Chapter 9 - The Anglo-Dutch Empire

"If the circumstances stand so with your Highness that you believe you can get here time enough,
in a condition to give assistances this year sufficient for a relief under these circumstances which
have been now represented, we who subscribe this will not fail to attend your Highness upon your
landing and to do all that lies in our power to prepare others to be in as much readiness as such an
action is capable of..."

The Letter of Invitation to William of Orange, a secret message sent by Venice's fifth column
in England, urging William III of the Netherlands, to launch his invasion of England.

    Preparations for a Dutch invasion were underway throughout the spring and summer of 1688. Covert communications were maintained from the Orange Court at The Hague with the English conspirators, with Henry Sidney, the grand-nephew of Philip Sidney and the brother of Algernon, acting as the go-between. In England, Sidney’s allies included William Cavendish, Lord Orford (Edward Russell), Lord Sunderland, and Bishop Compton, all pro-Dutch, and all in the Venetian orbit. After William of Orange landed in England, others rallied to the side of the Dutch, including Churchill (Marlborough), Portland, and Halifax. Contrary to some mistaken beliefs, this was not a peaceful walk-in-the-park “glorious revolution.” It was an invasion. When William sailed for England, the Dutch invasion fleet consisted of 21,000 troops, massive artillery, and 500 ships. This force was four times larger than the famous invasion fleet of the Spanish Armada, a century earlier. On December 18, 1688, Dutch troops, under William's command, occupied London.

    The pro-Empire grouping of English aristocrats who had organized the Dutch invasion became known as the Whig Junto, and they would be the new leadership of the nation. They publicly proclaimed a new motto for their regime ̶ “Liberty & Property,"1 and after 1688, crimes against property rose to great importance, with many being punishable by death. Under the new Whig regime, England developed the bloodiest penal code in all of Europe.

    Many of these Whig leaders were proteges of Anthony Ashley Cooper (the 1st Earl of Shaftesbury). The arch-conspirator Cooper had served under several governments, including Cromwell and the Stuarts, but by the late-1660s, as the leader of the anti-Stuart CABAL (a forerunner of the Whig Junto), he was at the center of the Empire faction in Britain. He was the employer of John Locke, and in 1669, Locke authored the pro-slavery Constitution of Carolina for Shaftesbury. In 1681 Cooper fled to the Netherlands after he was charged with treason for plotting to overthrow the Stuarts. From the Netherlands, he helped organize, before his death, the 1684 Monmouth Plot, a failed plan for an invasion of England, to be launched from the Netherlands.

    After 1688, the new institutions of Empire were rapidly put into place.2 Venetian agents such as John Locke, Charles Montagu, and Isaac Newton, among others, were key to the London revolution in financial and monetary affairs. In 1690, Locke’s Two Treatises on Government was published, to provide the “philosophical” lattice for the transformation. In 1694 the Bank of England was founded. The next year saw Isaac Newton’s “Great Recoinage,” carried out under Locke’s direction. In 1696 the Board of Trade and Plantations was established, with John Locke appointed as its first Commissioner of Trade,3 and in 1698 the New East India Company was created. Within ten years of the Dutch invasion, the new institutions of Empire were all in place.

Clearing up misconceptions

    Most historians misinterpret almost all of the events described above, because they view the struggle in England as one between the “democratic” Parliamentary forces of the Whigs versus the degenerate “divine right” Stuart monarchy, or, alternatively, between the Protestants and the Catholics. This is bad history. In truth, the conflict in England had deeper roots.

    In the late 15th century, in the wake of the Council of Florence and the reign of Louis XI in France, a fight was waged in England, to overthrow the feudal dictatorship of Venice’s Norman (Plantagenet) nobility, and to erect a sovereign nation-state. Henry Tudor’s defeat of Richard III ushered in a new era of Erasmus, Thomas More, and John Colet, all conscious followers of the Commonwealth idea. These developments were what Venice was determined to stop. After the death of Henry VII in 1509, and continuing throughout the entirety of the 16th century, the political situation in England was an ongoing battleground. But the real battle was not between Catholics and Protestants; it was between the Venetian-allied Empire faction on the one side, and the supporters of sovereignty and commonwealth on the other.

    This battle was the underlying theme in all of the dramas of William Shakespeare, particularly in the portrait he paints of Venice’s Plantagenet families in his “History” plays. In the 1520s, Henry VIII was corrupted by the Venetian agent Francesco Zorzi, and manipulated into the destruction of his own father’s policies. Under Henry’s daughter, Elizabeth I, the British Crown can only be described as under siege by Venice’s English agents, including the Walsingham and Cecil families. During this period, several Venetian-style maritime trading companies were established, beginning with the Venice (sic) Company in 1586. This company went through several transitions and mergers and finally emerged in 1600 as the (old) East India Company. Eight years later the New Exchange, London’s imitation of the Amsterdam Bourse was opened.

    In 1603, with Venice’s support,4 James I of Scotland was installed as the new King, and his first Privy Council included two men, Edward Wotton and Robert Cecil, who personally were on intimate terms with Sarpi’s Giovani leadership in Venice. This Venetian faction was the enemy which Shakespeare was organizing against during those years.

    During the remainder of the 17th century, from the standpoint of the Empire, the question for England was what form was the new British oligarchical state to take. There were the Stuarts, there was Cromwell’s regime (during which the power of the Empire crowd, as exemplified by the East India Company, continued to grow), and there were other potentialities.

    By 1688, however, the corrupt and idiotic Stuarts where clearly past their use. Efforts were underway to transform England in the image of Amsterdam, and the Stuarts were in the way. One example of this is the Stuart opposition to the creation of a Venetian-style Central Bank in London. Throughout the 17th century, oligarchical demands for the founding of such a bank grew into a chorus. The first I know of is the proposal, in 1646, by Benbrigge, for the creation of "a bank in the city of London as is at Amsterdam." Another similar proposal was made to Cromwell in 1657 by Samuel Lambe. In 1662, William Petty, in his Treatise of Taxes and Contributions, repeated these arguments. And, in 1676, Robert Murray published A proposal for a National Bank, calling for the establishment of a "Lombard Bank, modeled on the Bank of Amsterdam, incomparably the best bank in the world." There were many more, similar, proposals, some referencing the Bank of Amsterdam, others the Bank of Venice, and some both. After 1688 they would all get their wish.

The Bank of England

    What historians call the British "financial revolution" of 1694-1698, was nothing less than a seizure of power within Britain by private oligarchical interests, and the diminution, and eventual subservience of the institutions of government to that oligarchy. There was a saying in the mid-18th century that the three pillars of British rule were "the Bank, the East India Company, and the Exchequer." Two of those three pillars were in private hands, beyond the reach of sovereign control, and the Exchequer (together with the Treasury) was effectively a fifth column of the oligarchy within the state institutions.

    Moreover, what transpired in London, after 1688, was not a domestic revolution at all, but a foreign takeover, ostensibly by the Dutch, but actually by the Dutch-Venetian system of Empire. The founder of the Bank of England was William Paterson. He had been in Holland with William III, and active in effecting a Dutch invasion. The first Governor and the first Deputy Governor of the Bank were John Houblon and Michael Godfrey, both of whom had sat on the jury in 1681 which had acquitted the pro-Empire Lord Shaftesbury (Cooper) of high treason. The key agent of the Bank in the government was Charles Montagu (Lord Halifax), who had greeted William of Orange at the dock when his invasion fleet landed. Named Lord of the Treasury in 1692 and Lord of the Exchequer in 1694, it was Montagu who arranged the large government loans, which became the basis for the permanent national debt, a debt that would be controlled by the Bank. Later, in 1707, he became the British ambassador to Venice, but he returned once again to head the Treasury in 1714 after the takeover of the Hanoverian George I.

    In terms of its character, the Bank of England went even beyond the Wisselbank in its reach and power. One area where even the densest of historians have it right, is that the creation of the Bank of England was a defining moment in the emergence of modern private Central Banking. However, this is not due to many of the technical reasons that are usually given -- even if those technicalities are important -- but rather to the relationship between the Bank and the British state. In Amsterdam, the Wisselbank, the VOC, the Bourse, and the government all, more or less, coexisted. That may be a simplification, but for now, it is a useful simplification. In London, the financial oligarchy literally became the de facto government. The Parliament, the Privy Council, even the Church of England,5 were absorbed into a Leviathan oligarchical entity, all of whose parts had a different function. Even to this day, there really is no British “government” in any meaningful definition of that term which is legitimate. There is an oligarchy... and an empire.

    In 1697, the first of a series of Acts was passed by Parliament, the end result being that the Bank was given a total monopoly over all banking in England. In 1707 the Bank took over the exclusive management of the national debt, which at that time, was ₤7 million, and growing. As the creditor of the national debt, that debt guaranteed the continued existence of the Bank. In 1742 the Bank was given the sole authority to issue bank notes, and its notes became the only legal tender (legal money) in all of Britain.

    You have to grasp what you’re looking at here. This is not the “normal functioning” of an economy. This is the Anglo-Dutch system. This is the beginning of European Central Banking. This is the deliberate handing over of sovereign economic, credit, and banking power to a private oligarchy.

The British East India Company

    The original (old) East Company was founded in 1601, as one of several joint-stock companies (e.g., Virginia Company, Muscovy Company) to emerge in that period. In 1657, Oliver Cromwell issued a new charter for the Company which drastically changed its character, transforming it from a loosely knit group of merchants, into a centralized corporation with a permanent capital of £370,000. This change catalyzed a major expansion of East India Company operations in Asia between 1660 and 1690. This expansion was spearheaded by Sir Josiah Child, who from 1677 to 1690 was either Governor or Deputy Governor of the Company every year. Earlier, in 1668 Child had authored A New Discourse of Trade, which called for the use of Dutch financial and monetary methods in England.

    After 1688, the entire nature of the Company was changed. No longer merely a large mercantile (albeit oligarchical) trading corporation, it was remade into a ruling pillar of the new British Empire. In 1698, the "old" East India Company was dissolved and merged into the New East India Company. In 1708, under an agreement sponsored by Sydney Godolphin (an enemy of Jonathan Swift's), the power of the Company was vastly enhanced. It not only was granted extensive trading "privileges," it also became a direct partner with the Bank of England in controlling the finances of the British government, beginning with a ₤3.2 million loan to the government from the Company itself.

    As was the case earlier with the Dutch VOC, the East India Company recruited its own army, built its own navy, waged its own wars, and collected all the loot. When the Company’s army defeated the French at Plassey in 1757, all of India ̶ hundreds of millions of people ̶ came under the rule of the Company. India was not a British government or Crown colony. It was the property of the Company. They owned it. The Company coined its own money, which was legal tender in its dominions. And with the total defeat of the French in the Seven Years War, it was the Company, in 1763, which took possession of the French colonies and established a world-wide private empire.

The Final Nail in the Coffin

    After the death of William III, a final battle was waged by England’s patriots to prevent the subjugation of their nation. This fight was led by Jonathan Swift during the reign of Queen Anne.6 In 1710, Swift's faction, including Robert Harley, Henry St. John (Bolingbroke), Matthew Prior, and the Duke of Ormond, took control of the British government. In 1711 they founded the South Sea Company as a rival to the Bank of England, and between 1711 and 1713, ₤9.4 million of government debt were exchanged for South Sea stock, eliminating the floating debt and cutting deeply into the power of the Bank. Swift and Harley’s objective was to break the power of the Bank completely. The Empire counterattacked, and Amsterdam bankers organized a massive capital flight out of London, in an attempt to destroy Harley’s government. After the death of Anne in 1714, Harley and Prior were both arrested and Bolingbroke and Ormond both fled to France, charged with treason.

    Towards the end of his life, Bolingbroke described very clearly the enemy that Swift’s faction was fighting in 1710: "The method of funding and the trade of stock-jobbing began. Thus were the great companies created, the pretended servants, but in many respects the real masters of every administration."

    With the death of Queen Anne, Swift’s faction was crushed, and the Empire crowd used the "Act of Settlement" to bring in George I of Hanover as the new British king. This triumph of the Empire was immediately celebrated with the London publication of Bernard Mandeville's paean to oligarchical culture, The Fable of the Bees: or, Private Vices, Public Benefits. The following year Venetian master-spy and manipulator Antonio Conti arrived in England, and a new oligarchical puppet, Robert Walpole, was installed in 1721 as the head of the Treasury.

    Within six months of George I’s coronation, the Bank of England took over from the Exchequer the management of all government borrowing operations, and by 1719 the Bank was controlling most government stocks. The manipulation of those stocks, combined with loans by the Bank to the government, then became the means by which the Empire could carry out its global wars of expansion. This modus operandi was the key to financing all of the British wars of the 18th century, particularly the wars against France.

    In 1742, Parliament not only gave the Bank the sole authority to print (fiat) money, it also said, “to prevent any doubt that may arise concerning the privilege or power given to the Bank of England of EXCLUSIVE BANKING... it is hereby further enacted and declared by the authority aforesaid, that it is the true intent and meaning of the said ACT, that no other bank shall be created, established or allowed by Parliament." For the next 80 years the Bank of England was the only joint-stock bank company allowed to exist in England.

Rule Britannia

    The new London-based Empire was, of course, a maritime empire, and this would determine the geopolitical outlook of the Empire for the next two hundred years. It was an empire based on colonies, which were systematically looted of raw materials, agricultural products, and labor. At the same time, since the Empire’s economic looting and military enforcement capabilities rested in the power of its fleet, no effort was spared to prevent the emergence of land-based economic powers, particularly across Eurasia.

    A romantic mythology was created to portray Glorious England as the courageous island kingdom defending civilization. The romantic part is ludicrous claptrap, but there is a serious side to the mythology as well. As early as the reign of Elizabeth this theme of England as the great new maritime power was being discussed in various works of fiction and non-fiction. Scipio Gentili, with his long poem Nereus, Francis Bacon in the New Atlantis, and James Harrington in Oceana, all developed this theme in different ways. Harrington, who had spent years in Venice and who was a close friend of William Petty, believed that political power stems from economic riches, and Oceana describes an oligarchical society organized according to wealth.

    Perhaps the most explicit writing in this vein was Nicholas Barbon's A Discourse of Trade. Published just two years after the Glorious Revolution, Barbon’s work is a rabid hymn to free trade, supply and demand, and open-market economics. Concerning the establishment of Britain as a maritime empire, Barbon says,

"Those things that obstruct the growth of empire at land, do rather promote its growth at sea...
The seat of such an empire must be an island, that their defense may be solely in shipping...
England seems to be the proper seat for such an empire. It is an island, therefore requires no
military force to defend it...The ships, excise and customs will in proportion increase, which may
be so great in a short time, not only to preserve its ancient sovereignty over the narrow sea, but
to extend its dominion over all the great ocean, an empire, not less glorious, and of a much larger
extent, than either Alexander's or Caesar's.

    Much later, in Queen Victoria’s England, the British gadfly Walter Bagehot made the point of the advantage of London over Amsterdam as the seat of Empire. Writing in his 1873 ode to London finance, Lombard Street, Bagehot says, "The goodness of bank-notes depends on the solvency of the banker, and that solvency may be impaired if an invasion is not repelled, or a revolution resisted. Hardly any continental country has been till now exempt for long periods both from invasion and revolution. In Holland... there was never any security from foreign war."

    Between 1689 and 1763 Britain and France fought four wars, lasting a total of 29 years. These were global conflicts. At the conclusion of the War of Spanish Succession in 1713, Britain was given the asentio, a monopoly over the importation of African slaves into Spain’s Ibero-American colonies. They would hold this monopoly in the African slave trade for most of 18th century. The fourth English-French war (The Seven Years War) ended with the overwhelming defeat of France, the annihilation of the French navy, the bankruptcy of the French state, and the loss of the French colonies in India and North America. The Empire project was seemingly complete. The new London-based Empire was triumphant, and pre-eminent in power among all nations of the earth.

The Anglo-Dutch Axis

    Much of what is written just above is well known. The error made by most historians is when they portray these events as a scenario of “dueling empires,” i.e., “the British Empire versus the French Empire versus the Spanish Empire,” etc. That fallacy misses the point that what was created from 1688 to 1763, was a new type of empire fundamentally different from what had come before. Think of the British East India Company. Their’s was not an empire of the British nation, nor was it an empire of a monarch. It was an empire built for the benefit of a private financial oligarchy which existed outside of and above the institutions of state. Remember Locke’s argument: private property is derived from the Law of Nature. Governments are created by men merely to safeguard that prior and superior right. 1688-1763 represented a maturation of the process that began in Venice, traveled through Amsterdam, and into London. And, of course, the Empire which emerged in London was not British; it was Anglo-Dutch.

    1688 was not a transfer of the Empire’s capital from Amsterdam to London; it was a takeover of England, a cloning of the Amsterdam financial institutions onto London, and a fusion of the financial and military capabilities of both nations to effect the creation of a power on behalf of Empire, greater than anything seen up to that time.

    Initially, after 1688, the Netherlands was, by far, the greater of the two nations, both commercially and financially. In 1690, e.g., the VOC had 20,000 men is Asia, and the British East India Company only 1,000. Moreover, it was the financial resources of the Bank of Amsterdam and the Dutch money markets which created the Bank of England, and sustained it well into the 18th century. After 1690, and particularly after 1720, huge quantities of Dutch capital entered the English financial markets. By the 1730s, 30 percent of East India Company stock and 35 percent of Bank of England stock was held by the Dutch. Another ten percent of both companies was held by Geneva-based Swiss investors. By 1750 Dutch investors held 20 percent of the shares on the London Stock Exchange and held 26 percent of the England’s national debt.

    It was Amsterdam that remained the dominant financial power in Europe well into the 18th century. Even after the 1713 Treaty of Utrecht had established English maritime and commercial supremacy, Amsterdam’s financial power remained greater than London up until the Napoleonic invasion of the Netherlands. The original capital of the Bank of England was £1.2 million. This was increased to 2.2 million in 1697 and 5.5 million in 1710; but this was a tiny fraction of the resources of the Wisselbank.

    The important point, however, is not to compare the relative power of London versus that of Amsterdam, but to look at how, as the 18th century progressed, the financial oligarchies of the two cities created a unified Dutch/English financial monstrosity.8 The key to the integration of the London and Amsterdam markets was the trading in the stocks of the 5 big companies – the Dutch East India Company, the Dutch West India Company, the British East India Company, the Bank of England, and the South Sea Company. By no later than 1723, the two markets were tightly integrated. The two exchanges, in Amsterdam and London, functioned together, with daily shipments of financial contracts transported by ship between the two cities. Amsterdam speculators could take positions in the London exchange through corresponding attorneys, and vice-versa. There was a certain division of labor between the two, and not surprisingly, it was Amsterdam that was the center of futures and options trading for all five companies. By the 18th century, the marketing of British Government and Bank of England bonds to Dutch speculators was indispensable to the financing of Britain’s wars.9 Between 1723 and 1794, neither country attempted an independent monetary policy. It was one operation.

1This motto, which would later be paraphrased as “Life, Liberty, and Property” in the Constitution of the 1861-1865 Southern Confederacy, is to be contrasted with the Leibnizian commonwealth idea of “Life, Liberty, and the pursuit of Happiness.”

2 The best source for the events which took place in England in these years is H. Graham Lowry’s How the Nation Was Won

3I n the 18th century the Board of Trade became the political base for Lord Shelburne’s (William Fitzmaurice Petty) operations against the American Revolution.

4 This included the role of Paolo Sarpi’s ally Edwin Sandys, who was sent to Scotland to personally escort James I into London

5 This role of the Church as a pillar of oligarchical rule is associated with the English Arminians, and the Great Tew Circle.

6 I provide here only a sketch of these events. See Lowry’s How the Nation Was Won for the whole story.

7 In this same work Barbon makes an impassioned call for the creation of a national public bank: "In Cities of great Trade, there are public Banks of Credit, as at Amsterdam and Venice; Public Banks are of so great a Concern in Trade, that the Merchants of London, for want of such a Bank, have been forced to Carry their Cash to Goldsmiths."

8 Efficient Markets in the Eighteenth Century? Stock Exchanges in Amsterdam and London, by Larry Neal, University of Illinois at Urbana-Champaign

9 Richard Cantillon, Financier to Amsterdam, July to November 1720, by Richard Hyse, The Economic Journal, Vol. 81, No. 324.