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The Function of Commercial Centers in the Modernization of European Capitalism: Amsterdam as an Information Exchange in the Seventeenth Century

Published online by Cambridge University Press:  03 March 2009

Woodruff D. Smith
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Abstract

During Amsterdam's development as the commercial center of Europe in the seventeenth century, an informal “information exchange” appeared among the economic and political institutions of the city. Informational economies of the types discussed by Stigler, North, and Pred led to the emergence of Amsterdam as the focal point of information flows throughout Europe. They also encouraged a high level of innovation within all functional areas of Amsterdam's information exchange—especially in long-term data analysis—which contributed to the general modernization of capitalism.

Type
Articles
Information
The Journal of Economic History , Volume 44 , Issue 4 , December 1984 , pp. 985 - 1005
Copyright
Copyright © The Economic History Association 1984

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References

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5 It might also be objected that since warehousing capacity is largely a function of direct investment, one would expect the reign of a prime commercial center resting its hegemony on warehousing to be a short one in the face of a determined rival (of which Amsterdam had many) willing to build up its own facilities.Google Scholar

6 See, for example, Braudel, , Civilisation matérielle, vol. 2, pp. 353–82,Google Scholar and Barbour, Violet, Capitalism in Amsterdam in the 17th Century (Ann Arbor, 1963), p. 53.Google Scholar

7 De Vries, Economy of Europe, pp. 116, 121. In the mid-seventeenth century the intelligence systems of the major European states consisted to a large extent of agents stationed in the Netherlands.Google Scholar See Rowen, Herbert H., John de Witt, Grand Pensionary of Holland, 1625–1672 (Princeton, 1978), pp. 356–61. Amsterdam was a center of the nascent newspaper business. When the directors of the English East India Company wanted quick and reliable information about what was going on in their own factories in Asia, they consulted their correspondent in Amsterdam. See CCM, 1664–1667, pp. 417–18 (Court of Committees, 18 Dec. 1667).Google Scholar

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10 Stigler, Organization of Industry, p. 176.Google Scholar

11 The specific categories are the author's. For various approaches to informational structure, see Rappaport, Alfred, ed., Information in Decision Making: Quantitative and Behavioral Dimensions (Englewood Cliffs, New Jersey, 1970).Google Scholar

12 See de Vries, Jan, The Dutch Rural Economy in the Golden Age, 1500–1700 (New Haven, 1974), pp. 202–9,Google Scholar and Matthews, George T., ed., The Fugger Newsletter (New York, 1970), pp. 13–27.Google Scholar

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14 Evidence for this assertion comes from an examination of the inventories of family papers maintained in GA and from samples of the papers listed in the note to Figure 1.Google Scholar

15 Other factors were of course involved as well, but long-distance trade conformed well to the pattern outlined here. See for example the well-documented business affairs of Lionel Cranfield, discussed in Prestwich, Menna, Cranfield. Politics and Profit under the Early Stuarts. The Career of Lionel Cranfield, First Earl of Middlesex (Oxford, 1966), pp. 49–106.Google Scholar See also Cranfield's correspondence for the period 1597–1607 in Historical Manuscripts Commission, Calendar of the Manuscripts of Major-General Lord Sackville Preserved at Knole, Sevenoaks, Kent, vol. 2, ed. Fisher, F. J. (London, 1966), pp. 2–178.Google Scholar

16 Examples of the ways such links of correspondence were established and maintained are contained in GA: Velters papers, no. 1, p. 137 (letter Velters to A. de Cuijper, 1 July 1670); Brants papers, no. 902 (correspondence between D. Leeuw and T. and H. Boursse, Middelburg, 1713–1725).Google Scholar

17 Braudel, , Civilisation matérielle, vol. 2, p. 361. The format can be seen in most surviving sets of business correspondence, as for example in GA: Velters papers, no. 2/8 (correspondence with P. Macaré, 1676).Google Scholar

18 See the assessment of Dutch price information in Morineau, Michel, “Or brésilien et gazettes hollandaises,” Revue d'Histoire Moderne et Contemporaine, 25 (01. 1978), 3–60.CrossRefGoogle Scholar

19 The relationship between central and regional information exchanges can be traced in correspondence series to be found in GA: Burlamachi papers, nos. 288 (correspondence with Frankfurt), 362 (Cologne), 481–502 (Paris), and 701–22 (Vienna). The interim maintenance of correspondence links can be seen in GA: Velters papers, no. 2/4, p. 76 (letter Velters to M. Fletcher, 16 Aug. 1675) and no. 2/6, p. 188 (letter Velters to G. Minviele, New York, 26 Nov. 1675).Google Scholar

20 The process can be seen most clearly in the voluminous records of the Burlamachi house. Of particular interest is GA: Burlamachi papers, no. 6, which is a kind of guidebook to the operations of the house, with examples of real transactions drawn from the years 1663–1665, apparently intended for the training of junior clerks.Google Scholar

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22 The linking of Dutch cities together into a single interurban system is one of the subjects of de Vries, Jan, Barges and Capitalism: Passenger Transportation in the Dutch Economy (1632–1839) (Utrecht, 1981). See also Boyer, “Capitalisme hollandais,” pp. 13–22.Google Scholar

23 Queller, Donald E., “The Development of the Ambassadorial Relazione,” in Renaissance Venice, ed. Hale, J. R. (Totowa, New Jersey, 1973), pp. 174–96; Rowen, De Witt, pp. 731–80.Google Scholar See also Rowen, Herbert H., The Ambassador Prepares for War. The Dutch Embassy of Arnauld de Pomponne, 1669–1671 (The Hague, 1957).Google Scholar

24 On the commercial oligarchy in general, see Elias, Johan E., De Vroedschap van Amsterdam, 1578–1795, 2 vols. (Amsterdam, 1963; orig. ed. 1903, 1905),Google Scholar and Boxer, C. R., The Dutch Seaborne Empire: 1600–1800 (New York, 1970), pp. 31–54. An example of the private use of state and VOC information can be found in GA: Velters papers, no. 2/7, pp. 514–16 (letter Velters to Macaré, 25 Sep. 1676).Google Scholar

25 ARA: Levantse Handel, no. 173, contains reports of this sort from Cadiz. See esp. letters of 14 Sep. 1691 and 8 July 1696.Google Scholar

26 Dam, Van, Beschryvinge, vol. 68, pp. 334–37, discusses the VOC's “gratuities.”Google Scholar

27 The reports of the Asian stations are maintained in ARA: VOC, Overgekommene Brieven en Papieren. See also Coolhaas, W. Ph., ed., Generale Missiven van Gouverneurs-General en Raden aan Heren XVII der Verenigde Oostindische Compagnie, Serie, R. G. P. Grote, vols. 104, 112, 125, 134, 150, 159, 164 (The Hague, 1960–1979),Google Scholar and Glamann, Kristof, Dutch Asiatic Trade, 1620–1740 (Copenhagen and The Hague, 1958), pp. 25–26.Google Scholar

28 ARA: Hudde papers, no. 5 (exchanges of notes, Hudde and others, 1687–1689); CCM, 1668–1670, p. 120 (letter East India Co. to Hampson, agent in Amsterdam, 20 Nov. 1668).Google Scholar

29 For an instance of advantages expected from early access to VOC information, see GA: Velters papers, no. 14 (letter Velters to Bornezee, 12 May 1694). See also ARA: Hudde papers, no. 5 (letter C. van Beuningen to Hudde, 5 May 1688).Google Scholar

30 Dam, Van, Beschryvinge, vol. 68, pp. 555–605.Google Scholar

31 Braudel, , Civilisation matérielle, vol. 2, pp. 78–92; vol. 3, p. 106.Google Scholar

32 Van Dillen, Van Rijkdom en Regenten, pp. 108–37; Glamann, Dutch Asiatic Trade, pp. 29–34; GA: De Graeff papers, no. 200, esp. entry for 30 July 1680.Google Scholar

33 Aitzema's compilations of data were later published as a current history, which is our main source for the way he worked. See van Aitzema, Lieuw, Saken van Staat en Oorlogh, 6 vols. in 7 (The Hague, 1669 ff.). In vol. 5, pp. 193–99, Aitzema includes a verbatim transcript of a secret 1664 VOC internal report on conditions in Asia. The best modern discussion of Aitzema is in Rowen, De Witt, pp. 356–61, 373.Google Scholar

34 CCM, 1664–1667, pp. 420–21 (letter East India Co. to Hampson, 20 Dec. 1667); CCM, 1668–1670, p. 120 (letter East India Co. to Hampson, 20 Nov. 1668).Google Scholar

35 See HMC, Calendar (Cranfield papers), vol. 2, pp. 4–5, 31, 32, 35, for examples of rumor and consensus-building in early seventeenth-century markets.Google Scholar

36 Institutional aggregation of business information was not new in the seventeenth century, but earlier examples, such as the Fugger “newsletters,” were very primitive compared with the instances discussed here. See Matthews, ed., Fugger Newsletter.Google Scholar

37 ARA: Levantse Handel (for example, 173, consular letters from Cadiz, 1657–1765).Google Scholar

38 Smith, Woodruff, “The European-Asian Trade of the Seventeenth Century and the Modernization of Commercial Capitalism,” Itinerario, 6, no. 2 (1982), 68–90.CrossRefGoogle ScholarDam, Van, Beschryvinge, vol. 63, pp. 270–84, describes the work of the Advocate (Van Dam himself) as examiner of correspondence. The early composition and operation of the key Amsterdam committees–the committee of receivers and the committee on sales–are noted in ARA: VOC no. 230 (resolutions of Amsterdam chamber, 23 March 1623), and 231 (resolutions of Amsterdam chamber, 23 Mar. 1636). VOC no. 237 (resolutions of Amsterdam chamber, 29 March 1663) notes the establishment of a special committee to make up the order from Asia; no. 241 (resolutions of Amsterdam chamber, 16 Feb. 1682) includes recommendations on pricing to be presented to the board of the whole VOC; no. 243 (resolutions of Amsterdam chamber, 23 March 1688, 7 February 1692) contains recommendations on pricing based on analyses of price trends in pepper.Google Scholar

39 GA: Velters papers, no. 2/7, pp. 514–16 (Velters to Macaré, 25 Sep. 1676, enticing the latter into speculation in Indian wares based on “inside” VOC information); Glamann, Dutch Asiatic Trade, pp. 73–90; Van Dillen, Van Rijkdom en Regenten, pp. 37–68; Klein, De Trippen, pp. 163–83, 236–40.Google Scholar

40 ARA: Hudde papers, no. 17 (collection of printed price lists, exchange rates, announcements of sales, etc.); Van Vredenburch papers, no. 11 (collection of VOC publications); VOC, no. 237 (resolutions of Amsterdam chamber, 18 Oct. 1663); no. 6985 (printed sales announcements).Google Scholar

41 For example, Hollantsche Mercurius, vol. 1, p. 26 (July 1650), contains, along with international political news likely to affect trade, an announcement of the arrival of the VOC return fleet from Batavia. Amsterdamze Mercurius (February–July 1689) also concentrates on political news, mostly from England.Google Scholar On early newspapers, see Smith, Anthony, The Newspaper: An International History (London, 1979), pp. 17–45.Google Scholar

42 Jansen, Lucas, “De Koophandel van Amsterdam” Een critische studie over het koopmanshandboek van Jacques Le Moine de l'Espine en Isaac Le Long (Amsterdam, 1946), esp. pp. 1–7.Google Scholar

43 See Brown, Richard, ed., A History of Accounting and Accountants (Frankfurt am Main, 1968), pp. 41–180. Records of agricultural estates had of course long been kept for planning purposes. The whole question of the influence of agricultural planning on business practices is worth investigating but has not yet, to my knowledge, been studied.Google Scholar

44 Klare Ende waerachtige Vertooninghe, van eenige merckelijke Veranderinghen van goede ende duyre tijden (Amsterdam, 1624).Google Scholar

45 Rowen, De Witt, p. 184.Google Scholar

46 On bureaucratization in the VOC, see Glamann, Dutch Asiatic Trade, pp. 2–49;Google ScholarDam, Van, Beschryvinge, vol. 63, pp. 230–43, 270–84 309–43, 369–416, 554–619; vol. 68, pp. 304–7; ARA: VOC, no. 360 (operating regulations for East India House, late seventeenth century); Van Vredenburch papers, no. 15 (collection of VOC regulations).A process of bureaucratization can be inferred from the files of the Burlamachi house, especially GA: Burlamachi papers, no. 6 (handbook for employees).Google Scholar

47 Dam, Van, Beschryvinge, vol. 63, pp. 369–416; ARA: VOC, no. 241 (resolutions of Amsterdam chamber, 22 Jan. 1682, on the appointment of VOC librarians); no. 221 (index of resolutions of Heeren 17); no. 307 (register of resolutions of Amsterdam chamber); Hudde papers, no. 6 (standard filing procedures and formats, with data for 1672–1681).Google Scholar

48 The remnants of such files can be found in GA, especially the consular reports series and the Burlamachi papers, and ARA: WIC.Google Scholar

49 For example ARA: VOC, no. 14,532 (records of sales in Hoorn chamber, 1669–1685); Lyste Vande Gedenckwaerdige Teyckininghe op de Peper … (Haarlem, 1639), a list of purchasers of VOC pepper and the amounts they bought.Google Scholar

50 ARA: VOC, no. 238 (report of committee on sales and pricing, 11 Feb. 1668); no. 6988 (price estimate report, 1680);Google ScholarDam, Van, Beschryvinge, vol. 68, pp. 104–10, 144–299. “It is to be hoped,” writes Van Dam after describing earlier cases of excessive reliance on Indian loan capital for covering purchases in Asia, “that the foregoing will make us wiser on that score” (vol. 68, p. 109).Google Scholar

51 ARA: Hudde papers, no. 3, item 52; no. 9, item 3 (time-series and analyses, about 1692).Google Scholar

52 ARA: Hudde papers, no. 3, items 2–19 (data on costs, 1614–1682); item 43 (summaries of dividends, 1612–1682); no. 5 (papers on overhead appended to file); no. 18 (summary of sales); VOC, no. 243 (resolutions of Amsterdam chamber, 23 Marck 1688);Google ScholarDam, Van, Beschryvinge, vol. 63, pp. 416–36.Google Scholar

53 ARA: Van Vredenburch papers, no. 11 (collection of forms and procedures); Radermacher papers, no. 116 (summary of VOC returns, 1700–1733, with 1732 prediction of prices).Google Scholar

54 On the reform movement, see Stapel, F. W., “Johannes Hudde over de balansen van de Oostindische Compagnie,” Economisch-Historisch Jaarboek, 13 (1927), 215–39. Unpublished material is collected in ARA: Hudde papers, nos. 2, 3, 5, 6, 9. See also Stapel's introduction to Van Dam's Beschryvinge, vol. 63, pp. ix–xxxix.Google Scholar

55 A copy of the printed essay is contained in ARA: Van Vredenburch papers, no. 11, item 2.Google Scholar

56 The formats and descriptions of data items are contained in ARA: Hudde papers, no. 3, items 22, 27–30, 45, 49, 52.Google Scholar

57 ARA: WIC, no. 1232 (sales book of the Zeeland chamber of the WIC).Google Scholar

58 For example, the 1730s estimates of anticipated income from the sale of Indian goods in the files of S. Radermacher, a VOC director (ARA: Radermacher papers, no. 116).Google Scholar

59 It should be noted that the English East India Company, even after it drew ahead of the VOC in sales in the eighteenth century, did not for many years follow the VOC's lead in developing means of market research. Instead, the English company remained dependent on information emanating from Amsterdam. The English company's forté was active demand creation. Chaudhuri, K. N., The Trading World of Asia and the English East India Company, 1660–1760 (Cambridge, 1978), pp. 79–81.CrossRefGoogle Scholar

60 ARA: Hudde papers, no. 9, item 3.Google Scholar

61 For example, the general letter of instructions sent from the VOC to Batavia on 21 Nov. 1720 (ARA: VOC, no. 236, especially entries under Banda, Maccaser, Jambij, and Ceylon).Google Scholar

62 The argument about the relative modernity and effectiveness of the VOC is summarized in Glamann, Dutch Asiatic Trade, pp. 244–65, which comes down on the side of the VOC as an effective trading organization with a reasonable amount of internal control throughout the seventeenth and eighteenth centuries.Google Scholar