Why I Voted Against Seattle’s ST3 Light Rail Expansion

It is looking more likely that the Seattle area’s $54 billion ST3 light-rail extension will be approved. I voted against it. Here is why.

Being cool isn’t the same thing as being effective

Underlying many of the pro-light-rail arguments that abound — at least those by the casual voter I see on Facebook and overhear around the city — is an air of coolness and futurism. This isn’t articulated explicitly, but here’s a thought experiment to get my point across: suppose we had a ballot proposal to spend $54 billion on a bus expansion package (bus only express lanes, new long-range hybrid buses, more city-to-city bus routes, etc.). What would the reaction be? Probably something like, “Are you kidding me, $54 billion for a bunch of buses?!?! We could build light-rail for that much!” We could (or maybe not as I’ll discuss), but the question is why is light-rail inherently better than other alternatives?

What I hear most are rants about how China and Japan have high-speed rail, how Europe survives on it, how great it was to visit San Francisco and be able to take the BART. Obviously all of this is awesome so of course we should have more rail lines.

Yes, it is indeed great to rail around San Francisco on a train system that you did not pay to construct and do not pay to maintain in a city in which your main purpose is sightseeing not living and commuting to work. But the year is now 2016 and the question is whether we should spend $54 billion and 25 years building a light-rail system or think harder about the alternatives.

It doesn’t pass the sniff test

The one argument you do hear regarding the ST3 expansion is Seattle’s increasingly horrendous traffic. The scrawling of Seattle locals on Facebook every time a new “Top 10 Worst Cities for Traffic” is a smug reminder that if light-rail would’ve actually gotten funded 30 years ago “when it should have” that we wouldn’t have this traffic problem: “Gee, do you think we need light-rail?” the fake rhetoric proceeds.

But this argument doesn’t pass the sniff test. Rail ridership does not largely correlate with reduced congestion. I put together a simple dataset to show this (table below). Many of the cities with the largest weekly U.S. rail ridership also have the worst congestion.

Does this simple table prove we shouldn’t expand light-rail? No. It’s only a sniff test. But that’s precisely the point. The story is more complicated so we should think harder when drawing a direct line from Seattle’s congestion problems to its lack of expansive rail.

(By the way, researchers have found similarly negligent effects on congestion from light-rail and here is more research on the issue).


The project violates a basic economic principle

The principle being that projects should be paid for by the people that use them. Although this principle is mostly adhered to in the current budget, there is still $4.67 billion in federal grant funding meaning tens of millions of Americans that never ride Seattle’s light-rail will end up paying for it. Sure, we end up paying for a bunch of projects we’ll never use in cities we’ll never visit, but that doesn’t mean we should impose the same cost on others.

The principle is violated at the local level too since every tax payer will help front the bill for light-rail regardless of whether they end up riding it (a very small portion of operating costs come from fare revenue).

It costs ALOT (and will probably cost more)

It costs $54 billion!!! That’s a lot of money!!! And $28 billion of that is increased taxes. And that’s a lot of money!!! Sure cost alone does not indicate the merit of a project, but it does mean we should think really, really hard before moving forward. And it puts the onus on the proposers to make a very strong case about why the project is going to be awesome. In my view they haven’t done that.

And if history is any indication it could actually cost (much) more. This was written about the original lightrail project back in June of 2013:

Sound Transit’s light-rail system, called Link, has also had its share of challenges. The 25 miles of light rail that voters were told would be completed by 2006 at a cost of $1.7 billion, have resulted in 23 miles of track which, when completed, will end up costing $5.2 billion.

In other words the project cost 3 times more than originally projected for two fewer miles.

Overruns of these magnitudes are the rule not the exception. Here, Bent Flybbjerg has done great work (I recommend this interview). His research on megaprojects is gloomy (a megaproject is one that costs more than $1 billion and affects more than 1 million people). In a 2014 paper he wrote the following (emphasis mine):

Performance data for megaprojects speak their own language. Nine out of ten such projects have cost overruns. Overruns of up to 50 percent in real terms are common, over 50 percent not uncommon. Cost overrun for the Channel tunnel, the longest underwater rail tunnel in Europe, connecting the UK and France, was 80 percent in real terms. For Denver International Airport, 200 percent. Boston’s Big Dig, 220 percent. The UK National Health Service IT system, 400-700 percent. The Sydney Opera House, 1,400 percent (see more examples in Table 2). Overrun is a problem in private as well as public sector projects, and things are not improving; overruns have stayed high and constant for the 70-year period for which comparable data exist. Geography also does not seem to matter; all countries and continents for which data are available suffer from overrun. Similarly, benefit shortfalls of up to 50 percent are also common, and above 50 percent not uncommon, again with no signs of improvements over time and geography (Flyvbjerg et al., 2002, 2005).

ST3 will serve mostly current transit riders

The Washington Policy Center used Seattle Sound Transit figures to estimate that only 28 thousand new daily riders would be added by 2040. What they found is, well, troubling (emphasis mine):

This means that under ST3, each new transit rider will cost over $1 million dollars.

It also means that 97% of the one million new residents expected in 2040 will likely not be using Sound Transit’s costly services, meaning Sound Transit officials do not meet the demand for mobility they themselves anticipate.

If Sound Transit officials want to keep hypothesizing what they can do in theory – using the median price of a single-family home in King County, they could buy every new passenger a home and still have plenty left over ($38.2 billion) for:

– 8,000 new hybrid articulated buses
– Paying back taxpayers for the SR 520 bridge replacement
– Eliminating tolls and providing tax relief on the Viaduct replacement project
– Expanding I-90 through Snoqualmie Pass

Yet even after all this spending, they would still have enough left to buy those same homes for the 4,505 homeless people in Seattle, ending homelessness in the city with $21.8 billion still left in their bank accounts.

And here’s the abstract of a 2015 study making a similar point (emphasis mine):

We examine American support for transit spending, and particularly support for financing transit with local transportation sales taxes. We first show that support for transportation sales tax elections may be a poor proxy for transit support; many voters who support such taxes do not support increased transit spending, and many people who support transit spending do not support increased sales taxes to finance it. We then show that support for transit spending is correlated more with belief in its collective rather than private benefits—transit supporters are more likely to report broad concerns about traffic congestion and air pollution than to report wanting to use transit themselves. These findings suggest a collective action problem, since without riders transit cannot deliver collective benefits. But most transit spending supporters do not use transit, and demographics suggest they are unlikely to begin doing so; transit voters are wealthier and have more options than transit riders.

There are better alternatives

As Edward Glaeser recently said in an interview with Vox.com:

There’s a strong consensus that maintaining existing infrastructure gives you much more bang for your buck. There have been diminishing returns to building new roads, particularly since we completed the National Highway System. Whereas if you have existing corridors with potholes, the returns to fixing that are very high. [See here for more.]

Another area of agreement among transportation economists is a profound enthusiasm for buses over trains. Bus rapid transit is considered a very high-return investment. These aren’t necessarily buses operating on crowded city streets; these are buses with dedicated lanes that can achieve almost the same speed as trains.

The beauty of buses, from a cost-benefit perspective, is you don’t need to lay down massive infrastructure that you’re stuck with forever. If a bus route doesn’t attract enough people, you switch the route. Or you stop running it. It’s flexible in a way that trains aren’t. And that’s tremendously valuable in a world of uncertainty.

Now, this is not about gutting the subway in New York or the Metro in Washington, DC. But for new stuff, investing in buses tends to make more sense given the modest densities of most American metropolitan areas.

No, I don’t hate light-rail

In fact I live in Seattle and take it to work daily. And I love trains in general. I once traveled from Hong Kong to Madrid completely by train (just thought I’d find a way to throw that in there). But I see critical problems with the current proposal and I have mixed feelings about Seattle’s current light-rail.

For one, Seattle’s light-rail is rarely full except during a morning rush hour and again during an evening one. And even during these peak times the capacity is fractions of that seen on Asian rail lines (I’ve lived in Seoul) and even many in Europe. Sure, some people may see that as a feature and not a bug, but when current capacity is easily met and we’re already talking about spending $54 billion on a new system I think it’s time to stop and think. Yes, the city is growing and will likely continue to grow, the question is what is the benefit of light-rail in that climate and are there better and cheaper alternatives.

This is not to mention my commute is actually 25 minutes longer under the current light-rail regime because the 71, 72, and 73 buses were all rerouted from an express lane route that led directly downtown. Now they go — guess where — to the nearest light-rail station.

Third, the four crucial light-rail stops downtown use the same tunnel as bus traffic and so are subject to the same delays. If a bus breaks down or is slow letting passengers off, the light-rail must wait for the bus to move on. If you are not from Seattle you might have though that the original $5 billion construction project would’ve gotten light-rail a dedicated track, but you’d only be correct outside of the downtown area. These are not theoretical delays; these are daily delays. This is not life’s biggest tragedy, but we all know the feeling of wanting to get home after a long day and when you’re on a motionless train stuck behind a bus (!) and are delayed for two minutes at each of four out of your total six stops you do start to question if the money was worth it.

The Empress Has No Clothes: The Political Pornography of Marie Antoinette and the French Revolution

Figure 1. Gary Larsen, Cartoon depicting “Marie Antoinette’s last-ditch effort to save her head.” The Far Side. Accessed at: http://www.grin.com/en/doc/279873/manipulating-maria-marie-antoinette-s-image-from-betrothal-to-beheading

“I said, ‘Let them eat cake and ice cream!’” So cries a moribund Marie Antoinette as she climbs the final step to the Guillotine platform in a satirical The Far Side cartoon by illustrator Gary Larsen (Figure 1). The cartoon is aptly titled, “Marie Antoinette’s last-ditch effort to save her head.” As great comedians do, Larsen has infused both truth and irony into his work, though in this case probably more than even he realized. Marie Antoinette, of course, never said, “Let them eat cake,” but then she didn’t do a lot of things that were alleged by the Parisian rumor mill in the years from 1789 to her execution in 1793. Yet it was these very rumors, many of them explicitly or semi-pornographic in nature, that ultimately led to her death. Rumors of Marie Antoinette’s depraved behavior did more than get her beheaded, however. They played an instigating role in the French Revolution itself, both by fueling important pivots in the Revolution like the women’s march to Versailles and by helping to construct a milieu of opposition against absolutism and royal excess, ultimately undermining the legitimacy and authority of the French monarchy.

Unlike today, the pornography of revolutionary France carried with it important political messages. In the years after 1794, and certainly by the 1810s, pornography had been largely transformed into the explicitly sexual genre we know today.[1] But if we envision the pornography of the last two hundred years as designed solely to titillate and incite sexual feelings, we must view its history before this time as a form of expression that used the shock of sex as an instrument to convey other messages, often censuring political or religious figures, but also directly challenging social and moral conventions.[2] “Pornography was the name for a cultural battle zone,” wrote Lynn Hunt; quoting the historian Walter Kendrick she continued, “’pornography’ names an argument, not a thing.[3]” This fact is clearly evident if one examines the basis of government regulation during this era, which was focused on repression of unrest and sedition rather than expurgation of licentious material in the name of public decency.[4]

Though it was during the Revolution itself, and directly preceding it, that the largest effusion of political pornography was released, between the years of 1787 and 1792 there were important precursors that would later shape the direction of revolutionary erotic libel.[5] To be sure, all political elites, be they revolutionary or royalist, got a healthy dose of pornographic censure. But the orientation of this material was aimed disproportionately toward Marie Antoinette. “The avalanche of defamation that overwhelmed her between 1789 and her execution on October 16, 1793, has no parallel in the history of vilification[6]”, wrote historian Robert Darnton. Perhaps the most shocking evidence of the libel’s widespread dissemination comes from Boyer de Nîmes’s Histoire des caricatures de la révolte des Francais in which Boyer notes that “antiqueen pamphlets were sold at the gate to the Tuileries palace, in its gardens and right under the King’s window.”[7] These rumors of erotic manipulation and debauchery were so vast as to replace the real Marie Antoinette with a ribald fiction where imagined narratives of her private life rode roughshod over any actual movements the Queen might have made.

Though only ten percent of anti-Marie Antoinette material was published before 1789 a body of antiqueen material had already emerged during the pre-revolutionary era that would lay the foundation for the later groundswell.[8] For instance, an estimate by an anonymous expert on the matter, dating back to the 1770s, claimed to have found 126 pamphlets about the Queen he found to be libertine.[9] Considering that Essais Historiques alone was thought to have sold more than twenty thousand copies[10], it is probable that the circulation of antiqueen pamphlets totaled in the hundreds of thousands over the course of her rule. No doubt most of this material was generated from revolutionaries; a fraction, however, also came from the court itself. The author of Portefeuille d’un talon rouge, for instance, admitted the basis for his publication came from courtiers.[11]

Political pornography had a rather direct affect on public opinion during the Revolution and pre-Revolutionary epochs. Robert Darnton in his book Forbidden Best-Sellers of Pre-Revolutionary France suggests that gossip and printed libel reinforced one another, interacting also with public opinion in an iterative fashion.[12] “The contemporary view of events was as important as the events themselves; in fact, it cannot be separated from them,” he wrote.[13] One sure sign that pornography was particularly influential during the period of the Revolution was the way the narratives from pornography began to creep over into nonpornographic material. For instance, in 1792 a series of pamphlets were circulated listing a number of “political enemies who deserved immediate punishment.[14]” The names themselves had been lifted directly from pornographic libel of prominent men who had had illicit relations with the Queen. Certainly this blurring of the pornographic and the political publishing outlets of pre-revolutionary and revolutionary France goes a long way toward suggesting the type of public option at play during the era. It was not only the mood that was affected, however, but revolutionary action as well.

One such crucial event in the Revolution was the relocation of political power from Versailles to Paris. The episode began on the night of 1 October 1789 when the Queen had honored a regiment from Flanders, signaling a possible attempt by Louis XVI to reestablish order and authority. Making matters worse, the tricolored cockade was reportedly trampled over. Several days later on the 5th of October women met at the Hôtel de Ville and marched to Versailles. When, the next day, the royal family was brought back to Paris it signaled both a shift in the physical center of power and a cementing of the fact that it was now the people, not the monarchy, that truly controlled France. Bread prices no doubt played a major role, but so did rumors about the night of 1 October. It was portrayed not merely as “a ceremony”, or less officially “a party”, but instead described as yet another “orgy” between the Queen and her ever-growing harem, this time the King’s newly arrived soldiers.[15] Certainly this alleged debauchery, which was made all the more probable by years of pornographic antiqueen pamphlets, played a part in the excitation of the women.

The supposed debauchery of the Queen had grown over time, circumscribing an increasingly large coterie of high officials, nobles, and ministers. To understand how large this group had truly become, consider a post-revolutionary pamphlet depicting “Marie Antoinette in amorous embrace with just about everyone imaginable: her first supposed lover, a German officer; the aged Louis XV; Louis XVI impotent; the comte d’Artois; various women; various ménages á trois with two women and a man; the cardinal de Rohan of the Diamond Necklace Affair; Lafayete; Barnave, and so on.”[16]

Depictions of the Queen nearly always included group sex, homosexuality, and incest, since these acts had come to represent the decadence of political elites[17]. This decadence was largely echoed in what would be the ultimate piece of libel against Marie Antoinette: the bill of indictment at her trial. In the midst of a serious financial crisis in France she had prodigally spent on “disorderly pleasures” and been “the scourge and the bloodsucker of the French.”[18] So lecherous was her sexual appetite that “she had not stopped short of indulging herself with Louis-Charles Capet, her son…indecencies whose idea and name make us shudder with horror.”[19] And it was believed that through the use of bodily and verbal manipulation of Lafayette, Louis XVI, and his brothers, she had puppeteered counterrevolutionary movements during the opening years of the French Revolution.[20] There was, as there usually is, a modicum of truth to these rumors. The Queen did spend with ferocity, but it was mainly directed toward fashion for her and her inner circle, or on parties of a much more innocent nature than those alleged.[21]

The Queen was not the only woman of note to be censured in such a harsh manner. One of the most important antecedents to the revolutionary attacks against Marie Antoinette wasn’t aimed at the Queen herself, but rather Madam du Barry, King Louis XV’s Maîtresse-en-titre (head mistress). An anonymous poet, for example, went so far as to imply that du Barry would bring down all of France:

It seems to be your [France’s] destiny
To be subjugated to women
Your salvation came from the Maiden [Joan of Arc]
Your death will come from the Whore [du Barry][22]

It is easy to see here the attacks against du Barry were later echoed in the trial of Marie Antoinette: that the ruin of France would come because of the power, manipulation, and decadence of a woman of court. But whereas Du Barry was attacked for her lascivious behavior and affairs with Louis XV, attacks against Marie Antoinette were aimed at the Queen’s body itself. “Your health…does not belong to you alone; you must preserve it for our sake and that of the state[23],” wrote the Queen’s mother Maria Theresa in a letter pointedly relating what was known to all of France: that as Dauphine, Marie Antoinette had a royal obligation to act as a maternal vessel to assure the continuation of absolutism and the cementing of political unity between the Bourbons and Habsburgs. To destroy the monarchy, then, revolutionaries had to generate a rupture “between the literal bodies of the rulers and the mystic fiction of royalty.[24]

Indeed, much libel aimed at the Queen also implicitly undermined the legitimacy of Louis XVI as well. The two bodies of material played off each other; the Queen was forced to find pleasure elsewhere because of the King’s impotence (in reality a penile condition known as phimosis that was later cured), and the King could not hope to impregnate a queen that was a part party-all-night harlot.

Largely the images were meant to transmit the inept political aptitude of the King. One image, for example, shows a flaccid Louis XVI and a despondent Marie Antoinette lying on a chair waving away the impuissant King (Figure 3). Another poem aimed at both the King and Queen was titled Les Amours de Charlot et Toinette, written in the early 1780s, but reprinted and circulated after 1789. It starts by mocking Louis XVI’s lack of virility and impotence: Always limp and always curved,/He has no prick, except in his pocket;/Instead of fucking, he is fucked.[25] It continues to describe how the Queen has been forced to sleep with the King’s brother because Louis cannot satisfy her. Still another revolutionary pamphlet L’Autrichienne en goguettes depicts a series of plates of the Queen with both d’Artois and de Polignac. The three have only been able to begin copulation after Louis has passed out drunk. During one interval de Polignac masturbates while she reads a famous mid-eighteenth century pornographic text, a sign that later writers were actively building on a long tradition of ribald works.[26] Here the sexual impotence of the King was a thin allusion to his political impotence, perceived diffidence, and mismanagement of France; if he could not master his own wife and sexual affairs, how could he possibly manage the political affairs of France? In time an heir to the thrown was produced, but by this time the damage was done and many of the narratives of these initial pamphlets continued.

What emerged, then, in the political pornography of Marie Antoinette was an awkward tension between the continuation of the monarchy and its extinction. On one hand Marie Antoinette had to be destroyed, for her body stood in the way of the new Republic; as Queen she was the centerpiece of monarchical genealogy, giving birth to the royal heir and ensuring continued royal succession.[27] Consequently, it is no wonder that many pornographic writings had it that the young Dauphine was to have been conceived during one of the Queen’s surreptitious encounters[28], thereby severing the linage of legitimate absolutist rule. On the other hand, this was an uncomfortable portrait since the abstraction of a sovereign needed to be maintained in a Republic with a constitutional monarchy (at least in the early years of the revolution).

For still others, the pornography of Marie Antoinette, by acting on the most prominent woman in France, served to reinforce gender norms against an early feminist movement and rearticulate the National Assembly and its variants as a political brotherhood.[29] Collectively though, the varied pornography was nothing short of an assault on the ancien régime. If pornography is an “argument” as Lynn Hunt suggests, its message was clear: the monarchy was no longer legitimate in its current form.

To say that the political pornography of Marie Antoinette caused the French Revolution is far too bold an assertion, but to say it played a trivial role is perhaps too meek. To be sure, there were ongoing economic and political forces before 1789, which continued to play out as the Revolution unfolded. That said, the effusion of material in the runup to, and during, 1789 channeled passions and interests to particular effects. The pornography was rendered in a way accessible to a wide audience that provided the people of France both an entertaining voyeurism and an opportunity to be a moral judge.[30] As it soaked in to public opinion, the images of Marie Antoinette both excited direct political action and provided an environment where the confusion between pornographic libel and political news was all too easy. This created antipathy toward the crown and meant different things for different revolutionary participants, but ultimately undermined royal legitimacy and authority. And, in the end, it was these rumors that killed the Queen. It turns out the people wanted her head, not so much the cake and ice cream.

Figure 2. Typical lesbian depiction involving Marie Antoinette and the duchess of Pequigny. Louis Binet. From Marie-Jo Bonnet, Les Deux Amies (paris: Éditions Blanche, 200). Accessed at http://sappho.fromthesquare.org/?p=75 Text reads: “With your kisses, excite my desires, I am, my darling, at the height of pleasure.”
Figure 2. Typical lesbian depiction involving Marie Antoinette and the duchess of Pequigny. Louis Binet. From Marie-Jo Bonnet, Les Deux Amies (paris: Éditions Blanche, 200). Accessed at http://sappho.fromthesquare.org/?p=75
Text reads: “With your kisses, excite my desires, I am, my darling, at the height of pleasure.”
Figure 3. A despondent Marie Antionette waves away a flaccid Louis XVI. From Bibliotheque Nationale de France. Accessed at http://www.sabotagetimes.com/travel/the-biggest-porn-stash-in-the-world/
Figure 3. A despondent Marie Antionette waves away a flaccid Louis XVI.
From Bibliotheque Nationale de France. Accessed at http://www.sabotagetimes.com/travel/the-biggest-porn-stash-in-the-world/


[1] Lynn Hunt, The Invention of Pornography: Obscenity and the Origins of Modernity, 1500-1800 (New York  ;Cambridge Mass.: Zone Books ;Distributed by MIT Press, 1993).

[2] Ibid.

[3] Ibid. pp. 13.

[4] Ibid.

[5] Ibid.

[6] Robert Darnton, The Devil in the Holy Water or the Art of Slander from Louis XIV to Napoleon (Philadelphia: University of Pennsylvania Press, 2010).

[7] Hunt, The Invention of Pornography.

[8] Lynn Hunt, Eroticism and the Body Politic (Baltimore: Johns Hopkins University Press, 1991).

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Darnton, The Devil in the Holy Water or the Art of Slander from Louis XIV to Napoleon.

[13] Robert Darnton, The Forbidden Best-sellers of Pre-revolutionary France (New York: W.W. Norton, 1995).

[14] Hunt, Eroticism and the Body Politic.

[15] Ibid.

[16] Ibid.

[17] Hunt, The Invention of Pornography.

[18] Hunt, Eroticism and the Body Politic.

[19] Ibid.

[20] Ibid.

[21] Caroline Weber, Queen of Fashion: What Marie Antoinette Wore to the Revolution, 1st ed. (New York: H. Holt, 2006).

[22] Ibid.

[23] Regina Schulte, The Body of the Queen: Gender and Rule in the Courtly World, 1500-2000 (New York: Berghahn Books, 2006).

[24] Hunt, Eroticism and the Body Politic.

[25] Darnton, The Devil in the Holy Water or the Art of Slander from Louis XIV to Napoleon.

[26] Hunt, The Invention of Pornography.

[27] Hunt, Eroticism and the Body Politic.

[28] Ibid.

[29] Ibid.

[30] Ibid.


Darnton, Robert. The Devil in the Holy Water or the Art of Slander from Louis XIV to Napoleon. Philadelphia: University of Pennsylvania Press, 2010.

———. The Forbidden Best-sellers of Pre-revolutionary France. New York: W.W. Norton, 1995.

Hunt, Lynn. The Many Bodies of Marie Antoinette: Political Pornography and the Problem of the Feminine in the French Revolution. From Hunt, Lynn. Eroticism and the Body Politic. Baltimore: Johns Hopkins University Press, 1991.

———. Pornography and the French Revolution. From Hunt, Lynn. The Invention of Pornography: Obscenity and the Origins of Modernity, 1500-1800. New York  ;Cambridge Mass.: Zone Books ;;Distributed by MIT Press, 1993.

Schulte, Regina. The Body of the Queen: Gender and Rule in the Courtly World, 1500-2000. New York: Berghahn Books, 2006.

Weber, Caroline. Queen of Fashion: What Marie Antoinette Wore to the Revolution. 1st ed. New York: H. Holt, 2006.

The Dutch East India Company and Dutch State Formation in the Seventeenth Century


Today firms are part and parcel of the modern capitalist state enterprise. Aside from provisions of the state, firms provide the goods and services people consume, as well as wages (the means of consumption). It is worth asking, then, if early firms had a part in the emergence of the modern state. This paper briefly examines the role of the largest business enterprise of its time, the Dutch East India Company (VOC), in the formation of early-modern Netherlands. It finds that the VOC had an important role in the emergence of an independent Dutch Republic in 1648.

Setting the Stage

The Netherlands, from very early in its history, had a dynamic and varied economy. The Holland region circa 1500 already had the highest urbanization rate in Europe, with 40 percent of labor in early forms of industry, 20 percent in services, 15 percent in fishing and peat digging, supported by a mere 25 percent in agriculture. In addition, it was already dominated by wage labor (at a time when Western Europe on average had only a quarter of its population producing for wages)[1].

Politically the Dutch Republic was unique. From its outset in the tenth century free peasants inhabited the region with property rights over their land, relatively lax feudal structures were in place, and nobility were weak.[2]

During the latter stages of the Middle Ages the merchant class began to secure control of the town and municipal councils in the provinces of Holland and Zeeland. This process was exacerbated during the opening years of the Eighty Years’ War when Sea-Beggars retook coastal towns from Spain and placed themselves at the head of the councils. There was considerable variation in political control, however. Regions like Guelderland and Friesland, for example, remained in the hands of the nobility and landowning farmers.

In 1568 war broke out with Spain. By 1579 the Seventeen Provinces of the Netherlands, first brought together under Charles V in 1543, were split. The southern provinces, having been substantially decimated by battles with Spain, had already pledged allegiance to the Habsburg Spanish King Phillip II. The northern states, meanwhile, united around William of Orange and banded together as the Republic of Seven United Provinces under the Union of Utrecht in 1579, were intent on fighting the Spanish.

There are, then, many occasions across history one could point to as the founding of the Dutch State. For the purposes of this paper we will take this founding event to be the Treaty of Münster in 1648. This is not at all unreasonable. Prior to this period, though seven states had come together to form the Dutch Republic, the future of the Republic was very much in doubt. The war with Spain consumed considerable resources and it was not at all clear the Dutch union would emerge independent of Spain as it did at the end of the Eighty Years’ War. Indeed, 1648 seems to be the consensus of scholars as to when the Dutch State first arose. This choice also facilitates an examination of how the Dutch East India Company, what would become the world’s largest business enterprise, aided in the Dutch Republic’s founding.

Emergence of the VOC

Seaborne exploration in the Netherlands has a long and rich history dating back to the High Middle Ages when fishing arose as a significant part of the early Dutch economy. By 1565 the Baltic trading fleet already numbered 700 ships and by the last decade of the sixteenth century approximately 12 ships per year sailed as far afield as Italy. Even West Africa saw 20 Dutch ships per year by 1600. But as trade pushed toward southern Africa, and further still toward Asia, additional costs–such as increased provisions and heavy artillery to fight privateers–quickly made funding by standard methods prohibitive. [3]

Traditionally, each voyage of a particular ship constituted its own “firm” (or rederij), with several partners coming together with equity shares sometimes down to the 1/128th ownership fraction. Ships traveling further east, however, were four times as expensive and took at least twice as long to return, increasing risk for investors. Sub-shares began being sold to friends and family, but an even more permanent enterprise was required for true success. In 1602 the States-General persuaded several existing partnerships to come together and form the The Dutch East India Company­—or Vereenigde Oost-Indische Compagnie in Dutch (hereafter referred to simply as “VOC” ). By 1607, after four rounds of equity financing, investment in the VOC stood at 9 million guilders.[4]

By the seventeenth century town and municipal councils had come to be largely controlled by the merchant class. This in turn meant that the States-General, the national governing body, was also largely influenced by merchants. The VOC, then, was an institution created by merchants for merchants. It was a State before the Dutch Republic itself had acquired full statehood. The VOC could enter into treaties, enlist soldiers and wage war, and build fortresses and outposts abroad. This gave it unrivalled economic freedom as well as the substantial political power that came with the profits.

There were three economic contributions the VOC made toward the formation of the Dutch State: increased liquidity in capital markets, the emergence of Amsterdam as the central European hub for information exchange, and general economic stimulus through employment and colonization efforts. All three led toward state formation through roughly the same means: helping to fund the Eighty Years’ War against Spain. 

Increased Liquidity

Firms in early seventeenth century Netherlands had two primary forms of raising funds. The first type was the dividing of equity shares. These were split between two or three, but up to 15, partners. The second form of fundraising was IOU issuance (essentially an early form of corporate bond). By 1600 these debt issuances varied in amount from 600 to 3,000 guilders and ranged from three to 12 months.[5]

The problem was that neither method was particularly liquid. Information asymmetries made the price of finding the probable success of a particular shipping venture costly. Since early operations were small, there was a perceived risk about whether the returning vessel would be loaded with enough tradable goods to recoup the initial costs and have enough leftover for interest payments. This hindered the development of a market for buyers of both the equity and debt financing.

This changed with the formation of the VOC. Share-ownership was split substantially more than previously, with about 1,100 initial subscribers in Amsterdam (which had a population of only 50,000)[6]. Perhaps more importantly, the VOC established a set of procedures to transfer ownership between parties. Shares were easily tradable by means of double-entry registration in the company’s ledger. What resulted was the Bourse, the world’s first stock exchange. The exchange led to the use of shares as collateral for loans on the money market, reducing transaction costs over other forms of collateral such as commodities. Indeed, from 1602 to 1620 interest rates on short-term debt dropped from nearly eight percent to 5.5 percent.[7] The primary cause of this drop was two-fold. The first reason was the increased liquidity of financing instruments described above. The second was an increase in capital availability as merchants immigrated to Amsterdam; this phenomenon was itself likely caused, in some part, by the rise of the VOC.

With time the Bourse grew and, along with the Dutch Central Bank founded in 1609, played an important part in maintaining Dutch credit. The availability of Dutch debt financing persisted even as Dutch borrowing continued and war expenditures crested at 13 million florins (90 percent of total outlays).[8]

Amsterdam as an Information Exchange

The VOC also improved the information gathering and dissemination of sixteenth century Amsterdam, helping it to become the key information hub of Europe. This is no small economic contribution. As W. Fritschy noted in his book on the early Dutch economy, “Economic historians have long stressed that assembly and exchange of business information are important parts of the operation of a commercial center.”[9]

The VOC made three important contributions in the area of information networking. First, the VOC, in an attempt to streamline its operations in marketing, ordering, and price setting, began compiling information from its vast overseas network of colonial outposts. Later, it hired correspondents specifically to fill the role of information reporter.[10] Second, the VOC aided in the distribution of information. The directors of the VOC, the so-called “Heeren XVII”, and other high-level company officers, were often members of the political merchant oligarchy. As members of this commercial group, they would share information coming in from abroad with other elites who would in turn share it with their friends and family, and so on. Information would then spread down through the commercial classes until it became common knowledge. Third, in an attempt to forecast commodity prices, seasonal and yearly variations in importation of goods, and supply and demand across Europe at large, the VOC instituted a process of archival record keeping. As with other types of information, the forecasts that were rendered from studying these archives became public knowledge. Even today there are about 4,000 meters of shelved VOC archival documents worldwide.[11]

General Economic Stimulus

The VOC was a massive organization, especially for its day, and as such was large enough to have a substantial effect on the larger Dutch economy. Between 1602 and 1796, 1,772 ships made 4,785 passages to outposts in the “East Indies.” Over these two hundred years nearly one million Europeans rode aboard its fleet for short- or long-term visits to southern Africa and Asia. At its height 3,000 VOC employees worked in the Dutch Republic at offices, warehouses, and shipyards while 12,000 seamen manned its fleet.[12] In total, more than 2.5 million tons of goods from Asia were brought back for trade. (Compare this to the VOC’s nearest competitor, The British East India Company, which carried only one-fifth the total tonnage on traffic of 2,690 ships)[13]. In addition, the substantial number of colonial outposts established by the VOC no doubt acted to project Dutch power abroad, transforming it into a world power.

The VOC was truly the behemoth of the world’s commercial trading system during these two centuries. Profits came with its success. From 1630 to 1730 the average annual profit was 2 million guilders, of which fifty to seventy-five percent were distributed as dividends with the remainder being reinvested.[14]

Although it is not possible to know the exact magnitude of the VOC’s effects on the Dutch economy on the whole, it no doubt had a substantial impact. The rise of the VOC paralleled a gradual rise in living standards for the average worker. Yearly income of urban day-laborers rose from 195 florins in 1600 to 292 by 1650, and from 270 to 384 for the middle class worker.[15] This in turn paralleled a steadily increasing reliance on tax revenue that, along with government debt, helped to fund the war with Spain.

VOC Political Control

It is clear that the VOC had a powerful positive impact on the Dutch economy and as a result helped it to rise ever further above the Malthusian trap, a process Francis Fukuyama identified as a prerequisite for state development. Additionally, it aided directly in the surge in the Dutch economy that kept credit flowing and incomes, and therefore tax revenue, rising. All of this is simply to say that, despite being part of a broader and richer network of economic and trading activity, the VOC in particular seems to have played an important role in funding the war against Spain and thus ensuring the establishment of a Dutch State.

The VOC’s influence, however, did not end with the economy. The Heeren XVII and other VOC shareholders were extraordinarily prominent in Dutch politics. In fact, the VOC felt so empowered that in 1644 the company told the States-General that:

“The places and strongholds which they had captured in the East Indies should not be regarded as national conquests but as the property of private merchants, who were entitled to sell those places to whomsoever they wished, even if it was to the King of Spain, or to some other enemy of the United Provinces.”[16]

The VOC, with this quite remarkable declaration, demonstrated it felt supremely confident with its preeminence within the wider Dutch system. This is likely because the States-General themselves had chartered the company years earlier and bestowed it with such broad latitude. This political influence was magnified by the rather prominent position of Holland, and in particular Amsterdam (home of the main VOC office), in broader Dutch political decision-making.

In theory, the Seven Provinces of the Dutch Republic were each autonomous and sovereign with the House of Orange acting as stadtholder responsible mostly for military affairs. The Dutch Republic has often been thought of as an exception to the standard pattern of divine right monarchical or absolutist centralization as a prerequisite for state formation. And it was certainly an exception to the model of prolonged war leading to strong centralized government as it did in Western Europe. In fact, the States-General had essential no national political authority to do things like impose a national tax—this was done at the provincial level. In practice, however, Holland came to fill the role of the central authority.

This stemmed simply from its substantial economic contribution to the Republic. Nominally, Holland carried a “mere” 58 percent of the Dutch Republic’s financial burden, but in practice its sway equated to far more.[17] This gave the region increased negotiating power—if a particular policy was to be implemented, Holland must first be convinced. For alas, if Holland happened to disagree, the autonomous nature of the confederation allowed for the province to simply boycott implementation. But this in turn would almost certainly prohibit funding for the policy since invariably Holland would end up footing the bill for any legislation that passed.

Within these various levels of municipal, provincial, and national government sat the VOC’s directors, officers, and shareholders. These groups were so influential in Dutch politics (indeed often they were the very same people) that it caused an anonymous pamphleteer to famously protest:

“For, they say, if we complain to the regents of the VOC and the magistrates of the towns, there sit the directors [the Heeren XVII], […] if to the admiralties, there are the directors again. If to the Estates General, we find that they and the directors are sitting there together at the same time.”[18]

The famous Johan de Witt, for example, known as “the first Dutch Statesman” for his leadership leading up to and during the Anglo-Dutch wars, was the largest shareholder in the Zeeland chamber of the VOC.[19]

The VOC was economically and politically the single most important Dutch enterprise and conducted the bulk of its business in Holland, which itself supplied the majority of wealth and tax revenue to the Dutch Republic and had the political sway to prove it. It stands to reason, therefore, that aside from its economic role in Dutch State building, the VOC had an important role in exerting centralized political authority on other Dutch Republican provinces.

The denouement of this authority was acutely visible in the passing of the Treaty of Münster, which ended the Eighty Years’ War in 1648. Though there was extreme opposition to the treaty from all sides—the House of Orange wanted to conquer the southern provinces to gain dynastic power (which a treaty would forbid), the region of Utrecht objected for religious reasons, even Zeeland disapproved—Holland, with its economic and political capital, was able to pass the measure and end the war. Dutch historian C.R. Boxer concludes:

“Yet the regents of the other towns of Holland, and, above all, those of Amsterdam, were able to drive the Treaty through against the opposition of so many of their fellow-countrymen. […][The war with Spain] had ended with the formation of a loosely federated republic dominated by a group of merchant oligarchs.”[20]


Although the Dutch Republic was, de jure, a loosely confederate body of seven autonomous provinces, it was, de facto, a republic with Holland as its head. And there was no more important enterprise in Holland, and indeed in the Republic, than the VOC. The company founded a stock exchange, employed thousands of workers, supplied countless trade-goods from its colonies aboard, and helped transform Amsterdam into the hub of Europe. By doing so, the VOC created a financial platform to help secure a victory in the must-win war against Spain.


[1] Bavel and Zanden, “The Jump-Start of the Holland Economy during the Late-Medieval Crisis, c.1350-c.1500.”

[2] Ibid.

[3] Gelderblom and Jonker, “Completing a Financial Revolution.”

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Fritschy, “A ‘Financial Revolution’ Reconsidered.”

[9] Smith, “The Function of Commercial Centers in the Modernization of European Capitalism.”

[10] Ibid.

[11] Van Boven, “Towards A New Age of Partnership (TANAP): An Ambitious World Heritage Project (UNESCO Memory of the World – reg.form, 2002).”

[12] Stevens, Dutch enterprise and the VOC, 1602-1799.

[13] Van Boven, “Towards A New Age of Partnership (TANAP): An Ambitious World Heritage Project (UNESCO Memory of the World – reg.form, 2002).”

[14] De Vries, The first modern economy.

[15] Fritschy, “A ‘Financial Revolution’ Reconsidered.”

[16] Boxer, The Dutch seaborne empire, 1600-1800,.

[17] Ibid.

[18] Hart, The making of a bourgeois state.

[19] Boxer, The Dutch seaborne empire, 1600-1800,.

[20] Ibid.


Bavel, Bas J. P. van, and Jan Luiten van Zanden. “The Jump-Start of the Holland Economy during the Late-Medieval Crisis, c.1350-c.1500.” The Economic History Review 57, no. 3. New Series (2004): 503-532.

Van Boven, M.W. “Towards A New Age of Partnership (TANAP): An Ambitious World Heritage Project (UNESCO Memory of the World – reg.form, 2002)”, 2002.

Boxer, C. The Dutch seaborne empire, 1600-1800,. [1st American ed.]. New York: Knopf, 1965.

Fritschy, W. “A ‘Financial Revolution’ Reconsidered: Public Finance in Holland during the Dutch Revolt, 1568-1648.” The Economic History Review 56, no. 1. New Series (February 1, 2003): 57-89.

Fukuyama, Francis. The origins of political order : from prehuman times to the French Revolution. 1st ed. New York: Farrar Straus and Giroux, 2011.

Gelderblom, Oscar, and Joost Jonker. “Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595-1612.” The Journal of Economic History 64, no. 3 (2004): 641-672.

Hart, Marjolein. The making of a bourgeois state : war, politics, and finance during the Dutch revolt. Manchester UK ;;New York: Manchester University Press  ;Distributed in the USA and Canada by St. Martin’s Press, 1993.

Smith, Woodruff D. “The Function of Commercial Centers in the Modernization of European Capitalism: Amsterdam as an Information Exchange in the Seventeenth Century.” The Journal of Economic History 44, no. 4 (December 1, 1984): 985-1005.

Stevens, Harm. Dutch enterprise and the VOC, 1602-1799. [Zutphen]: Walburg, 1998.

De Vries, Jan. The first modern economy : success, failure, and perseverance of the Dutch economy, 1500-1815. Cambridge ;;New York: Cambridge University Press, 1997.