Download 3.2 – PART ONE: Exploration and the Commercial Revolution

UNIT 3: Exploration and Economic Evolution
3.2 – PART ONE: Exploration and the Commercial Revolution
Trade, Conflict, and Global Exchange
European mariners often attempted to build trading Empires in the areas they explored. Some attempted to control the spice
trade in the Indian Ocean and other areas; but they did not have the military power to do so effectively. The Portuguese were the
first to attempt control. They hoped to control trade routes by forcing merchants to call at fortified trading sites and pay duties.
By the mid sixteenth century, they had erected fifty fortified posts between west Africa and east Asia. They traded in slaves in
Africa and attempted to control the gold trade in Mozambique; and also attempted to channel the clove trade through their ports.
They often used heavy artillery mounted on their ships to overpower smaller craft.
The Portuguese commander of forces in the Indian Ocean was Alfonso d’Alboquerque, who attempted to force all foreign ships
to obtain safe conduct passes at Portuguese trading posts. Ships without passes had their cargoes confiscated, and violators of
his policies were executed, or their hands were cut off. Still, he only controlled half the trade effectively. Arab merchants still
transported pepper through the Red Sea to Cairo, and Indian merchants also operated successfully in the area. The Portuguese
were never able to control Cairo or the Mediterranean routes.
Eventually, Portuguese hegemony of the Indian Ocean grew weak, and was replaced by trading companies operated by English
and Dutch investors. Portuguese ships had often been manned by Spanish, English and Dutch sailors who soon became familiar
with Asian waters. The English and Dutch attempted to channel trade through their trading posts, but did not attempt to control
shipping on the seas as had the Portuguese. The Portuguese continued to operate in many of the Spice Islands, notably Goa and
Malacca; the English concentrated on India while the Dutch operated in South Africa and present day Indonesia, primarily Java.
The arms of the Dutch East India Company reached all across
the world, bringing financial dominance to the Netherlands
for a century.
English and Dutch merchants used faster, cheaper and more
powerful ships than had the Portuguese which gave them an
advantage; plus they conducted trade as Joint Stock
Companies, similar to a modern corporation which allowed
investors to realize huge profits but risk only the actual sums
invested in the enterprise. Among the more successful
companies were the English East India Company and the United
East India Company, operated by Dutch investors. It was known
by its initials, VOC (Vereenigde Oost-Indische
Compagnie.) The companies were supported by their
governments and outfitted ships with goods and money to trade.
They had no government oversight, and concentrated strictly on
profit. They even had the right to wage war to protect their
interests. Both companies were immensely successful. One
expedition of five English ships, which sailed from London in
1601 with gold and silver coins valued at £ 30,000; returned in
1603 with spices valued at greater than £ 1,000,000.
There was also a British West India Company, and several
other joint stock companies involved in the settlement of the
Americas. The London Company was largely responsible for the settlement at Jamestown, Va., and the Plymouth Company,
which later became the Massachusetts Bay Company, was responsible for the settlement of New England. Also, the Royal
African Company operated a number of ships engaged in the slave trade.
Global Exchanges
Interaction between people of Europe, Asia, and the Americas resulted in an unprecedented volume of exchange of plants, food
crops, animals, people, and diseases. The most famous of these was the Columbian Exchange, between Europe and the
Americas. It is important to note that these ex changes involved lands with radically different flora and fauna and diseases. The
result was a permanent alteration of the world’s geography and environment.
Europeans in the Americas brought with them small pox, whooping cough, diphtheria and influenza to which the native peoples
were not immune. Effects of the diseases in Europe had been less drastic, affecting perhaps ten per cent of the population,
mostly children under age ten. It did not pose a threat to society as it did not kill working adults often. In the Americas,
however, they became ferocious epidemics, killing as much as 95% of the native population within a century. The population of
Mexico declined from 21,000,000 to less than 1,000,000. The diseases were easily transmissible, and affected many people who
had had no contact with Europeans whatsoever. The diseases were also devastating in the Pacific Islands, although on a smaller
scale. Best estimates are that between 1500 and 1800, more than 100,000,000 people died of disease imported by Europeans.
In the long run, however, the Columbian exchange increased rather than diminished human population. The introduction of
food crops and animals resulted in improved diets which led to healthier populations which multiplied more easily. From
Europe to America went wheat, horses, cattle, pigs, sheep, goats, and chickens. (Sadly, cockroaches were an unintentional
import.) From America to Europe, Asia and Africa went maize, potatoes, tobacco, beans, tomatoes, peppers, peanuts, manioc,
papayas, avocados, pineapples, and cacao. The end result was a surge in population of the world.
Human populations also spread through transoceanic migrations, many of which were involuntary. Most migrants were
enslaved Africans sent to American and Caribbean destinations. Others were Europeans who settled in lands which disease had
depopulated in the Americas, Africa, Australia and the Pacific Islands. Some Asian people also migrated to tropical and subtropical destinations.
Trading post empires also led to the globalization of trade. European goods traveled to the Americas where they were traded for
silver from Mexico and Peru and agricultural products such as sugar and tobacco. European goods also were traded in Africa for
slaves who were in turn shipped to plantations in the west. Silver was particularly important, as it was the basis for Chinese
currency. European merchants often exchanged it for Chinese gold which was later traded profitably for more silver or other
trade goods. Many Asian luxury goods traveled from Manila to Mexico or Peru, while most traveled across the Atlantic to
Spain and European markets. European mariners and merchants had soon connected almost all parts of the world in trading
networks with the exception of Australia.
3.2 – PART TWO: The Seventeenth Century Dutch Republic
The seven northern provinces of the Netherlands won their independence from Spain and became the Republic of United
Provinces of the Netherlands in 1579 by terms of the Union of Utrecht. Their independence was confirmed by the Peace of
Westphalia which ended the Thirty Years War. Holland is/was the largest of these provinces, although there is a tendency to
refer to the entire country by that name. During the seventeenth century, Dutch scientific, artistic and literary achievements
reached full flower.
The House of Orange, of which William of Orange (later William III of England) would have preferred to establish a hereditary
monarchy in the Netherlands, but they people resisted. They did not want absolute rule; they identified it with the capricious
nature of the Spanish monarchy from which they had recently
been liberated. Within each of the provinces, an oligarchy of
wealthy merchants called "regents" handled domestic affairs
in the local legislative bodies, known as Estates. The
provincial Estates held almost all power. Each province was a
member of a larger, federal organization known as the States
General which handled foreign affairs. Members of the
nobility received automatic representation in the States
General, but their economic and political authority was
weak. The States General did not possess sovereign authority,
as it had to refer all issues back to the local Estates for
approval. It appointed a representative known as
the stadholder for each state, who was the highest executive
in that state. The stadholder was frequently a member of the
House of Orange. The stadholder had influence, but not
authority. He performed ceremonial functions and was
The 17th century Dutch were snappy dressers, which was
responsible for maintaining peace and good order as well as
representative of the great wealth the country contained.
for defense; however he could not declare war, legislate, or
even participate in the decisions of the Republic.
In 1659, William II (1626-1650), stadholder of six of the seven provinces, arrested six leaders of Holland and sent an army to
attack Amsterdam. A compromise reinforced the power of the stadholder; but William died unexpectedly two years later, and
the balance of power swung back to the regents. Any possibility of the Netherlands becoming an absolutist state was forever
ended.
Independence was closely guarded, and any attempt at a centralized government was vigorously resisted. Even so, the republic
was dominated by Holland, which had the largest navy and most wealth. The States General met at The Hague, Holland’s
capital. Commercially, the Dutch were amazingly successful, which contributed to their political success. The moral and ethical
bases of their wealth were thrift, frugality, religious toleration
The best descriptive term for the Dutch government would be a confederation. It fit none of the standard types of political
organization of the seventeenth century. They were not monarchial, but were rather fiercely republican. The government was
controlled by wealthy merchants and bankers whose values were strongly middle class, rather than aristocratic.
Religious toleration was practiced by the Dutch more than any other European state. All faiths were welcome. Although
there is some evidence of anti-Semitism in scattered areas, Jews enjoyed a degree of acceptance into society and business that
was quite unique. Jews in Amsterdam numbered 7,500 out of a population of 200,000 in 1672. Catholicism was also tolerated,
even though the Dutch were primarily Calvinist. The prevailing attitude was that religion was a private matter, and was not the
business of the community unless it interfered with business. Over 60,000 Huguenots fled France and migrated to the
Netherlands to escape persecution. The Separatists (known to every American History student as the "Pilgrims") originally
settled in Holland, but soon abandoned their homes there as they were horrified to learn their children began speaking Dutch.
Not everyone was routinely accepted, however. Armenians were not allowed religious freedom, and gypsies were routinely
persecuted.
Growth of the Dutch Economy
The growing Dutch economy, due to religious toleration and
the discovery of the New World, launched an historical era
known as the Commercial Revolution. The Commercial
Revolution increased production of goods, stimulated the
development of private and public business ventures, and led
to an overall growth in consumerism across Europe starting in
the early 16th century and lasting until approximately the end
of the 18th century, although its effects are still seen across
the world today.
The Bank of Amsterdam (whose deposits were guaranteed by
the City Council) became the chief bank of Europe and a
ready source of large loans at cheap interest rates. It also
became the chief clearing house for bills of exchange. An
ordinance in 1581 had listed bankers as a disreputable
profession, along with actors, jugglers, and brothel keepers,
all of whom were excluded from receiving communion in the
Dutch Reformed Church. With the onset of prosperity, Dutch
bankers earned a level of respect they had hitherto not
enjoyed.
Dutch agriculture also flourished. Thousands of workers and
horses constructed the dikes which allowed the reclamation
of fertile land from the sea. An agricultural surplus resulted,
the profits of which were reinvested in commerce and
manufacturing. (Necessary as they were, the dikes were also
dangerous and broke on occasion. In one momentous flood in
1421, a flood killed over 100,000 people.)
Stock markets were a common feature of the Dutch
Commercial Revolution. The common man could invest in
financial measures with limited risk.
Amsterdam’s trading centers featured people of every race
and creed; the docks of the Amstel River, on whose banks Amsterdam sits, saw as many as five thousand ships docked at its
berths, all there to do business. In the early seventeenth century, the people of Amsterdam constructed three large canals which
expanded the area of the city fourfold. The canals allowed boats to dock outside warehouses where they could load goods and
carry them to larger ships at the harbor.
The success of the Dutch banking and trading businesses led the poet Joost van den Vondel to proclaim:
God, God, the Lord of Amstel cried, hold every conscience free.
And Liberty ride, on Holland’s tide, with billowing sails to see.
And run our Amstel out and in, let freedom gird the bold.
And merchant in his counting house stand elbow deep in gold.
Shipping and fishing were the cornerstones of Dutch prosperity, primarily the herring business. Profits from the herring
business stimulated shipbuilding; powered by wind driven sawmills. The Dutch merchant marine was the largest in Europe,
with an estimated sixteen thousand ships in service, half the entire European fleet. All the wood for the ships was imported from
Norway, where the Dutch merchants often purchased entire forests. At the same time, they purchased entire vineyards of grapes
from French vintners before they were ever harvested. They also controlled the grain trade, buying entire wheat and rye crops in
Poland, East Prussia, and Pomerania. They dealt in large bulk, so no one could undersell them, their prices and shipping charges
were the cheapest in Europe. They were something of the Wal-Mart of the seventeenth century. Foreign merchants could
purchase everything from precision microscope lenses (invented by a Dutchman, Anton van Leeuwenhoek) to muskets for an
entire army. The tremendous wealth accumulated by Dutch merchants meant that the Dutch enjoyed the highest standard of
living anywhere in Europe, if not in the entire world.
The Dutch made most of their money from shipping rather than from export. In 1602, the Dutch East India Company was
formed. It was a joint stock company formed by a group of regents who received a percentage of the profits in proportion to
their investment in the company. The importance of the company is illustrated by the fact that it was given the power to wage
war to protect its commercial interests. Within 50 years, the company had deeply undercut Portuguese trading in Asia, seized
the Cape of Good Hope, Ceylon, and Malacca. It made huge profits in the market for cinnamon, nutmeg, and other spices. In
the 1630’s the return on an investment in the company was 35 per cent annually. In 1621, a sister company, the Dutch West
India Company, was formed to trade with Latin America and Africa. Among its other endeavors was the slave trade. In 1652,
the East India Company founded the settlement at Cape Town in South Africa as a fueling station for ships planning to cross the
Pacific and Indian Oceans. The spice islands of Indonesia were largely controlled by the Dutch for many years.
Wages were higher in the Netherlands than anywhere else in Europe. Even women’s wages were high compared with those in
other areas of Europe. As a result, the Dutch ate well. The price of bread was low, and only a tiny percentage of one’s grocery
bill was spent acquiring it. As a result, the Dutch also enjoyed eating fish, cheese, butter, vegetables, even meat on a regular
basis; this at a time when meat was a luxury in Europe for all but the wealthy few. Because the people of the Netherlands ate
well, the country did not experience food riots to the extent as other parts of Europe.
Even so, the Netherlands had its share of poor. Those in large cities often stole in order to survive. "Poor houses" and other
charitable organizations were formed not only to help, but to get these people off the streets, as it was considered bad for
business. Patience with those who stole or created disturbances was thin; and beatings, floggings, and branding were often used
as punishment. Every city had a gallows at its main gates as a reminder that those who persisted would be severely punished,
even executed.
Dutch Culture in the Seventeenth Century
Dutch painting of the period reflected the commercial wealth and toleration of the period, and openness to secular styles and
subject matter. The Dutch press enjoyed freedom unknown elsewhere. The first English and French newspapers were published
in 1620 in Amsterdam. The knowledge developed during the Scientific Revolution was disseminated by Dutch publishers.
Dutch painting reflected the wealth of the middle class. Artists of the period depended upon patronage from wealthy merchants.
Ironically, the Dutch Reformed Church did not support art as had the Catholic Church; in fact the Church ordered paintings
removed from its sanctuaries.
Dutch painters generally portrayed scenes of everyday life, often of ordinary people. Among the members of the Dutch School
of Painting were Rembrandt van Rijn, whose works include The Syndics of the Cloth Guild, and The Night Watch. He was the
only member of the Dutch school to frequently paint classical Biblical scenes. Other artists painted seascapes, naval scenes, and
occasionally battles.
The Dutch considered the household to be a place of refuge and safety from
the struggles of the outside world, and therefore a worthy topic of artistic
expression. Household scenes are frequently depicted in Dutch artistry. Many
show families at work or play, or eating. Still life painting of platters of food
became staples for Dutch artists. Among these are: Still Life with
Herring, and Jug Still Life with Lobster. Banquets together with tables, chairs,
pans, plates, etc. were often painted. Also considered important subjects of art
were paintings of families praying before a meal, carving meat, or toasting.
Parents and children are often portrayed together, as well as furniture, servants,
even pets.
Sadly Dutch prosperity did not last forever. The War of the Spanish
Succession, in which the Dutch Prince William of Orange (who was at that
time also William III of England) used Dutch wealth to finance the war was
costly in terms of labor and money. The treaty of 1713 which ended the war
marked the beginning of the decline of Dutch prosperity. Wars against England
to protect Dutch commercial interests drained resources, and France imposed
tariffs on Dutch imports that proved damaging. The French also forced the
Dutch out of Ceylon (present day Sri Lanka) and the Dutch West India
Company failed to dislodge the Portuguese from Brazil. The Dutch people had
no desire to emigrate to these far away places, and as a result, efforts at colonization were largely unsuccessful. Holland’s
commercial and shipbuilding industries, once powerful, lost ground to English manufacturers. Some Dutch entrepreneurs even
invested in English colonies and manufacturing rather than in Dutch industry. Prices for real estate fell, and merchants stopped
investing in land.
“Girl With A Water Pitcher” -- Jan Vermeer
After the Glorious Revolution of 1688, the United Provinces allied with England and Sweden, for fear that Louis XIV might
invade. The alliance held the French at bay for a time, but it dragged the country into a series of costly wars with France that
lasted almost 100 years, which were expensive in terms of cost and men.
With the decline in prosperity, political freedom also lapsed. Government became more rigid and less tolerant, and persecution
of religious dissidents became commonplace. A virtual with hunt against homosexuals was also launched. The Dutch army
became one of mercenaries, not citizens, and the republic’s influence in international affairs waned.
3.2 – PART THREE: DEVELOPMENT OF MERCANTILISM
Due to the growth of colonies in this Commercial Revolution, the monarchs of the early modern period needed money to
maintain the standing armies that would dominate the powerful nobles of the realm and protect the state against foreign
enemies. The Commercial Revolution and the growth of capitalism enriched a sizable segment of the population; personal
riches translated into good tax revenues.
Mercantilism prevailed in the 17th and well into the 18th century as an economic policy because it seemed to offer a way for the
monarchs of Europe to consolidate their centralized authority.
What follows are several of the major tenants of mercantilism…
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A nation’s wealth is measured by the amount of precious metals (bullion) it has accumulated rather than by its
productivity.
A favorable balance of trade – more exports than imports – is made up of gold and silver and therefore increases the
store of precious metals.
Overseas colonies supply the mother country with essential raw materials for manufacture and trade.
Essential industries – manufacturing for the national defense or making a product unique to the nation and valuable in
trade – were encouraged through subsidies and tax credits.
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The goal of mercantilism is national economic self-sufficiency, or the ability to maintain an economy without
depending on other countries to sustain it.
Overseas colonization was encouraged by the policy of mercantilism. Spain and Portugal, following up on the momentum of
their early explorations to Asia around the Africa continent and to the Americas across the Atlantic, monopolized colonization
in the 16th century. By the 17th century, the balance had shifted to the Dutch, French, and English, whose internal disorders of
the previous century had stabilized and whose inroads in Asia and North America overcame the supremacy of the Spanish and
Portuguese. The English colonial empire far surpassed that of any other European nation because its colonies attracted
proportionately more of its subjects for settlement and became power independent states: the United States, India, Canada,
Australia, and a number of other nations in Asia and Africa.
CORNELL NOTES QUESTIONS…
1) Describe the joint-stock company and how it operated in the context of the 17th century.
How did it lead to financial gain and growth during the Commercial Revolution?
2) Discuss the impact of the Columbian Exchange, both positive and negative.
3) What role did religious toleration have on advancing Dutch economic dominance?
4) What were some of the topics of Dutch Baroque art of the 17th century?
5) Discuss three ways that a country’s government could take to achieve the goals of
mercantilism.