This draft, 3 August 2007 Introduction

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Sources: Appendix
The largest group of entrepreneurs in Amsterdam were its 2,600 shopkeepers. These were the butchers, bakers, grocers, cobblers, wine-, fish- and fruit traders who sustained an urban population of 120,000 in 1620. There were about as many manufacturers, part of whom also catered to the needs of the local people. However, besides the artisans that produced clothes, shoes, pots and pans, and other household items, there were shipwrights, gold- and silversmiths, painters, and printers, working for local and foreign customers alike. Amsterdam’s leading role in international trade is reflected in the large number of merchants and shipmasters, as well as the brokers, hostellers, and notaries that supported the commercial sector. Together the various groups of entrepreneurs made up an estimated 12.5% of Amsterdam’s working population. If this relative share is in any way representative for other towns in the Dutch Republic, already in 1600 the total number of urban entrepreneurs may have been as high as 45,000, rising to over 60,000 in 1650.20

Entrepreneurs and innovation
The high rate of self-employed men and women in Dutch towns and villages was a salient feature of the early modern Dutch economy. But were these all entrepreneurs in the sense of Joseph Schumpeter’s theory about creative destruction? Surely the majority will have responded to new economic opportunities rather than creating them. Indeed, classic accounts of how entrepreneurs may have spurred economic change in pre-industrial Europe all favour a more restrictive definition, as they focus on the specific qualities of a few individuals, including their management skills, technical capabilities, commercial networks, financial capital, or even a capitalistic spirit.21

This interest in the personal attributes of a few exceptional entrepreneurs is echoed in the Dutch historiography of the Golden Age. Notably the Flemish merchants and artisans immigrating from the southern provinces after 1585 have often been describes as more highly skilled, richer, better connected, and more daring than their Dutch counterparts – a reputation they share with the much smaller group of Portuguese Jews arriving in the same period.22 A case in point are the Antwerp merchants Isaac Lemaire and Dirck van Os, both of whom figured prominently in the expansion of trade with Russia, Spain, and Italy; the spice trade with the East Indies; and the huge land reclamations north of Amsterdam. The fact that Lemaire’s investments in the VOC led to multiple lawsuits, bankruptcy and ultimately his departure from the city has only added to his reputation.23

It seems probable enough that a country catapulted into a position of economic and technological leadership achieved this through a massive mobilisation of innovative entrepreneurs. One example would be Cornelis Cornelisz. van Uitgeest, a farmer and millwright in a village near Amsterdam who built the first wind driven saw mill in 1594.24 The name of Willem Usselincx is inextricably linked to the exploration of new markets in the America’s after 1600.25 In the first decade of the sixteenth century Lambert van Tweenhuysen initiated whaling expeditions in the Northern seas.26 In 1618 Louis de Geer and Elias Trip started to set up extensive iron works in Sweden. But even if these men all had exceptional business acumen their endeavours falls short in explaining the exceptional growth of the Dutch economy.

In many sectors of the economy important technological and organizational changes occurred long before the Golden Age. This is true for improvements in the design of vessels used in the herring fisheries and ocean shipping27; the processing of foodstuffs such as butter, beer, and herring28; the opening up of new markets in Scandinavia, Poland, France, and the Iberian Peninsula29; water management in the polders of Holland30; the introduction of peat as an energy source in manufacturing31; and finally the development of rural industries such as the processing of red dyes from madder, salt refining, and brick making.32 It is important to note that very few of these innovations are linked to particular engineers or entrepreneurs. Even very famous attributions, like that of herring-gutting to Flemish fisherman Willem Beukelszoon, are currently disputed.33

This lack of names linked to innovations before the Golden Age is not just an artefact of an incomplete historical record. It also reflects the incremental nature of technological change.34 This is visible, for example, in the increasingly competitive butter and cheese production in Holland and Friesland. The growing quantity and gradually improving quality of dairy in the fifteenth and sixteenth centuries was the result of changes in the keeping, feeding, and breeding of the cattle that led to higher milk yields per cow, and concomitant adaptation of the interiors of farm buildings, the utensils for churning and cheese-making, and the actual preparation of butter and cheese. As a result, not a single peasant, or his wife, has been credited for this achievement. In fact, even the cattle driven churn mill that took over much of their handwork in the seventeenth century, remains without an inventor.35

Meanwhile, the technological advance of the Dutch Republic was driven by a constant interaction between economic sectors.36 One such web of innovation can be spun around the Dutch windmill.37 After a first adaptation of grain mills to the needs of water management in the fifteenth century, windmill technology spread further to industrial mills for oil, paper, and timber during the Golden Age. Saw milling in turn stimulated the growth of Dutch shipbuilding, with all its improvements in shipdesign. The Dutch competitiveness in shipping and trade in turn was related to improvements in navigational instruments and maps, and the introduction of the partenrederij, a limited liability contract first used in shipping but eventually also in paper and sawmills (cf. infra).

The exchange of goods and services between regions also contributed to the advance of individual sectors. This is most apparent from the growing interaction between the northern and southern provinces of the Low Countries in the course of the sixteenth century. In exchange for the import of high value manufactures and capital from the southern provinces, Holland exported large quantities of cheese, herring and peat, and they organized a transit trade in grain, hides, salt, and wine from the Baltic area and the Atlantic Coast of France. The result was a process of ongoing economic specialization.38

Most innovations in products, markets, and production processes in the Golden Age cannot be traced to individual entrepreneurs either. But there are a few exceptions. These include the first merchants trading with Italy, Russia, and West Africa, the initiators of the trade with Asia and America, the shipwright who built the first fluytschip, the printers of better maps, the inventor of the ribbon loom, and the first producers of luxury items such as glass, tulips, and ivory combs.39 Sometimes one can discern a small group of men responsible for the introduction of new products and techniques, like the Flemish schoolmasters who taught double entry bookkeeping in the principal ports of Holland and Zeeland, the owners of the earliest sugar refineries, or the first jewelry merchants in Amsterdam.40

But even in those cases it is doubtful whether the exertions of a few enterprising spirits can explain the sudden expansion of industry, shipping, and trade. On the one hand, the disruption of the economy of the Low Countries in the early decades of the Dutch Revolt was such that deficient supply of goods and services raised prices, inflated profits, and reduced risks for the beginning entrepreneurs that most of the immigrants from the southern provinces were. On the other hand, the entrepreneurs identified with the introduction of new markets, products, and technologies were not always the ones who provided the necessary knowledge. For example, Flemish and Portuguese jewelry merchants in Amsterdam put out their production to local goldsmiths and diamond-cutters. The owners of the first sugar refineries hired skilled masters to supervise production while limiting their own role to the purchase of raw materials, and the sales of sugar. Similar combinations of skilled workers and wealthy merchants are known to have existed in the production of textiles, leather, salt, madder, and tobacco.41

The organization of these urban industries bears out the importance of the institutional framework that shaped manufacturing. The craft guilds in Dutch towns allowed merchants to pay master artisans a wage for the production of luxury items, and thus appropriate a considerable part of their value added. Urban craftsmen accepted these arrangements, at least in the early phases of economic expansion, because their retained earnings were high enough for some of them to rise through the ranks and become merchants themselves. This is borne out by several artisans who started of as goldsmiths in Amsterdam in the late sixteenth century, to become wealthy jewelry merchants by the end of their career.42

Urban magistrates also tried to lure beginning entrepreneurs to their towns, especially in the boom years between 1580 and 1620. Silk weavers, glassmakers, sugar refiners and various other manufacturers benefited from tax exemptions, cheap (child) labor, favorable loans, guaranteed sales, or even entire production facilities.43 The main interest of the municipalities was in import substitution, employment for the unskilled or urban poor, and the support of ailing industries. The effect of their policies is hard to measure in an environment where many industries prospered anyway. On the other hand, several entrepreneurs left their host town within a few years, or even failed spectacularly, as with the attempts to grow mulberry trees to substitute for Asian silk imports.44

A far more targeted stimulus for entrepreneurial activity was the patenting system introduced by the States of Holland in the late sixteenth century.45 In textiles, milling, shipping, and several sectors, this allowed the producers of new knowledge to secure a share of the profits that issued from the application of their insights. Especially between 1580 and 1650 this gave hundreds of talented craftsmen and engineers the possibility to reap the fruits of their ingenuity. Another instrument used by the government to stimulate innovation was the granting of monopolies for the entry to new markets and/or the sale of new goods. These rights to exclusive purchases and sales – appropriately termed octrooien just like the patents for technical novelties – created similar financial rewards for innovators.46 The best known examples are the joint-stock companies trading with Asia and America, but monopoly rights were also granted to the whalers that worked near Greenland, to Flemish drapers in Leyden, and to the producers and traders of such an ephemeral product as civet, a smelly substance used for the making of perfume that was ‘harvested’ from African cats.47 With the exception of the colonial companies none of these monopolies survived after 1650, but in later years Dutch entrepreneurs did obtain similar rights from foreign rulers who tried to stimulate their own economy.48

The exclusion of competitors through cartels and monopolies is ill-reputed because the rents that are created are believed to exceed the profits necessary for the remuneration of labor and capital. However, the practical use of the Dutch octrooien was in fact in these rents: an income that entrepreneurs could use to cover their start-up costs, and some of the risks involved in the new activities.49 This financial rationale points to a final and perhaps most important explanation for the wide application of new knowledge during the Dutch Golden Age: the greater ability of entrepreneurs to mobilize capital for investments in agriculture, industry, and services.


Particularly puzzling about the Dutch Golden Age is the almost complete absence, as late as 1580, of entrepreneurs wealthy enough to finance large investments in agriculture, industry, and trade. Before the Dutch Revolt brewers, textile manufacturers, and merchants in the northern part of the Low Countries seldom owned more than a few thousand guilders.50 For example, in 1498 only five drapers in Leyden – at the time the principal producer of woolen cloth in Holland – were worth more than 5,000 guilders.51 Similarly modest was the capital of the merchants and manufacturers operating in mid-sixteenth century Holland and Zeeland. Habsburg tax receivers in 1543 estimated the capital invested by entrepreneurs from Amsterdam, Delft, Middelburg. Flushing, and Veere at 6,000 guilders or less.52 These estimates pale into insignificance compared with the tens of thousands of guilders, and sometimes considerably more, owned by the richest foreign and local merchants in Antwerp at that time.

It thus comes as no surprise that many historians have argued that economic expansion only truly began once wealthy merchants from the southern provinces fled to the north. Their capital would have allowed the rapid expansion of trade within Europe, the foundation of the colonial companies VOC (1602) and WIC (1621), and the large turnover realized from the very moment the Bank of Amsterdam was established in 1609. However, a closer look at the wealth of these immigrants shows that the vast majority came to Amsterdam with little or no money. Even the largest investors in the VOC started with modest capitals of several thousands of guilders only.53 The limited data available on the wealth of other immigrant merchants, notably Germans, Portuguese Jews, and Englishmen, show a similar picture.

This is not to say that these entrepreneurs made no contribution to the growth of the Amsterdam market. Quite the contrary. In Amsterdam the immigrants from the southern provinces and their children made up a third of the merchant community between 1580 and 1630. Their personal wealth was in keeping with this share, and hence their arrival raised the capital available for investment with 50%. However, if these were small capitals to begin with, how to explain the explosive growth of the Dutch economy between, roughly, 1590 and 1620?

One explanation would be that the closure of the Scheldt, and the warfare that occupied the Habsburg Empire, France, and England created windfall profits for merchants in the United Provinces willing to take the risks and trade with the Iberian Peninsula, Italy, and the Levant. However, in all these markets the Dutch had to compete with English and French traders. At the same time, returns on investment in the highly competitive Baltic run – the traditional Dutch stronghold – were never higher than 5 or 10 % either.

A far more important lever of riches was the trade with the East Indies. By 1608 the cumulative returns of the early companies sailing from Amsterdam between 1595 and 1602 amounted to 15 million guilders, against cumulative investments of 9 million – including a 3.6 million investment in the local chamber of the VOC in 1602. The Dutch East India company proved at least as lucrative in the following decades. In 1631, thirty years after its establishment, total dividend payments stood at 11 million guilders. In other words, Amsterdams’ investors in the East India trade accumulated seventeen (6+11) million guilders in less than forty years. To put this figure into perspective: the assessment for a 0.5% wealth tax in 1631 yielded an estimated wealth for the entire population of 66 million guilders – 35 of which can be traced to the city’s merchant community. Now even if this tax did not include movable goods and tax payers played down their wealth, the contribution of the East India trade to Amsterdam’s wealth was formidable. But still, how did merchants with modest means manage to fund such huge investments to begin with?

Property and contract law
An entrepreneur with only limited financial means has to rely on others to fund his business. In preindustrial Europe the preferred means to acquire additional capital was to rely on relatives. It was no different in Dutch agriculture, industry, shipping, and trade. On the one hand, fathers, brothers, uncles, and cousins worked together in partnerships. On the other relatives with money to spare who did not want the exposure to commercial risks could deposit their funds with enterprising family members in exchange for a fixed return on their loans. Through marriage and longstanding friendship it was often possible to further widen this circle of trusted partners and creditors.

The financial challenge for entrepreneurs in the Dutch Republic in the beginning of the Golden Age was that the wealth of their relatives and friends was limited, while potentially profitable investment projects abounded. The only possible way for them to take advantage of these opportunities was to find outside investors – partners with whom to share profits and losses, or lenders willing to part with their money in return for a fixed reward. However, without personal relations to rely on, it was more difficult for these outsiders to establish beforehand the trustworthiness of potential associates or debtors, as it was to secure their compliance after a contract was signed. This put a premium on the development of debt and equity contracts that allowed the transfer of funds between strangers.

A first solution was the adaptation of the general partnership through the writing of company contracts.54 The specification of the duration and purpose of a joint venture limited the liability of the partners to transactions that fell within the terms of their agreement. Notarial deeds that survive for Amsterdam show that these company contracts were used in a variety of economic sectors. However, the spread of this very basic limitation of liability may have been much wider, because by the end of the sixteenth century it sufficed for partners to record such agreements in private.55 What company contracts could not do was limit the liability for debts partners incurred within the boundaries of their agreement. In other words, a firm creditor could always claim an outstanding debt from every single partner of the company – leaving it to this particular partner to share the burden with the others. This is why even company contracts were often written between entrepreneurs with social ties between them.

A way out of this situation was found with the creation of the partenrederij – a contractual arrangement for the joint ownership of vessels either for fishing, transportation or trade.56 In what seems to have been an adaptation of the generally accepted limitation of losses at sea to the total value of a shipping enterprise, the partenrederij limited the liability of each of the shareholders to the value of his investment. It was not uncommon for the ownership to be divided in 8, 16, 32, or even more shares, thus giving even the smallest wealth owners the opportunity to participate. Besides, the contract allowed for the delegation of the management of the company to one or two owners, and thus it could serve a much larger crowd of potential investors. It remains unclear when and where this contractual form was first introduced but certainly by 1450 it was common practice in the fisheries and shipping the Low Countries and Northern Germany.

In the Golden Age the partenrederij spread to several other sectors with high capital requirements, including paper mills, saw mills, peat exploitations, and most importantly, the first ventures to West Africa and Asia.57 All of the early colonial companies that sailed from Amsterdam, Rotterdam, Middelburg and a few other ports in the 1590s were owned by dozens of shareholders, several of whom resold part of their investment to others again. Indeed, the financial organization of the VOC closely resembled that of the partenrederijen, albeit with one crucial difference: investments in the VOC were understood to be used for more than a single voyage. Indeed, the first company charter stipulated a ten years’ term for repayment of the initial shares, and this term was then prolonged several times to effectively create a permanent joint-stock company.

By 1650 equity finance with limited liability was common practice in Dutch ocean shipping, the herring fisheries, whaling, colonial trade, and a few capital intensive manufactures, but not in other parts of the economy.58 In agriculture, wholesale trade, retailing, and craft production entrepreneurs continued to work with their own funds or in small partnerships. A further extension of their working capital, if needed, was achieved through loans, mostly deposits from relatives, but also funds from outsiders. However, in order for entrepreneurs to obtain credit from strangers, they had to pledge some kind of collateral to ensure the creditor that he would get his money back.

Interestingly, one of the oldest forms of such collateral was still based on personal relations: namely the use of guarantors who had both sufficient insight in the financial position of the debtor, and a credible reputation known by the creditor. Provided the guarantor could be easily found by the creditor in case of default, the guarantee was a great help to secure repayment.59 How much credit was backed by personal guarantors is impossible to say but notarial deeds suggest it was widely used in Dutch trade, industry, and agriculture before and during the Golden Age.

Entrepreneurs who could not, or did not want to rely on the creditworthiness of relatives and close friends could use their own property as collateral instead. One obvious possibility was to use their own products to secure loans. This is of course the principle underlying the postponed payment of goods but it was also used for longer term credit operations. Peasants in Holland and Zeeland, for example, signed forward contracts for their grain, madder, and butter. Urban craftsmen and retailers left their property with pawnbrokers and banken van lening to obtain ready money.60 However, the use of merchandise as collateral had serious limitations. Creditors had to assess the exact quality of the goods, and they had to store them in a safe place in order to prevent material deterioration, damage, theft, or embezzlement by the borrower.61 Especially the latter requirement made it difficult to sell goods on short notice. Furthermore, leaving goods in the hands of a lender was of little use to entrepreneurs who wanted to be able to sell them at short notice.62

A more appropriate means to obtain long-term funding was to sell annuities secured by real estate. This instrument was first used in the Low Countries in the thirteenth century, and its importance increased considerably over the next centuries.63 Entrepreneurs who needed funds sold the right to an annual income (rente), in return for which they received a principal sum. For savers with excess funds who wanted to secure a future stream of rents, but unwilling to bear high risks, annuities were an attractive proposition. For one thing, the rente was not considered usurious. For another, the value of the underlying real estate was rather stable, especially once a growing number of houses was built in brick instead of timber. Furthermore, legislation by Charles V in the early sixteenth century gave creditors who wanted to liquidate their claim the right to sell it to a third party.64 Finally, all real estate transactions, and the credit operations related to it, had to be registered by the magistrates of towns and villages.65 This measure was taken for fiscal purposes but the registers obviously contained all the information renten buyers needed to establish the creditworthiness of their debtors – information that could be used in court in case of default.

Evidence from various parts of the Low Countries suggests that annuities were an important means for small entrepreneurs to expand their operations. In Holland and Brabant urban registers of private debt have survived from the late fifteenth century onwards.66 A case study of the jewelry trade shows that in Antwerp between 1530 and 1565 goldsmiths and diamond cutters from Flanders, Brabant, and Holland sold annuities to establish themselves as independent jewelry merchants.67 A preliminary analysis of the annuities registered by the town magistrate of Leyden in 1620 and 1660 reveals a similar pattern (table 1).

Table 1. The number and total value of term annuities registered by the aldermen of Leyden in 1620 and 1660

Economic sector














Textile industry





Food & beverages





Fishing and shipping





Various crafts





Wholesale trade





Handling of goods










Public officials




















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