ABSTRACT

In the sixteenth and seventeenth centuries the Dutch Republic became a striking example of a capital-intensive state, in which taxation relied heavily on the cooperation between rulers and capitalists.1 e sale of urban and provincial annuities and the investment of citizens in such annuities and loans were a crucial part of this nancial system for several reasons. First, taxation may have been the most import source of revenue for the Dutch Republic; a considerable part of the income of the state came from annuities and loans. e sale of annuities was an important source of income, particularly because loans were necessary for extraordinary expenses that could not be nanced with regular tax money. Taxes and annuities were to a certain extent complementary. Second, the taxation system was o en linked to the sale of annuities, and before the rise of a free capital market in the seventeenth century, coercion was a key factor in this. Sometimes additional taxes were imposed in the form of an annuity that would later be redeemed. Such renten were enforced contributions, quite similar to taxes. e legally forced nature of these loans makes it hard to discern between taxation and loans. ird, the nancial success of the Dutch Republic between c. 1580 and 1650 was also made possible because taxes allowed for a funded debt. From 1547 onwards provincial annuities that were sold and managed by the cities created a debt that was backed by new permanent excises. In contrast to the former renten, the new provincial renten were fully redeemed by the provincial taxes, which guaranteed that the provinces would indeed annually pay the interest. is made investors more inclined to buy life annuities or redeemable annuities, which allowed the provinces to mobilize future revenues for present needs by successfully selling annuities on urban markets.2 e new nancial system of the Dutch Republic entailed a shi of power from the sovereign to the provinces, but also from the urban governments to the provincial administration.3