This essay was authored by Murray N. Rothbard, and it is republished here with permission from the Ludwig von Mises Institute.
The British seizure of New Netherland — the vast if thinly settled Dutch territory in North America — wrought a permanent change in the pattern of English colonization in the New World. The grant of this vast area to the proprietorship of the Duke of York, younger brother of Charles II, and its seizure by Colonel Richard Nicolls in 1664, brought under English control a great land area that much later was to constitute the “middle colonies.”
How had New Netherland been formed? Seventeenth-century Dutch policies cannot be fully comprehended without recognizing the fierce and continuing political divisions within the Dutch republic over constitutional and foreign policies. Early in their long revolutionary struggle against Spain for religious toleration, freedom from taxation, and independence from central imperial rule, the seven northern Dutch-speaking Calvinist provinces of the Netherlands had established a loose confederation. Governing these United Provinces was a States-General representing the completely autonomous provincial legislatures or states. Not being burdened by the overweening state power of the other European countries, the Dutch maritime cities, especially those in the provinces of Holland and Zeeland, were able to forge the greatest economic progress in Europe. The Dutch freely engaged in trade throughout Europe, even after Spain’s union with Portugal had cut off their supplies of spices, sugar, and salt from the East Indies, Brazil, and the West Indies. The war against Spain, however, continued even after Spanish troops had been driven from the northern provinces, after the ten Catholic southern provinces had gained recognition of their rights by Spain, and after France and then England had determined to make peace with Spain. The struggle for national liberation thus became transformed into a war of Dutch aggression against the southern provinces. A regular standing army was developed, serving to expand the executive power in the central government, as well as central government power over the constitutionally independent provincial governments. Thus, the central executive, not to mention the officer class of the army, had a vested interest in continuing the war. This continuation of the war for the benefit of the executive-military authorities forced the syndicates of merchants who had successfully and rapidly developed private trade to the East Indies to seek a means of mutual defense from attacks by the Spanish or Portuguese fleets. Under the leadership of Amsterdam, these syndicates or chambers created the United East India Company in March 1602. This company, under the control of the local chambers, organized joint voyages to the East Indies for their mutual protection during wartime. After the war, however, the company became a monopoly for governing Dutch settlements in the Indies.
The fundamental cleavage in the politics of the United Provinces developed when the merchants of the cities of Holland and of other provinces, led by the foremost Dutch statesman, Johan van Oldenbarneveldt, successfully pursued peace negotiations with Spain despite the complete opposition of the Dutch military leaders. The Dutch merchants desired peace in order to end the threat of military dictatorship and the burden of taxes, and to gain access to world markets through free and peaceful trade. These merchants formed the basis of the Republican party, standing for liberal principles of peace, free trade, liberty, and, in particular, the maintenance of the original Dutch confederation of towns and provinces. In that confederation, each level of governmental power was strictly limited by the application of a virtual unanimity principle. The Republicans, furthermore, tended to be Arminians, following the liberal Dutch Protestant theologian Jacobus Arminius, who emphasized free will, natural law, and religious toleration as over against the Calvinist doctrines of predestination and state enforcement of religious conformity.
Opposition to the peace negotiations with Spain was centered in the Orange party, composed largely of gentry dependent upon their lucrative and powerful military positions and whose leader was the Prince of Orange, the military commander of the Netherlands. The Orange party sought greater powers for the central government, a strong standing army, and ultimately the substitution of an Orange monarchy for the republican confederation. Allied with the nobility and military in the Orange party was the great part of the Calvinist ministers; the Orange party, in fact, was often termed the “Calvinist party.” The Calvinist ministers found the discipline of war more suitable to Calvinist practices than was the increased standard of living resulting from peaceful trade. Furthermore, a strong central government, resulting from war, was seen as the best means of enforcing religious conformity, especially against the Arminians, who were protected by the provincial independence of Holland.
Holland was the center of strength of the Republican party, containing as it did the least influence by nobles or the military and the greatest commercial and maritime strength. The Orange party, however, had strong support even in the cities of Holland from Calvinist émigrés from southern Netherlands, largely French-speaking Walloons who formed an important and wealthy part of the population. Like most émigrés throughout history, the bulk of the southerners were not content to live in the free atmosphere of their newfound home. Instead, unable to persuade the majority of their original countrymen of the justice of their cause, they tried to win by dragging their new fellow citizens into war and thus riding to power on the backs of foreign troops and guns. Émigrés always tend to constitute a menace to those who graciously welcome their migration. In the Dutch republic, the Orange party had strong support from the southern émigrés, whooping for a war of aggression against the Spanish Netherlands to “liberate” the reluctant Catholics in behalf of Calvinism.
The peace negotiated by the Dutch Republicans, the Twelve Year Truce of Antwerp (April 1609), gained the recognition by Spain of the virtual independence of the United Provinces and of the right of the Dutch to engage in Eastern trade similar to the right won by England in the treaty of 1604. Also in 1609 the Dutch East India Company hired the English explorer Henry Hudson to find a northeast arctic route to the Orient. Hudson was instructed not to seek a northwest passage through North America, as the Republican-run company was anxious to avoid any danger to peace with Spain by challenging Spain’s imperial claims in the New World. Disobeying his instructions, Hudson, on failing to find a northeast route, sailed to North America and explored, among other areas, Delaware Bay and the Hudson River as far north as the fur trading region near Albany.
Since fur was a leading commodity in Dutch trade from Scandinavia and Russia, the new possibility of a cheaper American source spurred the remarkably enterprising Amsterdam merchants into action. During the next four years many Amsterdam merchants outfitted small ships and engaged in a very profitable fur trade with the Indians, in exchange for beads and cloth. These individual traders also founded a settlement on Manhattan Island, explored first by Adriaen Block in 1613. In 1614, 13 of the Amsterdam merchants there engaged in the America trade, banded together, and managed to secure from the states of Holland and Friesland a monopoly of all trade in America for the space of six voyages. Soon afterward, these merchants strengthened their hold by forming the United New Netherland Company and obtaining from the States-General a three-year monopoly of all American trade in the area between New France in the north and the Delaware River.
One of the first acts of the New Netherland Company was to found a settlement vital to the fur trade, far up the Hudson River at Fort Nassau (later Fort Orange, now the site of Albany), near the junction of the Hudson and Mohawk rivers. The fort was built on the site of an old ruined trading post, which had been erected about 1540 by French fur traders and soon abandoned. In 1618 the commandant of Fort Nassau came to a significant agreement with the chiefs of the mighty Iroquois Indians — the Five Nations. In this durable treaty, the Dutch and Iroquois agreed to trade peacefully in muskets and ammunition in exchange for fur.
The New Netherland Company tried to renew its monopoly in 1618, but heated opposition by excluded merchants blocked an extended grant, and the American fur trade was then thrown open again to the competition of individual merchants, albeit under license of the government. To its pleased surprise the New Netherland Company found that it prospered even more under the bracing air of competition, and the company now laid plans for further expansion.
At this point, however, Dutch affairs took a fateful turn. The Orange party, rallying the army officers (largely gentry dependent upon military posts), used the theological disagreements between Arminians and Calvinists to effect a coup and overthrow the republican constitution in 1619. Using its narrow 4–3 majority in the States-General, based on control of the rural Calvinist provinces, the Orange party had convoked a national synod of the Dutch Reformed Church. When the synod condemned and ordered the persecution of the Arminian theologians, the state of Holland refused to approve, using its well-founded constitutional independence to safeguard the principle of religious toleration. At that point, Prince Maurice of Orange and his army attacked Holland and arrested Oldenbarneveldt and other Republican leaders, including Hugo Grotius, the founder of international law. A reign of terror was instituted by the Orange party: the venerable Oldenbarneveldt was tried illegally, with no provision for defense, and executed for treason in May 1619. The Arminian leaders, moreover, were persecuted and exiled.
The now dominant Orange party proceeded to renew its aggression against the southern Netherlands upon expiration of the truce in 1621, and proposed to carry the war to the American possessions of Spain and Portugal. At this point there came to the fore an eminent Walloon émigré merchant, William Usselincx, who for 30 years had propagandized for the establishment of a Dutch West India Company to establish colonies in South America for reaping such valuable tropical products as sugar and tobacco. In June 1621 the States-General chartered the Dutch West India Company under Orange control with the aim of plundering and conquering the Spanish and Portuguese colonies and monopolizing the slave trade. Although modeled on the Dutch East India Company, the West India Company was a pure creation of the state to achieve military objectives; the state contributed half the capital and ships and forced the rest of the capital and ships from reluctant Dutch merchants. In place of the independent Dutch merchants (such as the New Netherland Company), who had gained an important smuggling trade to Brazil and the Caribbean and a free trade to the Hudson River, a monopoly of Dutch trade with and between the Atlantic coasts of Africa and the Americas was now granted to the new company. The company was also granted a monopoly of all colonization in America. A government in the form of a commercial company, this overseas instrument of Orange aggression possessed governmental and feudal powers — to rule its arbitrarily granted territories, to legislate, to make treaties, to make war and peace, to maintain military forces and fleets of warships in order to plunder, conquer, and colonize. Only the company’s appointed governor general had to be approved by the States-General. Dominant on the board of 19 directors was the Amsterdam Chamber of the Company, which owned over 40 percent of the capital and thus became the effective ruler of New Netherland.
Engaged in forming the huge Dutch West India Company, the States-General had no interest in granting the request made in 1620 by the English Pilgrims residing in Leyden, Holland, for founding a colony on Manhattan Island. Their proposal rejected, the Pilgrims soon ended their wanderings by landing at Plymouth, Massachusetts.
The Dutch West India Company mostly concentrated on the Atlantic colonies of Portugal in Brazil and Angola, for Brazil was the major source of European sugar and Africa supplied the slaves who produced that sugar. The company, in fact, temporarily captured Bahia in Brazil in 1624. When a company fleet captured the Spanish silver fleet in 1628, the money was used to finance the Dutch conquest of northeastern Brazil, beginning with Recife in 1630, and of the Portuguese ports of Luanda (near the lower Congo) and Benguela in Angola, Goree and Elmina in West Africa. The company established colonies on the Guiana coast and in the unoccupied islands in the Caribbean, St. Eustatius, and Tobago in 1632 and Curaçao in 1634. The governor at Curaçao for the next decade was Peter Stuyvesant, who had been in the military service of the company for many years. Thus, the Dutch West India Company had many valuable and important interests, of which the colony of New Netherland was one of the least valued.
The late Murray Rothbard has been referred to as a “dean of the Austrian School.” He wrote many articles and books within economics, economic history, and political philosophy. This essay was formerly published in Mises Daily, and it is republished here with permission from the Ludwig von Mises Institute.