with a population of only 1-2 million people. Below is a brief summary of the wars they had to fight to build and
hold onto their empire. As shown, they were all about money and power.
Eighty Years’ War (1566-1648): This was a revolt by the Netherlands against Spain (one of the strongest
empires of that era), which eventually led to Dutch independence. The Protestant Dutch wanted to free
themselves from the Catholic rule of Spain and eventually managed to become de facto independent. Between
1609 and 1621, the two nations had a ceasefire. Eventually, the Dutch were recognized by Spain as
independent in the Peace of Munster, which was signed together with the Treaty of Westphalia, ending both
the Eighty Years’ War as well as the Thirty Years’ War.8
First Anglo-Dutch War (1652-1654): This was a trade war. More specifically, in order to protect its economic
position in North America and damage the Dutch trade that the English were competing with, the English
Parliament passed the first of the Navigation Acts in 1651 that mandated that all goods from its American
colonies must be carried by English ships, which set off hostilities between the two countries.9
The Dutch-Swedish War (1657–1660): This war centered around the Dutch wanting to maintain low tolls on
the highly profitable Baltic trade routes. This was threatened when Sweden declared war on Denmark, a
Dutch ally. The Dutch defeated the Swedes and maintained the favorable trade arrangement. 10
The Second Anglo-Dutch War (1665–1667): England and the Netherlands fought again over another trade
dispute, which again ended with a Dutch victory. 11
The Franco-Dutch War (1672-1678) and the Third Anglo-Dutch War (1672-1674): This was also a fight over
trade. It was between France and England on one side and the Dutch (called the United Provinces), the Holy
Roman Empire, and Spain on the other.12 The Dutch largely stopped French plans to conquer the Netherlands
and forced France to reduce some of its tariffs against Dutch trade,13 but the war was more expensive than
previous conflicts, which increased their debts and hurt the Dutch financially.
The Fourth Anglo-Dutch War (1780-1784): This was fought between the Dutch and the rapidly strengthening
British, partially in retaliation for Dutch support of the US in the American Revolution. The war ended in
significant defeat for the Dutch, and the costs of the fighting and eventual peace helped usher in the end of the
guilder as a reserve currency.14
The chart below shows the Dutch power index with the key war periods noted.
As shown, the seeds of Dutch decline were sown in the latter part of the 17th century as they started to lose their
competitiveness and became overextended globally trying to support an empire that had become more costly than
profitable. Increased debt-service payments squeezed them while their worsening competitiveness hurt their
income from trade. Earnings from business abroad also fell. Wealthy Dutch savers moved their cash abroad both to
get out of Dutch investments and into British investments, which were more attractive due to strong earnings
growth and higher yields.15 While debt burdens had grown through most of the 1700s,17 the Dutch guilder
remained widely accepted around the world as a reserve currency so it held up solely because of the functionality
of and faith in it.17 (As explained earlier, reserve currency status classically lags the decline of other key drivers of
the rise and fall of empires.) As shown by the black line in the first chart above (designating the extent the
currency is used as a reserve currency) the guilder remained widely used as a global reserve currency after the
Dutch empire started to decline, up until the Fourth Anglo-Dutch War, which began in 1780 and ended in 1784.18