------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (January 2007)

Cl??? Lesger, _The Rise of the Amsterdam Market and Information 
Exchange: Merchants, Commercial Expansion and Change in the Spatial 
Economy of the Low Countries, c. 1550-1630_. Burlington, VT: Ashgate, 
2006. xii + 326 pp. $100 (cloth), ISBN: 0-7546-5220-3.

Reviewed for EH.NET by Larry Neal, Department of Economics, London 
School of Economics.


Cl??? Lesger, Senior Lecturer in Economic and Social History at the 
University of Amsterdam, provides quantitative evidence guided by 
economic theory to show that what really mattered at the end of the 
sixteenth century for Amsterdam's rise to economic preeminence in 
Europe in the seventeenth and eighteenth centuries was its 
institutions, not its geography. The impetus for its rise was not 
inherent in its institutions, however, but came from the external 
shock of the failure of the revolt against Spanish rule in the 
southern Netherlands combined with the failure of the Spanish to 
reestablish control over the northern Low Countries. Geography played 
a role in determining those military outcomes, but not, Lesger 
argues, in determining the resulting changes in the patterns of trade.

This argument, familiar to readers of Jonathan Israel's voluminous 
writings on the Dutch Republic, nevertheless runs counter to a 
tendency among historians to see very long-lived movements in 
historical developments that persist despite occasional shocks. 
Lesger notes that this has led historians, led by Fernand Braudel and 
others including some contemporary Dutch historians, to trace 
Amsterdam's rise to preeminence to its geography and especially the 
attempts of its citizens to alter and control that geography. Not so, 
argues Lesger. The older historical literature was correct when it 
attributed Amsterdam's rise to closing Antwerp's access to the 
Scheldt. This destroyed Antwerp's role as the major gateway for 
transportation networks throughout the Low Countries and forced its 
merchant community to disperse.

Amsterdam's elite welcomed the new merchants because they saw no 
conflict between the trades of the Antwerp merchants who dealt in 
luxury goods, sugar, spices, and naval stores from distant lands and 
the trades of the Amsterdam merchants who dealt more with 
transshipping these goods on to its regional hinterland, northern 
Germany and the Baltic. Very quickly during the 1590s, the new 
merchants and their information networks combined with the older 
merchants and their continued trade networks to make Amsterdam the 
next global entrepot, replacing Antwerp through the eighteenth 
century.

The entire region of the Low Countries comprising modern Belgium, the 
Netherlands, and Luxembourg was a well-integrated economic unit by 
the middle of the sixteenth century. Using the concept of a network 
of transportation gateways, Lesger shows that each city had a 
geographically determined hinterland and its niche for trade in 
specific commodities with the outer world. Prior to the revolt of the 
Netherlands against Philip II, Antwerp was the primary gateway 
through which the other cities in the Low Countries participated in 
the long-distance trades, the so-called "rich trades" in textiles, 
spices, porcelain, and luxury goods in general. Amsterdam was a major 
regional gateway, but focused on South Holland as its hinterland 
while re-exporting a wide variety of products to the Baltic and 
northern Germany, with emphasis on low value, bulky commodities. 
Overall, it accounted for only 6% of total exports, compared to 
Antwerp's 75%.

After the Revolt disrupted trade patterns, especially for Antwerp, 
Lesger argues that there was little change in the gateway role of 
Amsterdam. Figures on both exports and imports for 1580 and 1584 show 
that Amsterdam was still oriented in its trade toward northern and 
eastern Europe. Starting in the 1590s, however, Amsterdam's trade 
began a vertiginous rise that continued up to 1630. Lesger argues 
that rise had to be the consequences of the Revolt. To explain this 
sudden and dramatic break with geographically determined trade 
patterns, Lesger examines the role of the wealthy merchants displaced 
from Antwerp who increasingly fled to Amsterdam. Examining the 
records of the Wisselbank by various groups of depositors, he shows 
that the new merchants led the explosion of trade activity from 
Amsterdam, especially to Russia through the port of Archangel. Both 
the new merchants and various groups of North Hollanders led the way 
to the Indies, both East and West.

Part II turns to explore the institutional determinants in Amsterdam 
that enabled the influx of foreign merchants to occur so quickly with 
such dramatic results, and then to be sustained for the next century 
and a half. The answer, he argues, came from the ability of the 
incumbent Amsterdam elite to extract rents from the increased trading 
activity by maintaining political control while levying low indirect 
taxes on a rapidly increasing base of trade that did not conflict 
with Amsterdam's traditional trade flows as a regional hub, and 
indeed helped to expand those trade flows as well.

The rising importance of Amsterdam's traditional transit trade with 
the lower Rhine leads Lesger to see most of it increased trade with 
the wider world as really transit trade as well. In fact, he argues, 
Amsterdam displayed in the early seventeenth century all the features 
that modern trade analysts associate with transit trade. For a trade 
center to maintain its role in transit trade it must provide cost 
advantages to suppliers and customers in the services it provides in 
the form of finance, information, and price discovery, as well as in 
the physical facilities it maintains for transshipment. Ultimately 
then, the secret of Amsterdam's success as the preeminent entrepot 
for Europe's long-distance trade lay not in its port and warehousing 
facilities for transshipments, but rather in its information 
processing facilities.

Overall, Lesger's valuable quantitative study amplifies the 
importance of the service sector, which played a very modern role in 
establishing and then maintaining Amsterdam's preeminence. Finally, 
this reviewer was very pleased to see the emphasis on external and 
irreversible shocks for explaining Amsterdam's rise. A similar story, 
of course, helps explain its eventual demise in the nineteenth 
century and its replacement by London.


Larry Neal is Professor Emeritus at the University of Illinois, a 
Research Associate with the NBER and Visiting Professor at the London 
School of Economics.

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