The Amsterdam Entrepôt is the shorthand term that English-language economic historiographers use to refer to the trade system that helped the Dutch Republic achieve primacy in world trade during the 17th century. (The Dutch prefer the term stapelmarkt, which has less currency in the English language.)
Historiography is the study of the methods of historians in developing history as an academic discipline, and by extension is any body of historical work on a particular subject. The historiography of a specific topic covers how historians have studied that topic using particular sources, techniques, and theoretical approaches. Scholars discuss historiography by topic—such as the historiography of the United Kingdom, that of Canada, the British Empire, early Islam, and China—and different approaches and genres, such as political history and social history. Beginning in the nineteenth century, with the ascent of academic history, there developed a body of historiographic literature. The extent to which historians are influenced by their own groups and loyalties—such as to their nation state—is a debated question.
The Dutch Republic, or the United Provinces, was a confederal republic that existed from the formal creation of a confederacy in 1581 by several Dutch provinces—seceded from Spanish rule—until the Batavian Revolution in 1795. It was a predecessor state of the Netherlands and the first Dutch nation state.
In the Middle Ages local rulers sometimes gave the right to establish staple ports to certain cities. Amsterdam never received such formal rights (unlike e.g., Dordrecht and Veere), but in practice the city established a staple-market economy in the 15th and 16th centuries. This economy was not limited to a single commodity, though at first Baltic grain dominated it. It came into being because the economic and technological conditions of the time required a trade-network based on what is known in economic terms as an Entrepôt, or in other words a central point (for a given geographic area) where goods are brought together and physically traded, before they are re-exported to their final destinations. This need followed from the fact that in those days transportation of goods was slow, expensive, irregular, and prone to disruption, and that supply and demand for goods fluctuated wildly and unpredictably. The risks entailed by these circumstances put a premium on the creation of such a fixed base, where commodities could be stockpiled prior to marketing and final distribution. Furthermore, concentrating storage, transport, and insurance facilities in one place helped reduce transaction costs and keep long-term prices more stable than they otherwise would have been. The entrepôt functioned thus as a central reservoir of commodities, a regulating mechanism smoothing out fluctuations in supply and demand over time and minimizing the effects of interruptions and bottlenecks.
In the history of Europe, the Middle Ages lasted from the 5th to the 15th century. It began with the fall of the Western Roman Empire and merged into the Renaissance and the Age of Discovery. The Middle Ages is the middle period of the three traditional divisions of Western history: classical antiquity, the medieval period, and the modern period. The medieval period is itself subdivided into the Early, High, and Late Middle Ages.
Amsterdam is the capital city and most populous municipality of the Netherlands. Its status as the capital is mandated by the Constitution of the Netherlands, although it is not the seat of the government, which is The Hague. Amsterdam has a population of 854,047 within the city proper, 1,357,675 in the urban area and 2,410,960 in the metropolitan area. The city is located in the province of North Holland in the west of the country but is not its capital, which is Haarlem. The Amsterdam metropolitan area comprises much of the northern part of the Randstad, one of the larger conurbations in Europe, which has a population of approximately 8.1 million.
Dordrecht, colloquially Dordt, historically in English named Dort, is a city and municipality in the Western Netherlands, located in the province of South Holland. It is the fourth-largest city of the province, with a population of 118,450. The municipality covers the entire Dordrecht Island, also often called Het Eiland van Dordt, bordered by the rivers Oude Maas, Beneden Merwede, Nieuwe Merwede, Hollands Diep, and Dordtsche Kil. Dordrecht is the largest and most important city in the Drechtsteden and is also part of the Randstad, the main conurbation in the Netherlands. Dordrecht is the oldest city in Holland and has a rich history and culture.
The entrepôt performed an additional function, a derivative of its primary market-function: the physical proximity of merchants promoted the exchange of information about market forces, prices, and developments in the factors underlying supply and demand.This not only lowered the cost of information-gathering but even led to decreasing marginal information costs. Other things being equal, this externality would lower the total marginal cost of goods trading through the entrepôt. It is a well-known economic fact that in circumstances of decreasing marginal costs, economies of scale occur, which can give an advantage to early entrants that permits them to outgrow their competitors, sometimes even leading to a natural monopoly. This may explain why in the field of entrepôts certain markets (Antwerp, Amsterdam) gained a dominant position for some time, while others (London, Hamburg) were left behind and only came into their own when the special circumstances favoring the others came to an end. In the case of Amsterdam those circumstances changed when the technological possibilities of direct trade improved, obviating the intermediating function of the entrepôt.
In economics, marginal cost is the change in the total cost that arises when the quantity produced is incremented by one unit; that is, it is the cost of producing one more unit of a good. Intuitively, marginal cost at each level of production includes the cost of any additional inputs required to produce the next unit. At each level of production and time period being considered, marginal costs include all costs that vary with the level of production, whereas other costs that do not vary with production are fixed and thus have no marginal cost. For example, the marginal cost of producing an automobile will generally include the costs of labor and parts needed for the additional automobile and not the fixed costs of the factory that have already been incurred. In practice, marginal analysis is segregated into short and long-run cases, so that, over the long run, all costs become marginal.
In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. When there is no externality, allocative efficiency is achieved; however, this rarely happens in the free market, in part because of the pervasive availability of limited liability for business entities.
The resource-based view (RBV) is a managerial framework used to determine the strategic resources with the potential to deliver comparative advantage to a firm. These resources can be exploited by the firm in order to achieve sustainable competitive advantage.
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But why Amsterdam? The mechanism underlying the entrepôt trading-system does not explain the peculiar success of the Dutch Republic and Amsterdam in particular. Other merchant cities might have gained this prize and as a matter of fact, Antwerp for a time did. But the Antwerp entrepôt was destroyed with the Fall of Antwerp (1584–1585) and the subsequent expulsion of its Calvinist inhabitants (half of the city population), followed by the centuries-long blockade of the Scheldt trade.
Calvinism is a major branch of Protestantism that follows the theological tradition and forms of Christian practice set down by John Calvin and other Reformation-era theologians.
The Scheldt is a 350-kilometre (220 mi) long river in northern France, western Belgium, and the southwestern part of the Netherlands. Its name is derived from an adjective corresponding to Old English sceald ("shallow"), Modern English shoal, Low German schol, West Frisian skol, and Swedish (obsolete) skäll ("thin").
To explain the peculiar Dutch success we have to take account of a number of factors that in isolation still do not explain the Dutch primacy in world trade, but whose interplay may go far in doing that. The Dutch had gained an important role in the Baltic trade (grain especially) in the 15th and 16th century because of the nature of commodities exchanged (herring for grain, a low-value, high-volume bulk trade) and the dominance of the Dutch in the herring fisheries. These factors became dominant in this trade because Dutch shippers experienced a structural fall in shipping costs due to revolutionary innovations in shipbuilding (the wind-driven sawmill) — which brought down construction costs — and in ship-design (the Fluyt ship that required smaller crews) at the turn of the 17th century. This so improved their competitive position that they soon dominated the European bulk trades, not only the Baltic trade, but also the salt trade of the Iberian Peninsula.
Bulk cargo is commodity cargo that is transported unpackaged in large quantities. It refers to material in either liquid or granular, particulate form, as a mass of relatively small solids, such as petroleum/crude oil, grain, coal, or gravel. This cargo is usually dropped or poured, with a spout or shovel bucket, into a bulk carrier ship's hold, railroad car/railway wagon, or tanker truck/trailer/semi-trailer body. Smaller quantities can be boxed and palletised. Bulk cargo is classified as liquid or dry.
A sawmill or lumber mill is a facility where logs are cut into lumber. Modern saw mills use a motorized saw to cut logs lengthwise to make long pieces, and crosswise to length depending on standard or custom sizes. The "portable" saw mill is iconic and of simple operation—the logs lay flat on a steel bed and the motorized saw cuts the log horizontally along the length of the bed, by the operator manually pushing the saw. The most basic kind of saw mill consists of a chainsaw and a customized jig, with similar horizontal operation.
A fluyt is a Dutch type of sailing vessel originally designed by the shipwrights of Hoorn as a dedicated cargo vessel. Originating in the Dutch Republic in the 16th century, the vessel was designed to facilitate transoceanic delivery with the maximum of space and crew efficiency. Unlike rivals, it was not built for conversion in wartime to a warship, so it was cheaper to build and carried twice the cargo, and could be handled by a smaller crew. Construction by specialized shipyards using new tools made it half the cost of rival ships. These factors combined to sharply lower the cost of transportation for Dutch merchants, giving them a major competitive advantage. The fluyt was a significant factor in the 17th-century rise of the Dutch seaborne empire. In 1670 the Dutch merchant marine totalled 568,000 tons of shipping—about half the European total.
High profitability of the bulk trade resulted in the possibility of large savings, and the reservoir of savings looking for profitable investment eventually resulted in a lowering of interest rates as a primary effect, and of the development of sophisticated financial markets as a secondary effect. Such financial markets also profited from the phenomenon of decreasing marginal information cost; this soon helped make Amsterdam an important financial center also.
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed. The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.
The physical proximity of a strong financial sector partially explains why after 1590 Amsterdam also became a center for the low-volume, high-value "rich trades" (i.e., commodities like spices, silk, and high-quality textiles). In such trades the Dutch low shipping rates did not necessarily provide a competitive advantage. What did attract the specialists in this type of trade (apart from the favorable financing possibilities) was the influx of skilled workers and entrepreneurs from the southern Netherlands in the 1580s that helped transfer the sophisticated Flemish textile industry to the Republic. This gave her an industrial base for her export trade. The "rich trades" were also stimulated by government intervention, as they were by nature (because of the price-inelasticity of their demand) prone to large price fluctuations (as a little over-supply would bring about a large fall in prices). The readiness of the Dutch government to regulate markets and to provide legal monopolies to chartered companies like the Dutch East India Company helped to lessen the risk of investment in such enterprises.
All these factors conspired to concentrate trade at entrepôts (in view of their trade advantages as described above) and in particular at the Amsterdam entrepôt (once Antwerp had been eliminated as a competitor) because of the time-window (1590-1620) in which they came to exert their influence. The rise of the Amsterdam entrepôt was therefore to some extent also a matter of being in the right place at the right time. But once the entrepôt had been established, its growth-promoting peculiarities helped Amsterdam (and the port cities in the maritime zone of the Netherlands, interlinked to Amsterdam by the area's inland waterways) achieve its position of economic preeminence.
Eventually this preeminence would be undermined by technological and economic changes that would eliminate the advantages of the entrepôt and promote disintermediation. However, these developments were not to occur until the 18th century. During the 17th century, the need for intermediation in commodities and financial markets still reigned supreme. The Amsterdam entrepôt provided great advantages to European consumers and producers (inherent in its operation) and to the merchants that used it. But there also were losers in the process. Competitors, like the Hanseatic and English merchants, lost appreciable market share and hence income, especially after the trade embargoes imposed by Spain on Dutch commerce during the Eighty Years' War had been lifted. The resurgence of Dutch trade on Spain and Portugal and other Mediterranean countries after 1647 overwhelmed the Republic's competitors.
To remedy this situation, first England and later France took to coercion in the form of economic and military warfare. The English Navigation Acts of 1651 and 1660-1663 restricted free trade in an attempt to divert trade to a putative London entrepôt. However, as the Acts only regulated English and colonial trade (and imperfectly so) and England only managed to dominate a few commodities markets for which it formed the main customer, these attempts were never successful.England would only achieve primacy in world trade after other factors had undermined the Dutch entrepôt. French protectionism was eventually more successful, because the French and Dutch economies were complementary, rather than competitive like the Dutch and English economies. Restricting trade between France and the Republic therefore resulted in the roll-back of the specialization that Comparative advantage had engendered in both economies (though at great cost to the French consumer also) and helped throttle the once-flourishing Dutch industries.
In the 17th century, the economic elite of Amsterdam moved with William of Orange to England, where they helped to restart the English international trade, leaving behind in Amsterdam the more religious, and less competitive, burghers.
During the 18th century this combination of adverse economic and technological developments (promoting disintermediation) and foreign protectionism led to a relative decline of Dutch preeminence in world trade and of the Amsterdam entrepôt. It also led to a fundamental restructuring of the Dutch economy, with a large degree of deindustrialization and a shift to service industries, like merchant banking, and foreign direct investment in emerging economies, like the Great Britain of the Industrial Revolution. By that time there was no longer a role for entrepôts in world trade—except Rotterdam, New York, Singapore, and Hong Kong.
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.
A merchant is a person who trades in commodities produced by other people. Historically, a merchant is anyone who is involved in business or trade. Merchants have been known for as long as industry, commerce, and trade have existed. During the 16th-century, in Europe, two different terms for merchants emerged: One term, meerseniers, described local traders such as bakers, grocers, etc.; while a new term, koopman, described merchants who operated on a global stage, importing and exporting goods over vast distances, and offering added value services such as credit and finance.
The Dutch East India Company was an early megacorporation founded by a government-directed amalgamation of several rival Dutch trading companies (voorcompagnieën) in the early 17th century. It was originally established on March 20 1602 as a chartered company to trade with India and Indianised Southeast Asian countries when the Dutch government granted it a 21-year monopoly on the Dutch spice trade. The Company has been often labelled a trading company or sometimes a shipping company. However, the VOC was in fact a proto-conglomerate company, diversifying into multiple commercial and industrial activities such as international trade, shipbuilding, both production and trade of East Indian spices, Formosan sugarcane, and South African wine. The Company was a transcontinental employer and an early pioneer of outward foreign direct investment. The Company's investment projects helped raise the commercial and industrial potential of many underdeveloped or undeveloped regions of the world in the early modern period. In the early 1600s, by widely issuing bonds and shares of stock to the general public, the VOC became the world's first formally-listed public company. In other words, it was the first corporation to be listed on an official stock exchange. The VOC was influential in the rise of corporate-led globalization in the early modern period.
The Commercial Revolution consisted in the creation of a European economy based on trade, which began in the 11th century and lasted until it was succeeded by the Industrial Revolution in the mid-18th century. Beginning with the Crusades, Europeans rediscovered spices, silks, and other commodities rare in Europe. This development created a new desire for trade, and trade expanded in the second half of the Middle Ages. Newly forming European states, through voyages of discovery, were looking for alternative trade routes in the 15th and 16th centuries, which allowed the European powers to build vast, new international trade networks. Nations also sought new sources of wealth and practiced mercantilism and colonialism. The Commercial Revolution is marked by an increase in general commerce, and in the growth of financial services such as banking, insurance, and investing.
The Navigation Acts, or more broadly The Acts of Trade and Navigation were a long series of English laws that developed, promoted, and regulated English ships, shipping, trade, and commerce between other countries and with its own colonies. The laws also regulated England's fisheries and restricted foreigners' participation in its colonial trade. While based on earlier precedents, they were first enacted in 1651 under the Commonwealth. The system was reenacted and broadened with the restoration by the Act of 1660, and further developed and tightened by the Navigation Acts of 1663, 1673, and 1696. Upon this basis during the 18th century, the acts were modified by subsequent amendments, changes, and the addition of enforcement mechanisms and staff. Additionally, a major change in the very purpose of the acts in the 1760s — that of generating a colonial revenue, rather than only regulating the Empire's trade — would help lead to revolutionary events, and major changes in implementation of the acts themselves. The Acts generally prohibited the use of foreign ships, required the employment of English and colonial mariners for three quarters of the crews, including East India Company ships. The acts prohibited the colonies from exporting specific, enumerated, products to countries and colonies other than those British, and mandated that imports be sourced only through Britain. Overall, the Acts formed the basis for English British overseas trade for nearly 200 years, but with the development and gradual acceptance of free trade, the acts were eventually repealed in 1849. The laws reflected the European economic theory of mercantilism which sought to keep all the benefits of trade inside their respective Empires, and to minimize the loss of gold and silver, or profits, to foreigners through purchases and trade. The system would develop with the colonies supplying raw materials for British industry, and in exchange for this guaranteed market, the colonies would purchase manufactured goods from or through Britain.
Tulip mania was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637. It is generally considered the first recorded speculative bubble; although some researchers have noted that the Kipper und Wipper episode in 1619–1622, a Europe-wide chain of debasement of the metal content of coins to fund warfare, featured mania-like similarities to a bubble. In many ways, the tulip mania was more of a hitherto unknown socio-economic phenomenon than a significant economic crisis. Historically, it had no critical influence on the prosperity of the Dutch Republic, the world's leading economic and financial power in the 17th century. Also, from about 1600 to 1720 the Dutch had the highest per capita income in the world. The term "tulip mania" is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.
The Dutch Golden Age was a period in the history of the Netherlands, roughly spanning the 17th century, in which Dutch trade, science, military, and art were among the most acclaimed in the world. The first section is characterized by the Eighty Years' War, which ended in 1648. The Golden Age continued in peacetime during the Dutch Republic until the end of the century.
The Eighty Years' War or Dutch War of Independence (1568–1648) was a revolt of the Seventeen Provinces of what are today the Netherlands, Belgium, and Luxembourg against Philip II of Spain, the sovereign of the Habsburg Netherlands. After the initial stages, Philip II deployed his armies and regained control over most of the rebelling provinces. Under the leadership of the exiled William the Silent, the northern provinces continued their resistance. They eventually were able to oust the Habsburg armies, and in 1581 they established the Republic of the Seven United Netherlands. The war continued in other areas, although the heartland of the republic was no longer threatened; this included the beginnings of the Dutch Colonial Empire, which at the time were conceived as carrying overseas the war with Spain. The Dutch Republic was recognized by Spain and the major European powers in 1609 at the start of the Twelve Years' Truce. Hostilities broke out again around 1619, as part of the broader Thirty Years' War. An end was reached in 1648 with the Peace of Münster, when the Dutch Republic was definitively recognised as an independent country no longer part of the Holy Roman Empire. The Peace of Münster is sometimes considered the beginning of the Dutch Golden Age.
Euronext Amsterdam is a stock exchange based in Amsterdam. Formerly known as the Amsterdam Stock Exchange, it merged on 22 September 2000 with the Brussels Stock Exchange and the Paris Stock Exchange to form Euronext.
The history of capitalism has diverse and much debated roots, but fully-fledged capitalism is generally thought to have emerged in north-west Europe, especially in the Low Countries and Britain, in the sixteenth to seventeenth centuries. Over the following centuries, capital has accumulated by a variety of different methods, in a variety of scales, and associated with a great deal of variation in the concentration of economic power and wealth, and capitalism has gradually become the dominant economic system throughout the world. Much of the history of the past five hundred years is, therefore, concerned with the development of capitalism in its various forms.
Some economic historians use the term merchant capitalism to refer to the earliest phase in the development of capitalism as an economic and social system. However, others argue that mercantilism, which has flourished widely in the world without the emergence of systems like modern capitalism, is not actually capitalist as such.
The Company of Merchant Adventurers of London was a trading company founded in the City of London in the early 15th century. It brought together leading merchants in a regulated company in the nature of a guild. Its members' main business was exporting cloth, especially white (undyed) broadcloth, in return for a large range of foreign goods.
The economic history of the Netherlands (1500–1815) is the history of an economy that scholar Jan de Vries calls the first "modern" economy. It covers the Netherlands as the Habsburg Netherlands, through the era of the Dutch Republic, the Batavian Republic and the Kingdom of Holland.
The financial history of the Dutch Republic involves the interrelated development of financial institutions in the Dutch Republic. The rapid economic development of the country after the Dutch Revolt in the years 1585–1620 accompanied by an equally rapid accumulation of a large fund of savings, created the need to invest those savings profitably. The Dutch financial sector, both in its public and private components, came to provide a wide range of modern investment products beside the possibility of (re-)investment in trade and industry, and in infrastructure projects. Such products were the public bonds, floated by the Dutch governments on a national, provincial, and municipal level; acceptance credit and commission trade; marine and other insurance products; and shares of publicly traded companies like the Dutch East India Company (VOC), and their derivatives. Institutions like the Amsterdam stock exchange, the Bank of Amsterdam, and the merchant bankers helped to mediate this investment. In the course of time the invested capital stock generated its own income stream that caused the capital stock to assume enormous proportions. As by the end of the 17th century structural problems in the Dutch economy precluded profitable investment of this capital in domestic Dutch sectors, the stream of investments was redirected more and more to investment abroad, both in sovereign debt and foreign stocks, bonds and infrastructure. The Netherlands came to dominate the international capital market up to the crises of the end of the 18th century that caused the demise of the Dutch Republic.
The First Stadtholderless Period or Era is the period in the history of the Dutch Republic in which the office of a Stadtholder was absent in five of the seven Dutch provinces. It happened to coincide with the period when it reached the zenith of its economic, military and political Golden Age. The term has acquired a negative connotation in 19th-century Orangist Dutch historiography, but whether such a negative view is justified is debatable. Republicans argue that the Dutch state functioned very well under the regime of Grand Pensionary Johan de Witt, despite the fact that it was forced to fight two major wars with England, and several minor wars with other European powers. Thanks to friendly relations with France, a cessation of hostilities with Spain, and the relative weakness of other European great powers, the Republic for a while was able to play a pivotal role in the "European Concert" of nations, even imposing a pax nederlandica in the Scandinavian area. A convenient war with Portugal enabled the Dutch East India Company to take over the remnants of the Portuguese empire in Ceylon and South India. After the end of the war with Spain in 1648, and the attendant end of the Spanish embargo on trade with the Republic that had favored the English, Dutch commerce swept everything before it, in the Iberian Peninsula, the Mediterranean and the Levant, as well as in the Baltic. Dutch industry, especially textiles, was as yet not hindered by protectionism. As a consequence, the Republic's economy enjoyed its last great economic boom.
An exchange, or bourse also known as a trading exchange or trading venue, is an organized market where (especially) tradable securities, commodities, foreign exchange, futures, and options contracts are sold and bought.
The development of urban centers in the Low Countries shows the process in which a region, the Low Countries in Western Europe, evolves from a highly rural outpost of the Roman Empire into the largest urbanized area above the Alps by the 15th century CE. As such, this article covers the development of Dutch and Flemish cities beginning at the end of the migration period till the end of the Dutch Golden Age.
Pieter Dircksz. Hasselaar was an Amsterdam brewer and schepen (alderman), and one of the founders of the Dutch East India Company. He is famous, along with his aunt Kenau Simonsdochter Hasselaer, for courageous actions during the siege of Haarlem in 1573. In 1578, after the Alteratie, he moved to Amsterdam and by 1583 was manager of the brewery of Andries Boelens. In 1587 he bought a brewery, the Eagle, between Nieuwendijk and Prins Hendrikkade.
The history of the Dutch economy has faced several ups and downs throughout the 16th and 17th centuries. It has undergone moments of prosperity and was once noted as one of the most dominant world powers in the 17th Century. It was heavily involved in the Atlantic Trade that had a large impact on its economy and growth. There is no clear definition for the Atlantic Trade, but researchers have concluded it may be referred to as: Trade with the New World, and trade with Asia through the Atlantic including, but not limited to, imperialism and slavery based undertakings. Among the most important of these traders were the Dutch and the British. It is noted that these two nations experienced a more rapid growth than most due to their non-absolutist political institutions. This is only one of many benefactors that played a large role in the shaping in the growth and economic change within the Netherlands that occurred throughout the 16th and 17th Centuries.
Baltic maritime trade began in the late Middle Ages and would continue to develop into the early modern era. During this time, ships carrying goods from the Baltic and North Sea passed along the Øresund, or the Sound, connecting areas like the Gulf of Finland to the Skagerrak. Over a period of 400 years, maritime powers in the east and west struggled to control these markets and the trade routes between them. The Baltic system can be explained beginning with the German Hanseatic era and ending with the Great Nordic Wars.