Between 1568 and 1670, a coalition of small waterlogged and sea- threatened Dutch provinces in Northern Europe broke out to become a global empire and the dominant power in world trade. This event marked the Dutch Golden Age. How did this great shift occur so quickly in such a disadvantaged region? This chapter explains how innovations powered this transformation and investigates the factors that drove these innovations.

The shift began in 1568 when a coalition of northern provinces known as the Low Countries revolted against the Spanish rule of King Philip II, in protest of high taxes and the persecution of Protestants. Initially a mere entrepôt, or a place where commodities were stocked for reexport, the Low Countries grew into the Dutch Republic, which, by the mid- seventeenth century, was the dominant trading power in Europe. Initially a nation built on bulk shipments of grain and fish, the Republic initially expanded trade to include wool, silk and spices. As trade spread abroad, the Dutch East India Company was founded in 1602 to protect Dutch trading interests in the Indian Ocean. It steadily expanded into trade of goods from Asia and Africa, most importantly spices such as cinnamon, pepper and cloves. The East India Company built forts in colonies, maintained treaties with native rulers and became the first multinational corporation. By the end of the seventeenth century, the Dutch empire spanned from the east to west of Japan, Indonesia, Bengal (India), South Africa, New York and Suriname. By 1670, the prosperous Dutch trade totaled about 568,000 tons— an amount that exceeded Spanish, Portuguese, French, English, Scottish and German shipping combined. The East India Company alone was worth 78 million guilders. If adjusted for inflation, this value is equal to a few trillion dollars in 2012, making it the most valuable company in history.

While several important technological and financial innovations contributed to Dutch dominance in trade, innovations in ship design and shipbuilding played a crucial role in fostering its expansion. This section first describes the innovations and then the factors that promoted its development.