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Published by EH.NET (December 2003)  
 
David Ormrod, _The Rise of Commercial Empires: England and the Netherlands 
in the Age of Mercantilism, 1650-1770_. New York: Cambridge University 
Press, 2003. xvii + 400 pp. $75 (cloth), ISBN: 0-521-81926-1  
 
Reviewed for EH.Net by Paul M. Hohenberg, Department of Economics, 
Rensselaer Polytechnic Institute.  
 
  
 
The late Charles Kindleberger liked to quote an unnamed physicist to the 
effect that "everything is much more complicated than most people think." 
He was an economist who turned to economic history, yet it is usually 
scholars coming to the subject from history who assert the complexity of 
the individual case as a critique of the sweeping generalizations and 
simplified, universal models that economists favor. The present volume can 
stand as evidence in favor of the view that things indeed get complex when 
one digs deeply into any subject. David Ormrod (Senior Lecturer in Economic 
and Social History at the University of Kent in Canterbury, England) has 
been exploring the commerce of England and Holland in the early modern 
period for many years. The present book is an outgrowth of research begun 
for his doctoral dissertation (completed in 1973) and presented at a 
Montreal colloquium the next year, whose bi-lingual Proceedings this reader 
happened to co-edit (1975). In fact, the book limits itself pretty much to 
the commerce of the North and Baltic Seas and to the related industries. 
Long-distance trade and financial matters get much less attention.  
 
Ormrod has cast his progress through the thickets of history in the 
framework of recent debates on the role of institutions, notably the 
central state, in the process of economic development. He sides with those, 
such as Epstein (2000), who see a positive role for the activist state, and 
by inference against the view championed by Douglass North and others that 
government's main contribution is to reinforce property rights and then 
stay out of the way. The rise of Britain can be attributed, Ormrod argues, 
largely to successful and sustained mercantilism. Messy and drawn out its 
execution may have been, but the combination of policies represented by the 
Navigation Acts, a strong navy, and protectionism resulted in Britain's 
capturing gains from trade as well as achieving fruitful import 
substitution. The argument is fairly persuasive, although one thinks of the 
year 1776, after a century or so of such "success," and recalls two events: 
the rebellion of the most populous colonies and Adam Smith's magisterial 
rejection of the whole mercantilist paradigm.  
 
The book focuses tightly on England and the Netherlands (really Holland), 
and somewhat more on the first. It is clear that including France and 
Spain, for instance, would have brought out the limits of British 
government action and the beneficial effects of this relative restraint. 
The binary comparison points up the role of the British state, and may 
therefore slight the crucial response of the private sector to the 
opportunities that mercantilist policies opened up. Still, the idea that 
development owed a lot to long-sustained and purposeful political action in 
an age of radical social inequality is worth pondering since it is so 
distinctly unfashionable  -- somewhat akin to challenging the prevailing 
skepticism regarding China's current strategy of vigorous economic reform 
coupled with glacial political change. Can it really work for any length of 
time?  
 
The book does address the long-running debate about Holland, of course. Did 
the Republic "decline" in the eighteenth century, and if so, why? Here 
Ormrod takes issue with Jan de Vries and Ad van der Woude who defiantly 
label the Dutch economy "modern" (1997). In Ormrod's view, since state 
formation and action proved critical to development, the Dutch Republic 
should be seen by contrast as the last -- and most highly developed -- of 
the pre-modern city states (really a federation of city states). A strong 
central state presiding over a unified domestic market is the true sign of 
modernity, on this showing, something the Dutch did not develop. And, of 
course, if British growth indeed owed much to mercantilist policies, then 
Dutch decline is a direct corollary. Mercantilism was after all based on a 
view of the world as very nearly a zero-sum game. Growth and decline may be 
relative, but hegemony or leadership is not.  
 
English mercantilism was in large part about acquiring market power in 
trade, as well as reducing that of their rivals. What had made the Dutch 
prosperous was not just trade, but trade with market power, along with 
efficient intermediation, from shipping and entrepot trade to banking. 
Competition, notably from England, hurt Dutch profits even more than the 
volume of Dutch trade, even as Britain adopted effective Dutch practices. 
In fact, Ormrod appears to argue that part of the Dutch problem came from 
tying up capital in low-margin lines. Another economic aspect that figures 
strongly in the book is the trade-off between tariffs and taxes to finance 
the state, especially in times of frequent conflict. While protection can 
be costly in partial equilibrium -- less so when one works the 
infant-industry game as well as the English did -- tariff revenues, even 
net of rebates, etc., did help keep taxes in Britain lower than in the 
Netherlands.  
 
Of course another, more materialistic interpretation of Dutch difficulties 
is consistent with the evidence, and it too is part of Ormrod's story. The 
Republic was vulnerable as a (natural) resource-poor country heavily 
dependent on trade for its subsistence, its wealth, and its employment, 
including processing industries such as dyeing, printing, and food 
processing. The energy sector is telling. The one domestic Dutch source, 
wind aside, was peat, a depletable asset with no real scope for innovation. 
England, on the other hand, had enough coal for a couple of centuries of 
industrial development, and developed steam engines as well as coal-based 
metallurgy to help mine, transport, and consume the superior fuel. 
Diminishing returns on one side and a stimulus to enormous technological 
change on the other: who cares about institutions!  
 
I have tried to bring out the bones of Ormrod's thesis, but the potential 
reader needs to be warned that they are pretty well buried in the book 
itself. This is no easy read. Most of the text consists of dense discussion 
of details, significant to be sure, but not always easy to relate to the 
larger questions. Sources, data, business organization, and earlier 
interpretations are subjected to thick description and close analysis. Long 
chapters cover trade in wool, linen, grain, and coal, as well as shipping, 
commercial policy, and the Dutch staplemarket. Part of the problem no doubt 
stems from the fact that this is a reworking of much older material, part 
also from a Weltanschauung that shuns simplification and revels in the 
fruits of archival research. Still, the patient reader can find here much 
information and fodder for some important questions. As for what is modern, 
that debate will no doubt go on.  
 
References:  
 
Jan de Vries and Ad van der Woude, _The First Modern Economy: Success, 
Failure and Perseverance of the Dutch Economy, 1500-1815_ (New York: 
Cambridge University Press, 1997).  
 
Stephan R. Epstein, _Freedom and Growth: The Rise of States and Markets in 
Europe, 1300-1750 (New York: Routledge, 2000).  
 
Frederick Krantz and Paul M. Hohenberg, editors, _Failed Transitions to 
Modern Industrial Society: Renaissance Italy and Seventeenth-Century 
Holland_ (Montreal: Interuniversity Centre for European Studies, 1975).  
 
  
 
Paul M. Hohenberg is Professor Emeritus of Economics at Rensselaer 
Polytechnic Institute. He is the author, with Lynn Hollen Lees, of _The 
Making of Urban Europe, 1000-1994_ (Harvard University Press, 1995).  
 
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