by Andrew Marr
The under-gunned, under-shipped, under-capitalized British had so far found it impossible to loosen the Dutch stranglehold. In recent years, the heroic story of the British sailor Nathaniel Courthope, who defended the tiny spice island of Run, Britain’s first Asian colony, against a long Dutch siege, has made an inspiring bestseller. Thanks to his courageous stance, Britain was eventually able to barter her legal title to Run for another small island then held by the Dutch, called by the natives ‘Manhattan’. New Amsterdam would become New York, and the British imperial story would really start in North America, where she was already established in the outposts of Virginia and Carolina.
A yearning for religious freedom rather than spices or simple profit would result in a colonization much more significant than any struggles in the Indian Ocean. British naval power would grow to the point where, during the Napoleonic wars, she would be able briefly to return to the Spice Islands and simply dig up, pot, and transplant the valuable trees to other colonies such as Grenada, thus ending the Dutch monopoly. But that was only after nearly two hundred years of easy profits had poured into the Netherlands. Mostly, the Dutch would make sensible use of their good fortune, producing the world’s first stable, consumer-rich middle class. But before that happened, as we are about to see, these sober, business-minded, cold-headed northern Europeans would make half the world gape – and roar with astonished laughter at their expense.
A Very Modern Story
History, in its conventional sense, is made mostly outside the home. Outdoors, generals mount their horses and sailors haul rope. In workshops, inventors hack and twist, and bite their lips and scribble. In the street preachers bawl, and traders are always heaving into sight with something new. But history is not truly made until it is felt inside the home. The big changes are the ones experienced around the supper table, or in the sickbed. Sometimes the home is in a new continent, or is burned down or abandoned. The great discontinuities of human life, which taken together we call ‘history’, are those that have a direct impact on how the mass of us humans live; and where we live, in general, is at home.
Pieter Wynants was a Dutch textile merchant, who also manufactured linen and thread. He had a fine house in Haarlem and on 1 February 1637 had invited some friends for family lunch. It would have been a good spread, placed by the servants before the polite, soberly dressed gathering, on a crisp tablecloth. This is a world we think we know through the great Dutch painters of the golden age – Rembrandt, Rubens, de Hooch and Vermeer – a reassuring world of straight-backed, quizzical people wearing bright white ruffs and surrounded by a softly lit abundance. Yet just beyond the edge of the canvas it was also a world of epidemics, the constant threat of war, fierce religious arguments and financial hysteria. If the Dutch of this period are the first model for today’s bourgeois, consumerist society, there was nothing stable or reassuring about it.
At Pieter Wynants’s table, everyone knew each other well and all were in the prime of life, their thirties or forties. They were well off and interconnected by their Mennonite faith, members of a Protestant group who were (and are) pacifist, hostile to state interference in religion, and against infant baptism. Among them were no fewer than three women who had been recently widowed by the latest outbreak of bubonic plague. This had taken the lives of around one in eight people in Haarlem, which had run out of places to bury the dead. It had also resulted in these women inheriting money. The host’s younger brother Hendrick had a good, if obvious, idea about how they should spend it. He suggested to one of them, Geertruyt Schoudt, whose husband had been a wool merchant, that she should buy some Switzer tulip bulbs; their price was continuing to shoot up, and she would make a hefty profit. Switzers were comparatively dull flowers, not in the same league as the subtly patterned rarities coveted by the most sophisticated tulip connoisseurs. But the great Dutch tulip mania was at its peak. Even Switzers were changing hands at 1,350 guilders a pound, the price of two very fine houses or a pair of fully fitted ships.24
We know what happened next, from detailed court records. The widow was dubious about buying the bulbs, and only came round to the idea when another man at the meal, Jacob de Block, offered to guarantee her the sale for eight days while she raised the money. Something of the tense, competitive mood at the lunch is captured by the fact that as soon as Widow Schoudt agreed the deal, she was offered an instant 100-guilder profit if she sold them again on the spot. Egged on by Jacob, she refused the offer and decided to hold out for a far bigger profit. This would be a mistake. For the tulip bulb bubble, like all financial bubbles, was about to break. Within days the bulbs would be worth almost nothing.
This tulip mania has been seen as the classic case of financial hysteria, the precursor to the South Sea Bubble, the 1929 Great Crash, the ‘dot-com bubble’ of 1995–2000 and property bubbles before the most recent banking crash. There is a lot of truth in this. The people around the Haarlem lunch table were, like so many later investors, hard-working folk – Mennonites often call themselves ‘the plain people’ – who thought they understood the market they were dealing in. They were doing what had become normal, even ‘sensible’, in their milieu. You ‘couldn’t lose’ with tulip bulbs, just as you ‘couldn’t lose’ with Internet companies or hedge-fund mathematics. Queasy though it might have made them, the greed-is-good motto of a later investor had already wormed its way into Protestant Holland.
‘Holland’ was in fact only one of the territories in a country which then called itself the United Provinces. This was a better name. Most of Europe was a province of somewhere, and these particular ones had banded together as a result of the impact of Luther’s Reformation. The Dutch, like their north German neighbours, had mostly converted to Protestantism. At some point it would have become absurd for the agricultural and fishing lands on Europe’s northern coast to continue to be ruled from Madrid by the Habsburgs, but the religious divide gave the Dutch wars of independence a special urgency and edge. After Philip of Spain intensified the persecution of ‘heretics’, what had started as protests against high taxes and the quartering of troops turned into a full-scale revolt.
As Europe split itself up into rival religious tribes, Protestant refugees poured into the Netherlands. Following a heroic defence of the town of Leiden, the Dutch beat back the first Spanish attempt at reconquest. The Spaniards’ policy of terrorism ruled out the possibility of compromise, and a complicated struggle began, involving famine, persecution and war by both land and sea. At different points the desperate Dutch had offered the monarchs of France and Spain the Netherlands crown in return for support, but by 1609 the northern provinces had effectively seceded, leaving the southern Netherlands Catholic and Habsburg. There would be a further Spanish invasion in 1628, and the gathering at Pieter Wynants’s house nine years later could not have been sure that more attacks might not be in the offing; the final peace was not signed until a decade after the tulip mania had ended.
By then, as we have seen, the Dutch Republic had established itself as the world’s premier sea-going power. A people who had fished and then traded across the North Sea and around Europe’s coasts had built up a seafaring tradition second to none – not even their near-neighbours and Protestant rivals, the English. Their merchants could be found in India, China and Japan. Without much in the way of natural wealth, either rich soil or mineral reserves, the Dutch were making themselves rich through a global network. But the same innovations that allowed them to out-finance their rivals carried a risk. Buying and selling shares introduced the thrill of competitive, high-stakes gambling to a once conservative society. The idea of ‘futures’ – selling not the commodities themselves but their future price, as pure speculation, became commonplace among a people who were already becoming notorious for their lotteries and their addiction to gambling.
Without the huge influx of wealth to the United Provinces brought about by the ‘rich trades’ and the fact that the most prominent citizens were growing richer still by trading bets, th
e tulip mania could never have happened. All that was needed now was a mindset change among the vast majority of artisans, inn-keepers, small-time manufacturers and farmers who would never normally have the capital to follow the example of the rich bourgeois. For the first time in history, the little guy could dream of a single, life-changing investment.
The Dutch have been mocked ever since because their speculative boom was focused on something so ridiculous and transient as flower bulbs. To the modern eye, the idea of a tulip being worth a house, or a painting by Rembrandt, is certainly absurd. Should it be? After all, we put apparently disproportionate values on objects whose rarity (real or manufactured) brings the owner status. A painting by Monet is (mostly) better than a masterpiece by one of his followers done twenty years after the heyday of Impressionism. But is it a hundred or a thousand times better? A Chanel bag does the same job as a bag from a high-street store and to the untutored eye does not necessarily look a hundred times nicer. Is the price differential between Beluga caviar and lumpfish roe justified by the difference in the oily globules?
The same point could be made about wine, diamonds, sports cars or brand-label clothes. If anything, the Dutch obsession with tulips was more reasonable than these. Tulips, which had originally grown as wild flowers in the mountains between China and Persia, had been treasured there as being beautiful enough to represent love or even the perfection of God. They had been cultivated and prized by the Ottoman Turks, which is how they arrived in Europe. Difficult to breed to obtain different colours and shapes, they had entranced early botanists and been gifted and swapped by gardeners looking for something especially vivid. Is it any wonder they elicited particular delight under the grey skies of northern France, Holland and Germany?
The mania had begun among learned and specialist connoisseurs who were particularly keen on a small number of bulbs, those that produced flowers with delicate patterns on their petals, complex swirls and dribbles of rich red, yellow or purple on white. In fact, these were tulips suffering from a virus spread by aphids. They were sick. Today they have virtually died out. But in the 1630s, given grand names like ‘Semper Augustus’ and ‘Admirael van der Eijck’, they were traded by the super-rich. A single bulb could reach six or seven times the annual wages of a carpenter. (Again, we should think in terms of the competitive frenzy between rich collectors over very rare stamps in today’s world.)
The network of growers, traders, publicists and companies that grew from the new commodity then transmitted its enthusiasm to wider Dutch society. Ordinary people could not afford these super-bulbs, but there were plenty of humbler varieties to trade in. Because tulips flower only once a year, for a few weeks in the spring, people found they were necessarily trading a commodity whose performance could be guessed at but not entirely guaranteed. This meant that the trade was carried out in latent tulips, or tulip futures, ahead of the flowering season. Tip-offs, double-dealing, bulb theft and simple ignorance – such as the oft-repeated story of a bulb of fabulous worth being mistaken by a sailor for an onion, and eaten – fuelled the gold-rush atmosphere.
A system of buying and selling now sprang up in inns throughout the Dutch Republic, but particularly in Amsterdam and Haarlem. These mimicked the Amsterdam stock market, but in a beery, winey, smoky atmosphere of misrule. One of the historians of the mania has pointed out that for the people in the taverns, even if they had managed to put aside a little money, both the stock market and the new banks were still out of reach: ‘There were no building societies in the seventeenth century, no unit trusts, no personal equity plans, no penny shares, no tax breaks and no tax shelters.’25 The tavern system, involving bids being chalked on boards and then haggled over by ‘friends’ of the would-be buyer and seller, was fixed to encourage sales. There were financial penalties for a buyer who refused the finally offered price, and similar ones for sellers who pulled out. Celebratory drinks, rounds of food and singing, greeted deals.
In the peak period of the mania, the four years from 1633, the nominal value of the tulip-bulb trade has been estimated at ten times the value of the mighty Dutch East India Company, on which so much of the real wealth of the Dutch rested. We know exactly when the bubble burst. On the first Tuesday of February 1637, in a Haarlem tavern, a pound of Switzers was offered at 1,250 guilders, and nobody bought them. The auctioneer kept cutting the price, yet still nobody bought them. It must have been a sickening few minutes. The panic took hold, and spread. Within three months, prices had fallen a hundredfold. On paper, at least, hundreds of thousands of people faced ruin, bankruptcy and even starvation. For they had not simply invested spare cash. As with later booms, they had borrowed very heavily against future profits. Others had mortgaged their homes, their land, the tools of their trade. And all for wrinkled, onion-like objects suddenly worth almost as much in a casserole as in a vase.
Yet the really interesting thing about the tulip boom is that it did not end in universal disaster, or even in the widespread bankruptcy of Dutch speculators. The Estates General which ran the republic refused to take special measures, and passed the problem back to the civic authorities. Many towns, in their turn, refused to process or hear any court actions involving the tulip trade, carrying on as if none of it had really happened and allowing the paper losses and the paper gains to wipe each other out. If the dreams of sudden enrichment were snatched away, so were the nightmares of destitution.
The Dutch prided themselves, even then, on their common sense and their ability to talk things through. It was a very Dutch solution and the economy carried on regardless. Tulip-growers were badly hit and there were many individually sad cases, but the republic and its new financial system were hardly shaken.
Indeed, the Dutch went on to make tulips (which grow well in the sandy soil of the Netherlands, as in the sandy uplands of Asia) a normal export trade, just another modest luxury to put on a table in Bristol, Düsseldorf or Lille. Today the Dutch dominate the global flower business, and the system they devised in the early 1600s of stock markets, futures-trading and international dealing dominates the world economy. They provided a fitting answer to the simpler idea of wealth held by the Spanish of the age of Columbus and Pizarro – blocks of gold to be melted down to decorate churches and fight wars, and land to be squatted on for God and for glory. The Dutch way, which is to make the most of meagre land and to use money as a tool, became the modern way. We call it capitalism.
Part Six
DREAMS OF FREEDOM
1609–1796: Enlightenment and Revolution, from India to the Caribbean
Capitalism worked. But it worked for a few lucky people in a few European towns. For the vast majority of people even in Europe, there was no sense of a revolution. Life went on, dominated by the traditional limitations on how much food could be grown and how much energy could be exploited by burning wood and some coal, by harnessing the muscular help of animals; by means of a little wind and water power, and above all, of the toil of humans themselves. There were some new luxuries, but life remained rural and bounded by old stories and old beliefs.
And for people in Australia, the Pacific Islands, Persia, the Ottoman Empire, Korea, Japan, most of Siberia, India, North America, Indonesia and China, there was no sense of change at all. Their traditions ranged from Stone Age hunting to sophisticated imperial management, but there can have been little sense of anything important having happened, still less of acceleration. Most people everywhere were peasant farmers whose world extended only to the next village or two and who heard little about wider events, except perhaps a year or more after they had happened. In Eastern Europe the farmers were often still serfs, legally tied to their land and treated as property by the landowners. In Gaelic Scotland, Ireland, much of Scandinavia and northern Russia, people lived in their clans or lineage groups, barely linked at all to the outside world. Most Europeans either did not speak the language of whatever nation claimed to rule them, or spoke dialects that would have been incomprehensible in their capital cities.
Just as they had in the Americas, the Spice Islands and a few limited parts of West Africa, a few Europeans were about to disturb and unsettle most of the rest of the world. Many indigenous people were already doomed. They did not have the immunity, the weapons or the level of organization to resist. But in 1600 there was no obvious reason why other parts of the world might not soon catch up with the Britons, the Hollanders and the French. Indeed, the Mughals in India and the Qing dynasty in China seemed further ahead – richer, running vast territories efficiently, and relatively self-sufficient. The victory of Europeans hardly seemed inevitable. So what tilted the balance?
We have already seen how apparently small local changes can have global results. In this period the most important local changes would be in politics, and began in Britain, with no plan. Had the British not been ruled at the time with particular incompetence and pig-headedness by one of their worst dynasties, the Stuarts, they might have muddled through the 1700s still obeying monopolistic monarchs. But poor kingship, war and religious argument resulted in a two-stage revolution that gave Britain a new kind of government. First, their rebellious parliamentarians overthrew and killed a king. Next, when one of his successors proved both incompetent and religiously unreliable, they scared that king enough to make him run away and brought in a husband-and-wife monarchy that was clearly and overtly under the thumb of Parliament.