page_title: Economic history of the Netherlands (1500–1815)
section_title: Final crisis
hierarchical_section_title: Economic history of the Netherlands (1500–1815) / Stages of development / Final crisis
caption_attribution_description: Gravure représentant l'arsenal et le chantier de la VOC à Amsterdam vers 1650
context_page_description: The economic history of the Netherlands (1500–1815) is the history of an economy that American-Dutch scholar and economist Jan de Vries calls the first "modern" economy. It covers the Netherlands as the Habsburg Netherlands, through the era of the Dutch Republic, the Batavian Republic and the Kingdom of Holland.
  After becoming de facto independent from the empire of Philip II of Spain around 1585 the country experienced almost a century of explosive economic growth. A technological revolution in shipbuilding led to a competitive advantage in shipping that helped the young Republic become the dominant trade power by the mid-17th century. In 1670, the Dutch merchant marine totalled 568,000 tons of shipping—about half the European total. Pillars of this position were the dominance of the Amsterdam Entrepôt in European trade, and that of the Dutch East and West India Companies in intercontinental trade. Beside trade, an early industrial revolution, land reclamation from the sea, and agricultural revolution helped the Dutch economy achieve the highest standard of living in Europe by the middle of the 17th century.
context_section_description: After 1780, a new conjuncture of internal and external conditions conspired to drive the economy and political structure of the Republic to crisis. The Fourth Anglo-Dutch War ended the cloak of neutrality that had protected Dutch shipping for most of the century, obviating during that period the need for naval protection that was now lacking due to many years of neglect of the navy. Trade came temporarily to a standstill, because the British blockade could not be broken, as exemplified by the Dutch failure in the Battle of Dogger Bank (1781). The trade of the VOC was devastated, even apart from the loss of some of its colonies. It experienced a liquidity crisis, which exposed its inherent insolvency. The company was too important to let it fail (also because of the importance of its outstanding debt in the Dutch financial system), so that it was kept afloat for more than a decade by emergency aid from the States of Holland, before it was finally nationalized in 1796.
  Attempts at political reform (and attendant reform of the derelict system of public finance) by the Patriots were thwarted by the suppression of their revolt by the Prussian intervention in the quarrel with Stadtholder William V in 1787. This meant that no further attempts  at reform were made until the overthrow of the  old Republic and its replacement by the Batavian Republic in 1795. That puppet state of the French Republic was unable to get the freedom of movement from its "sister republic", that would have been necessary to bring about effective reforms, even though the Patriots now had the chance to force  them through. An enormous new tax burden to finance transfer payments to France (a war indemnity of 100 million guilders and annual maintenance costs of 12 million guilders of an army of occupation), amounting to 230 million guilders total, broke the back of the fiscal system. Eventually, the public debt was forced into default (though only when the Netherlands were annexed to imperial France in 1810).
  More importantly, the Dutch trading system was remorselessly ground away between a British blockade and the French enforced boycott of British goods in the Continental System. This was not compensated by adequate access to the French market, because even when the Netherlands were incorporated in the French empire the old protectionist barriers remained in place. For a while, the Dutch were therefore unable to trade legally anywhere (which left smuggling as the only alternative). In the period of the annexation, 1810–1813, the ports were bereft of shipping and the remnants of industry collapsed.
  
  These external factors were reinforced by internal ones. The necessary reforms of the Dutch system of public finance (as embodied in the Tax Reform Plan of Isaac Jan Alexander Gogel) were blocked for a long time by federalist opposition, and only enacted in the final year of the Republic, just before its transformation to the Kingdom of Holland in 1806. By then it was too little too late. 
  In the long period of crisis, disinvestments from the commercial and industrial sectors (in the face of unprofitability, high risks, taxation, and forced lending) and the destruction of asset value through foreign and domestic default undermined the remaining international stature of the commercial and financial sectors. Domestically, the disruption of institutions and the irregular access to markets plunged the once-protected sectors of employment ... into a crisis that tore at the venerable structure of the labor market and overwhelmed the Republic's charitable system. This crisis hit hardest in the cities of Holland and Zeeland, which lost 10 percent of their population between 1795 and 1815 ...Deurbanization, re-agriculturalization, and pauperization dominated the final days of this economy.
  It is therefore fitting to see the year 1815, in which the United Kingdom of the Netherlands embodied a newly independent political incorporation of the original Habsburg Netherlands, as the end of an economic era also. The hoped for economic resurgence of the Netherlands (other than 
caption: The Arsenal of the VOC
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