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Why were the Dutch in the late sixteenth and early seventeenth century so good at international trade?
As I pointed out in my last free post, it was unusual for any nation’s merchants at all to trade internationally by sea — it was extremely risky, after all. The Dutch and the English, by 1600, were the exception rather than the rule. Yet the risks of trade were dealt with in different ways. Being at the mercy of foreign rulers seemingly dissuaded the English from adopting all of the profit-maximising strategies of the Dutch, for example, lest they anger their trading partners; and the threat of other predators, like pirates or enemies, could push the more efficient Dutch ships out of certain European trade routes, like the Mediterranean, where the greater defensibility of English ships, bristling with cheap iron cannon, allowed them to continue regardless. Although the Dutch emphasis on sailing efficiency worked during times of peace with Spain, the English sacrifice of efficiency for defensibility worked whenever else. There was not always a strictly superior strategy for winning market share, at least in Europe.
But there was further afield. By the mid-seventeenth century, although the trans-Atlantic trades were still almost entirely in the hands of the Spanish, the European trade to the Indian Ocean had come to be dominated by the Dutch — which is quite surprising, as they had arrived so late. The high-value exports of the Indian Ocean — particularly pepper — had anciently arrived via the Red Sea, the Persian Gulf, or overland, and then been bought up in Egypt or Syria by the Venetians and Genoese, who then sold them on to the rest of Europe. It was then the Portuguese who had supplanted that trade in the late fifteenth century by discovering the direct route to the Indian Ocean around the Cape of Good Hope. The Portuguese monopolised the new sea route around Africa for a century, almost totally undisturbed by other Europeans, entrenching their position by building forts — occasionally with the permission of local rulers, but often without.
The Portuguese seem to have spread the rumour in Europe that they had effectively conquered the entire region, presumably to dissuade others from even trying to break their monopoly. Even as late as the 1630s, when other nations were already regularly trading there, foreign writers took the time to mock such assertions. As the Welsh-born merchant Lewes Roberts put it, the Portuguese “brag of the conquest of the whole country, which they are in no more possibility entirely to conquer and possess, than the French were to subdue Spain when they possessed of the fort of Perpignan, or the English to be masters of France when they were only sovereigns of Calais.” Quite.
But caring little for the deals of Catholic monarchs — Portugal and Spain had by treaty split the rest of the world in two, as recognised by the Pope — it was seemingly only the Protestant pirate nations who dared impinge on their monopolies. The English found their way into the Indian Ocean in 1579, when Francis Drake plundered his way around the entire globe, having taken the long way around, south of South America, up its western coast, and then all the way across the Pacific. Drake’s foray was soon followed by a series of English expeditions to the Indian Ocean via Syria overland in order to collect information on the Indian Ocean’s commerce and navigation, and to open diplomatic relations with the rulers of India and China. In 1591 the English then managed to get a few ships around the Cape of Good Hope, the Portuguese way (though the voyage was a disaster, with only a handful eventually finding their way home).
And only then the Dutch arrived, latecomers following on the heels of the English, as they had been almost everywhere else. In the 1580s-90s they had copied, zone for zone, the 1550s-70s expansion of English navigators’ range — to Muscovy via the White Sea, to the Arctic in search of a northeast or northwest passage to the Pacific, to the Gulf of Guinea, across the Atlantic, and of course into the Indian Ocean.
They often even used English navigational expertise to do it. A 1598 expedition from Rotterdam to follow Drake’s westward route, but to Japan, was guided by one William Adams (who ended up becoming an an adviser to the first Tokugawa Shogun). Henry Hudson, who had been in the service of the Muscovy Company trying to find a northern passage, was poached by the Dutch in 1608 to do the same (though he ended up being a bad choice: having been expressly ordered not to go northwest, he did so anyway, and then returned with his discoveries first to England rather than the Netherlands). One of the earliest Dutch voyages to the Indian Ocean in the 1590s, which followed the Portuguese route around the Cape of Good Hope, was piloted by John Davis, a veteran of three attempts at a northwest passage, who gave his name to the Davis Strait between Greenland and Baffin Island. Davis was also the inventor of an improved backstaff, known as the “Davis” or “English quadrant”, which allowed navigators to measure the height of the sun by observing its shadow rather than looking into it directly. Just as British expertise in the nineteenth century would be relied upon to spread new technologies like steam engines and railways to the rest of Europe and America, in the 1590s English navigators did the same for the Dutch.
Otherwise, however, the Dutch found their way to the Indian Ocean by more covert means. A Dutch merchant, Jan Huygen van Linschoten, having moved to Lisbon in 1580 managed to get a job as secretary to the newly-appointed archbishop of Goa — one of the main Portuguese bases in India. He kept a detailed diary of his years there, in particular recording details of the voyage. When he returned to the Netherlands in 1592 he immediately shared his findings with his compatriots. One Cornelis de Houtman then spent time in Lisbon collecting additional information before in 1595 leading the first Dutch voyage to copy the Portuguese route around the Cape of Good Hope (they had, in the meantime, like the English, tried a few times to find a northwest or northeast Arctic passage to the Pacific).
But for all their tardiness, the Dutch arrival in the Indian Ocean was dramatic. The English may have been the first to threaten the Portuguese monopoly, but in the whole of the 1590s they sent a mere two expeditions out east, and in 1600-10 sent only a further eight (seven by the newly-chartered East India Company (EIC), with a monopoly over English trade with the region, and another voyage licensed to break that monopoly in 1604 by the king, which unhelpfully spoiled the company’s relations with local rulers by turning pirate and plundering Indian and Chinese ships). What the English sent out over the course of twenty years, the Dutch exceeded in just five. Between just 1598 and 1603, after the successful return of de Houtman’s first voyage, they sent out a whopping thirteen fleets — and this despite their merchants not even pooling their efforts like the English had until the very end of that period, when in 1602 the various small and city-based Dutch companies were merged to form a single, national joint-stock monopoly, the Verenigde Oost-Indische Compagnie (VOC). The founding of the VOC accelerated the divergence. Between 1613 and 1622 the EIC sent out a paltry 82 ships compared to the VOC’s 201.
The sheer quantity of Dutch ships heading for the Indian Ocean meant that they were soon dominant amongst the European merchants there, capturing forts from the Portuguese, founding further bases of their own, and able to forcibly keep the English out — sometimes by attacking the English directly, other times by simply threatening any of their would-be trading partners. The steady stream of Dutch ships also allowed them to resupply and maintain their factors — the key infrastructure of long-distance commerce, as I explained in last week’s post for subscribers. They were able to have a presence, and project force, in a way that the English could not. By 1638, Lewes Roberts, despite often lauding England’s commercial achievements, and being an EIC official himself, had to concede that in the Indian Ocean “the English nation are the last and least”.
That English weakness was reflected in how EIC merchants had to comport themselves in the region so as to have any share in the trade at all. Despite the EIC’s later reputation for bloodthirsty rapaciousness, in the early seventeenth century they were highly reliant on good relations with the locals. Whereas the Dutch could often afford to use force and bear the repercussions, the English more or less only held on in the early days by ingratiating themselves with local rulers — often by finding common cause against the aggressive and domineering Dutch. The infrequently-supplied English factors were often heavily indebted to local merchants too, including the Indo-Portuguese — a group that they often married into, for access to social networks and support. As the historian David Veevers argues in a new overview of the early EIC (a relatively pricey academic book, but compellingly argued and juicy with detail), the English often went further than just friendliness or integration, subordinating themselves to local rulers too. Of the few early forts that the English managed to establish, for example, that at Madras in 1640 was only built because the local ruler encouraged it, treating the English there as his vassals.
In the long run, especially in India, the English strategy of subordination and integration would pay off, as the EIC consolidated its hold. But in the early seventeenth century the smart money would have been on the Dutch. Why were they able to send out so many more ships, and thus outcompete the English? As I’ll explore another time, it seems to have come down to capital — financial and organisational innovations brought to bear almost half a world away.
P.S. Paying subscribers to this newsletter get another post every other week, and directly support me in writing these free ones too. Last week’s subscribers-only post was on the use of factors — a crucial commercial innovation. And others you’ll have missed include how we get almost everything about the enclosure movement wrong, and how inventors have rebranded themselves over the centuries.
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