6.1: a World Economy - T -

• History
• Middelbare school
• vwo
• Leerjaar 2

AGE 6. The Time of Regents and Monarchs

6.1 A World Economy

THEORY

people in this lesson

Jan Pieterszoon Coen

Important dates in this lesson:

1585: Spanish conquer Antwerp

1602: foundation of the VOC

1621: foundation of the WIC

1. Amsterdam, the largest city

In the 17th century Amsterdam took over the position of Antwerp as the commercial center.

2. The Baltic Trade

Dutch companies traded with countries around the Baltic Sea

3. The rise of the VOC

The VOC was the first multinational and the start of an economic system we call capitalism.

4. The power of the VOC

The VOC not only traded in the East Indies, it also waged war against competitors.

5. Jan Pieterszoon Coen

He ruled the East Indies for the VOC . Profit was more important than the lives of the indigenous people

6. To the West!

The WIC traded in North and South America. The slave trade became an important activity of the WIC

In this lesson :

Introduction

This lesson explains how a world economy grew in the 1600s, with the Dutch playing a big role.

It shows why the VOC and WIC were created and how Amsterdam became a major trade center.

You will see how ocean trade and the Baltic trade moved pepper, sugar, silk, wood, and grain across continents.

It also notes the downside: monopolies, violence, and the slave trade that brought great suffering.

Typical Dutch merchant ship from the 17th century. 

1. Amsterdam: The largest trade city 

In 1585, the Spanish army conquered the city of Antwerp, the most important trade city of North-western Europe at that time. Because the waterways to the city were closed off, no trade ship was allowed to go in or out. Because of this, the merchants who traded in Antwerp had to find another trade center. They found this in Amsterdam. 

Amsterdam always had many foreigners living there, often more than half the city’s population. In the seventeenth century the largest number of immigrants came from the Spanish Netherlands. Many were Protestants moving for religious reasons.

Amsterdam had a big and easily accessible port. In the sixteenth century, Dutch merchants brought luxury products like wine and salt to countries around the Baltic Sea, such as Poland and East Prussia. In return, the merchants brought huge amounts of grain and wood back to the Republic to sell it to other countries. This is called the Baltic Trade. 

Top: Dam Square with the new Town Hall in the 17th century. 

Left: The expansion of the Amsterdam canal ring.

2. The Baltic Trade

Goods brought in from other countries were not immediately sold, but were stored in warehouses instead. The merchants waited for a buyer who really needed the goods and then sold them for the highest possible price. For example: the merchants stored a lot of grain and then waited for a famine to break out in another country. The starving people would pay a large amount for the stored grain. 

The trade in Amsterdam boomed even more when many small Dutch companies started sailing to the East Indies and brought back luxury products like silk, cinnamon and pepper to trade. As a result, Amsterdam became a commercial center, a place where goods from all over the world were brought in, stored and eventually sold to places throughout Europe.

warehouses at the Brouwersgracht in Amsterdam

3. The rise of the VOC 

The many small Dutch companies that sailed to the East Indies had to compete with each other. As a result, their profits reduced because they had to sell their goods at lower prices. This also meant that the Republic received less profit taxes from the sold goods. In 1602, the States General decided it would be more effective to join all the small companies together into one unified company. Representatives from the small companies were invited by the States General to establish the Dutch East India Company ('Vereenigde Oost-Indische Compagnie'), also known as the VOC.

The States General granted a monopoly to the VOC. This means that the VOC was the only Dutch company allowed to trade spices in the East Indies.

Setting up the VOC was very expensive: ships had to be built, crews had to be hired. To finance this and to spread the risks, the VOC issued shares. By buying a share, people owned a small part of the company. If the company was successful, the value of their share would increase and could be sold against a profit. Therefore, many people would invest money in the VOC and its trading opportunities. This is the beginning of a new economic system based on commercial capitalism.

VOC shipyard

original VOC share

4. The power of the VOC 

Seventeen lords, called the Lords Seventeen ('Heeren XVII'), managed the daily affairs of the VOC. The VOC had many privileges. By decree of the States General, it was allowed to wage war, take and execute prisoners and invade areas in the East Indies to establish colonies and set up trading posts. 

The VOC established a large trading network with many trading posts throughout the East Indies. The Company became the first multinational in the world because it traded with so many different areas in the East Indies. To oversee this large trading network, the VOC appointed a Governor-General who looked after all the financial and other affairs in the East Indies. The Governor-General resided in Batavia, the present-day city of Jakarta.

Batavia in the 17th century

5. Jan Pieterszoon Coen

To get more profit from the spice trade, the VOC decided to cut out the local merchants by taking over areas overseas. They placed these areas under the direct control of the Dutch Republic, making them colonies of the Republic. In this way, the Republic acquired a monopoly on the trade of spices such as cinnamon, clove, mace and nutmeg. Batavia and Sumatra are examples of these colonies. 

In 1619, Jan Pieterszoon Coen (1587-1629) was appointed the Governor-General of the VOC. Coen came up with an idea to make the trade with the East Indies more profitable.

To establish a monopoly on the spices nutmeg and mace, Coen used the VOC's right to wage war to establish control over the Banda Islands. These were the only islands where these spices were grown. This proved to be a black day in the history of the Republic: to gain control over the Banda Islands many men, women and even children were killed. Their villages were burned down to the ground and their ships were destroyed. 

6. To the West! 

On the other side of the world were other trading opportunities. In 1621, the Dutch West India Company ('West-Indische Compagnie') or WIC was established. The WIC was managed almost similarly to the VOC. It established many trading posts and colonies in North and South America and the Caribbean, like Curacao and Brazil. 

The WIC traded mostly in gold, sugar and slaves. They bought slaves on the west coast of Africa. African tribe leaders would often sell their captured enemies as slaves. These slaves were shipped to a trading post of the WIC, such as Curacao. 

Here the slaves were sold at auctions, mostly to work on plantations in North or South America.

logo of the Geoctroyeerde Westindische Compagnie

WIC ships sailing to America

Dutch slave traders bringing slaves to the slave market

Slaves were crammed together

 and treated miserably on the

WIC ships. Slaves that got sick or died during the journey across the Atlantic were thrown overboard. You will learn more about the Atlantic slave trade in one of the next lessons.

Besides trade, the WIC was also allowed to capture and destroy Spanish ships that journeyed between the Spanish colonies and Spain. Their goods and silver were taken by the WIC. This was called privateering and caused a big blow for the Spanish economy. The States General supported privateering to stop Spain from waging war against the Republic.

click for interactive poster

overview Dutch trading routes, trading posts and colonies

West Indies

East Indies

New Amsterdam as it appeared in 1664. Later, under British rule, it became known as 

New York.

painting by Johannes Vingboons (1664)

Word Duty

WORD DUTY

Baltic trade: the trade of luxury products in exchange for grain and wood between the 

Dutch Republic and countries around the Baltic Sea (Oostzee).

Commercial center: a place where goods from all over the world were stored and eventually 

sold throughout Europe.

VOC: Dutch East India Company; trading company which sailed to the East-Indies and traded mainly in spices and silk.

Monopoly: being the only company that has the right to trade in a certain product.

Capitalism: an economic system in which trade and industry is controlled by private owners who want to make as much profit as possible.

Shares: represent parts of a company; you can buy and sell them for a profit, if the company is successful. 

Multinational: a company that is represented in many locations around the world. 

Governor-General: a person who looked after the large trading network of the VOC in the East Indies. 

WIC: Dutch West India Company; trading company which sailed to the West-Indies and mainly traded in slaves. 

Privateering: the capturing and destroying of enemy ships. 

What you can do or explain after this lesson

• what a creation narrative is
• what the evolution theory is
• how both theories are used to explain where humans come from
• what the "Out of Africa" theory means
• how you can  read the family tree of   modern humans
• what paleontologists and archeologists do

MAKE YOUR OWN SUMMARY using the test yourself questions

1. Why did many merchants move their trade from Antwerp to Amsterdam after 1585?

     If you want to create your own summary, write the           answer like this:

"After 1585, many merchants moved their trade from Antwerp to Amsterdam because......"

      So: repeat the question in your answer.

Tip:

What you can do or explain after this lesson

• what a creation narrative is
• what the evolution theory is
• how both theories are used to explain where humans come from
• what the "Out of Africa" theory means
• how you can  read the family tree of   modern humans
• what paleontologists and archeologists do

TEST YOURSELF

What you can explain or do after this lesson:

1. Why did many merchants move their trade from Antwerp to Amsterdam after 1585?
2. Name two reasons why Amsterdam was attractive to merchants in the 1600s.
3. What was traded in the Baltic trade: what did Dutch merchants bring there, and what did they bring back?
4. Why did Amsterdam’s merchants store goods in warehouses instead of selling them immediately?          Give one example from the text.
5. Which new goods arriving from the East Indies helped Amsterdam become a commercial center?        Name two.
6. Why did the States General create the VOC in 1602? Mention the problem it solved.
7. What special right did the VOC receive from the States General in the East Indies?
8. How did selling shares help the VOC? Name one benefit.
9. Who managed the VOC from the Netherlands, and what were they called?
10. Name two powers/privileges the VOC had overseas.
11. Where did the Governor-General live, and what present-day city is this?
12. What did Jan Pieterszoon Coen do to build a spice monopoly on nutmeg and mace?
13. Why was the conquest of the Banda Islands described as “a black day” in the Republic’s history?
14. When was the WIC founded, and in which regions did it set up posts/colonies? Name one example.
15. What is privateering, and why did the States General support the WIC in doing it?

What you can do or explain after this lesson

• what a creation narrative is
• what the evolution theory is
• how both theories are used to explain where humans come from
• what the "Out of Africa" theory means
• how you can  read the family tree of   modern humans
• what paleontologists and archeologists do

TEST YOURSELF

KEY

KEY

1. Because Spain captured Antwerp in 1585 and closed its waterways, so traders moved their business to Amsterdam.
2. Large, accessible port; many skilled immigrants/foreigners (e.g., Protestants from the Spanish Netherlands).
3. They brought luxury goods like wine and salt to the Baltic and brought back grain and wood to sell in Europe.
4. To wait for higher prices; for example, storing grain until a famine elsewhere so it could be sold for more.
5. Silk, cinnamon, pepper (any two).
6. Too many small Dutch companies competed and lowered profits (and taxes), so they were joined into one VOC in 1602.
7. A monopoly: the VOC was the only Dutch company allowed to trade spices in the East Indies.
8. It raised capital and spread risk; if successful, share values rose and could be sold for profit.
9. The Seventeen Lords (Heeren XVII).
10. It could wage war, take and execute prisoners, invade areas, establish colonies, and set up trading posts (any two).
11. In Batavia, present-day Jakarta.
12. He used the VOC’s right to wage war to seize control of the Banda Islands (the nutmeg/mace source) and force a monopoly.
13. Because many men, women, and children were killed, villages burned, and ships destroyed during the Banda campaign.
14. Founded in 1621; operated in North and South America and the Caribbean—for example, Curaçao or Brazil.
15. Capturing/destroying enemy (Spanish) ships and taking their cargo/silver; supported to weaken Spain and stop it from waging war on the Republic.

"fill in the gap" summary

LINK

11. Upload a printscreen of your finished summary

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