For the better part of a century, the Spanish and Portuguese dominated global trade, making them the primary source of silks and spices from the Far East and gold, tobacco, and sugar from the New World for the rest of Europe. This trade became even more monopolized in 1580, when Spain took control of Portugal and its overseas empire. However, despite this massive amount of power and wealth, the Spanish pretty much completely squandered their new found wealth. The Spanish government spent lost the equivalent of billions of dollars in fruitless religious wars and failed political machinations, and the Spanish elite wasted their new found wealth on the purchase of extravagant luxuries, leaving little left to improve the country. As a result, the country a stagnated and by the start of the seventeenth century Spain’s global hegemony was already waning rapidly, creating new opportunities for the other powers of western Europe. However of all the great powers, it was a relative new comer which took full advantage.
By the start of the seventeenth century, the Dutch Republic was just turning twenty years old, having only gained its assured independence from Spain in 1581. Not really wanting to go back to being ruled by a some random asshat, the nobility of the region instead created a confederation centered on several port cities with an unusual for the time focus on religious tolerance and supporting the growth of the merchant class. At the time, most nations required all trade to pass through their borders, a system known as mercantilism which guaranteed the monarch was able to get their cut via taxing ships as they arrived. The Dutch just said to hell with this system, instead deciding to let their traders go wherever the hell they wanted, moving goods in whatever fashion resulted in the highest profit. This combined with the designing of new super efficient trading ships, called fluyts, and new efficient sawmills to make them, quickly turned the Dutch into the dominant traders throughout northern Europe. Arguably the Dutch Republic was the first free trade capitalist nation in the world.
Of course, if you are a nation pretty much run by merchants always looking for the next big score, its only going to be a matter of time before you start looking at the biggest sources of wealth in the world. For a century, the Portuguese had jealously guarded their charts for sailing to the riches of Asia via going around Africa, hiding important details about prevalent currents, winds, and the locations of reefs. Unfortunately, when Spain took over things got rather sloppy, and a number of Dutch mariners hired as sailors on Portuguese ships turned out to be spies, resulting in several Dutch expeditions around Africa to eastern Asia between 1595 and 1600. To better coordinate this new trade, in 1602 the Dutch formed the Dutch East India Company. Previously, investors would only invest in a single expedition, getting paid off when the expedition returned. The Dutch East India Company instead paid back a portion, re-investing the rest to pay for further expeditions, allowing investors to get in and out as they chose via the buying and selling of stock. It was the world’s first joint stock company, and it proved extremely profitable, so much so that the Dutch copied the structure for all sorts of endeavors and then founded the first national bank to support it.
Thanks to having the best trading ships in the world and not having to worry about how to fund each new expedition, the Dutch East India Company quickly began to outdo the Portuguese in importing spices. Within twenty years, they pretty much had a monopoly over the spice trade, controlling numerous trading posts across Africa, India, and southeast Asia, many once controlled by the Portuguese. By 1630, their ships were travelling as far away as Japan, not only dominating the shipment of spices back to Europe, but also trade amongst the various nations of east Asia, the profits of which funded the purchase of spices. The Dutch East India Company grew so powerful that it built its own military, which not only attacked its trade rivals, but even went to war with local Asian powers. Throughout all of this, a ridiculous amount of wealth flowed into the Dutch Republic, which led to the development of the largest urban middle class in European history up until that point, as well as major public works projects such as large scale hydraulic engineering works which claimed new farmland from the sea. The sheer amount of wealth pouring in also attracted numerous artists and scientists looking for rich benefactors to fund their endeavors. The Dutch Republic became the center of science and culture in Europe, eclipsing the old Italian city-states which had dominated such things since before the beginning of the Renaissance.
The Dutch East India Company was such a huge success that the Dutch West India Company was founded in 1621. Though not as successful as its precursor, it did enjoy some success. Initially meant to open a new trade route to Asia via sailing around South America, it quickly devolved into funding the raiding of Spanish shipping in the Caribbean, which in turn was used to fund further ventures, such as the founding of New Amsterdam at the mouth of the Hudson River in an attempt to dominate the northern fur trade, the conquest of parts of Brazil in 1630 to get into the sugar industry, and the purchase of slaves from Africa to ship to the new Brazilian colony of New Holland to grow said sugar. Unfortunately, an ongoing war to retain New Holland sapped the company’s resources, eventually resulting in the loss of the South American colony by 1654. However, despite this setback, the Dutch West India Company continued, primarily as a shipper of slaves from Africa to the New World.
What would later be referred to as the Dutch Golden Age lasted into the eighteenth century. However, it would not last forever. Competitors such as England and France copied the successful Dutch model model, eroding the Dutch trade monopoly; Dutch investors increasingly invested in highly profitable foreign loans, helping further develop other nations while leaving the Dutch economy stagnant during a time of increasing industrialization; and the Dutch increasingly found themselves on the losing end in their military and political endeavors. However, that shift is a tale for a different time.
