Semper Augustus: End of the Golden Age | Australian Markets

On our approach back from Argentina, we stopped over in Amsterdam. It was our first go to to the metropolis. It is late spring in Europe. Cold and wet after we arrived, the climate turned lovely on the weekend.

Every canine has its day. And the Dutch Republic — precursor to as we speak’s Netherlands — had its day in the mid-Seventeenth century. It broke away from the Spanish Empire in 1579 and have become the richest place in the world with a far-flung empire of its own.

Today, the nation remains to be affluent…and enticing. Everything is clean and well-maintained — the highways, buildings, factories. Even the farms are exceptionally orderly. It’s a small nation, so space there’s little wasted ground, with cultivated fields close up in opposition to housing developments, cities, and factories.

One of the first stuff you discover is the lack of noise. Most of the automobiles are parked alongside the leafy streets. And these few in movement are quiet. They are nearly all electric. People get round on bicycles…tens of millions of them. The loudest sound you hear is the tching tching of bicycle bells warning you to get off the bike path or you’ll be run down. Many of the two-wheelers are electric, too. And the flat, small nation — with its abundance of bicycle lanes — is right for them.

Another factor you discover is an absence of fats. The Dutch are large, however hardly ever do you see American-style heft. Perhaps that, too, is a consequence of the bicycle tradition.

There are additionally varied species of tiny electric autos that we had not seen elsewhere. They are so short they park perpendicular to the sidewalk…and so small and quiet, they have to be properly suited to in-town driving.

Even the quietest residential areas are punctuated by eating places, bars and retailers. The total impact is one of calm magnificence together with city comfort. It looks like a good place to dwell, the place you possibly can go away your home and discover a good restaurant or espresso store within strolling distance.

We didn’t go into the Rijksmuseum. We’ve by no means seen a line we needed to affix…and the queue to buy tickets for the museum was one of them. Apparently, we didn’t miss a lot.

“The Rijksmuseum was terrible,” got here the eyewitness report, tipping us off. “It is very crowded… and noisy. There are great pieces of art from the Golden Age — Vermeer, Rembrandt, et al — but the most popular works have hordes of tourists gawking at them… with tour guides loudly giving out information and opinions. Probably better to go in the winter.”

Instead, we took a taxi to the Hague to go to the quieter Mauritshuis museum, targeted fully on the Dutch Masters.

“People in the Hague are nicer than those in Amsterdam,” mentioned our Hague-based driver.

But there, too, we had been nearly turned away…

“You didn’t reserve? I’m sorry but the museum is full,” mentioned the tall, skinny blond. Then, calling somebody on a walkie-talkie…

“Wait…it’s okay…you can go in…”

It is a giant personal mansion that has been repurposed as a museum. What shocked us about it was how many Dutch masters there have been… and how superb they had been. Of course, many of the work are well-known all through the world. But the customer remains to be impressed; the stage of experience — capturing gentle and shadow…facial expressions… and telling tales — is extraordinary.

What does it take to have a ‘Golden Age?’ Ancient Lydia had its day in the solar, making its king ‘as rich as Croesus.’ Greece had its golden age, too, which got here to an finish when Athens banned trade with Sparta and set off the Peloponnesian War. Hollywood had a golden age — between the Twenties and the Sixties. Golden ages, like empires and head colds, come and go.

With just one.5 million people…and a tiny floor space…the Dutch Republic flourished from trade. It purchased and offered. Did it get ‘ripped off’ by its trading companions? The query appears absurd. If they felt they had been being ripped off…Dutch retailers wouldn’t do the trade!

It was not solely free trade that introduced the Dutch wealth. Freedom of faith and freedom of motion additionally contributed. Jews from Spain and Portugal. Protestants from France. Thinkers and tinkers from throughout Europe discovered freedom in the Dutch Republic. Descartes, Bayle, Locke, Spinoza — all took refuge in Holland. And the new immigrants introduced contemporary concepts…and capital.

New merchandise got here in too. In the Seventeenth century, Europeans had been increasing their trade routes into Africa, Asia and the Americas. They introduced back tobacco, tomatoes, potatoes and plenty of different merchandise by no means earlier than obtainable in Europe. With the new imports…and the new immigrants…Amsterdam grew to become what New Amsterdam (aka New York) was to turn out to be years later — a dynamic melting pot.

But none of the arrivals had the impact of a plant that got here from the Ottoman Empire — the tulip. It caught the eye not solely of gardeners, however of traders. One of the improvements made by the Dutch was futures markets. They may wager on the future…utilizing markets not solely to set present costs, but in addition the costs that people anticipated tomorrow.

Typically, the tulips flowered in the springtime…after which the bulb was dug up and saved. For the autumn and the winter, the bulb stayed the place it was. It was the ‘underlying’ asset. But the trades had been made on paper. Prices soared on the most fascinating bulbs — similar to the Semper Augustus.

The consumers typically borrowed, utilizing their different bulb holdings — on paper — as collateral. And so it went for the proto-crypto merchants; they started to see they may get wealthy simply by trading issues they might by no means see. Prices went up additional and additional… each a measure of hope.

Until…till…the future got here.

In February 1637 an public sale was held. This time, there have been no consumers. Word rapidly received round that there could also be no one keen to buy the bulbs. Prices collapsed. Promises went unfulfilled. Loans went unpaid. Contracts had been torn up. The bulbs — actual issues — had been nonetheless there. But the ‘paper’ wealth disappeared.

The Dutch ‘Golden Age,’ nonetheless, continued for one more 65 years… till the death of Prince William III in 1702.

Or, so they are saying.

Regards,

Bill Bonner,
For The Daily Reckoning Australia

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