Mr. Peterson is headmaster of The Pilgrim Academy in Egg Harbor City, New Jersey. His articles have appeared in a variety of publications, including National Review and Human Events.
“The Dutch must be understood as they really are, wrote Daniel Defoe,” the Middle Persons in Trade, the Factors and Brokers of Europe . . . they buy again to sell again, take in to send out, and the greatest part of their vast commerce consists in being supplied from all parts of the world that they may supply all the world again.”[1] What Defoe was describing was perhaps the freest society in Europe, the Dutch Republic. While Puritans and Cavaliers were still fighting each other in England—the nation we think of most as laying the foundation for freedom in the modern world—Holland served as a haven for refugees from both sides. The modern world provides us with hundreds of examples of what happens when a nation adopts the philosophy and practices of socialism. Certainly we can learn from bad examples—about what not to do—but we can learn equally well from good examples. Unfortunately, such positive “role models” are few and far between. History does provide us with some, however,—Hong Kong comes to mind, as do nineteenth-century Britain and America. The Dutch Republic is one example that has been often overlooked. Newly freed from Spanish oppression, the Dutch built one of the world’s great civilizations. In art, it was the age of Hals, Rembrandt, Vermeer, and deHooch. Of this period historian Peter Gay has written, “Never in history has one country—and so small a country!-produced so many painters of such high caliber in such short time.”[2] In science and philosophy, it was the age of Huygens and van Leeu-wenhock, and of Descartes and Spinoza. Finally, in commerce, it was the golden age of Dutch influence, as Dutch ships plied the oceans and explored the Tasman Sea and Barents Straits. By 1625, The Netherlands was engaged in more shipping than all other countries of the world combined. Yet, unlike many other nations, her prosperity was not built on military adventurism or expropriation from others, but on an underlying philosophy of freedom. The prosperity and freedom that the Dutch enjoyed in the sixteenth and seventeenth centuries were largely the result of the interplay of various ideas which came together at the right time. First, through their constant struggle with the sea, the Dutch had developed into one of Europe’s most disciplined and hard-working peoples. Second, the Dutch had recently experienced the tyranny of government intervention under the Spanish—and they found out that they didn’t like it. After an epic struggle for freedom, the Dutch weren’t about to allow their new rulers to govern with the same heavy hand. In Holland, old priests became new regents writ small. Third, there was the influence of Calvinism. Like most of Northern Europe, Holland had been deeply touched by the teachings of the Reformers. The Bible came to affect nearly every area of Dutch life, including politics and economics. Of the Bible’s influence in creating the free society John Chamberlain wrote in The Roots of Capitalism:
[O]ne needs no paraphernalia of scholarship to know that the commandment against murder is simply the other face of Locke’s and Jefferson’s “unalienable” right to life. “Thou shalt not steal” means that the Bible countenances private property—for if a thing is not owned in the first place it can scarcely be stolen. “Thou shalt not covet” means that it is sinful even to contemplate the seizure of another man’s goods—which is something which socialists, whether Christian or other, have never managed to explain away. Furthermore, the prohibitions against false witness and adultery mean that contracts should be honored and double-dealing eschewed. As for the commandment to “honor thy father and thy mother that thy days may be long,” this implies that the family, not the state, is the basic continuing unit and constitutive element of society.[3]
Although Chamberlain was thinking primarily of Great Britain and America, his words apply equally well to Holland. And as Max Weber pointed out long ago, there seems to be a direct relationship between the Calvinist idea that every man has a “calling”—not just in religious professions, but in business ones as well—and the “spirit of capitalism.” According to Weber, Calvinism’s emphasis on sobriety, thrift, upright conduct, and dedication to one’s calling led, as a side effect, to capitalist accumulation and investment. In Holland, Calvinism’s emphasis on thrift had its effects even on the rulers—the Princes of Orange lived in a large house rather than a palace, and DeWitt, the Grand Pensionary of Holland, had no entourage and chose to walk rather than ride in a carriage.
We need not accept Weber’s thesis as a complete explanation for the rise of capitalism, for we know that free economies have existed in small pockets throughout the history of the world. Ideas that make for liberty transcend national boundaries, as is illustrated by the fact that many of the institutions that made capitalism possible—marine insurance, double-entry bookkeeping, and modern banking—came from Catholic Italy. But it cannot be denied that all through modern history there has been a strong correlation between Calvinism—or rather, its practical outworking—and capitalism.
The Dignity of’ the Individual
Calvinism also served to strengthen and nurture a deeper Western tradition—the idea of the dignity of each individual. Not only did all Western creeds believe that man is created in the image of God, but Martin Luther gave further impetus to the idea by emphasizing the “priesthood of the believer.” When one accepts the idea that every man has a right to both read and interpret the Scriptures for himself, it’s just a short intellectual journey to believing that every man has a right to make economic and political decisions for himself as well. Along with respect for the individual came respect for property, for without property the individual cannot be sustained.
In addition to the emphasis on the dignity of man, economic freedom was further promoted by some of the lowest interest rates in Europe. In the fifteenth century, interest rates fell from 14 per cent to 5 per cent; by the sixteenth century, they were 3 per cent in the Netherlands—the lowest in Europe. In England, where interest rates were twice what they were in Holland, the London merchant Josiah Child saw how important they were in producing the Dutch economic miracle. “This in my poor opinion,” wrote Child, “is the causa causans of all the other causes of riches in that people; and if interest of money were with us reduced to the same rate as it is with them, it would in a short time render us rich and considerable in trade as they are.”[4]
Although governments can manipulate interest rates through a central bank and by increasing or decreasing their fiat currencies, such policies always cause serious economic dislocations. True interest rates are a reflection of a society’s basic philosophic and moral outlook. If a given society is rife with anarchy, pessimism, and rulers who try to do everything but enforce contracts and protect the citizenry from lawbreakers, the price of money will be high. People with money will either send their money out of the country, or spend it immediately. It is this kind of “eat, drink, and be merry for tomorrow we die” philosophy that causes high interest rates.
On the other hand, if a society encourages thrift, self-government, hard work, and morality, and the government performs its proper function of protecting citizens from criminals and contract-breakers, there are fewer risks in lending money. In such a society, people are more likely to forgo present consumption, since the stability all around tells them that there will be a future to be enjoyed.
This was the kind of attitude that prevailed in seventeenth-century Holland. Spain was no longer a threat, businessmen played a part in the nation’s councils, and disputes were settled peacefully and rationally. It was this kind of society that gave the Dutch such low interest rates. And this in turn helped to make The Netherlands, for a time, Europe’s greatest economic power.
A Government Limited to Protecting Life and Property
What were the results of all these “roots of capitalism”? First, the Dutch allowed only the most limited of governments. The new government was limited to protecting life and property. Of the Dutch Republic immediately after the Revolt, historian Charles Wilson has written: “The constitution of the new state seemed to many supposedly wise and experienced contemporaries elsewhere to be an impossibility. How could a motley collection of tradesmen, salt dealers, fishermen, and tallow chandlers hope to govern themselves without even royal or even noble guidance? The Dutch were in no way perturbed.”[5]
According to the Dutch legal scholar Hugo Grotius, the basis of The Netherlands’ limited government was individual self-government: “He knows not how to rule a kingdome, that cannot manage a Province; nor can he wield a Province, that cannot order a City; nor can he order a City, that knows not how to regulate a Village; nor he a Village, that cannot guide a Family; nor can that man govern well a Family that knows not how to govern himselfe; neither can any govern himselfe unless his reason be Lord, Will and Appetite her Vassals: nor can Reason rule unless herselfe be ruled by God, and (wholy) be obedient to Him.”[6] Grotius understood that there were other “governments” besides civil governments—family governments, personal government, etc.—and that when these governments were healthy, they formed a powerful bulwark against the growth of the State.
Because of the laissez-faire policies of the Dutch government, Holland became the most liberal society in the seventeenth century. It was the only society where Jews were treated as equals, and the torture and execution of witches and wizards ceased in Holland a century before it did in any other European country—including England.[7] Moreover, as the great Dutch historian Johann Huizinga has pointed out, “The history of Holland is far less bloody than that of any of the surrounding countries . . .”[8]
Seeking religious freedom, Protestants from Belgium and France fled to The Netherlands. France and Belgium’s loss was Holland’s gain as thousands of hard-working and skilled emigrés came to Amsterdam, Rotterdam, and other cities to lend their talents to building the Dutch Republic. Perhaps the most famous Protestants to find refuge in Holland were the Pilgrim Fathers, who later left Holland to go to America, not because of any lack of freedom there, but because they feared their children would become more Dutch than English. At one time there were over forty English churches in Holland, served by more than 350 ministers from England and Scotland.
When the Puritans went home in the time of Cromwell’s ascendancy, it was the Anglicans who became the exiles of the 1640s and 1650s. Even the University of Leyden was filled with Englishmen: between 1575 and 1675, over 950 students poured through this great university’s doors.[9] Thus, while England was still rife with civil war, her next-door neighbor provided freedom for both factions.
Even John Locke found temporary sanctuary in Holland during his enforced exile from En gland, While in Holland, the free flow of ideas, as well as the influence of Huguenot refugees from France, helped to make Locke the philosopher we know today. Other famous thinkers who benefited from Holland’s liberal atmosphere included Descartes and Spinoza. Spinoza, a member of the Jewish community that had settled on the Jodenbreestraat (Jewish Broad Street), described Amsterdam in glowing terms. It was a city “whose enjoyment of this freedom has made it great and admired by the whole world . . . In this flourishing state,” he continued, “this city without a peer, men of every race and sect live in greatest harmony . . .”[10] Despite the growing capitalist economy, Spinoza could not find a market large enough for his ideas, and had to subsidize his work in philosophy by grinding and polishing optical lenses. And even though this trade may have hastened his death from phthisis, through the absorption of glass particles into his lungs, he was a philosopher who was not beholden to the state for his income.
By 1685, there were so many immigrants in The Netherlands that a French observer calculated that they comprised half the population in the province of Holland. What brought them there was the tremendous opportunity that Holland’s free market offered. When Adam Smith published his Wealth of Nations in 1776, Holland was beginning to wane as an economic power. Yet there was still enough freedom there for him to cite it as an example to his British readers: “Though there are in Europe,” he wrote, “a few towns which in some respects deserve the name of free ports, there is no country which does so. Holland, perhaps, approaches the nearest to this character of any, though still very remote from it; and Holland, itis acknowledged, not only derives its whole wealth, but a great part of its necessary subsist tence, from foreign trade.”[11] With few natural resources, save for her own sturdy people, Holland was the Hong Kong of the seventeenth century.
Freedom of the Seas
Dutch dependence on open markets and free trade led to one of the first formulations of the doctrine of freedom of the seas. Although many believe this doctrine to be of British origin, it was first formulated by Hugo Grotius. Taking aim at the overbearing claims of Spain and Portugal, Grotius wrote: “Between us and the Spaniards the following points are in dispute: Can the vast, boundless sea be the appanage of one kingdome alone, and it not the greatest? Can any one Nation have the right to prevent other nations which so desire from selling to one another, actually from communicating with one another? Can any Nation give away what it never owned, or discover what already belonged to someone else? Does a manifest injustice of long standing create a specific right?”[12] The doctrine of the freedom of the seas, so important for the unhindered flow of world trade even to this day, was primarily a Dutch contribution. Upon the oceans, the Dutch plied not only their wares but those of other nations, and thus made their fortunes.
As the Dutch economy grew, nurtured by the “first principles” of freedom, so did the middle class that depended on such a philosophical climate. This rising group of entrepreneurs, in turn, helped to foster one of the greatest eras in the history Of art. The Dutch masters painted everything—portraits, landscapes, still-lifes—not just the subjects chosen by a few wealthy patrons. Rich merchants, shopkeepers, and yes, even peasants bought pictures to furnish their homes and for investments (in lieu of land, perhaps, since it was in short supply). Had there not been this expanding market for paintings, Van Goyen may very well have had to sell more tulips than he did, while Jan Steen would have had to expand his inn. Dutch money also found its way into Europe’s most elaborate private welfare system. “It is doubtful if England or any other country,” wrote Wilson, “could rival the scores of almshouses for old men and women, the orphanages, hospitals, and schools maintained by private endowments from the pockets of the Dutch regent class.”[13]
Unable to contain their economic activity to their own country, Dutch capital and ideas went to work all over the world. In Russia, the Dutch exported caviar, tar, hemp, oil, salmon, and wool. In Scandinavia, they drained swamps, cleared forests, built canals, and opened mines. They introduced the cabbage to England, and planted the fast pineapple on English soil. All over Europe they taught farmers how to grow crops that took salt out of the reclaimed land, as well as how to rotate crops.
As Dutch ships reached into the far comers of the globe, Dutch mapmakers incorporated these new discoveries into their work and at the same time became the best mapmakers in Europe (Mercator was a Fleming). And to help their ships pick their way across uncharted seas, the Dutch produced the best telescopes, binoculars, spectacles, and navigational instruments in Europe (the telescope was a Dutch invention). Peter the Great paid the Dutch lasting tribute, for when he wanted to learn how to build a “real” ship, he went to Holland. Liberty, not coercion, brings out the best in man’s industry and creativity.
Eventually what was working in practice was soon defended in print. Although written chiefly as a tract against the house of Orange, The Interest of Holland, written by Pieter de la Court, is filled with the kind of policies that make for freedom. A self-made man, he supported the practices which made social mobility possible for others as well as for himself. His arguments went something like this: war is perhaps the most devastating thing to the Dutch economy, so it ought to be avoided at all costs. Peace is the most beneficial of all conditions for Holland. Since Holland’s wealth is based upon the sea—and the bulk of her property consists of ships, cargoes, and stocks in warehouses—it is always at risk in wartime. Holland should never start an offensive war, and should promote freedom within her own borders. The most important freedom to be promoted is religious freedom, since it involves the right to own one’s thoughts and beliefs. Immigration should continue to be encouraged, and taxes should be as low as possible. The main purpose of taxes should be to defend Holland’s merchant marine by a strong navy. Finally, let the flow of precious metals be as free as possible.[14]
The Dutch experience from 1579 to 1750 clearly shows that a nation’s wealth rests not so much on population, for England and France had many more people, nor on natural resources, for Holland had few, but on an underlying philosophy of freedom. In Holland’s case, this state of relative freedom was not so much the result of a deliberate government policy of laissez-faire as it was a natural outgrowth of people acting freely in the marketplace under certain conditions. Certainly Holland in the seventeenth and eighteenth centuries was not a society of Friedrich yon Hayeks or Ludwig von Miseses. Inconsistencies were legion. Grotius was forced into temporary exile in Sweden, and it was a Dutch ship that brought the first slaves to America. But it was, for its time, the world’s freest society, and the result was the Dutch Golden Age.
Had The Netherlands continued to move in the direction of freedom, it might very well have become the “Hong Kong” of twentieth-century Europe. Instead, Holland took a left turn somewhere along the path of history. The trend toward more government was evident even in Adam Smith’s day. “In Holland the heavy taxes upon the necessaries of life have ruined, it is said, their principal manufactures,” Smith wrote in The Wealth of Nations, “and are likely to discourage gradually even their fisheries and their trade in shipbuilding.”[15]
Today, The Netherlands stands knee-deep in a flood of socialism and government intervention, a force against which her famous dikes have proved defenseless. Even the heirs of the great Dutch painters are subsidized by the government, and warehouses are full of paintings that are bought up by the government through a guaranteed income program for artists. Yet it would be unfair to single out Holland and neglect to mention most of the other nations in theWest. One would be hard-pressed to find a nation today that is not overgoverned. All over the world, government regulations on businesses and individuals “hang like ice on a Dutchman’s beard,” as Shakespeare put it. Only in the past few years haS the debate begun to change, and people in the West are seriously talking about stopping the growth of government.
One of the most famous stories that has come down to us from Dutch history is that of the little boy who discovered a leak in one of the dikes. All night he held his finger in that dike, until others could arrive to make the necessary repairs. Through his heroic action, his town—his “civilization”—was saved from destruction. Today, those of us who believe in liberty stand, like that little Dutch boy, with our fingers in the dikes of freedom all over the would. But holding back the forces of coercion is not enough. Each year we must work to reclaim new territory for freedom. If there is a shift beginning to occur in today’s philosophical climate, it is because there are men and women who continue to stand for the great principles of liberty, and who encourage the ideas and institutions that worked so well for the Dutch in the seventeenth century—self- government, morality, free markets, limited government, and free men.
1. Daniel Defoe, A Plan of the English Commerce. 1728, p. 192.
2. Peter Gay and R. K. Webb, Modern Europe to 1815 (New York: Harper and Row Publ., Inc., 1973), p. 223.
3. John Chamberlain, The Roots of Capitalism (Indianapolis: Liberty Press, 1976, originally published by D. Van Nostrand Co., 1959), pp. 70-71.
4. Henri Pireene, Economic and Social History of Medieval Europe (New York: Harcourt, Brace, and World, Inc., 1937), p. 212; Charles Wilson, The Dutch Republic (New York: McGraw-Hill Book Co., 1968), p. 33.
6. Grotius, quoted in Gary De Mar, God and Government (Atlanta: American Vision Press, 1982). p. 12.
8. Johann Huizinga, Erasmus and the Age of Reformation (New York: Harper and Row Pub., 1957), p. 194.
9. Keith L. Sprunger, A History of the English and Scottish Churches of the Netherlands in the Sixteenth and Seventeenth Centuries (Leiden: E. F. Brill. 1982).
10. Spinoza in the Tractatus Theologica-Politicus, 1670, printed in The Political Works. ed. A. G. Wereham, 1958. p. 241.
11. Adam Smith, The Wealth of Nations, ed. Edwin Cannon (Chicago: The University of Chicago Press, 1976). Volume I, Book IV, p. 523.
12. Hugo Grotius. The Freedom of the Seas, ed- J. B. Scott (New York and Oxford, 1916), p. 4.
Robert A. Peterson
Mr. Peterson is headmaster of The Pilgrim Academy in Egg Harbor City, New Jersey. His articles have appeared in a variety of publications, including National Review and Human Events.