The capture of Cochin and victory of the Dutch VOC (East India Company) over the Portuguese in 1656.

Part 5 — The Anglo-Dutch Financial Empire

In 1461, only nine years after the birth of Leonardo da Vinci, Louis XI ascended the throne of France, this at a time when the radiance of the Italian Renaissance was approaching its zenith. The reign of Louis coincided with—and was a lawful product of—that Renaissance. This was the beginning of the modern sovereign nation state and the beginning of modern economics. Louis authored a book, Le Rosier des Guerres (“The Rosebush of Wars”), wherein he defined the raison d'être of the state to act on behalf of the Common Good;  to act in such a way as to advance and improve the conditions of life of the people. 

Louis’ outlook and actions flowed directly from the 1434 work by Nicholas of Cusa, De Concordantia Catholica (“The Catholic Concordance”). In that work Cusa posits the concept of the Commonwealth as the basis for human society. Cusa’s Commonwealth is based in the recognition of the creative power which exists within each human individual, and it flows directly from Dante’s vernacular exploration of the nature of the human identity in his Divine Comedy. In the Commonwealth, the nation will act to defend the people, to help the people to advance, and to build a scientifically advanced economy. It will be future-oriented, looking toward the continual betterment of the human condition. Louis XI, as King of France, took up this challenge and proceeded to create a national currency, and to build ports, roads, schools, industry, and infrastructure. He transformed the productive power of the nation.

In 1485, Henry Tudor, who had been trained at the court of Louis XI, overthrew the degenerate Venice-allied Plantagenet dynasty in England, and as King Henry VII, adopted the same methods of national economic development and sovereignty for England that Louis had pursued in France.

These actions overthrew the old feudal order of stagnation and oppression and defined the inseparable link between national sovereignty and progressive economic development.


In 1587 an institution named the Banco della Piazza di Rialto (later simply known as the Bank of Venice) came into existence. Financed and controlled by the Venetian aristocracy, the Bank quickly gained the monopoly right to print money; it became the creditor to the Venetian Empire; and it initiated a new regime of financial speculation. All of these operations were in private hands.

Twenty-two years later, in 1609, the Bank of Amsterdam (the Wisselbank) was created, modeled explicitly on the Bank of Venice. Over the next half century an enormous financial colossus rose to dominance in Amsterdam, based in the Bank, the Bourse (stock exchange) and the Dutch East India Company. The most extreme parasitic financial practices of that troika are vividly described in Confusion de Confusiones, a work written by Joseph de la Vega in 1688. Vega describes the frenzy in the trading of futures, options, and forward contracts, as well as short selling, margin sales, and “Duction Shares,” a primitive form of financial derivatives. One economic historian has stated that 17th century Amsterdam contained a “mature speculative market,” the likes of which would not be seen again until the second half of the 20th century.

In other words, what was created in Amsterdam was a usurious private financial empire based solely on the accumulation of money.

In 1688 the Dutch invaded England and placed the Dutch ruler William of Orange on the British throne. With lightning speed, the institutions and practices of Amsterdam were cloned to London. This included the founding of the Bank of England (1694), the reformed Stock Exchange (1697) and the “new” East India Company (1698). The Bank was granted monopoly right over the issuance of money, and it became the sole creditor of the government’s national debt. Out of these complementary practices of Amsterdam and London was born “central bank money,” i.e., that the “governments” of Britain and the Netherlands ceded to the oligarchical Bank of England and Bank of Amsterdam the monopoly right to issue currency.

Britain was now transformed into a privately controlled oligarchical financial state. The state, in fact, became subservient to oligarchical private financial interests. There was patriotic opposition to all of this, led by Jonathan Swift, but it was crushed.

By 1763, with the defeat of France in the Seven Years War, British hegemony was established, and with the final subjugation of France at the 1815 Treaty of Paris, British financial and monetary dominance reached an unchallengeable position worldwide.

It is very clear that Friedrich Hayek was completely aware of the trajectory of these historical developments, and he welcomes them. He cheers them. Writing in The Constitution of Liberty about the emergence of this Anglo-Dutch “liberal” economic system, Hayek writes:

“In the Low Countries and Britain, it for a long time enjoyed its fullest development and for the first time had an opportunity to grow freely and to become the foundation of the social and political life of these countries. And it was from there that in the late seventeenth and eighteenth centuries it again began to spread in a more fully developed form to the West and East, to the New World and to the center of the European continent. . . 

“For over two hundred years English ideas had been spreading eastward. The rule of freedom which had been achieved in England [i.e., in 1688–RI] seemed destined to spread throughout the world. By about 1870 the reign of these ideas had probably reached its easternmost expansion.”

Hayek is explicit:  the creation of a private monetarist financial empire in Amsterdam, and then its spread into London after 1688 is, for him, the beginning of the “liberal” economic system which he adores. 

In reality, what began in Venice in 1587 was a counter-revolution against the ideals of the Renaissance, an attempt to ensure that oligarchical rule would re-establish its authority over human society. By 1815, the grand-child of that Venetian initiative—the modern-day British Empire—had succeeded in creating a global financial imperial system, the likes of which had never before been seen in human history. 

And none of this is just about economics. It is about oligarchical rule, oligarchical culture. It is a sustained attempt to eradicate the Renaissance idea—which applies to ALL human beings— of Man “In the Image of God.”  One of the architects of the Venetian financial empire was a monk named Paolo Sarpi. Sarpi was the greatest intellectual influence in Venice, and his ideas spread to Amsterdam and London. Sarpi denies that human creativity exists. He was the founder of what became known as “empiricism,” and for Sarpi, Man only knows what he can see, hear, touch or smell. Truth is unknowable. Sarpi’s writings anticipate Bacon, Locke, Hobbes, Bentham, and Smith, and from his empiricist philosophy, Sarpi developed the linear mathematical methods that were then employed in the financial markets of Amsterdam and London.

The Empire in Action

As stated in the quote from Hayek given above, for him the year 1870 represents the apex of the influence of British liberal values. It is the high point of British liberal economics. But what exactly was going on in 1870—and in the prior decades—when the British Empire rose to such staggering global power?

First the British had just crushed China in the Second Opium War (1856-1860), sanctioned by Queen Victoria, thus concluding their campaign to force narcotics—financed, produced, and transported by the British—on the people of China. It is estimated that by 1900, 13.5 million Chinese were addicted to opium, including 27 percent of the country’s adult male population. The “liberal” British did this.

Second, the British had also just concluded their unsuccessful attempt to dismember and destroy the American Republic. First, they tried to bankrupt the United States government in 1861, and when that failed, they became the chief supplier of ships, weapons, and ammunition to the Confederacy from 1861 to 1865. Because of Abraham Lincoln and the American citizenry, this failed, to the dismay of the British, and possibly Hayek as well. The “liberal” British did this, too.

Now, let’s go back a little further. Hayek points to the emergence of Amsterdam at the beginning of the 17th century, and then Britain after 1688, as the beginning of the “glorious” liberal era. Yet from no later than the Dutch capture of the Elmina slave trading fortress in 1637, well into the early 19th century, it was the “liberal” Dutch and British Empires which maintained—for 200 years—an iron grip on world-wide slave trafficking. This was the apex of trans-Atlantic slave trading, which resulted in millions killed and more than 20 million slaves taken out of Africa. The Dutch transformed the Dutch East Indies (today’s Indonesia) into a hideous gigantic slave plantation, and slaves were transported and sold by the British to every corner of the earth.

From the slave-trading and narcotics trafficking, money poured into the financial institutions of the City of London. This was the actual source of wealth and power for London’s financial elite during those decades, not the fairy-tale spun by Hayek. The banking and financial power of the City of London was erected on the corpses of colonial natives, murdered, or forced into drug addiction.

The Body Count

According to the Indian historian Shashi Tharoor, the British Empire was responsible for the deaths of 35 million Indians. 

Now, for those who don’t know these things, consider the following:

When the British first arrived in India in the 18th century, the sub-continent was not some backwards region. India was one of the most productive nations in the world, with advanced industry and agriculture and accounting for 27 percent of global gross domestic product. By the time the British left in 1947, India was one of the poorest, most diseased, and most illiterate countries on Earth.

Winston Churchill is worshiped at Hillsdale College, yet in 1943—right about the time Hayek was writing The Road to Serfdom—a terrible famine (caused entirely by Britain’s economic looting of India) broke out in Bengal. Prime Minister Churchill ordered that no aid be sent, and he diverted tons of grain away from the starving province. Three million Indians starved to death, but Churchill sputtered that it was the fault of the Indians for “breeding like rabbits.”

No one knows how many human beings were killed by the British Empire. One historian has claimed that the Empire “killed with famine, sword and fire more people than Genghis Khan, Attila the Hun, Hitler or Stalin.”  A very conservative estimate would be 200 million, with a very significant percentage of those deaths coming from Africa. 

What is critical to grasp, however, and this is of the utmost importance, is that only a small percentage of this total were people who were shot, stabbed, or otherwise murdered face-to-face. Overwhelmingly, the death toll was a result of British economic policy. Imperial financial and economic policy. The “liberal” economics of Adam Smith, Richard Cobden, James Mill, and all of the British aristocrats whom Hayek holds up as exemplars of “freedom.”

Today, this modern Anglo-Dutch Empire has spread its tentacles everywhere. National sovereignty has been dramatically weakened. This phenomenon is sometimes called “globalization,” but that can be a very misleading term. If we take a closer look at the 18th and 19th century British and Dutch empires, and at their tens of millions of victims, we will get a much more precise picture of what this force really is.

Part 1—What's Wrong With Hillsdale College?

Part 2—The Road to Serfdom: Hayek, the Imperial Sophist

Part 3—Hayek's Constitution of Liberty: The Worship of Oligarchical Culture

Part 4—Hayek and Keynes: Two Peas in a Pod

Part 5—The Anglo-Dutch Financial Empire

Part 6—American Economics

Part 7—Abraham Lincoln Conquers Inflation


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