6/8/10 - wealth and gold

In today's excerpt - wealth without resources. In the 1500s and 1600s, the experience of two countries seemed to defy all that had gone before. Spain had amassed the largest supply of gold in history thanks to its New World conquests, but saw inflation and near bankruptcy as a result. And in Holland, the Dutch were gaining greater wealth than most any country on earth by trading in fish and other mundane items—in the beginnings of a strange new way that came to be known as a market economy:

"During the seventeenth century, the Dutch extracted tons of herring from waters that washed on English shores, had the largest merchant fleet in Europe, drew into their banks Spanish gold, borrowed at the lowest interest rate, and bested all comers, in the commerce of the Baltic, the Mediterranean, and the West Indies. Dutch prosperity, like Dutch land, seemed to have been created out of nothing. The inevitable contrast with Spain, the possessor of gold and silver mines now teetering on the verge of bankruptcy, only underscored the conundrum of Dutch success.

"The Netherlands represented a kind of anti-fairy tale. The rags-to-riches heroes of medieval folklore invariably found pots of gold or earned fortunes through acts of valor. Elfin magicians, fairy godmothers, and subdued giants were the bestowers of great wealth. Spanish exploits in the New World had been entirely in keeping with this legendary tradition. The conquistadors had won the fabled mines of the Incas and Aztecs with their military prowess. Even the less glamorous triumphs of the Portuguese conformed to the 'treasure' image of getting wealthy. Venturing into uncharted oceans, they had bravely blazed a water trail to the riches of the Orient. The Dutch, on the other hand, had made their money in a most mundane fashion. No aura of gold and silver, perfumed woods, rare stones aromatic spices, or luxurious fabrics attended their initial successes. Instead their broad-bottomed flyboats plied the waters of the North Sea in an endless circulation of European staples.

"From this inglorious foundation the industrious people of the Low Countries had turned their cities into the emporiums of the world. The Dutch were the ones to emulate, but to emulate was not easy, for the market economy was not a single thing but a complicated mix of human activities that seemed to sustain itself. ...

"In the Dutch example there were challenging contradictions between appearances and reality with puzzling divergences between expectations based upon established truths and what actually happened. Without mines, how did the Dutch come to have plenty of coin? With few natural resources for export, how could the Dutch engross the production of other countries? How did the Dutch have low interest rates and high land values? How were high wages maintained with a burgeoning population? How could high prices and widespread prosperity exist simultaneously in the Low Countries (Holland)?"


Joyce Appleby


The Relentless Revolution: A History of Capitalism


W.W. Norton & Company, Inc.


Copyright 2010 by Joyce Appleby


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