ranges. †  ��������������� Each barrel of jeuckxsteert in Nimwegen pays four stuivers. †� †  ��������������� Each barrel of jeuckxsteert in Nimwegen pays ten stuivers. †††  ���������������������������������������������������������������� For each barrel of Nijmegen Mol, tavern-keepers pay 20 stuivers. *

Following this agreement, in the early 1580s, Holland, Zealand, and Friesland continued to tax beers brewed within the Union as beers brewed within their jurisdiction. For example, Holland and Zealand jointly approved the collection of the excise on beer running from October 1583 to March 1584.39 The rates levied for the different strength beers sold in the provinces were the same regardless of where inside of the Union they had been brewed. Beers brewed outside of the Republic, however, were taxed at a higher rate. So too, on 22 February 1584, the States of Friesland approved a measure taxing each of the various quality beers at the same rate regardless of where it was brewed in the Union.40 Again, beers imported from outside of the Union were taxed at a higher rate. Precisely how long these policies were maintained is unclear. In the petitions submitted by Holland’s brewers to the States of Holland in 1638 concerning tariffs and trade barriers in 39   Groot placaatboek, vervattende de placaaten, ordonnantien en edicten van de hoog mog. heeren Staaten generaal der Vereenigde Nederlanden … , eds Cornelius Cau et al., (9 vols, ’s-Gravenhage: Hillebrandt Iacobsz van Wouw, 1658–1796), see vol. I, column 1701. 40  ���� See Groot placaat en charter boek van Vriesland ..., eds, Georg Frederik Schwartzenberg en Hohenlansberg, et al., (5 vols, Leeuwarden: W. Coulon, 1768–1793), vol. IV, pp. 433–5.

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the Republic, they claim that tariffs on beers brewed in Holland had only been imposed recently.41 While more evidence on the tariffs imposed by municipal and provincial authorities is needed, available evidence suggests that most provincial authorities did not levy significant tariffs on beers brewed in Holland for almost 50 years. For example, the excise on beer levied in Zealand dating from 23 September 1637 did not differentiate between beers brewed in Zealand or in other provinces.42 For each of the four classes of beer listed in the excise schedule, all beers brewed in the United Provinces were taxed at the same rate. Just as the tax schedule of 1583, in 1637, Zealand did not tax beers brewed in Holland at a higher rate than beers that had been brewed in Zealand. The province of Utrecht also appears to have complied with the eighteenth article of the Union of Utrecht.43 In 1602, for instance, Delft’s brewers reported to the States of Holland that while the town of Utrecht and the Province had levied tariffs on their beers, these had been lifted in accordance with the Union of Utrecht when they complained.44 On 28 February 1606, the States of Holland requested the burgomasters of Woerden to investigate if Utrecht had imposed a tariff on Holland beer, but did not generate further action in the States of Holland.45 In the legislation regulating the payment of the so-called Logysgelden in the countryside passed in 1620, tavern keepers paid the same tax for beers brewed inside Utrecht as brewed elsewhere in the Union, but others buying heavy beer paid eight pennies more for beer brewed elsewhere in the Union than beers brewed in Utrecht.46 According to the petitions presented to the States of Holland by the province’s brewers’ in 1637, it was only recently that Utrecht had levied tariffs on Holland beer.47

41

 ����������������������������������������������������������������������������� Nationaal Archief, Geduputeerden van Haarlem ter Dagvaart, toegang, 3.01.09, number 486. 42   Groot Placaatboek … der Vereenigde Nederlanden, vol. 3, column 1124. 43  ��������������������������������������������������������������������������������� For an example of where Utrecht raised the taxes on her beers to comply with the Union of Utrecht in 1587, see E.M.A. Timmer, “Delftse bierconflicten,” Bijdragen voor Vaderlandsche Geschiedenis en Oudheidkunde, 5th series, 9 (1922): 113–30, especially 127. 44   Resolutiën van de Staten van Holland en West Vriesland, 9 December 1602. 45   Resolutiën, 28 February 1606. 46   Groot placaatboek … Staten ’s Lands van Utrecht, vol. III, p. 653. For ���������������� heavy beers of five guilders or more per barrel, tavern keepers in the countryside paid 14 stuivers and eight pennies for beer brewed in Utrecht, while they paid 15 stuivers for beer brewed elsewhere in the Union, a differential of about three and a half percent. Those who were not tavern keepers paid eight stuivers and eight pennies in tax for beers that sold for less than two guilders the barrel. See vol. III, p. 653. 47  ����������������������������������������������������������������������������� Nationaal Archief, Geduputeerden van Haarlem ter Dagvaart, toegang, 3.01.09, nummer 486. The ��������������������������������������������������������������������������� tariff imposed by the States of Utrecht went into effect on 26 January 1636. ���� See Groot placaatboek … Staten ’s Lands van Utrecht, vol. III, pp. 656–7.

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The excises collected under the provincial excise were collected for all of Overijssel starting in 1601.48 Evidence for Overijssel suggests that while there was a tariff on beers brewed elsewhere in the United Provinces in 1603, it was no longer in effect in the 1623.49 In 1603, beers brewed elsewhere in the United Provinces were taxed at a higher rate than Overijssel. For example, Overijssel beers that were “tapped” were taxed at one guilder four stuivers, while beers brewed elsewhere in the Republic paid a tariff of 16 stuivers more. For beer sold at five guilders the barrel, beers brewed outside the province paid a tariff of about 13 percent. In 1623, however, beers brewed throughout the Republic, including Overijssel, were taxed at the same rate.50 In Holland, the schedules for the excise taxes on beer early in the century show that beers brewed elsewhere in the United Provinces were taxed at the same rate as beers brewed in Holland.51 As the sixteenth article of the ordinances on the beer excise that was in effect in Holland between 1605 and 1632 put it: Item, on all the beers brewed outside the Lands of Holland, West-Friesland, and Zealandt, one shall pay as much as on the domestically brewed beers.52

It was only in 1675, in an effort by the States of Holland to streamline and increase the excise taxes on beer and in response to pressure from Holland’s brewers that beers brewed elsewhere in the Republic were taxed in the excise on beer consumption.53

 ����������������� Wantje Fritschy, Overijssel (1604–1795) in Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden, vol. 1 (Den Haag: Instituut voor Nederlandse Geschiedenis, 1996), p. 16. In addition to this tax, other taxes were also levied on beer in Overijssel in this period, including the “opaccijs” and the “konings-accijns.” Rates on these beers have not been included above. 49  ������������������������������������������������������������������������������ Historisch Centrum Overijssel, Staten van Overijssel, 698. Also ������������������� see Fritschy, Overijssel, p. 178. 50  ����������������������������������������������������������������������������������� Beers brewed in Overijssel or elsewhere in the United Provinces that were intended for private consumption were taxed at 18 stuivers the barrel. Beers that were bought to be “tapped” were taxed at three guilders and six stuivers the barrel. On the other hand, beers from England, Lübeck, and Hamburg sold by tavern keepers were taxed at five guilders the barrel. 51   Groot placaatboek … der Vereenigde Nederlanden, vol. 1, columns 1724–6. 52   Groot placaatboek … der Vereenigde Nederlanden, vol. 1, column 1705. 53  ���������������������������������������������������������������� While the province of Holland levied a tariff to offset the two stuivers tax on brewers, it did not include a tariff on the excise on beer paid by consumers until 1675. Throughout the seventeenth century, towns like Leiden, however, did levy a tariff in the excise on beer consumption on beers brewed elsewhere in the Republic. See for example the case brought before the Court of Holland against Leiden by the town of Breda in 1621. See Regionaal Archief Leiden, SAII, 1970. 48

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Although the States of Holland did not tax beers imported from other areas in the Republic in the excise on the consumption of beer, it levied a compensatory tariff on beers elsewhere in the Republic in 1623 to offset an increase in the tax on turf paid by brewers in Holland. When the tax increase on turf was proposed, it elicited protests from a number of industries that argued that the tax increase threatened their competitive position vis-à-vis industries in other provinces.54 At first, it was proposed in the States of Holland “… that we will also increase taxes on all beers brewed outside of this Province in the excise due to the increase [in tax] on the turf, so that those beers will not be benefited more than the domestic beers.”55 Finally on 14 September 1623, the States of Holland decided instead to include a compensatory tariff on beers brewed outside of Holland in a tax directly paid by the brewers, the so-called two stuivers tax.56 Thus, Holland’s brewers were to pay two stuivers for each barrel of beer, while beer brewed outside Holland, but inside the Republic was to pay four stuivers per barrel. The published sources and literature suggest that aside from Drenthe and Groningen,57 most provinces did not typically levy protective tariffs on beers brewed elsewhere in the Republic. However, given the gaps in our knowledge of the tax rates for this early period, more evidence is desirable. Based on the number of complaints made by brewers in Holland to the States of Holland, provincial trade barriers do not appear to have been widespread or a persistent problem for them before 1630. As shown below in Table 4, the situation before 1630 contrasts starkly with the range of complaints about tariffs voiced in the States of Holland after 1630.

  Resolutiën, 4 and 5 July 1623.   Resolutiën, 29 March 1623. 56  ����������������������������������������������������������������������������������� Provincial authorities appear to have taken the provisions of the Union seriously. Even when the States of Holland sought to introduce compensatory tariffs in 1623 so that her industries would not suffer from increased competition from industries elsewhere in the Republic, it was careful to examine the way in which this could be accomplished without harming (krenking) the Union. For a history of the two stuiver tax, see E.M.A. Timmer, “De impost op de gijlbieren. ������������������������������������������������������������� Bijdrage tot de geschiedenis der bierbrouwerij in Holland in de 16de en 17de eeuw,” Bijdragen voor Vaderlandsche Geschiedenis en Oudheidkunde, 5de reeks, 3 (1916): 360–91. Also see R. Liesker and W. Fritschy, Holland (1572–1795) in Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden, vol. 4. (Den Haag: Instituut voor Nederlandse Geschiedenis, 2004), pp. 309–11. 57  �������������������������������������������������������������������������������� For the tariffs in Drenthe on beer brewed elsewhere in the Republic, see L. van der Ent and W. Fritschy, Drenthe (1602–1795) in Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden, vol. 2. (Den Haag: Instituut voor Nederlandse Geschiedenis, 1998), pp. 179–84. For tariffs in Groningen, see L. van der Ent and V. Enthoven, Groningen (1594–1795) in Gewestelijke financiën ten tijde van de Republiek der Verenigde Nederlanden, vol. 2. ���������������������������������������������������� (Den Haag: Instituut voor Nederlandse Geschiedenis, 2001), pp. 209–13. 54

55

The Union of Utrecht, Tariff Barriers, and the Interprovincial Beer Trade

Table 10.4

277

References to trade barriers on beers brewed in Holland in the Resolutions of the States of Holland, 1600–166158

1602

Delft notes that by their request tariffs on beers brewed in the Republic have been lifted by the city of Utrecht and the States of the Furstendoms of Gelre

1606

The States of Holland request Woerden to investigate if Utrecht has tariff on Holland beer

1633

Rotterdam complains regarding tariffs on their beers in Emmerich, Wessel, and Rees.

1637

Rotterdam complains regarding tariff in Wijk bij Duurstede

1637

Haarlem, Rotterdam, Dordrecht complain regarding tax on Holland beer in Utrecht

1638

Brewers in Haarlem, Delft, Rotterdam, Schiedam and Weesp complain that tariffs are levied on their beers elsewhere in the United Provinces

1638

Representatives from the States of Utrecht and Holland meet regarding taxes on Holland beer

1639

Gelre and Zutphen respond to the States of Holland regarding tariffs on Holland beer

1640

Rotterdam complains of tariffs in Nijmegen and Maastricht

1640

Haarlem complains regarding tariffs on their beer in Overijssel

1640

States of Holland makes resolutions regarding tariffs on Holland beer in Utrecht

1643

States of Holland makes resolutions regarding tariffs on Holland beer in Utrecht

1648

Holland’s brewers request tariff of 2 stuivers on beer brewed in other provinces be lifted

1648

Negotiations with Utrecht to have taxes on beers brewed in Holland lifted

1651

States of Holland makes resolutions regarding tariffs on Holland beer in Friesland

1654

States of Holland makes resolutions regarding tariffs on Holland beer in Friesland

1658

Brewers in Dordrecht, Haarlem, Delft, Rotterdam, Schiedam and other cities meet regarding taxes on their beers in neighboring provinces

1661

States of Holland requests Friesland not to tax Holland beer higher

58  ������������������������������������������������������������������������������� This provisional finding requires further archival research. See the following Resolutiën, 2 December 1602, 28 February 1606, 4 May 1633, 27 March 1637, 9 July 1637, 23 July 1637, 25 July 1637, 14–15 August 1637, 29 July 1638, 18 January 1639, 4 April 1640, 13 April 1640, 20 April 1640, 9 July 1640, 2 August 1640, 20–21 September 1640, 27 September 1640, 14 December 1643, 18 July 1648, 1 December 1648, 11 December 1648, 25 April 1651, 26 April 1651, 10 May 1651, 21 May 1651, 14 July 1651, 19 July 1651, 21 May 1654, 21 July 1654, 20 July 1658, and 16 June 1661.

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Petitions presented to the States of Holland do not, of course, demonstrate that there were no tariffs at all nor do they represent all of the incidences of tariffs on beer brewed in Holland. For instance, there is no evidence in the resolutions of the States of Holland that Haarlem’s brewers protested against the tariffs levied on their beer by the province of Drenthe in 1604.59 Since it was a costly and timeconsuming process to petition the States of Holland, brewers and town governments presumably only undertook such actions when the potential benefits of the petition weighed up favorably against the costs. In cases when the brewers’ market share was relatively small, it would not make sense to engage in the process. In fact, it is likely that brewers and town governments would only petition the States of Holland when all other means had failed, including direct communication between the town’s brewers or magistrates and the government concerned. In some of these cases, it is quite possible that a mutually agreeable solution was arrived at, including agreements with tax farmers that reduced the rate they paid. Appeals to the States of Holland can be viewed as a last, perhaps desperate, attempt to have the province use its political clout to assist the industry. As shown above, markets in other provinces played an important role in the growth of Holland’s brewing industry in the early Republic. In a petition to the States of Holland in 1631, Holland’s brewers claimed Holland beers “… on the one side were sold most in the Veluwe, Overijssel and Friesland, and other side in Zealand and some quarters of Gelderland and Brabant …” despite the tariffs then imposed in Neder-Betuwe, Den Bosch, and Friesland.60 The relative cost advantages of Holland’s brewers, stemming in part from economies of scale in production and the production of a differentiated beer, underlay the growth of the brewing industry in Haarlem and Rotterdam. Despite breaches of the eighteenth article of the Union of Utrecht, the tariff policies of other provinces was nonetheless an important condition for the growth of Holland’s brewing industry.

Provincial Tariffs and the Decline of Export Brewing, 1630–1750 The increasing incidence and permanence of provincial trade barriers in the 1630s and 1640s mark an important turning point for Holland’s export brewers and brewing industry. While Holland’s brewing industry expanded from 1590 to about the middle of the seventeenth century, the industry’s output appears to have leveled off around then, subsequently stagnating and declining. Haarlem’s brewing industry, for instance, reached its peak around mid-century and declined gradually as markets in Holland and in other provinces were lost. While there were  ������������ Paul Brood, Belastingheffing in Drenthe, 1600–1822 (Meppel: Boom, 1991), pp. 33–9. 60  ������������������� See J.G. Van Dillen, Bronnen tot de geschiedenis van het bedrijfsleven en het gildewezen van Amsterdam (3 vols, ’s-Gravenhage: M. Nijhoff, 1929–74). ������������� See vol. II, number 1338. 59

The Union of Utrecht, Tariff Barriers, and the Interprovincial Beer Trade

279

55 brewers in 1655, in 1660 there were 47, and in 1663 there were 37 brewers. For the next decade, Haarlem numbered about 30 brewers, but between 1680 and 1700 the number gradually declined from 27 brewers to 14. In the span of 45 years, 75 percent of the breweries that had been in operation in 1655 closed their doors. Although changes in the consumption of beverages played a major role in the decline of Holland’s brewing industry, the decline in the industry’s output between 1650 and 1700 cannot be simply ascribed to the increased consumption of tea and coffee. As De Vries and van der Woude noted, “declining per capita production set in long before the shift toward coffee and tea [in the 1690s, RY] became a mass phenomenon, and this remains a puzzle.”61 While the decline in Holland’s brewing industry was related to the growing consumption of distilled liquor and wine, to increases in taxes on the production and consumption of beer, and to rising brewing costs, tariff barriers and the loss of export markets in other provinces also played a role.62 Explanations for the timing and rate of the industry’s decline in the seventeenth and eighteenth centuries have often failed to take into account the role of internal trade barriers on beer exports. After decades of relatively free trade, tariff barriers became a critical issue for Holland’s export brewers in the late 1620s and 1630s as provincial governments imposed tariffs on beers brewed elsewhere in the Republic. An important underlying cause for the tariffs was the growing pressure on provincial governments to raise tax revenues to pay for rising military costs and to pay their quota to the Generality. To raise more revenue, provincial governments in Friesland and Utrecht increased taxes on the grain that was milled (gemaal) and used in brewing. Since the taxes on brewing rose, local brewers clamored for help and protection against Holland’s brewers who paid less in the gemaal in Holland. Provincial authorities responded by imposing tariffs on foreign beer.63 As described above in the section on tariffs and the political economy of protection, tariff barriers were politically and financially advantageous. They provided protection to local brewers and they raised additional revenue for provincial coffers. And, as shown below, tariffs reduced the volume of beer exported from Holland to other provinces. The growing number of petitions Holland’s towns and brewers submitted to the States of Holland in the 1630s and 1640s seeking relief from trade barriers suggests the incidence and burden of tariffs became greater for Holland’s export brewers at this time. As shown in Table 10.4, time and again Holland’s brewers claimed that provincial and municipal tariffs in Friesland, Utrecht, Gelderland, Overijssel, and Zealand undermined their sales in these markets and requested the States of Holland’s help in protecting their interests. In 1633, brewers in Rotterdam 61

 ����������������������������������� De Vries and Van der Woude, p. 335.  ������������������������������������� Yntema, “Een kapitale nering,” p. 78. 63  �������������������������������������������������������������������������������� A lively debate broke out between brewers and provincial authorities in Holland and their counterparts in other provinces about whether or not the tariffs were compensatory and, therefore, “legitimate” and in keeping with the Union. 62

The Political Economy of the Dutch Republic

280

complained to the States of Holland about the tariffs levied on their beers in Emmerich, Wessel, and Rees. In the following year, the brewers in Rotterdam, Haarlem, and Dordrecht complained about the tariff levied on their beers by the States of Utrecht. In 1638, the brewers in Haarlem, Delft, Rotterdam, Schiedam, and Weesp combined together and petitioned the States of Holland to help remove the tariffs levied on their beers by towns and provinces across the Republic, including Friesland, Utrecht, and Overijssel.64 According to the brewers, as a result of the tariffs, “… their beers could not be sold since the burghers could not afford to drink such expensive beers.”65 Consequently, the burghers had to be “content” with domestic beers. As the brewers put it, the tariffs are working greatly to the disadvantage of the brewing industry, which has consequently already declined in the aforesaid cities, and will continue to decline further in the course of time, unless it is redressed with a prompt remedy by your Noble High Mightinesses.

Moreover, the brewers argued that if the States of Holland did not act, the trend toward imposing tariffs on Holland beer would continue. According to the request, in the late 1620s Friesland levied a tariff on beers brewed outside the province and raised it again in 1632. In the previous summer (of 1637), Vlissingen in Zealand and the province of Utrecht had imposed tariffs on Holland beer. The brewers petitioned the States of Holland to act, not only to help the brewing industry, but also to prevent a decline in tax revenue in Holland on grain, turf and other inputs used in brewing due to the decline in the consumption of Holland beer in other provinces. In their petition, the brewers presented a list detailing the provincial and municipal governments that levied tariffs on their beers. The brewers sought relief from tariffs levied by the province of Utrecht, in Wijk bij Durstede, in Overijssel (including Campen and Zwolle), the States of Friesland (specifically in Harlingen, Franeker, Bloswaart and Sneek), the towns of Vlissingen and Goes in Zealand, Bommel and Tiel in Gelre and Zutphen, and finally in the towns of Emmerich, Rees, and Wesel in Brabant. The height of the specific tariffs imposed on Holland’s brewers varied somewhat across the provinces, yet when the rate is calculated as an ad valorum tariff, a tariff

64

 ����������������������������������������������������������������������������� Nationaal Archief, Geduputeerden van Haarlem ter Dagvaart, toegang, 3.01.09, nummer 486. ������������������������������������������������������������������������� On 29 July 1638, the States of Holland passed a resolution based on this request appeal to the States General to have the trade barriers lifted since they were contrary to the Union of Utrecht. See Resolutiën, 29 July 1638. 65  ���������������������������������������������������������������������������� This paragraph is based on Nationaal Archief, Geduputeerden van Haarlem ter Dagvaart, toegang, 3.01.09, nummer 486.

The Union of Utrecht, Tariff Barriers, and the Interprovincial Beer Trade

281

of ten to 15 percent was not uncommon.66 For example, according to Holland’s brewers, a domestic barrel of good beer brewed in Wijk by Durstede paid 35 stuivers in tax to the province of Utrecht and the town, while beer imported from Rotterdam or elsewhere paid one guilder, ten pennies more. Assuming a barrel of beer cost five guilders, when taxes are included, consumers paid 15 percent more for beer from Holland. The percentage difference was about the same for beer sold by tavern keepers. Tariffs also raised the price of Holland beer in Kampen, Overijssel: it was about 11 percent more than local beers when sold by tavern keepers and 15 percent more when sold to burghers. Tariffs also played an increasingly important role for Holland’s brewers in Friesland. In a petition written by Haarlem’s town government to the States of Friesland in 1636, the town requested that Friesland remove the tariff on “outside beer” (buiten beer). In 1628, 1629, and 1630 the tariff levied for the States of Friesland was three guilders per barrel. In 1634 the tariff charged by the province of Friesland was raised to four guilders ten stuivers and it allowed the towns to charge an additional 30 stuivers, making a total tariff of six guilders. According to Haarlem’s magistrates, in 1636 the tariff was increased to five guilders, not including the 30 stuivers the towns could charge. Thus, the nominal tariff on Haarlem beers and other beers brewed outside of Friesland could be as high as six guilders ten stuivers. To top matters off, Haarlem beer also could be sold for no more than four stuivers the halve kan, further restricting its marketability. According to Haarlem’s town government, the barriers on their beers in Friesland were prohibitory and Haarlem beer was effectively banned from Friesland, injuring Haarlem’s brewers and the town’s prosperity. Haarlem’s magistrates appealed to the States of Friesland to lift the tariff, arguing that it was against the eighteenth article of the Union of Utrecht, stating that if this were not done, they would appeal the matter to the States of Holland. Despite the efforts of the brewers, towns, and States of Holland, the tariffs on Holland beer were not fully rolled back. Consequently, on 29 July 1638, the States of Holland resolved: Upon the request of the combined brewers of Haarlem, Delft, Rotterdam, Schiedam, and Weesp; [it] is understood and resolved, that efforts will be made in the States General, that on account of their High Mightinesses the respective provinces that have taxed the same beers higher than their own beers, may be written in order that the aforementioned taxes may be promptly removed according to the Union; [and] that the delegates of the respective provinces may be inclined to similar efforts.67

66  �������������������������������������������������������������������������������� While it would be preferable to calculate the effective rate of protection, the necessary data are not available. For the method involved, see Wilfred J. Ethier, Modern International Economics, 3rd edn (New York: Norton, 1995), pp. 241–4. 67   Resolutiën, 29 July 1638.

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282

This, too, had little effect. Each province considered itself an ally (bondgenoot) of the other province in the Union, and thus equal with it. There was no authoritative body in the Dutch Republic that could force a province to comply with the eighteenth article of the Union of Utrecht. In 1640, Overijssel introduced a havengelt (harbor tax) of 18 stuivers on each imported barrel that entered the province via a waterway.68 The States of Overijssel had reduced the tax on beers to be sold in taverns coming in from other provinces by 18 stuivers in the common means (Gemeene Middelen), while it kept the tax on beers brewed in Overijssel at the same rate. By collecting the tax on incoming beers at the point of entry and sharpening the enforcement of the articles forbidding agreements between Holland’s brewers and tax collectors that reduced the rate that was paid, the effective rate paid by Holland’s brewers increased. In conjunction with the introduction of the havengelt in Overijssel, Drenthe raised its havengelt from four stuivers to 18 stuivers. Given the distributional effects of the tariff, the harmed parties immediately sprang into action. The brewers’ guild in Haarlem promptly protested the increase, supported by the beer distributors in Coevorden, because it would reduce the sale of Haarlem beer in Coevorden and in the County of Bentheim.69 These actions were to no avail. The havengelt on beers en route to Drenthe were collected in the harbors in Overijssel and passed along to the collectors in Drenthe. After the 1640s, the States of Holland negotiated with Friesland, Utrecht, Gelderland, and Overijssel to reduce or eliminate trade barriers on beer. With one province or another, these negotiations continued on through the end of the century. Despite these efforts, trade barriers on Holland beer proved impossible to eliminate through bilateral trade negotiations. A complex system of retaliatory trade barriers on goods produced or processed in Holland and shipped to or from other provinces came to life, including turf, grains, bricks, tobacco, and the like, vastly complicating any solution to complex negotiations regarding interprovincial trade barriers. Ultimately, due to the decentralized nature of political authority in the Republic, there was no authority that could adjudicate the trade disputes and enforce a solution to the trade conflicts that continued throughout the remainder of the century.70 In 1674, when the States of Holland were considering increasing the taxes Holland’s brewers paid on turf used in brewing, Holland’s brewers petitioned the States of Holland to impose a tariff on beers brewed elsewhere in

68

 �������������� See Fritschy, Overijssel, pp. 204–6.  ���������������� Brood, pp. 36–7. 70  ����������������������������������������������������������������������������� According to the Union of Utrecht, the Generaliteit would decide where there were differences between two or more provinces. If all provinces were involved then the Stadthouders who ruled would decide. ������������������ See Robert Fruin, Geschiedenis der Staatsinstellingen in Nederland tot den val der Republiek (’s-Gravenhage: Nijhoff, 1980), p. 172. 69

The Union of Utrecht, Tariff Barriers, and the Interprovincial Beer Trade

283

the Republic in the excise on the consumption of beer.71 Their argument was that if the States of Holland increased the tax rate for brewers on turf, this would benefit brewers in other provinces. Brewers elsewhere would gain a cost advantage and their market share in Holland would increase. This tariff was vigorously protested by brewers elsewhere in the Republic, but was nonetheless collected until the end of the Republic. Provincial trade barriers on beer had become commonplace and provincial politics and autonomy prevailed. The provincial tariffs on beer show that provincial policies could fragment markets, and diminish the opportunities for the Republic’s economy to grow efficiently through regional specialization, economies of scale, and the static and dynamic gains of trade.

Tariff Revenues on Imported Beer in Overijssel and Friesland Although the numerous complaints by Holland’s brewers, towns, and the States of Holland present a strong prima facie case for the impact of trade barriers on Holland’s brewing industry, the issue must be addressed in further detail. The efforts of contemporaries to have the barriers lifted and evidence regarding the height of the tariffs need not reflect the rate at which trade barriers impacted Holland’s brewing industry. For example, the published tariffs rates need not have been the rates brewers paid. Brewers could (and did) engage in smuggling thereby undercutting the impact of the tariffs. Holland’s brewers also made agreements with tax farmers to pay rates that were substantially less than the official rates, even though this was usually strictly forbidden by legislation. Taxes levied on imported beers in Overijssel and Friesland show that there was a marked decline in imported beer into these provinces after the provincial tariffs were implemented. Starting in 1640, the States of Overijssel instituted a havengelt (harbor tax) of 18 stuivers on beers shipped into Overijssel. Unfortunately, the origins of the beers imported into Overijssel are not specified in the provincial accounts of the receipts of the haven accijns. Yet, it is likely that most of the beer was imported from Holland and that it came from Haarlem. Beer distributors working for Haarlem brewers were prosecuted for the non-payment of excise taxes on beer in Overijssel. In the 1650s, Haarlem’s brewers thought it profitable to file complaints against brewers in Zwolle for the misuse of beer barrels from Haarlem. The yields of the havengelt levied on beer shipped into Overijssel show that there was a marked decline in import of beers into the province between 1655 and 1745. As shown in Table 5, while the haven accijns amounted to over 20,000 guilders in 1655, when the tax had already been in effect for about 15 years, by 1745 the receipts had declined to less than 100 guilders. 71   Resolutiën 17 August 1674. In De generale brouwers Timmer describes the lobbying efforts of Holland’s brewers. Starting in 1675, the Resolutiën record numerous complaints from other provinces regarding the tariff levied in Holland on their beers.

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The receipts of the haven accijns shows the impact of the tariffs levied on beers brewed in Holland, especially in Haarlem, was gradual, but decisive. The ����������� height of the tariffs was not great enough to suddenly stop the beer trade. Haarlem beer continued to be consumed in Overijssel during the late seventeenth century, albeit on a more limited scale than previously. For example, even as late as 1695, beers brewed in Haarlem were sold by tavern-keepers in Zwolle in Overijssel.72 The beers purchased by the town’s citizens, however, were almost entirely brewed in Zwolle. Just as in Haarlem, tavern-keepers tapped a variety of “foreign” beers to satisfy their customers’ tastes and wants. So too, there is evidence that Haarlem’s brewers were able to profitably export what they called “small beer” to the countryside in Overijssel until the mid-1690s. Then, apparently due to complaints from brewers in Overijssel’s countryside that they could not compete with Holland’s brewers since their taxes had been increased, the States of Overijssel increased the tariffs on Holland beer. According to Slicher van Bath, small breweries in the countryside were hardly profitable in this period.73 Between 1675 and 1703, 36 breweries closed in the countryside as a result of the competition of Holland’s breweries and increased concentration in the industry. Given these conditions, it is not surprising that the States of Overijssel maintained tariffs on beers brewed in Haarlem.

72

 ���������������������������������������������������������������������������� Noord-Hollands Archief, Haarlem Brouwersgilde, number 86. Haarlem’s brewers collected a variety of data to support their claim that Overijssel imposed tariffs on their beers. Officials in Overijssel sometimes denied these claims and pointed to the tariffs the States of Holland imposed on goods from other provinces. 73  ������������������ Slicher van Bath, Een Samenleving Onder Spanning. Geschiedenis van het Platteland in Overijssel (Assen: Van Gorcum & Co., 1957), pp. 196–7.

Table 10.5

The receipts of the harbor tax in Overijssel, 1640–1750 Campen IJsselMonde Eylant Ens

Genemuiden

Vollenhooven Blockzyl Swarte- sluit

Cuinre

Hasselt Zwolle

Gross

1655

4,330

395

6,600

1,900

7,410

20,635

1665

1,760

280

5,524

1,205

4,159

13,446

10,888

1675

700

150

3,945

1,056

1,408

7,259-

6,409

6,827

4,433

Year

Deventer

Net Total

1685

170

1,224

130

2,870

870

1,563

1695

150

130

40

1,200

500

1,540

3,560

1705

200

26

25

185

140

485

1,061

1715

45

12

4

300

145

180

686

1725

30

10

1

90

96

98

325

1735

28

7

0

56

15

34

140

1745

11

5

0

14

11

31

72

Source: Historisch Centrum Overijssel, Staten van Overijssel, nrs. 2216, 2356, 2357, 2358, 2359, 2361, and 2362. Also see Fritschy, Overijssel, pp. 145–51. In some years there is some variation between the receipts of the havengelt reported by Fritschy and the figures in Table 10.5, but the differences are small. In other years, the totals are the same.

286

The Political Economy of the Dutch Republic

Tariff revenues on imported foreign beer are also available for Friesland. Here too, most of the beer was imported from Haarlem. As shown above, Haarlem’s brewers developed extensive distribution networks in Friesland during the seventeenth century. The tariffs enacted on beer brewed elsewhere in the Republic in 1628: by the States of Friesland set off a conflict with Holland’s brewers and the States of Holland that continued throughout most of the seventeenth century. In the first ten years of the tariff, the rates fluctuated. The tariff levied by Friesland stood at three guilders between 1628 and 1630, was raised to four guilders and ten stuivers in 1634, and then to five guilders in 1636, not including the 30 stuivers towns could add to this. In the Resolutions of the States of Holland of 21 May 1651, it was asserted that Holland’s beers were taxed five guilders the barrel more than beers brewed in Friesland. While the exact rates levied on beers brewed outside of Friesland are unknown for many years, the yields of this tax are available for much of the seventeenth and eighteenth centuries. In contrast to the haven accijns in Overijssel, the tariffs in Friesland yielded substantial revenues for an extend period of time. As shown in Table10.6, in 1630, the duty on beer produced elsewhere in the Republic yielded 124,000 guilders. In the following four decades yields fluctuated, but as late as 1660 the revenue still amounted to 144,600 guilders. After the 1660s, beer imports into Friesland declined rapidly. Between 1670 and 1700, the yield dropped relatively quickly from 65,000 guilders to 25,000 guilders. In the following 50 years, the revenue on beers brewed elsewhere in the Republic fell to about 1,000 guilders per year. As Faber suggested in his study of early modern Friesland, it is unlikely that the declining trend was due to a decline in the tariff rates. Faber provides some evidence suggesting that the tariffs were more than five guilders in the 1780s.74 The extensive trade in beer brewed in Holland in the seventeenth century was undoubtedly the result of the substantial cost advantages that Haarlem’s brewers enjoyed over brewers in Friesland. While direct estimates of production costs are not available, the difference in the scale of brewing in the two provinces suggests this was the case. In the town of Dokkum where there were 19 brewers, brewing was carried out on a small scale. In 1711, Dokkum’s brewers processed 110 lasten of grain or about six lasten on average. The largest producer processed 14 lasten.75 This contrasts markedly with the scale of production in Haarlem. In 1711, Haarlem’s brewers used almost 2,400 lasten of grain, or an average of 197 last per brewer. 76 The smallest brewery used 70 lasten, while the largest brewery

74  ������������ J.A. Faber, Drie Eeuwen Friesland. Economische en sociale ontwikkelingen van 1500 tot 1800 (2 vols, Wageningen: Afdeeling Agrarische Geschiedenis, 1972), vol. 1, p. 246. 75  ������� Faber, Drie Eeuwen Friesland, vol. 2, p. 498. 76  ��������������������������������������������������������� Noord-Hollands Archief, Haarlem Brouwersgilde, number 57.

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processed almost 400 lasten of grain. In an industry with increasing returns to scale, the cost advantages of Haarlem’s brewers are evident.77 While the scale of production may have been larger in breweries in Leeuwarden, Friesland’s chief town, on balance, brewing was a small-scale business across Friesland’s towns and villages. In order to keep their head above water, Friesland’s brewers required substantial protection in the form of tariffs. Table 10.6

*

Tax revenues on foreign beer in Friesland, 1630–175078 Year

Foreign Beer

1630

123,900

1640

131,000

1650

142,600

1660

114,860

1670

65,265

1680

32,542

1690

42,700

1700

25,044

1710

9,700

1720

7,466

1730

3,275

1740

1,777

1748

1,121*

1752

1,829

1760

1,134

1771

1,134

1781

681

1791

483

  Includes both domestic and foreign beer.

77  ����������������������������������������������������������������������������� For data on the economies of scale in Holland’s brewing industry in the 16th century, see R.J. Yntema, “Entrepreneurship and Technological Change in Holland’s Brewing Industry, 1500–1580,” in C. Lesger and L. Noordegraaf, (eds), Entrepreneurs and Entrepreneurship in Early Modern Times (Den Haag: Stichting Hollandse Historische Reeks, 1995), pp. 199–201. 78  ������������������������������������������������������������������������ Tresoar, Leeuwaarden, Toegangsnummer 5; Staten van Friesland 1580–1795, numbers 2624, 2636, 2637, 2638, 2639, and 2640. ������������������������������������� The revenues for 1751–1791 are drawn from J.A. Faber, Drie Eeuwen Friesland, vol. 2, p. 499.

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The Political Economy of the Dutch Republic

Conclusion Provincial trade policies, including free trade and protection, played an important role in the growth and decline of Holland’s export brewing centers. For the brewing industry, the eighteenth article of the Union of Utrecht was not a dead letter in the early decades of the Republic’s history. The principle of free trade articulated in the eighteenth article of the Union was largely put into practice by the provinces until the 1620s and 1630s. Many provinces in the Republic then had low tariffs, if any at all, on beers brewed in other provinces. Such policies widened the market for beer and facilitated regional specialization and the growth of domestic trade. Since brewers in Haarlem and Rotterdam could produce high quality beers at lower costs than small, less efficient brewers in other provinces, they could distribute their beers in cities and towns across much of the Republic. Grains, fuels, and other inputs used in brewing were shipped from other provinces to Haarlem and Rotterdam’s breweries. In addition to limiting local monopolies, the interprovincial trade in beer gave consumers a greater variety of beers to choose from. In the 1620s and 1630s, under political pressure to protect local brewers and to raise tax revenue, provincial governments and towns began to levy tariffs on beers brewed outside their borders. This shift in policy in provinces like Friesland, Zealand, Utrecht and Overijssel hurt Holland’s export brewers. As shown by the tariff revenues on foreign beer in Overijssel and Friesland, the market share of Holland’s brewers in these markets declined over time. The numerous protests of Holland’s brewers and the States of Holland were ineffective in rescinding the tariffs. The transfer of income to domestic producers and provincial governments carried much more political weight in the provinces that considered themselves to be sovereign. Due to protectionist policies, many small-scale breweries continued to operate in Overijssel and Friesland. Tariff policies, thus, limited the extent of the market for export brewers and increased the amount of beer supplied by local producers, while they simultaneously reduced the overall demand for beer and increased the price consumers paid for beer. The loss of export markets in the Republic contributed to the decline of Holland’s brewing industry after mid-century. While other causes were also at work in the decline of Holland’s brewing industry, such as the growing consumption of distilled liquor and jenever and rising costs, the loss of export markets also helps to account for the decline in the output of Holland’s export brewers prior to the growing consumption of tea and coffee in the 1680s and 1690s noted by De Vries and Van der Woude. By the early eighteenth century, the interprovincial beer trade had dried up as local brewers enjoyed substantial protection from provincial trade barriers. While the welfare loss due to tariffs on beer cannot be reliably estimated, tariffs reduced consumer welfare by raising the cost of beer and decreasing the ability of consumers to drink different varieties of beer. Tariffs also led to greater investment in brewing where it was less efficient, and undercut breweries elsewhere that were

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more efficient. In other words, tariffs had important consequences for the location and structure of the brewing industry. Tariffs also entailed the cost of lobbying, which are typically argued to entail a welfare cost for the economy. The costs of lobbying along with the aforementioned costs of protection were the seemingly inevitable outcomes in a society in which interest groups, including guilds, were well organized and active in local and provincial politics and often able to gain protection due to the structure and needs of local politics and public finance. This case study of the brewing industry suggests that the economic integration of the Dutch Republic is more complex than suggested in the literature. While in some markets, including the markets for capital, labor, and information and commodities like grain, there was indeed a notable degree of integration by contemporary standards, the history of the brewing industry shows that the extent of economic integration within the Republic varied remarkably over time per sector. For fifty years following the Dutch Revolt, the market for beer within the Republic was largely integrated as the eighteenth article of the Union was followed by many provinces. Yet, the integration of the beer market across much of the Republic proved unsustainable in the 1620s and 1630s as one province after another instituted provincial tariffs on beer brewed in other provinces, driven by underlying differences in the provincial economies, the political need to protect local industries and pressure to raise tax revenues. The internal dynamics of the political economy of individual provinces began to weigh more heavily than the economic integration of the Union. As the declining tax yields on imported beers show, the market for beer became increasingly disintegrated in the seventeenth century, with all of the negative economic consequences for Holland’s export brewers and for the Republic’s economy. By the eighteenth century, the interprovincial trade in beer was a distant memory as the dynamics of the Republic’s political economy favored local, provincial interests above that of the Union.

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Chapter 11

Local Particularism Challenged, 1795–1813 Thomas Poell

As the previous chapters have shown, the political structure of the Dutch Republic differed from those of the larger states of Western Europe such as France, England, Austria, and Prussia. These states became relatively centralized in the course of the seventeenth and eighteenth centuries, when part of the political power of the Church, cities, and aristocracy was transferred to the central state. In this centralization process, the medieval corporate institutions, such as independent civic militias, local citizenship, and the guilds, were largely suppressed. The Republic differed from the states mentioned above in that local and provincial autonomy remained fully intact up to the end of the eighteenth century. The city patricians and the aristocracy together ruled the Dutch state through the provincial estates and the States General, and the local corporations and citizenship arrangements continued to operate as they had done in the past. The Republic did have a military leader, the Stadholder, who also wielded substantial political authority. However, this ruler cannot be compared to a king as he was appointed by the provincial states, and his authority was based on local and provincial privileges. This local particularistic state structure collapsed during the revolutionary period at the turn of the nineteenth century (1795–1813). After indigenous revolutionaries took control of the state, the Dutch Republic quickly became more unified, similar to other decentralized city-dominated states of early modern Europe, such as Switzerland, and the German and Italian states. Moreover, in the first years of the Batavian revolution the Republic rapidly became more democratic. Thus it would appear that the Dutch state was taking major steps toward becoming a modern unitary democracy. However, upon closer scrutiny, this transformation was far from straightforward. In 1801, six years after the revolution of 1795, the processes of centralization and democratization were again reversed; the democratic procedures which were introduced by the constitution of 1798 were abolished, the provincial and local governments regained part of their traditional autonomy, and the local corporations were again partly restored. 

 ��������������� Charles Tilly, Coercion, Capital, and European States, AD 990–1990 (Cambridge, 1990); Brian Downing, The Military Revolution and Political Change (Princeton, 1992); Wolfgang Reinhard, Geschichte der Staatsgewalt (München, 1999).   ������������������� A.J.C.M. Gabriëls, De heren als dienaren en de dienaar als heer (Den Haag, 1990); Jonathan Israel, The Dutch Republic (Oxford, 1995); Maarten Prak, Republikeinse veelheid, democratisch enkelvoud (Nijmegen, 1999).

292

The Political Economy of the Dutch Republic

Significantly, a similar reversal took place in the other decentralized citydominated regions of Europe. Democratic institutions everywhere were eliminated and centralized state structures again fell apart. Thus, instead of a straightforward development of unitary democracy, we can observe strong reversals in the process of revolutionary change. This is not to say that city-dominated states all experienced the same revolutionary changes in the late eighteenth, and early nineteenth centuries. In fact, the transformation process of the Dutch state differed in at least one important respect from the development of the Swiss, Italian, and German citydominated states. After the Dutch centralization process had collapsed in 1801, it was revived again in the years between 1805 and 1813. During this period, the Dutch state became financially unified, and important advances were made in the abolishment of the local system of privileges. Although this centralization process met with strong local resistance, it did establish the basis for the construction of a fully unified state in the following decades. This chapter investigates how the local particularistic state structure of the Dutch Republic was challenged during the late eighteenth century revolutionary period. In particular, it examines why the transformation of this state was characterized by almost as many retreats from as advances in the processes of centralization and democratization. Until now, the oscillating character of the revolutionary transformation process has not been systematically researched by historians of the Dutch revolutionary era. Instead, current approaches to the revolution have concentrated on the question of what motivated the Dutch revolutionaries to change their political and cultural landscape. For example, the proponents of the “bourgeois revolution” thesis, such as Robert Palmer and Simon Schama, have argued that the revolutionary changes were the result of the rise of bourgeois democrats, who wanted to create a more liberal democratic state. In turn, cultural historians, such as Niek van Sas and Wijnand Mijnhardt, have claimed that the late eighteenth-century revolution must be examined in the context of the Enlightenment process, during which new ideas on freedom and citizenship were developed. Finally, state formation analysts, such as Jan Luiten van Zanden, and Tom Pfeil, have asserted that the revolution should principally be seen as an attempt by the political elite to solve the financial, economic, and military problems, which confronted the Republic during the course of the eighteenth century. None of these approaches, however, can explain the twists and turns in the Dutch state formation process.   ��������������� Robert Palmer, The Age of Democratic Revolution (Princeton, 1959–1964); Simon Schama, Patriots and Liberators (New York, 1977).   �������������������������������������� Margaret Jacob and Wijnand Mijnhardt, The Dutch Republic in the Eighteenth Century (Ithaca, 1992); Joost Kloek and Wijnand Mijnhardt, 1800: blauwdrukken voor een samenleving (Den Haag, 2001); N.C.F van Sas, De metamorfose van Nederland, (Amsterdam, 2004).   ����������� Tom Pfeil,“Tot redding van het vaderland” Het ������������������������������� primaat van de Nederlandse overheidsfinanciën in de Bataafs-Franse tijd 1795–1810, Neha-Series Iii (Amsterdam:

Local Particularism Challenged, 1795–1813

293

To explain the specific advances in, as well as the reversals of, the process of centralization and democratization, this study focuses on the revolutionary process itself. Following the theoretical work of Anthony Giddens, and more recently Doug McAdams, Sidney Tarrow, and Charles Tilly, I want to stress that even though political actors clearly operate within a specific political, cultural, and economic setting, their actions are not necessarily determined by this setting. Political interests and actors are always constructed through processes of political interaction. Moreover, in these processes of interaction, actors not only clash with each other, but they also enter into strategic coalitions. To understand how specific political changes take place, it is crucial to analyze the construction of these coalitions because individual political actors are usually not powerful enough to bring about political change on their own. Consequently, political actors tend to work together to consolidate or transform political institutions. Thus, to examine how the local corporate organization of the Dutch Republic was challenged, we must analyze how political interests, actors, and coalitions were formed which combined to transform the political relations of the early modern Republic. This study will do so through an examination of the Amsterdam elite, which played an important role in local, provincial and central state politics. By focusing on the Amsterdam political elite, we can observe first-hand the struggles over the transformation of the Dutch state.

The democratic coalition Prior to the transformation of the Dutch state in the late eighteenth century, two political coalitions dominated public life. On the one hand, there was the cooperation between aristocrats and regents in local, provincial, and central state institutions. On the other hand a coalition existed between the local elite and privileged citizens, which constituted one-third of the urban population. These two groups cooperated through particularistic corporations in the administration of the cities. Each group clearly benefited from these alliances: they allowed the elite to hold on to its political power, and they guaranteed the citizens privileged access to the guilds, social welfare institutions, and the educational system. To understand how the political organization of the Republic was challenged in the course of the revolutionary period, we must investigate how these early modern coalitions became overruled by new alliances. NEHA, 1998)��������������������������������������������� ; Jan Luiten van Zanden and Arthur van Riel, Nederland 1780–1914 (Amsterdam, 2000).   ����������������� Anthony Giddens, The Constitution of Society (Cambridge, 1984); Doug McAdams, Sidney Tarrow and Charles Tilly, Dynamics of Contention (Cambridge, 2001).   ���������� Gabriëls, De heren als dienaren.   ������ Prak, Republikeinse veelheid; Maarten Prak, “Citizen Radicalism and Democracy in the Dutch Republic”, Theory and Society, 20/1 (1991): 73–102.

294

The Political Economy of the Dutch Republic

The first revolutionary coalition to effectively challenge the local particularistic organization of the early modern Republic was created in the years between 1795 and 1798. This coalition constituted a sharp departure from the revolutionary activity of the 1780’s, which had largely reinforced the decentralized corporate state structure. Although the revolutionaries of the 1780s, or Patriotten as they called themselves, were clearly motivated by the ideals of the Enlightenment and determined to solve the economic, financial and military crises, they did not consider the centralization of the state a viable option. Instead they were mainly focused on the democratization of the political regime. In their pamphlets, the patriots constantly stressed that the only way to solve the crisis, which in the 1780s was deeply felt because of the disastrous war with Great Britain (1780–1784), was to increase popular political influence. For example, the Leids Ontwerp, a prominent patriot pamphlet, proposed a representative system in which the burghers would be able to elect the regents. Such a “beneficial union of interests between regents and burghers” should make the Republic, as the title page of the pamphlet claimed, “internally happy and externally feared.”10 Yet, this call for democratization was not linked to the ideal of a unitary state. In fact, the opposite was the case. The patriots associated political centralization with absolutism, which was exactly what they suspected the Stadholder of wanting to achieve.11 Instead, the patriots claimed that popular political influence and true freedom was based on local autonomy, and the preservation of the privileges of the citizens.12 To accomplish this, the relationship between the regents and the privileged burgers, who “because of their property and occupation have an immediate interest in the maintenance of the constitution,”13 needed to be strengthened. Thus, during the 1780’s, the local particularistic coalition was reinforced instead of weakened. Moreover, in the minds of the patriot revolutionaries, centralization and democratization were diametrically opposed to one another. Political ideology only started to change after the failure of the Patriot Revolt, which ended in 1787 with the invasion of the Prussian army, and more importantly after the French Revolution of 1789. The example of the French Revolution was crucial because it showed the Dutch that centralization and democratization could indeed be combined. The ideal of a unitary democratic state, which was   ��������������� Stephan Klein, Patriots republikanisme (Amsterdam, 1995); Prak, “Citizen Radicalism”. 10  �������������������������������������������������������������������������� “heilzaame vereeniging der belangen van regent en burger” […] “van binnen gelukkig en van buiten gedugt” (Johan Hendrik Swildens, Ontwerp, om de Republiek door eene heilzaame vereeniging der belangen van regent en burger, van binnen gelukkig en van buiten gedugt te maaken (Leiden, 1785), p. 1. 11  ������������������ Klein, pp. 140–51. 12  ������������������������������������� Prak, “Citizen Radicalism”, pp. 93–6. 13  ���������������������������������������������������������������������������������� “die door hunne bezittingen en betrekkingen een weezenlijk en onmiddellijk belang hebben in de handhaving der Constitutie” (Swildens, Ontwerp, om de Republiek, p. 49).

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promoted by the French Revolution, promised to bring universal freedom and equality. And, as the French revolutionary state was militarily quite successful, this ideal also held the promise that the economic, financial and military problems of the Republic could be solved as well. Consequently, the Dutch revolutionaries began to reconsider how they could solve the crises and at the same time realize the ideals of the Enlightenment.14 This reevaluation process had potentially farreaching consequences for the form of the state, as it opened up the possibility of creating new coalitions that overruled the early modern particularistic alliances. The prospect for such coalitions greatly increased when the revolutionary movement took control of the Dutch state after the French invasion in 1795. Not all revolutionary politicians embraced the ideal of a unitary democratic state, but crucially an influential minority did. Prominent examples of such unitary-minded politicians (henceforth: unitarists) were merchant Isaac Gogel (1765–1821), cloth producer Pieter Vreede (1750–1837), and lawyer Samuel Wiselius (1769–1845). These men saw the local particularistic Republic as an old fashioned and highly unjust state, which very much needed to be reformed on the basis of the ideals of the Enlightenment.15 Gogel, for example, envisioned: A One and Indivisible Commonwealth [...], in which no longer one city or region, governed through particular laws or self-interested aristocrats, seeks to subordinate the other city or region. [A state] in which all inhabitants form one people of brothers.16

To this, he added that this goal could only be reached through a national assembly, which represented the entire people.17 For Gogel the unification and democratization of the state was the only way to abolish local privileges and liberalize society. However, the majority of the revolutionary elite did not fully embrace the unitary democratic state model. Most of the revolutionary politicians only adopted particular aspects of this model, while continuing to hold on to crucial features of the early modern federalist state. Clear examples of such federalist-minded politicians (henceforth: federalists), were the regents Johan Pieter Farret (1744–1822), Jan  ���������������� oost Rosendaal, Bataven! (Nijmegen, 2003), pp. 499–536.  ������������������������ P. ��������������������� van Limburg Brouwer, Het Leven van Mr. Samuel Iperuszoon Wiselius (Groningen, 1846); J.A. van Sillem, De politieke en staathuishoudkundige werkzaamheid van Isaac Jan Alexander Gogel (Amsterdam, 1864); Samuel Iperuszn Wiselius, Tafereel van de staatkundige verlichting der Nederlanden (Brussel, 1793); Pieter Vreede, Mijn Levensloop (Hilversum, 1994). 16  ���������������������������������������������������������������������������� Een Een en Onverdeelbaar Gemeenebest [...], waarin niet langer de eene stad of streek volgens verschillende wetten bestierd, of door belangzoekende Aristocraaten beheerscht, de andere stad, de andere streek zoekt te onderdrukken. Waarin alle inwoonders een Volk van broeders uitmaken. (NA, arch. ���������������� Gogel (arch.nr. 2.21.005.39), inv. 2 Proposition of Gogel in neighborhood assembly no. 20 on 17 August 1795). 17  ����� Ibid. 14

15

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296

Bernd Bicker (1746–1812), and the lawyer Rutger Jan Schimmelpenninck (1761– 1825). These men were not interested in a completely centralized state. As Farret argued: The unity of this Republic should only exist in those matters without which the safety and the happiness of the entire Republic cannot be promoted. […] Yet, all that does not belong to the general interest, but to the domestic affairs of the provinces, the cities and villages, should not be centralized.18

Although the majority of the revolutionary politicians were aiming for something between the decentralized early modern Republic and a fully unified state, during the years of 1795 to 1798, the United Provinces, at least on paper, were transformed into a unitary democratic state. To understand how this was possible, we need to examine the construction of alliances between the various political actors.

The Clubs and the French It is important to realize that in the Dutch Republic there were no political parties or social movements as we know them today. Traditionally, the regents and noblemen cooperated with each other through informal contacts, while the burghers were organized in corporations. Research by cultural historians has shown that in addition to these traditional forms of social organization, new societies and magazines were created which played an important role in the mobilization and organization of the Dutch revolutionary movement. Particularly in the 1780s and 1790s, numerous politically oriented societies and magazines were established. Many of the political societies were officially registered as reading clubs. In total, an estimated 300 of these reading clubs existed in the Republic in the last decades of the eighteenth century, although it is not clear whether all were politically active. Moreover, after the revolution of 1795, neighborhood assemblies sprang up in various cities with the express objective of discussing political matters.19 These new forms of social organization were a crucial element in the struggle over the reform of the state, as they were used in particular by unitarists to organize themselves, and to mobilize the support of middle-class revolutionaries  ������������������������������������������������������������������������������ De eenheid derhalven ������������������������������������������������������������������� deeser Republicq behoort alleen te bestaan in alle zulke zaaken zonder welke de veiligheid en het geluk der geheele Republicq niet kan bevorderd worden. […] Edog al wat tot de algemeene belangens niet behoort, maar het privatif huishouden der gewesten aangaat behoort hun zo min ontnoomen te worden als aan de onderscheide steden en dorpen van ieder gewest en aan ieder ondeeligen in dezelve de beheering in hunne huishoudelijke zaaken behoort ontnoomen te worden (Leonard de Gou, Het plan van Constitutie van 1796 (Den Haag, 1975), pp. 32, 54). 19  ������������������� Wijnand Mijnhardt, Tot heil van ’t menschdom (Amsterdam, 1987), pp. 80–113; Kloek and Mijnhardt, 103–39; Van Sas, pp. 195–221. 18

Local Particularism Challenged, 1795–1813

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for the creation of a unitary democratic state. This support was not self-evident. In fact, during the 1780s, the middle-class revolutionaries had fought for the democratization of local government, which they continued to do after 1795. These demands for local democracy were in direct competition with the ideal of a unitary democratic state.20 Yet, local democratic struggles did work to the advantage of the unitarists, as they led to clashes between the clubs and the new local governments, which were established after the revolution of 1795. In Amsterdam the clubs and neighborhood assemblies strongly petitioned for a direct form of local democracy in which the voting population would have the right to issue proposals to the municipality. Primarily in the first year after the revolution of 1795, the Amsterdam municipality, like many other local governments across the Republic, rejected these petitions for direct democracy. The Amsterdam governors argued that the changes proposed by the assemblies and clubs would seriously undermine their ability to govern, and would lead to anarchy.21 This subsequently gave the unitarists the opportunity to promote the unitary democratic state as an attractive alternative to the limited representative systems that were created at the local level. Several of the leading unitarists were personally linked to the clubs and neighborhood assemblies. Gogel as well as the Reformed preacher Bernardus Bosch (1746–1803) – later one of the main unitarists in the National Assembly – were prominent members of the Amsterdam neighborhood assemblies.22 They worked within these clubs, and through their favorite magazines, to mobilize support for their cause. For example, the unitarist-minded magazine De Democraten, which was edited by Gogel, Wiselius, and the Reformed preacher Willem Ockerse (1760–1826), maintained that true friends of the people would “promptly establish a constitution that introduces unity and indivisibility, the sovereignty of the people, the human and burgher rights, and a representative democracy.”23 By linking democratization to unification, De Democraten, and other unitarist magazines such as the Telegraaph, De Politieke Blixem, and the

20  ��������������������������������������������������������������� This was made very explicit in the unitarist-minded periodical De Democraten of 22 September 1796. ��������������������������� (NA, arch. Gogel (arch.nr. 2.21.005.39), inv. 73, De Democraten, no. 15, 22 September 1796). 21  ������������������������������������������������������������������������ Johan Breen, “De regeering van Amsterdam gedurende den Franschen tijd,” Jaarboek Amstelodamum, 12 (1914): 19–32, 47–68; Renger de Bruin, Burgers op het kussen (Zutphen, 1986); Prak, Republikeinse veelheid, pp. 216–23; GAA, arch. ����������� NSB, (arch. nr. 5053), inv.nr. 1075, Minutes of the General Assembly, of 16 April 1795. 22  ���������������������������������������������������������������������������������� GAA, arch. NSB, (arch.nr. 5053), inv.nr. 1075, Minutes of the General Assembly of the neighborhood assemblies in Amsterdam. 23  ����������������������������������������������������������������������� “zoo spoedig mooglyk eene constitutie te verkrygen, die, op eenheid en ondeelbaarheid gegrond, de oppermacht des volks, de rechten van mensch en burger huldigende, en eene democratie by vertegenwoordiging invoerde” (NA, arch. Gogel (arch. nr. 2.21.005.39), inv. 73, De Democraten, no. 44, 9 maart 1797).

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Advocaat der Nationale Vrijheid, tried to mobilize the revolutionary middle-class groups for the centralization of the state.24 These activities paid off. In August 1795, the Amsterdam neighborhood assemblies officially declared their support for the efforts of the unitarist government of Holland to establish a strong National Assembly, which should replace the old States General.25 Many other clubs and assemblies across the Republic did the same thing.26 In September 1795, the clubs and assemblies even created a national organization to help move the unification process forward.27 On 5 October 1795, this organization wrote to the government of Holland that it was happy to cooperate with the effort “to destroy the seven headed federalism28 and turn Bato’s Yard29 into an indivisible country,” and “to ensure the people, through the introduction of wise laws, that they will be free and independent.”30 The political influence of the unitarists grew further when they started organizing their own network of local clubs. On 27 March 1797, the first Society for One and Indivisibility was established in Amsterdam, by, among others, Gogel, Wiselius, Ockerse, journalist Wibo Fijnje (1750–1809), and professor Jan Konijnenburg (1758–1831).31 These men swore that they would do everything in their power to establish a constitution based on the sovereignty of the one and indivisible Dutch people.32 Soon the Amsterdam society had a large number of members, who came from a middle-class background. A reconstruction of the membership shows that 36 out of the 73 members whose occupation could be determined were craftsman, 17 were merchants, five were shopkeepers, and three were clerks. Moreover, there were 17 (23 percent) merchants, some of whom were  ���������������� Leonard de Gou, Het ontwerp van constitutie van 1797 (3 vols, Den Haag, 1983), vol. 1, p. XXVI; Van Sas, pp. 287–91. 25  ��������������������������������������������������������������������������������� GAA, arch. NSB (arch.nr. 5053), inv. 1068 Minutes of the neighborhood assemblies of 11 October 1795. 26  ���������������������������������������� P. Brood, P. Nieuwland, and P. Zoodsma, Homines Novi (Amsterdam, 1993), pp. 64–5; Jacob Roelof Kuiper, Een revolutie ontrafeld (Franeker, 2002), p. 100. 27  ������������������� H.T. Colenbrander, De Bataafsche Republiek (Amsterdam, 1908), p. 78. 28  ��������������������������������������������������������������������������������� The seven headed federalism refers to the seven sovereign provinces of the early modern Republic. 29  ���������������������������������������������������������������������������� Bato was considered as the mythical forefather of the Batavians, which were thought to have been the original inhabitants of the Low Countries. 30  ��������������������������������������������������������������������������� “door het vernietigen van het zevenhoofdig foederlisme, Bato’s Erf tot een onverdeelbaar land te brengen.” […] “om, door het invoeren van wyze wetten, eenmaal aan het volk te verzekeren dat het vry en onafhanglyk is.”(NA, Rijksarch. �������������� Zuid-Holland: Provisionele representanten 1795–1796 (arch.nr. 3.02.01), inv. 8.). 31  ��������������������������������������������������������������������������������� NA, arch. Gogel (arch.nr. 2.21.005.39), inv. 2 List of the members of the secret bureau of the Society of One and Indivisibility. 32  ���������������������������������������������������������������������������� Wetten der Sociëteit voor Eenheid en Ondeelbaarheid, opgericht in Amsterdam (Library of the University of Amsterdam); NA, arch. Gogel (arch.nr. 2.21.005.39), inv. 2, Oprichtingsvoorstel voor de Sociëteit van Eenheid en Ondeelbaarheid. 24

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probably middle class as well.33 The large presence of the middle classes in the unitarist movement is confirmed by a similar study of Renger de Bruin on the Society of One and Indivisibility in Utrecht.34 Once established in Amsterdam, branches of the Society of One and Indivisibility were created all across the Republic.35 Contemporary observers claimed that the Society functioned as a political action network: “the presidents of the [society] formed a bureau of correspondence, which was connected to a provincial bureau. In turn, these provincial bureaus held contact with the central office in Amsterdam.”36 In the summer of 1797, when the National Assembly was about to bring a constitutional proposal to a public vote, the Society of One and Indivisibility organized a resistance movement. The proposal contained various elements that were not to the liking of the unitarists, such as substantial provincial political autonomy and limited parliamentary influence over the executive power. In response, the Society created a petition to the National Assembly, which it distributed to all its branches. Soon petitions were pouring into the National Assembly from all over the Republic.37 In terms of organizational and ideological resources, the federalists were strongly disadvantaged in the first years after the revolution of 1795. Although they were supported by a few clubs and magazines, they lacked a widespread integrated network of societies.38 Yet, the success of the democratic coalition did not depend on revolutionary assemblies and clubs alone; of particular importance was also the disposition of the French regime. Although the French had promised, in return for a “liberation fee” of one hundred million guilders and the maintenance of their occupying troops, not to interfere in the internal affairs of the Republic, they did influence the political struggle, as we will see, at crucial points. Their policy, at least in the first years, was not based on systematic ideological assumptions. Their main interest was financial: they were primarily concerned that the Republic make its payments of the “liberation fee.”39 During the Thermidorian regime, which lasted until September 1797, the French government was in favor of a more centralized Dutch state, but it showed 33  �������������������������������������������������������������������������������� GAA, Burgher Books; GAA, arch. NSB (arch.nr. 5053), inv. 228a, nr.526, petition of the Society of One and Indivisibility to the municipality of Amsterdam, 15 April 1798. 34  �������������������� De Bruin, pp. 196–7. 35  ��������� Ibid., p. 193. 36  ����������������������������������������������������������������������������������� “presidenten derzelve in eene stad maakten te zamen een bureau van correspondentie uit; deze bureaux van correspondentie stonden weder in verband met centrale bureaux in de provincie, en deze met het bureau generaal te Amsterdam gevestigd” (Van Limburg Brouwer, p. 88). 37  ��������������������������� (NA, arch. Gogel (arch.nr. 2.21.005.39), inv. 73, De Democraten, no. 56 and 59 of 1 and 22 June 1797. 38  �������� De Gou, Het ontwerp van constitutie van 1797, vol. I, ���������������� pp. XXIV–XXV. 39  ���������������������������������������������������������������������������������� Annie Jourdan, “Les Gaulois en Batavie,” in Annie Jourdan and Joep Leersen (eds), Remous révolutionnaires (Amsterdam, 1996), pp. 99–102; Pfeil, pp. 126–7.

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no real preference for a particular group of federalists or unitarists. Only after the Fructidor coup in September 1797 did the French government start to show a clear preference for the creation of a unitary democratic Dutch state. In turn, this allowed the unitarists to ask for assistance in their conflict with the federalists.40 Consequently, the unitarists were able to form a broad coalition with the revolutionary clubs and the French, a coalition that was held together by the ideal of unitary democracy. This ideal was crucial in divorcing middle-class groups from the local corporate coalition, which they had tried to strengthen during the 1780s. The new coalition could now begin to create a unitary democratic constitution.

The centralization of authority The first stage of the centralization and democratization of the Republic in the years 1795–1798 revolved around the transfer of authority from local to provincial governments. Although the unitarists were a minority in most municipalities, the backing of revolutionary clubs and the French authorities enabled them to control a few provincial governments. Crucial was their control of the States of Holland, exercised by unitarists like Samuel Wiselius and Wibo Fijnje from Amsterdam.41 As Holland was by far the largest and richest province, the control over the government of this province gave the unitarists the opportunity to pressure individual cities and other provinces into cooperating in the centralization process. The weight carried by the revolutionary clubs and the French authorities became clear when the government of Holland clashed with the Amsterdam municipality over the centralization of authority. On 9 March 1795, the provincial government demanded an oath of allegiance from the municipalities and their civil servants to the people of Holland and its representatives.42 This demand was immediately rejected by the Amsterdam municipality which included, among others, lawyers Schimmelpenninck and Jan Willem Irhoven van Dam. The Amsterdam governors claimed that no legitimate change in the structure of the state had yet taken place. Consequently, they refused to “attribute more rights or authority to [the provincial government], than has been enjoyed by its predecessors.”43 To ensure  ���������������� Leonard de Gou, De staatsregeling van 1798, (2 vols, Den Haag, 1988), vol. 1, pp. ������������� XIII–XXXVIII. 41  �������������������������������������������������������������������������������� NA: Rijksarchief Zuid-Holland: Provisionele representanten 1795–1796 (arch. nr. 3.02.01), introduction inventory; list of representatives of Provisional Representatives from January 1795 until March 1796. 42  ������������������������������������������������������������������������ GAA, arch. NSB (arch. nr. 5053), inv. 13–15, Correspondence between the provisional deputies of Amsterdam in the provincial assembly and the Amsterdam government 19 Jan.–16 Juni 1795. 43  ����������������������������������������������������������������������� “geen meer recht noch gezag toekennen, dan dat voorheen door derzelver predecesseuren genoten is geweest.” (NA, ��������������������������������������������� rijksarchief Zuid-Holland: Provisionele representanten 1795–1796 (arch.nr. 3.02.01), inv. 98, Letter of the Provisional 40

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that the Amsterdam municipality would nonetheless cooperate, the provincial government constructed a temporary alliance with the Amsterdam clubs and the French.44 This alliance allowed the provincial governors to simply imprison the resisting part of the Amsterdam municipality, including Schimmelpenninck and Irhoven van Dam, and to make a compromise with the remaining members of the municipality, who agreed that the municipality would swear its loyalty to the people of Holland.45 More importantly, the cooperation between the Amsterdam clubs and the provincial government represented the first revolutionary blow to the traditional alliance between the local elite and the privileged citizens, which had previously formed the basis of the decentralized state. The coup in Amsterdam in 1795 became the blueprint for the unitary democratic revolution in the following years. The same coalitions and tactics were again employed in the establishment of the National Assembly. In the summer of 1795, the government of Holland had proposed to establish a National Assembly based on the sovereignty of the united Dutch people. This assembly would have the authority to formulate a new constitution that would settle disputes between the local, provincial, and central state. This proposal was strongly resisted by the provincial assemblies of Friesland, Zeeland, and Groningen, while the other provinces were willing to cooperate.46 At this point, the unitarists from Holland again started to work together with the French and the revolutionary clubs to ensure the proposal’s success. In January 1796, the Committee of Public Safety47 of Holland, of which among others Wiselius and Wibo Fijnje were members, planned in close cooperation with the French representative, Noël, and the French General, Jean Moreau, a coup in Friesland. The governors of Holland agreed with the French that they would bring about a political change by using a conflict between the provincial assembly and the revolutionary clubs of Leeuwarden to their advantage.48 The governors of Holland were more than willing to lend their support to the clubs. It was agreed with Noël and Moreau that the French would temporarily withdraw all troops from Friesland, thereby allowing the clubs and civic militias of Leeuwarden to take control of the provincial government. This operation took place on 26 January 1796. After the provincial governors had been dismissed, a provincial assembly of Friesland was appointed which was prepared to join the National Assembly. Representatives of the People of Amsterdam to the Provisional Representatives of the People of Holland of 16 March 1795). 44  ����������������������������������������������������������������������������������� Ibid., inv. 97 and 98, Minutes of the committee of the provisional representatives of Holland. 45  ����������������������������������������������������������������������������������� Ibid.; GAA, arch. NSB (arch. 5053), inv.nr. 1, Acts of the Revolutionary Committee of 20 March 1795. 46  ������������������������������ Brood, Nieuwland and Zoodsma, Homines Novi, pp. 17–19; Colenbrander, De Bataafsche Republiek , pp. 77–9. 47  ������������������������ Comité van Waakzaamheid. 48  ��������������� Kuiper, p. 113.

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This coup proved to be a turning point, since it convinced the provincial states of Zeeland and Groningen to join the National Assembly as well.49 The actions and ideals of the governors of Holland were clearly aimed at combining the processes of democratization and centralization. As men like Gogel and Wiselius made clear, only in a unitary democratic state would the Dutch be free and equal. However, in practice the actions of the unitarists were far from democratic. Paradoxically, the coups in Amsterdam and Friesland effectively undermined the representative institutions which had been created. Thus, although the unitary democratic ideal made it possible to create a broad coalition for centralization, it did not necessarily lead to the consolidation of democratic institutions. This again became clear when the revolutionary politicians clashed with each other in the National Assembly over the proposal for a new constitution. The debate over the new constitution started in March 1796, when the National Assembly was established. Since the unitarists formed a minority in the National Assembly, the constitutional proposal which was created by the assembly, in the course of 1796 and 1797, retained a substantial degree of provincial political autonomy. Moreover, the organization of the representative system was not as democratic as the unitarists had wanted it to be: the parliamentary supervision over the executive power was limited and the electorate only had indirect voting rights. The constitutional proposal did include the abolition of the privileges of the guilds and the Reformed Church, and it contained (as will be discussed in the second part of this chapter) the financial unification of the state, which was supported by many of the representatives of the heavily indebted provinces of Holland, Zeeland, and Utrecht, irrespective of their unitarist or federalist inclinations.50 Although the National Assembly’s constitutional proposal accomplished many things that were important for the unitarists, it did not establish the ideal of a unitary democratic state. Consequently, they again mobilized the revolutionary clubs and the French authorities to achieve this goal by force. Through the clubs and magazines the unitarists started a veritable publicity war against the constitutional proposal and for the creation of a unitary democratic state. As mentioned already, the Society for One and Indivisibility organized a nation-wide petition campaign in which they urged the members of parliament to reconsider the constitutional proposal. Moreover, the society composed negative reports about the plan. For example, a report of the Amsterdam Society for One and Indivisibility maintained that the plan was “not based on popular representative government,” but on “an elected aristocracy.”51 The periodical De Democraten argued, in addition, that the proposal revived the “old provincial sovereignty,” and left the municipalities considerable autonomous power concerning their internal  ��������������������������������� Ibid., pp. 113–37; Colenbrander, De Bataafsche Republiek, pp. 80–81.  �������� De Gou, Het ontwerp van constitutie van 1797; Pfeil, pp. 175–80. 51  ������������������������������������������������������������������������������� “niet op eene volksregeering bij representatie gegrond” […] ������������������� “eene verkiesbaare aristocratie” (GAA, library, B (1797) 7, Notes of the Amsterdam Society of One and Indivisibility on the constitutional proposal. 49 50

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affairs.52 Some of the unitary-minded periodicals, such as The National Batavian Newspaper, not only delivered critique, but also encouraged their readers to take physical action against potential supporters of the plan.53 In the mean time, the unitarists in the National Assembly also did their part. In July 1797, 12 representatives, among them Bernardus Bosch and Pieter Vreede, published a pamphlet in which they advised the population to vote against the constitutional proposal. They declared that “the constitutional proposal does not correspond with the demand of a popular government by representation.”54 When the proposal had been rejected by an overwhelming majority of the voters in August 1797, the unitarists continued their publicity campaign.55 On 12 December 1797, 43 representatives published a manifesto in which they declared that “the government should be both politically and financially One and Indivisible from within as well as without, so that there is just one representative assembly, and all other powers should be purely administrative.”56 The efforts of the unitarists, societies, and periodicals were reinforced by many more petitions issued to the National Assembly.57 Thus, as with the struggle over local and provincial political autonomy, the unitarists employed the national democratic ideal to mobilize the popular revolutionary groups in support of unification. In addition to influencing public opinion and mobilizing the revolutionary clubs in support of the centralization of the state, the unitarists also secretly asked the French regime to support a military coup. A few national representatives, including Vreede, and Ockerse, contacted the Amsterdam club the Uitkijk for this purpose. Whether this club was linked to the Society for One and Indivisibility is unclear. At any rate, after several delegations of members of the Uitkijk to Paris as well as a large financial donation to one of the French ministers, the government

 ��������������������������������������������������������� “oude provinciale oppermacht” (NA, arch. Gogel (arch.nr. 2.21.005.39), inv. 73, De Democraten, no. 54, 18 May 1797). 53  �������������������������������������������������������������������������� I.J. van Manen and Vermeulen, “Het lagere volk van Amsterdam, 1780–1800,” Tijdschrift voor sociale geschiedenis, 7 (1981), pp. 14–15. 54  ����������������������������������������������������������������������������� “het ontwerp niet overeenstemt met de vereischten van een volksregeering bij vertegenwoordiging” (NA, arch. Gogel ������������������������������������������������������������ (arch. nr. 2.21.005.39), inv. 177, Manifest of the 12 apostles, 1 Juli 1797). 55  ������������������������������������������������������������������������������������� No less than 108,781 people voted against the plan, while only 27,955 were in favor. Not in one single province did the proposal obtain a majority (Colenbrander, Bataafsche Republiek, p. 106). 56  ������������������������������������������������������������������������������ “Dat ‘er eene volkomen Een- en Ondeelbaarheid der Republiek behoore plaats te hebben in bestaan en bestuur, zo na binnen als na buiten, in het politieke en finantiëele, zodanig, dat ‘er slechts één Vertegenwoordigende Vergadering bestaat, en alle andere aangestelde Machten zijn louter Administratief” (NA, arch. Dumont �������������������������� Pigalle (arch. nr. 2.21.057), inv. 124, Manifest of 43 representatives of the National Assembly to the Batavian nation of 12 December 1797). 57  �������� De Gou, De staatsregeling van 1798, vol. 1, p. XXII. 52

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in Paris responded to the wishes of the unitarists.58 The French regime, which was also becoming impatient with the slow pace of the Dutch reform process, appointed Charles Delacroix as the new French representative. Delacroix was given the express instruction to stimulate the creation of a “constitution based on freedom, and a stable and powerful central government.”59 Again ensured of the support of French regime and the middle-class clubs, the unitarists were ready to take the final step toward a centralized state. This took place in several phases. First, the National Assembly was reformed on 22 January 1798. With the assistance of the French army, the group of Vreede and Ockerse reformed the National Assembly, leading to the departure of 61 representatives.60 Having eliminated the federalist-minded opposition, the unitarists continued to proclaim a series of resolutions which turned the Republic in a matter of days into a centralized state. All the provincial sovereignties were invalidated, and a sovereign central executive body was created.61 Subsequently, the reformed National Assembly produced a constitutional proposal that built on the existing plan, but also permanently transferred provincial sovereignty to the central state.62 To ensure that the population would approve the proposal, the new regime purged the local governments and the voting assemblies. This was done with the assistance of the revolutionary clubs, which provided personnel and information on the local governors and voters.63 In Amsterdam, the purge of the municipality took place on 15 March 1798. Approximately half of the new Amsterdam governors had been active in the neighborhood assemblies, or was a member of The Society of One and Indivisibility, or of Virtuousness and Skills, the other important unitary-minded club in the city. After the reform of the Amsterdam government, a special committee with far-reaching authority purged the voting assemblies of potential dissidents. 64 Similar purges took place all over the Republic. Although these purges made the regime of Vreede and Ockerse highly unpopular with the 58

 ������������������� Ibid., p. XI–XVIII.  ����������������������������������������������������������������������������������� “l’établissement d’une constitution libre, d’un gouvernement dixe dont la force ne soit point illusoire” (H.T. Colenbrander, Gedenkstukken der algemeene geschiedenis van Nederland van 1795 tot 1840, (22 vols, Den Haag, 1906), vol. 2, p. 142). 60  ������������������������������������ For a detailed account see: De Gou, De staatsregeling van 1798, vol. 1, pp. XI– LXVI. 61  ����������������� Pfeil, pp. 187–8. 62  �������� De Gou, De staatsregeling van 1798. 63  ���������������������������������������������������������������� Breen, pp. 72–76; ����������������������������������������������������� See for example the address of the Society of One and Indivisibility, which delivered a list of 909 Orangist officials (GAA, arch. NSB (arch. nr. 5053), inv. 225, Minutes of the Administrative municipality of Amsterdam of 5 April 1798). 64  ���������������������������������������������������������������������������� Breen, pp. 74–5; GAA, arch. NSB (arch.nr. 5053), inv. 1075, “Minutes of the General Assembly of the neighborhood assemblies in Amsterdam,” GAA, arch. NSB (arch.nr. 5053), inv. 228a, nr.526, petition of the “Societeit voor Een en Ondeelbaarheid” to the municipality of Amsterdam of 15 April 1798; GAA, arch. NSB (arch.nr. 5053), 59

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general population, they accomplished their goal. The constitution was approved by a majority of 153,913 against 11,597 votes.65

The reversal of the centralization process In the spring of 1798, the Dutch state seemed to be moving firmly in the direction of unitary democracy. The alliance between the unitarists, the clubs, and the French regime had made it possible to eliminate the resistance against the unification process. However, as we have seen, this coalition was held together by the ideal of unitary democracy, but it did not proceed by democratic means. In fact, the unitary democratic constitution could only be achieved by overruling political opponents and representative procedures. The revolutionary politicians quickly discovered that the democratic procedures of representation and consultation formed an obstacle for change, as they gave a broad range of political groups the opportunity to resist the elimination of their traditional political, economic, social, and religious privileges. Between the years of 1795 and 1798, these contradictions did not obstruct the state transformation process, as the unitarists were able to overrule representative procedures and eliminate political opponents in the name of the national democratic ideal. However, the situation changed once this ideal had been achieved through the creation of the new constitution. If the unitarists would continue in the same authoritarian fashion, they would undermine their own constitution and the legitimacy of their regime. Alternatively, if they were to begin to play by the rules of democracy, they would give the opponents of the new constitution the opportunity to resist the transformation of the state. The unitarists failed to solve these contradictions; hence the unitary democratic alliance eventually broke down and the constitution of 1798 was reversed. The first blow to the unitary democratic coalition occurred immediately after the new constitution had been established. The regime of Vreede and Ockerse decided to continue down the authoritarian path and not organize general elections as prescribed by the constitution. Instead, it ruled on 4 May 1798, that only onethird of the members of parliament would be replaced through elections. The other two-thirds would be reinstated as representatives in the Legislative Assembly.66 The unitary-minded parliament justified its decision by arguing:

inv. 233, nr. 798 Petition of the “Societeit voor Deugd en Kundigheden” to the municipality of Amsterdam, 5 June 1798.” 65  �������������� Colenbrander, De Bataafsche Republiek, pp. 132–4. 66  �������������� Colenbrander, Gedenkstukken, vol. 2, pp. 673–84.

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It is possible that a large portion of the people, in this time of political conflict, will be misled by intriguers and choose the false over the true patriot, (...) which will have disastrous consequences for the Republic as a whole.67

The decision undermined the legitimacy of the central government and immediately caused a split within the unitary democratic coalition. A few days later, the Executive Council received reports from Amsterdam that some of the “most determined patriots were highly dissatisfied with the decree of the Constituting Assembly.”68 It was said that the decision was publicly cursed and that the step of the Assembly was seen as a direct violation of the constitution, an aristocratic action, and an assault on the rights and power of the people. It turned out that the critique came from the members of the Society for One and Indivisibility.69 The unitarists split into two factions: those who wanted to maintain the representative system, and those who were mostly interested in the survival of the unitary-minded regime. This split occurred in various parts of the country.70 Significantly, the actions of Vreede and Ockerse created a rift within the central government itself. Gogel, the minister of finance, together with the ministers of marine, warfare, justice, and internal police were becoming increasingly dissatisfied with the decisions of the Executive Council and the Legislative Assembly. Subsequently, these ministers organized a coup to overthrow the regime of Vreede and Ockerse, restore the democratic process, and reinstate the authority and legitimacy of the central government, which had been severely undermined by the authoritarian measures of the Vreede group. Eventually the efforts of the ministers were successful, as they were able to mobilize the support of the French government, which had been informed about the growing resentment against the Vreede regime.71 With the backing of the French, Gogel and the other four ministers were able to take control of the central state government.

 ��������������������������������������������������������������������������������������� ’t is moogelyk, dat een groot gedeelte des volks, in dit tydstip, waar in de woelingen der partyschappen alomme zo meenigvuldig zyn, (door intriguanten misleid) weder in zyne keuze mistaste, den schynpatriot boven den waaren de voorkeur geven, [...] en daardoor de rampzaligste gevolgen voor de geheele Republiek berokkene (Dagverhaal der handelingen van de Nationaale Vergadering representeerende het Volk van Nederland (9 vols, Den Haag, 1796–1798), vol. 9, p. 618). 68  ������������������������������������������������������������������������������������ “de fermste patriotten zeer ontevreeden waren over het decreet der Constituerende Vergadering” (GAA, arch. �������������������������������������������������������������� NSB (arch. nr. 5053), inv. 225, Minutes of the Administrative municipality of Amsterdam of 9 May 1798). 69  ����� Ibid. 70  �������������������������� Kuiper, pp. 452–60; Prak, Republikeinse veelheid en democratisch enkelvoud, pp. 251–2. 71  �������������� Colenbrander, Gedenkstukken, vol. 2, p. 681. 67

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After the coup, the ministers immediately made clear that they wanted to maintain the constitution and restore the democratic process.72 Yet, despite the unitary democratic intentions of its instigators, the coup dealt a major blow to the coalition. Firstly, the group of unitarist politicians, already weakened by the ideological split, lost some of its most determined members as a result of the coup.73 Furthermore, most of the unitary-minded clubs were discontinued. This was partly the result of restrictive measures of the new government; the new regime abhorred the populist tactics of its predecessors. But it also had to do with the lack of enthusiasm of club members themselves, who were no longer actively involved in the political game.74 Finally, although the restoration of the democratic process restored the legitimacy of the central government, it also enabled some of the opponents of the constitution to return to national politics. After the elections of July 1798, the composition of the Representative Body again strongly resembled that of the National Assembly before the revolution of January 1798.75 In the course of 1799 to 1800, the unitary democratic coalition was further undermined when it became clear that the implementation of the constitution was indeed hampered by time-consuming democratic procedures. Consequently, many Dutch politicians started to reevaluate the constitution.76 For example, in December 1800, the unitarist-minded politician Gogel wrote: The present constitution is completely unsuitable to ensure the Dutch people of lasting happiness. (...) Provincial and city interests, expedience, personal relationships, favoritism, and whatever else have replaced the general interest. (...) The Legislative Body does not know what it wants. (...) Such a body is not capable of doing something good, something great.77

72

  Dagverhaal der handelingen van het Vertegenwoordigend Lichaam des Bataafschen volks (13 vols, Den Haag, 1798–1801), vol. 1, pp. 357–60. 73  ���������������������������������� A.M. Elias and P.C.M. Schölvinck, Volksrepresentanten en wetgevers (Amsterdam, 1991). 74  ���������������������������������������������������������������������������������� De Bruin, pp. 198–9; Henk Reitsma, “Lesegesellschaften und bürgerliche Revolution in Amsterdam,” in Otto Dann (ed.), Lesegesellschaften und bürgerliche Emanzipation. Ein ���� europäischer Vergleich (München, 1981), pp. 159–80. 75  ����������������������������������������������������������������������������� Before January 1798, the juridical professionals and regents had constituted about 40 percent of the total number of representatives in the National Assembly. In the Representative Body, which held its first session on 31 July 1798, they formed 50 percent of the members (Elias and Schölvinck). 76  ���������������� Leonard de Gou, De staatsregeling van 1801 (Den Haag, 1995), p. XV. 77  ����������������������������������������������������������������������������� De tegenwoordige staatsregeling is geheel ongeschikt om immer het Bataafsche volk een duurzaam geluk te verzekeren. (...) Provinciale en stedelijke belangen, eigenbaat, personeele betrekkingen, gunst en wat dies meer is vervangen de plaats van het algemeen belang. Dit alles leert de dagelijksche ondervinding: zie de dagverhalen van 1798–1800. (...) Het Wetgevend Lichaam weet zelf niet wat het wil. (...) Zodanig lichaam is niet in staat iets goeds, iets groots te verrigten. (Colenbrander, Gedenkstukken, vol. 3, pp. 643–4.)

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Gogel along with various other unitarists came to the conclusion that influence of the legislative assembly should be severely limited and the power of the executive strengthened. Although many other unitarist politicians continued to hold on to the democratic ideal, this cognitive shift further weakened the democratic coalition, which could hardly be called a coalition anymore. Not only had the unitarists become internally divided, their former coalition partners, the clubs and the French regime, had distanced themselves as well. In fact, after the authoritarian coup of Napoleon in 1799, the French no longer supported the democratization of the Republic. From the spring of 1801, the federalists in the Executive Council and the Representative Body started to exploit the collapse of the unitary democratic coalition in an effort to reverse the constitution. These politicians not only wanted to diminish the influence of the legislative power, but also to refederalize the state. For example, the regent Augustijn Besier, who was a member of the Executive Council, maintained that above all he wanted to restore the authority of the departments to oversee their domestic affairs. He emphasized that in doing so, the departmental administrations would again have sovereign control over their internal politics, the form of its government, the civil legislation, and taxation.78 The other federalists in the central government shared the opinion of Besier. In the course of 1801, and in cooperation with the French regime, they took control of the Dutch state and revised the constitution according to their own vision.79 Thus, precisely what the Vreede and Ockerse regime had feared would happen, did happen. The representative system allowed the federalists to return to politics and subsequently reverse the national democratic revolution. Although the central state remained sovereign under the constitution of 1801, several key reforms of the previous constitution were reversed. The authority of the Representative Body was greatly reduced, and the authority of the Executive Council enhanced. This effectively ended the democratization process, which was not again revived until the 1840s. Moreover, the plan to create a national tax system was abandoned, and part of the political autonomy of local and provincial authorities was restored. This suggests among other things that these governments again had the authority to make new legislation concerning domestic affairs.80 The Amsterdam government, which was appointed in November 1801, immediately used this authority to restore the political autonomy of the city. The municipality even established a committee to investigate the “affairs that have unjustly been withdrawn from the authority of the city and should again be brought under its

78

 �������� De Gou, De staatsregeling van 1801, pp. 546–7.  ������ Ibid., pp. XXVI–XXVII. 80   Dagverhaal der handelingen van het Vertegenwoordigend Lichaam des Bataafschen volks, vol. 13, pp. 600–606; Pfeil, pp. 309–21. 79

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control.”81 The efforts of the municipality paid off as it regained the authority over the civic militias and the appointment of the local officials.82 The restoration of the early modern practices and institutions was above all visible in the organization of the economy. Despite the fact that the constitution of 1801 reaffirmed the abolishment of the guilds, the Amsterdam government and its successor did everything in their power to reinstate the central features of the guild system. On 8 January 1802, the municipality decided to reinstate the rule that anyone who wanted to set up a shop or work as a craftsman in Amsterdam was obligated to become member of one of the former guilds. Moreover, it ruled that one had to be a citizen of Amsterdam to become a member of a former guild.83 In January 1803, the municipality added that only people who had taken the appropriate examination, or who had been an apprentice for a certain period of time, as stipulated in the guild regulations, could become guild member. Finally, new members had to pay an examination fee and a certain amount of money to enter a guild.84 The ruling of the municipality was an open invitation to the craftsmen, small merchants and shopkeepers of the city to cooperate in the reinstatement of the guild system. Soon various occupational groups responded and effectively revived the local corporate coalition between the privileged burghers and the local governors. New restrictive regulations were created against peddling, and the traditional guild regulations of the bakers, shipyard workers, mast makers, small merchants, shopkeepers, shoemakers, and tar salesmen, among others, were restored.85 The restoration of the guilds was certainly not restricted to Amsterdam; other cities, such as Den Bosch, Rotterdam, and Den Hague also started to reinstate guild regulations.86 Consequently, in the years after 1801, the guilds experienced a strong revival. The local corporate alliance became popular again once the democratic ideal had been abandoned and the unitary democratic coalition had collapsed. The 81  ���������������������������������������������������������������������������������� “zodanige meerdere zaaken, welke, uithoofde van de van tijd tot tijd plaats gehad hebbende omstandigheden, ten onrechte aan de beheering van het stedelijk bestuur zijn onttrokken, en waaromtrend dus, uit kragte van het gemelde art. der staatsregeling, redres behoorde te worden gedaan.” ���������������������������������������������������� (GAA, arch. NSB (arch. nr. 5053), inv. 522, nr. 294 Supplements of the minutes of the intermediary municipality of Amsterdam: report of the personal commission of the municipality.) 82  ���������������������������������������������������������������������������������� Ibid., inv. 573 Minutes of the Council of Amsterdam of 15 January and 26 February 1805. 83  ��������������������������������������������������������������������������������� Ibid., inv. 511, “Minutes of the intermediary municipality of Amsterdam of 5 and 7 January 1802.” 84  ����������������������������������������������������������������������������������� Ibid., inv. 530, nr. 7 Supplements of the minutes of the intermediary municipality of Amsterdam: Ordinances to restore the businesses in Amsterdam. 85  ��������������������������������������������������������������������������� Ibid., inv. 511, 571, 572, 573 Minutes of the intermediary municipality of Amsterdam of 30 April 1802, Minutes of the Council of Amsterdam of 6 September, 25 November 1803, 4 September, 4 December 1804, 2 July 1805. 86  ������������������� Cornelis Wiskerke, De afschaffing der gilden in Nederland (Amsterdam, 1938).

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corporate middle classes, which were previously active in revolutionary clubs, now actively cooperated with the old regime elite in promoting local autonomy and the restoration of the corporations.

The Financial Coalition By 1801, the centralization process seemed dead. Yet, in 1805, it was again revived. As a result of this revival, the state finances could be unified, the central state strengthened, and the assault on the local corporations renewed. But what caused this revival? It was certainly not due to a rebuilding of the unitary democratic coalition. After 1801, the group of unitarists drifted further apart and the revolutionary clubs were not resurrected either. The cause of the revival was the construction of a financial coalition between central state politicians from Holland and the French regime. Although the financial coalition was effectively established in 1805, the first attempts to create such a coalition dated back to the first National Assembly in 1796. From the beginning of the revolution, the state finances had been a major concern of the politicians from Holland. By 1795, the debt of Holland, which had financed the lion’s share of the Dutch wars in the seventeenth and eighteenth centuries, had massively increased. At an amount of 455 million guilders, which represented no less than 70 percent of the annual provincial tax revenue, Holland was on the verge of financial bankruptcy while the landed provinces, Gelderland, Overijssel, Brabant, Friesland, Groningen, and Drente, had very few or no debts at all.87 Given this distribution of debts, it is not surprising that many of the representatives from Holland, along with those from Zeeland, and Utrecht, which also had relatively large debts, shared a strong interest in the financial unification of the state. Thus, already at the start of the revolutionary period the call for financial unification could have provided a political basis to challenge the decentralized particularistic organization of the early modern Republic. But although the representatives of the indebted provinces shared a common interest in financial unification, the attempt to create a financial coalition failed, in the first years after 1795. The problem was that some of the advocates for financial unification were not in favor of unitary democracy while others were. This can clearly be observed in the case of lawyer Rutger Jan Schimmelpenninck. For him, financial and political unification were two separate issues. In 1795, as discussed above, he resisted the transfer of authority from the Amsterdam municipality to the provincial government. Furthermore, when the National Assembly had to decide whether the central state should become fully sovereign, he contended that this would be a sure road to despotism.88 Yet, when it came to the amalgamation of the

87

 ����������������������������������� Van Zanden, and Van Riel, pp. 53–4.  �������� De Gou, Het ontwerp van constitutie van 1797, vol. 2, p. 141.

88

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provincial debts, Schimmelpenninck had no problems with centralization. In fact, he maintained that such an amalgamation was only fair because: The majority of the provincial debts and especially those of Holland have been incurred to uphold the interests of the entire country. Moreover, it seems to me that the relations between the various provinces, which have for a long time now been united through a common bond, so tender and vested with common interests that the amalgamation of the provincial debts cannot be compared to the uniting of debts between nations.89

In the National Assembly, Schimmelpenninck was vigorously supported in this view by among others the Amsterdam merchant banker Nicolaas van Staphorst (1742–1801) and the former pensionary of Haarlem Pieter Leonard van de Kasteele (1748–1810). Kasteele even threatened the representatives of the other provinces that Holland would no longer contribute to the state budget, if no financial union were to take place.90 By contrast many of the representatives of the landed provinces rejected financial unification and the amalgamation of the provincial debts. The federalist-minded representatives from these provinces in particular were against the amalgamation. For example, lawyer Herman Vitringa from Gelderland argued that it was: Unjust, unconstitutional, and very harmful for most provinces, since its collective inhabitants would be deprived of their property without their express consent. Moreover, they would be burdened with debts, which neither they nor their ancestors had incurred.91

However, not only the federalists from the provinces with small debts were against amalgamation, many unitarists from these provinces also had their reservations. Like Schimmelpenninck, they made a distinction between political and financial 89

 �������������������������������������������������������������������������� Verre het grootste gedeelte der provinciale schulden en wel bijzonder der Hollandsche, zeer zeker tot behoud der algemeene zaake des geheelen Vaderlands zijn gemaakt en het koomt mij bovendien voor, dat men toch nimmer zal kunnen ontkennen, dat de betrekking tusschen de onderscheidene Gewesten, zints zulk een geruime tijd door een bondgenootschappelijken band vereenigd, dermaten teder en wederzijdsch belang en elks bloei, welvaart en bestaan zo groot is, dat de algemeenmaking deezer gewestelijk schulden tusschen zodanige gewezene bondgenoten niet kan gelijk gesteld worden met eene ineensmelting van de schulden tusschen volken. (De Gou, Het ontwerp van constitutie van 1797, vol. 1, p. 216.) 90  �������� De Gou, Het plan van Constitutie van 1796, pp. 66–7. 91  �������������������������������������������������������������������������� “onrechtvaardig onstaatkundig en ten hoogsten verderfelijk voor de meeste gewesten, omdat men aan de collective ingezetenen hunne eigendommen, zonder hun voorafgegaan expres consent zou ontneemen en hen met schulden bezwaaren, die zij noch hunne voorouderen nimmer gemaakt hebben” (De Gou, Het ontwerp van constitutie van 1797, vol. 1, pp. 17–18).

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unification. For, example, doctor Petrus Guljé from Brabant was a strong supporter of the unitary democratic ideal. Yet, at the same time, he argued that a financial amalgamation would be particularly unjust for the people of Brabant, who in the early modern Republic were ruled by the States General.92 Thus, financial unification cut right across the federalist–unitarist divide. The financial issue had the potential of allowing a coalition to form between the politicians from Holland, Zeeland, and Utrecht. Yet, in the first years after the revolution of 1795, no such coalition could be formed because the struggle over unitary democracy overruled all other issues of contention, including the debate over financial unification. Only when the unitary democratic coalition collapsed in 1801, and the political relations between the federalists and unitarists depolarized, did it become possible to form a financial coalition. This is not to say that there were no attempts to create a financial alliance before 1805. From 1796 onwards, there were continuing efforts to establish such a coalition. Although these attempts failed, they were important because they laid the foundations for the successful creation of such a coalition in 1805 and in subsequent years. The construction of the financial coalition The first attempt to create a financial coalition took place in the National Assembly in 1796 and 1797. Schimmelpenninck in particular was very active in rallying support for the establishment of a national tax system and the amalgamation of the provincial debts.93 His primary concern was to convince the federalists from Holland, Zeeland, and Utrecht that the financial advantages would offset the loss of political autonomy that accompanied the centralization of the financial institutions. They had to be convinced that the central state would be able to manage the public debt, collect taxes, and make financial policies. For example, the wealthy regent Jan Bernd Bicker from Amsterdam asked in 1796: What would be the consequences, if after the principle of financial unity had been established, it became clear that it was impossible to implement such unity? This would put the cart before the horse. Moreover, it is important to note that the people who have argued for financial unity and an amalgamation of the provincial debts have not yet made clear how such unification should take place.94 92

 ����������������� Ibid., pp. 204–8.  ������ De Gou, Het plan van Constitutie van 1796, pp.�������������� 66–8; Ibid., Het ontwerp van constitutie van 1797, vol. 1, pp. 8–9, 21, 212–20. 94  ���������������������������������������������������������������������������������� “Wat doch zoude de gevolgen zijn, als men eerst het principe decreteerde, van het finantieele geheel op onbepaalde eenheid te vestigen en men zag bij het nader discutieeren van het plan dat het onuytvooerlijk was, zou dit niet zijn, de paarden agter den wagen spannen. Ook verdient bij mij, veel opmerking, dat die leeden welke het meest ijveren voor 93

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Thus, Schimmelpenninck had to prove that the financial union was indeed feasible. Together with the unitarist politician Pieter Vreede, Schimmelpenninck subsequently proposed, in December 1796, to establish a special committee to investigate how the state finances should be organized. The creation of this committee was a first attempt to create a coalition that crossed the divide between federalists and unitarists. This special financial committee, which included Schimmelpenninck, Vreede, and Van de Kasteele, produced a favorable report on financial unification. The detailed report showed that an amalgamation of the provincial debts would be the best strategy for solving the financial difficulties of the Republic as a whole. The report also concluded that for such an amalgamation to be successful, it was essential that the general needs of the state be financed through national taxation and a uniform system of tariffs.95 The report and the pleas of Schimmelpenninck, and Van de Kasteele eventually convinced many federalists-minded politicians from Holland, Zeeland, and Utrecht to support the project of financial unification. Among others Jan Bernd Bicker was now prepared to vote in favor of the amalgamation of the provincial debts and the creation of a national tax system.96 Although Schimmelpenninck and Vreede had convinced the majority of the National Assembly to support the project of financial unification, their coalition did not last very long. Once it became clear that the federalists, including Schimmelpenninck and Bicker, were not willing to support the political unification of the state, the unitarists withdrew their support from the constitutional plan.97 Vreede along with various other unitarists started his own propaganda campaign against the plan (cf. supra). This campaign, combined with protests of the Reformed Church and the guilds resisting the elimination of their specific privileges, led to the public rejection of the constitutional proposal in August 1797. For Schimmelpenninck the failure of the constitutional proposal was a major disappointment. Consequently, he decided to withdraw from the National Assembly.98 In the following years, he worked behind the scenes to accomplish the reform program laid down in the constitutional plan of 1797. His position as Dutch ambassador in Paris (1798–1800; 1803–1805) and London

eene onbepaalde eenheid in het finantieele en voor een amalgame van de ouden schulden, geen plan hebben uytgewerkt, op welk men de uytvoerlijkhied daarvan kon bereekenen” (GAA, arch. ����������������������������������������������������������������������������� Bicker (arch.nr. 195) inv. 374, My advice on the first plan of constitution.) 95  �������������������������������������������������������������������������������� NA, arch. Wetgevende Colleges 1795–1810 (arch.nr. 2.01.01.01), inv. 565, Report of special financial committee, 9 January 1797. 96   Dagverhaal der handelingen van de Nationaale Vergadering representeerende het Volk van Nederland, vol. 4, pp. 579–80; Elias and Schölvinck. 97  �������� De Gou, Het ontwerp van constitutie van 1797, vol. 2, pp. 56–61. 98  ������������������������� Gerrit Schimmelpenninck, Rutger Jan Schimmelpenninck, en eenige gebeurtenissen van zijnen tijd (2 vols, Den Haag, 1845), vol 1, pp. 141–5.

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(1802–1803) greatly helped to accomplish this task.99 In particular when the democratic coalition collapsed in 1801 Schimmelpenninck tried to forge a broad coalition between the federalists and unitarists. To win the support of politicians from the landed provinces, he proposed to tone down the goals of financial unification. In order to gain the support of these politicians, Schimmelpenninck argued that the establishment of a full-blown national tax system should be postponed. This system could, he believed, be partly centralized, which would leave the departmental governments in control of the taxation for infrastructure.100 In effect, his plan still entailed a major step toward a financial union. Schimmelpenninck cautiously tried to find the middle ground. He proposed a state that was less centralized than that which was envisioned by unitarists such as Vreede and Gogel, but it was clearly not as decentralized as federalists, such as Farret and Besier, had desired. Despite these ideological differences, Schimmelpenninck was confident that members of both sides would be happy with his compromise. In a letter to Gogel, he argued that: The Unitarist would be content because the Republic would still be one and indivisible with a general government and a chosen representative Legislative Body, which represents the entire undivided nation. (...) Concerning finances, he would rather have seen that all of the departmental systems of finances were immediately abolished and replaced by general national taxes, but the opportunity for such a reform has been refuted by many sensible and reasonable people. (...) He, who is more prone to a moderate federalism, will also join this state of affairs because his departments will have sufficient constitutional power to organize local affairs and domestic economic interests without being dependent on a strange and far away power, which is less familiar with the details.101

 

Elias and Schölvinck, p. 208. �����������������������������  �������� De Gou, De staatsregeling van 1801, p. 544. 101  ����������������������������������������������������������������������������������� De Unitarist zou met zijne eene en ondeelbaare Republiek met een niet geëntraveerd algemeen gouvernement met een welgekozen representative Wetgevende Vergadering, de geheele onverdeelde Natie representerende. (...) Hij zou, ten opzichte van het finantieele, ja wel liever gezien hebben dat dadelijk alle departementale stelsels van finantie konden zijn afgeschaft en alles door algemeene nationale heffingen konde gevonden worden, maar de mogelijkheid daarvan door zeer veele verstandige en redelijke menschen gecontesteerd wordende. (...) Hij, die meer naar een gemodereerd federalismus overhelde, zou zich insgelijks met die order van zaaken vereenigen, omdat aan zijne departementen genoegsame constitutioneele macht gereserveerd wordt om de huishoudelijke oeconomische belangen, de dagelijksche locale aangelegenheden te kunnen beredden zonder daaromtrent van een vreemde en op verre afstand werkende magt, minder met die details bekend, af te hangen. (Ibid., pp. 544–5) 99

100

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To achieve this coalition, Schimmelpenninck wrote a great number of letters to leading men of both factions and to the French regime.102 But it was all to no avail, since the federalists took control of the central government through a coup in the fall of 1801. They simply eliminated the proposal for financial unification. Only when the ideological relations had become further depolarized in the years after 1801, and Schimmelpenninck had obtained the personal support of Napoleon, did it finally become possible to create a coalition for financial unification. This brings us back to the vital role played by the French in the transformation of the Dutch state. Just as the unitarists could not have established a unitary democratic constitution without French support, the Schimmelpenninck faction would not have been able to pursue a financial union. Napoleon’s backing was particularly crucial because Schimmelpenninck and his advocates did not have the popular support which the unitarists enjoyed in 1798. Yet, French support was by no means a given or constant. Even after Napoleon took control of the French regime in 1799, the attitude of the French government toward the Dutch had undergone important changes. In the Napoleonic government, the Republic became, even more so than before, instrumental in the European power politics of the French state. Consequently, the construction of a financial coalition, or any coalition for that matter, came to depend on European political developments.103 In 1801 this worked to the advantage of the federalists from the landed provinces, who opposed financial unification. France had just made a peace agreement with its main rivals, England and Austria. At the time, Napoleon was primarily interested in consolidating the French military advances of previous years. Hence, he wanted to stabilize the political relations in France and in the Dutch Republic by supporting the return of the old administrative elite. The federalists from the landed provinces in particular jumped at the opportunity, and proceeded to decentralize the state and abolish the plans for financial unification. Thus, the coup of 1801 was not only directed against the unitary democratic constitution, but also against the interests of Holland, whose weakened position was reflected in the central government. Of the 12 members of the Executive Council only two came from Holland. Based on the size of its population it should have been entitled to four or five members. In financial terms, the representation of Holland was even more disproportionate, as the province continued to provide 60 percent of the state’s revenue.104 In 1804, the prospects of the revolutionary elite of Holland dramatically improved, when Napoleon came to the conclusion that a federalist Republic could not effectively assist him in the new round of European warfare into which France had entered. Napoleon wanted to maximize the revenue extracted from the Republic, and he called on Schimmelpenninck to achieve this. In the course of 1804 and the beginning of 1805, Schimmelpenninck constructed, in close cooperation with Napoleon, a new constitution, which was even more authoritarian than the 102

 ��������������������������������� Ibid., pp. 504–10, 530–36, 543–5.  ������������������ Pfeil, pp. 310–12. 104  ������������������������������������ Van Zanden and Van Riel, pp. 32, 54. 103

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constitution of 1801, but which included the financial unification of the state. Subsequently, Napoleon appointed him head of state.105 Schimmelpenninck now had the authority to form his own government and finally to realize the financial coalition he had been striving for since the beginning of the revolutionary period. In his government, both federalists and unitarists from Holland were appointed to prominent positions. Gogel became minister of finance, while Van de Kasteele received a seat in the State Council. The Jewish Amsterdam insurer Johannes Goldberg, and the Reformed Amsterdam merchant Willem Six – both exponents of the Amsterdam financial elite – were appointed to Schimmelpenninck’s advisory committee.106 The financial union Once the Schimmelpenninck government was in place, it immediately went to work on the implementation of a national tax system. The new system, designed by Gogel, was based on the principles of universal freedom and equality, which entailed that all citizens were burdened in the same way and had the same rights. To accomplish this, Gogel proposed to discard all the old urban taxes and prohibit any local regulations concerning the production, transport, storage, and delivery of goods. The new law on taxation potentially had a large effect because it contained the leading principles on which other legislation could be based. To ensure that the local administrators would comply with the new regulations, the Schimmelpenninck regime issued a law that regulated the municipal governments. Local commissioners would supervise the collection of taxes and control the financial dealings of local and provincial governments.107 In addition to the implementation of tax reforms the new regime once again attempted to abolish the guilds. Gogel issued a proposal for a patent law, which introduced a tax on the free practice of most businesses, occupations, and trades. Anyone who wanted to create a new firm or start a practice would have to obtain a license from the municipality. The law gave everyone who had bought such a license, the freedom to start any occupation of their choosing anywhere in the Republic, without the obstruction of guilds or city regulations.108 This effectively ended the monopoly of the guilds over the regulation of economic life. Thus, although the struggle for democracy was abandoned after 1801, the enlightenment ideals of freedom and equality still informed the politics of men like Gogel. In 1806, Schimmelpenninck was replaced by the brother of Napoleon, Louis Napoleon, as head of state. Even though this officially transformed the Republic 105  �������� De Gou, De staatsregeling van 1805 en de constitutie van 1806 (Den Haag, 1997), pp. IX–XXVII. 106  ����������������� Pfeil, pp. 405–7. 107  ������������������ Ibid., pp. 409–15. 108  ����������������� Wiskerke, p. 158.

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into a kingdom, it did not affect the financial coalition, which continued to serve as the basis for central state politics after 1806. The relationship between the French and the central state politicians from Holland was still one of collaboration. Meanwhile, the unification process did meet with strong opposition. Without the ideal of national democracy, it turned out to be very difficult to obtain the cooperation of either the burghers or the local governments. In fact, the local corporate coalition between the urban governors and the privileged members of the population, which had been revived in the years after 1801, formed a strong basis of resistance against the centralizing measures of the governments of Schimmelpenninck and Louis Napoleon. Although politicians from very different ideological backgrounds worked together in the financial coalition, this coalition did not include any local political groups. Consequently, the central government soon came into conflict with the municipalities when it tried to abolish the guilds and exercise stricter control over the local administrations. In particular, the financial coalition clashed with the Amsterdam municipality. In 1805, the Amsterdam government, in which Johan Pieter Farret played a prominent role, wrote an extensive memorandum in defense of local autonomy and the guild system. The city administrators emphasized that the abolishment of the guilds would reduce their ability to regulate the urban community.109 Moreover, they insisted that the appointment of financial commissioners would have a very negative effect on Amsterdam “because governments within governments lead to troublesome clashes.”110 The resistance of the Amsterdam municipality, which was soon joined by other municipalities, turned the state transformation process into a continuous struggle between central and local governments over the organization of the state and the economy. Although the centralization process was strongly opposed after 1805, it did change the organization of the state and the economy. Despite the resistance of the municipalities, Gogel made some progress with the elimination of the guilds, many of which had ceased to function by the end the French occupation in 1813. Moreover, in spite of local opposition, the civic militias had been integrated into a national armed burgher force. Perhaps the most important achievement was the financial subordination of the local governments. The establishment of the national tax system, based on Gogel’s design, can be considered a major success.111 Although the construction of this system was resisted by the Amsterdam municipality, there were also signs that it set off self-reinforcing mechanisms.112 After the public finances had been centralized it became attractive for the local governors to turn to the national state for financial support. In fact, central state support became 109  ������������������������������������������������������������������������� GAA, NSB (arch.nr. 5053), inv. 689 Secret minutes 1805 September 24–1808 Januari 20. 110  ���������������������������������������������������������������������������� Door regeeringen in regeeringen ontstaan zeer verdrietige en zeer nadeelige botsingen. (Ibid.) 111  ��������������������������������� For a detailed account see Pfeil. 112  �������������������������������������������������������������������������� GAA, NSB (arch.nr. 5053), inv. 574 Minutes of Council of 16 December 1806.

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318

vital, since the freedom of the Amsterdam governors to seek alternative financial sources had disappeared. For example, in 1809, when the Amsterdam municipality was faced with a large deficit of half a million guilders, the city council proposed to demand larger contributions from the central government to the city’s finances.113 Even though the municipality did not obtain the larger central state subsidies, its actions do reveal that, at least in financial terms, it no longer attempted to be completely independent. Thus, in the absence of obstructive democratic institutions, significant advances in the centralization process were able to take place, which in turn laid the foundation for the development of a unified Dutch state in the decades to come. The dismissal of democratic ideals and the effective abolishment of representative procedures, however, did come at a price. It became much more difficult to obtain the cooperation of local political groups. Consequently, each centralizing measure met with strong local resistance. This resistance became especially strong in the years between 1810 and 1813, when the Dutch state was incorporated in the French empire. At this point, the relationship between the Dutch and the French changed from collaboration into domination. Even the central state politicians from Holland lost their enthusiasm for the state transformation process. For example, Elias Canneman, one of the financial experts of Holland, wrote about the annexation to Gogel: “the beginning is misery, the blow has been too generally felt and has overthrown too much, to find medication that can revitalize the weak and decrepit woman from her miserable state.”114 The politicians from Amsterdam and Holland were particularly shocked by the decision of the French regime to reduce the interest payments on the national debt to one third.115 This measure dealt a major blow to the Dutch public finances, and severely damaged the private finances of the Amsterdam elite. However, it was not only the elite who felt the adverse effects of the French measures. The press was censored; strict border patrols to enforce the Continental System damaged trade; and the civic militias were turned into a conscription army, and were employed in France’s wars.116 As a result, the Dutch population started to protest. In Amsterdam, there were several revolts against the French authorities.117 By this point, the central government had completely lost control. Only after the French had left in 1813, and new political alliances were constructed under the reign of the King William I, did the centralization process gain momentum again. 113

 ��������������������������������������������������������� Ibid., inv. 716 Minutes of vroedschap of 27 January 1809.  ������������������������������������������������������������������������������ de aanvang is ellende, en de trilling is te algemeen gevoeld en heeft te veel omvergesmeten dan dat het mogelijk zijn zoude geneesmiddelen te vinden om de zwakke uitgeteerde vrouw uit dien ellendigen staat op te beuren. ��������������������������� (NA, arch. Gogel (arch.nr. 2.21.005.39), inv. 80, Letter of Canneman to Gogel of 11 Augustus 1810) 115  ������������������������������� H. Smitskamp and L.C. Suttorp, Historische teksten (Zwolle, 1959), pp. 181–3. 116  ������������ Johan Joor, De adelaar en het lam, (Amsterdam, 2000), pp. 340–42, 425–7; Van Zanden and Van Riel, pp. 89–90. 117  ������������������ Joor, pp. 799–807. 114

Local Particularism Challenged, 1795–1813

319

Conclusion As the late eighteenth century Dutch revolutionaries discovered, it was very difficult to eliminate the early modern local corporate state structure. Rapid advances in centralization and democratization in the first years after the revolution of 1795 were followed by a partial restoration of local particularism. The centralization process was eventually revived in the years after 1805, but it continued to face strong local resistance. To explain the setbacks in the state transformation process, this investigation has focused on the process of revolutionary struggle, rather than on the socio-economic, financial, or cultural background of the revolution. This examination has led to three observations, which help to explain not only the sudden advances and reversals in the processes of centralization and democratization in the Netherlands, but also those in other parts of Europe during the late eighteenth century revolutionary period. Firstly, the relationship between the processes of centralization and democratization was far more complicated than has previously been portrayed. On the one hand, the struggle for democracy clearly strengthened the centralization process, as the ideal of unitary democracy could be used to create a broad coalition for the centralization and democratization of the state. On the other hand, the democratic institutions which had been created served to obstruct the efforts to reform the state, in that they were time consuming and they allowed the various political groups to resist political change. In the Republic these competing forces ultimately led to a sharp reversal in the transformation process in 1801. Similar patterns of revolutionary change in other European countries would seem to suggest an equally difficult relationship between democratization and centralization in other late eighteenth century revolutions. Secondly, the creation of a financial coalition between the central state politicians from Holland and the French regime eventually made it possible to revive the centralization process from 1805 onwards. Although this coalition had only a small political basis and met with strong local resistance, it was able to facilitate the unification of the financial system, thereby making it possible to renew the assault on the local corporations. To date, there is no evidence that such financial coalitions were also formed in other decentralized European states around the turn of the eighteenth century. This suggests that finances were the main reason why the Republic centralized relatively quickly compared to the other decentralized European states. Finally, the arguments presented here call for a reevaluation of the role of the French in the revolutionary transformation of the Dutch state. Thus far, theorists have wavered between giving the French all the credit or giving them no credit at all. By focusing on the revolutionary process, it has been possible to qualify the role of the French. They were above all an essential coalition partner, but they certainly did not dictate the revolutionary changes. The Dutch state became more centralized because unitary democratic and financial coalitions had been created. The advances in the state transformation process only occurred because Dutch

320

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politicians were willing to cooperate with the French. The latter could not simply impose political reform, which became abundantly clear in the years after 1810. This causal link is also supported by the failed attempts of the French to establish centralized state structures in Switzerland and Northern Italy, where the political elite and the population were not as willing to cooperate with them.

Index

(References to diagrams are in bold) Abba, Cornelis 130 Abbenbrouck, Gerrit Jansz 207, 208 Absolutism, consequences 164 Advocaat der Nationale Vrijheid 298 agricultural development commercialization 11 Dutch Republic 27 Europe 169–73 Guelders river area 16, 170 agricultural prices, Holland, rise 186 Alba, Duke of 49, 149 financial policies 164 Allen, Robert 169, 170 Amsterdam 5, 42 annuities 124, 130 134, 135, 136 Baltic trade 227 bonds 123–30 ‘Deductie’ 79, 81, 84 district receivers 117–18, 120, 119–23, 130 Dutch Revolt, participation 119 foreign trade 39, 80, 226, 230, 234, 238–9, 264 guilds, restoration 309 merchants, taxation 242–3 money market, emergence 238 Muscovy trade 230 Society for One and Indivisibility 298–9, 302, 304, 306 Spain, loyalty to 45 Uitkijk club 303 unitarists 297 Virtuousness and Skills 304 Anglo-Dutch war (1780–84) 9 Antwerp burgher land ownership 191 capture by Spain 227 collapse 264 fall (1585) 11 finance, Dutch Revolt 47

as international market 226–7 money market 246, 247 Arminius, Jacobus 131 Ashley, William 19 Austrian War of Succession (1740–48) 8, 77, 82, 152 Bank of England 142 Batavian Revolution (1795) 14, 57, 291 Beccaria, Cesare 33 beer brewers’ guilds 262, 282 brewing industry 13, 257, 264–9, 279 demand, and population growth 266–9 Dutch Republic, excise taxes 272–3 exports 270, 271, 278–83 tariffs 43, 44, 260–62, 274, 275, 282, 283–8 trade, and Union of Utrecht 272–8, 288 Berch, Anders 22 Besier, Augustijn 308 Bicker, Jan Bernd 296, 312 Bielfeld, Jakob Friedrich von, on state decadence 38 Bijlsma, R. 270 Bogaert, Frans 121 Bol, Ferdinand 132 Bol, Jacob 42 Borielle, district receiver 11 Bosch, Bernardus 303 Botero, Giovanni 19, 22, 27, 37 on the Dutch economy 32–3 Ragion di Stato 23 Relationi universali 32–3 Sulle grandezze delle città 32 Brabant 312 population growth 266–7 bread bakeries 110, 111 baking trials 1, 93–4, 109 production, German predominance 91 rye vs wheat 7

322

The Political Economy of the Dutch Republic

taxation 7 Holland, grain milling 67, 91–7 bread prices control and competition 111 consumer interest 102–6, 109, 113–14 and cost of living 108–9 and the middle classes 105–6, 114 and the poor 102–5, 114 producer impact 106–12 purpose 102 Dutch Republic 85, 100 England 85, 87, 89–90 Europe 85 new system 90–97, 113 old system 86–90 France 85, 86–7, 90 Germany 85, 90 Holland see under Holland Italy 85 Leeuwarden 87 Netherlands cross-subsidies 98 excise taxes 99 wheat types/prices 99–100 Brenner, Robert 170, 173 Brielle, district receiver 11 Brill, debts 49–50 Burlamachi, Philip 248 Campanella, Tommaso 22 Canneman, Elias 318 capital market, Holland 190 capitalism 22–3 Charles I, King of England 248 Charles V, Emperor 4, 60 Child, Josiah 19, 20–21, 32 citizenship, definition 144–5, 163–5 Civil War (1572–76) 6, 54 Cockayne, William 240, 248 Colbert, Jean-Baptiste 31, 34 Commesteijn, Johannes 133 Committee of Public Safety, Holland 301 consumption, taxes on 225 Court, Pieter de la on consumption taxes 79 on the Dutch economy 31–2

Het Welvaeren der Stad Leyden 30 Interest van Holland 27 Cranfield, Lionel 248 Crispe, Nicholas 248 customs duties Dutch Republic 55–6 England 243, 244 de Bruin, Roger 299 De Democraten 297, 302 de Graeff, Andreas 133 de Lange, Dirck 130 De Politieke Blixem 297 de Vicq, Francois 133 de Wilhem, David 122 de Wilhem, Paulo 122 de Witt, Johan 128 ‘Deductie’, Amsterdam 79, 81, 84 Defoe, Daniel 24, 25–7 Deijman, Johannes 133 Delacroix, Charles 304 Delft 13 district receiver 11 repartitiën 45–6 Dordrecht 229 district receiver 11 Dordt Synod (1618) 131 Doudijns, Henrik 60 Downing, Sir George 115, 140 Drake, Francis 247 Dudley, Robert, Earl of Leicester 54 Dutch East India Company (VOC) bills, obligatory 12 charters, payment for 240–41 formation 12, 183–4, 231 investment in 189, 236, 237 monopoly 12 shareholders 238 shares, transferability 238–9 ships, armament of 241 Dutch economy 10–13 agriculture, 167 growth 264 integration 256–7, 289 manufacturing 31 protectionism 257 tariffs 257 Dutch Republic 1

Index agriculture 27 army 14 bonds 8, 9, 251 bread prices 85, 100 centralization 292, 300–310, 319 customs revenues 55–6, 244, 245 debt 8, 75 democratization 293–6, 319 federalism, call for 295–6 fiscal system, evaluation 82–3 grain prices 256 income tax 153 Louis Napoleon, head of state 316 merchants, 229–31, 234, 242, 245, 246 National Assembly 298, 299 navy 14 Patriot Revolt (1781–7) 294 political economy 3 population 57 fn9 public finance 6–10, 145–51, 249 revolutionary elite 295 Stadholder 291 States General 56 taxation quota system 147–8 revolts against 152–3 trade chartered companies 226 decrease 80 domestic 257 England, comparison 225–54 expansion 232–3, 252–3 imports 232–3 see also Dutch East India Company war of 1672–8: 64, 74, 79, 80 War of Spanish Succession, threat 81 see also Holland Dutch Revolt 1, 3–6, 16 Amsterdam 119 finance 46–8 in Holland 42 and oppressive taxation 149, 164 and trade 11 Dutot, Charles, Political Reflections 31 East India Company see English East India Company Eastland Company 227

323

economic growth 20–23; see also Dutch economy Eighty Years War see Dutch Revolt Ekelund, Robert B. 23 Elizabeth I, Queen of England 25 Emilius, Johannes 132 England bonds, interest on 250, 251 bread prices 85, 87, 89–90 cotton spinning, success 35–6 customs revenues 243, 244 finance 115, 137 foreign trade Asia 236 chartered companies 227–9, 232 exports 234 imports 233 land transfers 174–5 lease rights 176 loans to government customs farmers 248, 249 merchant bankers 248 public finance Dutch system, comparison to 141 features 137, 138 forced loans 139, 246, 247, 248 interest payments, irregularity 139–40 Treasury Orders 140–41 ship money levy (1626) 139 taxation collection costs 64 of merchants 242 per capita 148 wool trade 24–5 English East India Company 228 investment in 236, 237 investors 238 loanable funds, scarcity 239 Enlightenment ideals 294 Ernst der Fromme, Duke of Sachsen-Gotha 34 Europe agricultural development 169–73 bread prices 85 peasant economies 169 state structures 291–2 trade fairs 224

324

The Political Economy of the Dutch Republic

Eversdijk, Cornelis 93 Farret, Johan Pieter 295, 296 Fijnje, Wibo 298, 300 Finance Office, Holland 59–64 fish pickling industry, Dutch Republic 24 Flanders land transfers 174 population growth 266–7 Flinck, Govert 132 foreign trade benefits 223–4 Dutch Republic/England, comparison 225–54 import/export licenses, sales 241 taxation of 240–51 see also under Amsterdam; England Fouquet, Nicolas, financial loss 138–9 France 4, 79 bread prices 85, 86–7, 90 Dutch Republic coalition with unitarists 300, 304, 319 financial interest in 299, 303–4, 318 incorporation in French empire 318 invasion of 2, 152, 210, 295 occupation 15, 317, 318 role in transformation 315, 319, 319–20 rule 2, 151, 300, 305, 306, 308 threat to 78, 80 war against 159 finance 115, 137 Friesland, withdrawal from 301 Fructidor coup 299 lease rights 176 population 57 fn9 protectionism 34 public finance 9 public loans Burgundy loans (1660–69) 140 features 138–9 forced loans 139 interest rates 140 taxation 148 Thermidorian regime 299 trade barriers, internal 258

French Company 227 French Revolution 294–5 Frey, Bruno 144 Friesland beer tariffs 286–8 French withdrawal 301 National Assembly, joining 301 taxation, quota contribution 147 Fugger family, 191, 235 ‘Gecommitteerde Raden’, Holland 59, 60, 66, 70, 74, 79 Gee, Joshua 25, 28 Genovesi, Antonio 22, 33 Germany bread prices 85, 90 land ownership 179, 191 trade barriers, internal 258 Ghent, burgher land ownership 191 Giddens, Anthony 293 Glorious Revolution (1688–9) 3, 254 Gogel, Isaac 63, 64, 71, 74, 295, 302, 306, 307–8, 316 Goldberg, Johannes 316 Golden Age 4, 5, 7, 14, 36, 164–5 Gouda 13 district receiver 11 grain milling, taxation 106–7 Holland 67, 91–7, 113 Netherlands, 107–8 Great Britain Dutch Republic, war (1780–84) 294 population 57 fn9 see also England Gresham, Thomas 246–7 Griffiths, Trevor 35 Groningen, lease rights 176 Grotenhuis, Johan ten 130 Guelders (duchy/county) 4 Guelders river area agricultural development 16, 170 land leasing 177, 186 land ownership 171 Guicciardini, Lodovico Descrittione di tutti i Paesi Bassi 32 on Dutch agriculture 27–8 guilds 317 abolition 316

Index Amsterdam 309 brewers 262, 282 restoration 309 Guinea Company 228 Guljé, Petrus 312 Haarlem 13 bakers, numbers 110 brewers, numbers 270, 278–9 district receiver 11 export brewing 270, 271 siege 45 The Hague, Receiver General 117 Hanseatic League (Hansa) 4, 36, 38, 39, 226, 229 Hellemont, Jan 133 Henry IV, King of France 31 Henry VII, King of England 22, 24–5 Hicks, Baptist 248 Hinlopen, Frans 125 Hinlopen, Michiel 133 Hocquet, Jean-Claude, Il sale e la Fortuna di Venezia 24 Hoffman, Phil 169, 170 Holland (province) 4, 6, 15 agricultural development 167, 168 agricultural prices, rise 186 Amsterdam, dispute on form of government 300–301 annuities see renten beer tariffs 43, 44 bread prices 87, 91–7 baking trials 93–4 costs 94–6 brewing industry 257, 264–9, 278, 279 capital market 190 civil war 54 Committee of Public Safety 301 Court of Holland 177 creditworthiness 42, 45 creditors 46–8 debts 50–51, 65, 310 in Dutch Revolt 42 ecclesiastical properties, seizure 49 farm size 168 feudal tradition, lack of 174 Finance Office 59–64, 83 financial preeminence 41

325 financial union 316–18 fiscal policy 77–8 contemporary views 79–82 evaluation 83 ‘Gecomitteerde Raden’ 59, 60, 66, 70, 74, 79 gemene middelen taxes 6, 44–5, 51, 64, 66, 67–74, 80, 82 Great Council 177 land distribution 1560: 180–184 prices 182–3 reclamation 183, 184, 185 tax burden on 187–8 transfers 174 land ownership 173–4 by burghers 177, 180–90, 192, 193, 194–5 registration 179 urban 179, 194–5 lease prices 176, 178, 182–3, 186 lease rights 173–4, 175, 176–8, 193 National Assembly 298, 301, 304, 310 natural resources, lack of 28–9 peasant economy 167–8, 180 population growth 266–7 property rights, changes (16c) 177–80 proto-industrialization 172–3, 188 public loans annuities 118, 119 bonds 116–19 English system, comparison to141 renten 42, 47, 48–9, 50, 246 rural development 167 approaches 171–3 European perspective 190–95 tax revenues 7, 42–5 beer 43, 44 bonds 9, 66 cattle 67 collection costs 63–4 grain milling 67, 91–7, 99, 113 land/house 66 peat 67, 70 property 76, 77, 78 transfer tax 66 wine 43, 44, 67, 70 taxation 1572–1795: 68–9, 70–71

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on consumption 149 efficiency 58–84 ‘extraordinary’, changes 74–8 farming 63, 83, 149 on income, difficulties 84, 150 increase 149 morale 149 morgengeld 218 national system 316, 317 per capita 148, 162 progressive 149–50, 163 property 64, 65, 66, 75, 84 quota contribution 147 rebellions (1748) 63, 83, 149 self-assessment 153–4 unitarism, call for 298 unitarists 300, 302, 303 urbanization 180, 186 Hooft, Jacob 125 Hooftmans family 235 Hoorn 52, 53 Hoppenbrouwers, Peter 171–2 Huet, Pierre Daniel 24, 27 A View of the Dutch Trade 25 Commerce de Holland 33 Hume, David 27 Hunt, Philip 35 Ibn Kaldoun 38 immigration 30 income distribution 260–61, 262 Israel, Jonathan 2 Italy bread prices 85 burgher land ownership 191–2 James I, King of England 247 Johan Maurice of Nassau, Count 133 Justi, Johann Heinrich Gottlob von 36, 37 Keynes, John Maynard 30 Kindleberger, Charles 38, 39 Konijnenburg, Jan 298 Laffemas, Barthélemy 31 land ownership Germany 179 Guelders river area 171

Leiden 181 see also under Holland land transfers England 174–5 Flanders 174 Holland 174 Lane, Frederic 24, 39 Laspeyres, Etienne 21, 31 on Dutch Republic economy 81, 82 Le Roy Ladurie, Emmanuel 170 lease prices, Holland 176, 178, 182–3, 186 lease rights England 176 France 176 Groningen 176 Holland 173–4, 175, 176–8 Overijssel 176 Leeuwarden bread prices 87 revolutionary clubs 301 Leiden 8 budget cuts 161–2 district receiver 11 land ownership, by burghers 181 municipal expenditure 160–61 Provisional Tax 157 siege (1574) 50 special commission 156–7 tax assessment bonmeesters 155–6, 157 complaints procedure 157–8 tax riots 157 taxation free riding, avoidance of 158 success factors 158 town council 146 les Paull, Isaack 133 Levant Company 227, 235, 240, 245 Lievens, Jan 132 List, Friedrich 38 Louis Napoleon 316 Lyon, burgher land ownership 190–91 McCullagh, W. Torrens 28, 29 Mandeville, Bernard 34 manufacturing 22, 23, 26–7, 31 Marshall, Alfred 23 Marx, Karl 111–12

Index Maurits of Orange, Prince 60 Mazarin, Cardinal Jules 115 mercantilism 20, 21 Merchant Adventurers, Company 47, 226–7, 240, 246, 253 Middelburg 229 Mijnhardt, Wijnand 292 Mons, siege of 48 Moreau, Jean 301 Mun, Thomas 22 Munster, Treaty of (1648) 148 Muscovy Company 228 Napoleon Bonaparte 315–16 National Assembly Holland 298, 301, 304, 310 new constitution 302 The National Batavian Newspaper 303 natural resources, Holland, lack of 28–9 Navigation Acts (1651) 34 Netherlands Habsburg 11, 16 Spanish 16 unification 15 see also Holland Nine Years War (1688–97) 74, 75 Noordegraaf, Leo 257 North, Douglass C. 3, 4 O’Brien, Patrick 34 Ockerse, Willem 297, 304, 305, 306 Oetgens, Frans 121 Oetgens, Weyntge 121 Olson, Mancur 262–3 Overijssel beer tariffs 275, 282, 283, 283–5 harbour tax 283–5 income tax 150 lease rights 176 taxation, quota contribution 147 Palmer, Robert 292 Paris, burgher land ownership 192 Patriotten, Dutch Republic 294 peasant economy, Holland 167–8, 180 peasants, and agricultural development 169–70

327

peat mining, Rijnland 208–11, 221 tax revenues, Holland 67, 70 Perrotta, Cosimo 21 Petty, William on the Dutch economy 32 ‘Petty’s Law’ 32 Pfeil, Tom 292 Philip II, King of Spain 6, 51, 247, 250, 259 Pindar, Paul 248 Piso, Willem 133 profits see rents property rights Holland, changes (16c) 177–80 land 11 property taxes, Holland 64, 65 proto-industrialization, Holland 172–3, 188 Reael, Frans 130 Reael, Hendrik 130 Reael, Johan 120–21 Reael, Pieter 121, 124 Receiver General The Hague 117 Utrecht province 121 Rembrandt (van Rijn) 132 Remonstrants 130–31, 142 renten, Holland 42, 47, 48–9, 50, 246 rents 24 repartitiën 48, 49 revolutionary clubs, Dutch Republic 296, 297, 298, 299, 300, 302, 303, 304, 305, 307, 310 Reynst, Pieter 121 Rijnland creditors 215–18 finances, supervision 218–20, 221 landscape, changes 203 life annuities, sale of 215, 217, 222 loans 215–16, 217 peat mining 208–11, 221 special apportionment 217–18 Rijnland water board 11, 13, 198 function 199–200 management expenses 219, 220–21 morgengeld tax 200–203, 206–7, 209, 212–13, 215, 220

328

The Political Economy of the Dutch Republic

revenues 200–203, 206–8 Rotterdam district receiver 11 export brewing 270, 271 rural development 167, 171–3, 184 Rusius, Albertus 133 Russell, William 248 Russia Company 235 salt trade 24 Schama, Simon 292 Schimmelpenninck, Rutger Jan 296, 300, 301, 310–16 Schuyt, Nicolaas 130 Sea Beggars 227 Seckendorff, Veit Ludwig von 34 Seligman, Edmund Essays in Taxation 83 Serra, Antonio 19, 21, 26, 29, 34, 37 Six, Johan 133 Six, Willem 316 Sladius, Cornelis 133 Sladius, Matheus 133 Smith, Adam on the Dutch economy 34–5 on political economy 2 The Wealth of Nations 2 Society for One and Indivisibility Amsterdam 298–9, 302, 304, 306 Utrecht 299 Spaarndammerdijk 199, 200, 204, 210, 215 Spain, economy 20, 21, 22, 29, 30 Spanish Company 227 Spanish Succession, War of (1702–13) 1, 9, 67, 75, 77, 152 tax burden 216–17, 221–2 threat to Dutch Republic 81 Spiegel, Elbert 128 Stadtholder, Dutch Republic 291 Staplers Company 240 States General 3, 5, 9 States of Holland 4, 7, 8, 9, 117, 118, 153 creditworthiness 249 loans, from merchants 250 obligations, sale 250, 251 Steuart, James 34 Stevin, Simon 60 Switzerland, tax morale 144

Tarrow, Sidney 293 tax evasion, modern 143 tax morale 143–4, 149, 155 taxation Netherlands, centralization 57 Union of Utrecht 55, 147 for War of Austrian Succession (1740–48) 8, 77 see also under Holland Telegraaph 297 Temple, William, Observations upon the United Provinces 251–2 tenant farmers, and rural development 171 Thirty Years War (1618–48) 33, 164 Tholink, Aarnout 133 Tilly, Charles 293 Tollison, Robert D. 23 trade fairs, Europe 224 Trip, family 235 Troubles, Council of (1567–74) 49 Tulp, Nicolaas 133 Turkey Company 228 Tuscany, burgher land ownership 187 Twelve Years Truce (1609–21) 60, 231–2 Uijttenbogaert, Augustijn 121, 122, 125 Uijttenbogaert family, network 130–34 Uijttenbogaert, Frans 121 Uijttenbogaert, Johannes 116, 121, 122, 123, 126, 137 artistic connections 132–3 Uijttenbogaert, Pieter 125 Uitkijk, Amsterdam 303 unitarism 297–8, 300, 302–3, 306 United Provinces see Dutch Republic Utrecht 13 beer tariffs 274 Society for One and Indivisibility 299 Utrecht, Union of (1579) 3, 9, 14, 55, 147, 256–9, 272–8, 288 Uztáriz, Gerónimo 22, 27, 28 Teórica y practica de comercio y de marina 33 Valckenier, Gillis 133 van Beuningen, Coenraad 122, 133 van Beuningen, Dirck 122

Index van Dam, Jan Willem Irhoven 300, 301 van de Kasteele, Pieter Leonard 311, 313, 316 van der Hagen, Steven 130 van der Hem, Laurens 133 van der Laen, Adriaen, financial scandal 211–15, 218–19, 221 van der Waijen, Johannes 133 van der Woude, Ad see de Vries, Jan van Hall, 15 van Holy, Jacob Muys 53, 54 van Lore, Peter 248 van Nassau, Jan 43 van Neck, Reynier 120, 121 van Os, Dirk & Hendrik 183, 189 van Sas, Niek 292 van Staphorst, Nicolaas 311 van Valkensteyn, Franchoys 43 van Zanden, Jan Luiten 8, 9, 108, 111, 172, 292 Veblen, Thorstein23 Venice 20, 21, 24, 26, 29 Venice Company 235 Vienna, Congress of (1815) 2, 15 Virginia Company 253 Vitringa, Herman 311 VOC see Dutch East India Company Vreede, Pieter 303, 304, 305, 306, 313

329

Wallerstein, Immanuel 38 water boards (waterschappen) 197–200; see also Rijnland water board water management 197–9 Weingast, Barry R. 3, 4 West India Company 231–2, 241 William I, King of the Netherlands 2, 15 William I, Prince of Orange 2, 6, 43, 44, 52, 54 William III (William of Orange) 3 wine tax, Holland 43, 44 Wiselius, Samuel 295, 300, 302 Witsen, N. 80 Woerden 204–6, 220 wool trade, England 24–5 Wtenbogaert, Johannes 131, 132 Zeeland 41, 51, 147 Zwolle 8 Common Council 146, 151, 154 Family Tax, appeals 154–5 Liberal Gift tax 152 commissioners 154 municipal expenditure, 1709 158, 159–60 services 159 taxation 151–2, 155